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Merck
A good third quarter

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Merck, a science and technology company, generated very strong organic sales growth in the third quarter of 2018. However, this was impacted by negative exchange rate effects. Despite organic growth, EBITDA pre of the Group also declined in comparison with the year-earlier quarter owing to strong negative foreign exchange effects. Merck confirmed its forecast for the development of organic EBITDA pre for the full year 2018.

“2018 was a challenging year for Merck. We made future-oriented decisions that will lead to profitable growth as of 2019. In the third quarter, we generated strong organic sales growth across all three business sectors. In particular, Healthcare and Life Science performed well, delivering strong organic growth of nearly 10 percent.”

Stefan Oschmann, Chairman of the Executive Board and CEO of Merck

Healthcare generates very strong organic sales growth

The Healthcare business sector delivered very strong organic sales growth of 9.9% in the third quarter of 2018. Including currency headwinds of –3.3%, net sales amounted to € 1.6 billion (Q3 2017: € 1.5 billion), representing an increase of 6.6%. The organic growth of Healthcare was driven by double-digit growth rates in the Fertility franchise as well as the antidiabetic agent Glucophage. As in the previous quarters, net sales of the two new medicines Mavenclad and Bavencio also contributed to organic growth. In the third quarter, net sales of the immuno-oncology medicine Bavencio rose to € 19 million (Q3 2017: € 7 million). With Mavenclad for the oral short-course treatment of highly active relapsing multiple sclerosis (MS), Merck generated sales of € 25 million in the third quarter of 2018 (Q3 2017: € 3 million). On July 30, 2018, Merck announced that a resubmission of the New Drug Application for cladribine tablets as a potential treatment for patients with relapsing forms of MS had been accepted for filing by the U.S. Food and Drug Administration (FDA).

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Susumu Kitagawa
Emanuel Merck Lectureship 2019

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Merck, a science and technology company, announced that Susumu Kitagawa, Professor at the Institute for Integrated Cell–Material Sciences at Kyoto University, Japan, has been named the sixteenth recipient of the Emanuel Merck Lectureship. He is being recognized for his pioneering scientific work in the field of metal organic frameworks (MOFs). His fundamental contributions to the development of this innovative class of nanoporous materials could lead to new ways of capturing, storing and releasing gases. Broadly speaking, MOFs could contribute to improving the state of our planet by helping to fight climate change.

“I am thankful for the honor bestowed upon me today for my work as a scientist,” said Kitagawa on receiving the news about this distinction. “My big dream is to synthesize very important chemicals such as amino acids directly from an ubiquitous element: air. When you think of it, all the elements are right there: oxygen, carbon, nitrogen, but also hydrogen in moisture. I’m not sure I will actually be able to achieve that, but I can encourage young researchers in this direction.”

“We are honoring an outstanding scientist whose contribution to mankind might not be visible to everyone now, but will be sooner or later,” said Klaus Griesar, Head of Science Relations at Merck. “This science prize not only serves to promote scientific exchange with internationally recognized researchers, but it also provides insights into front-line scientific research. It fits in well with Merck as a science and technology company and complements chemical research at the Technische Universität Darmstadt.”

The Emanuel Merck Lectureship was jointly established by Merck and the Technische Universität Darmstadt in 1992. It recognizes globally renowned scientists who have made superb contributions to chemical and pharmaceutical research. From 1993 to the present day, the award has been granted to 16 eminent scientists from all over the world. The prize, worth € 30,000, was presented to Kitagawa on May 13, 2019 during a public lecture at the Hörsaal- und Medienzentrum at the Lichtwiese campus of TU Darmstadt. At 5 p.m., the prize winner was hold a lecture entitled “Welcome to Small Spaces – Chemistry and Application of Porous Coordination Polymers /Metal-Organic Frameworks”.

Kitagawa’s development of nanoporous materials could lead to new ways of capturing, storing and releasing gases like in a cage with bars so small as to lock gas molecules inside it. In essence, metal organic frameworks (MOFs) are such cages. They combine metallic knots and organic ligands that hold them together. By combining different types of metals and ligands, the size and shapes of the pores can be controlled, which means MOFs can be used to capture or release gases on a molecular scale.

The potential applications are very wide, but certain fields are already quite promising, such as gas storage (typically for methane, hydrogen or CO2 ), gas separation (which would be useful in the field of air quality, for capturing harmful molecules for example), gas transformation – using the catalytic properties of MOFs – as well as for making high-sensitivity gas sensors. Capturing and re-using gases in these cages could help develop clean technologies to tackle climate change and open up new possibilities in energy storage.

Apart from the Emanuel Merck Lectureship, Merck honors science and scientist with many other awards. The latest addition to this is the Future Insight Prize, which was announced in July 2018 and will be awarded for the first time in July 2019. Merck aims to give up to € 1 billion annually for the next 35 years to incentivize people whose work has enabled significant progress towards making this vision a reality by discovering new ground-breaking science or by developing enabling technologies. This year’s prize will be granted for a visionary product to protect humanity from a new pandemic threat.

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Plans for Future Growth

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Merck, a science and technology company, held its 24th Annual General Meeting today at the Jahrhunderthalle in Frankfurt am Main. After Stefan Oschmann, Chairman of the Executive Board and CEO of Merck KGaA, briefly recapitulated the anniversary year 2018, he presented the company’s plans for future growth to Merck shareholders.

“Science and technology are transforming our world at lightning speed and we at Merck are helping to shape this transformation. Science is at the heart of everything we do,” said Oschmann. “We performed well in 2018, which was a challenging year. In 2019, we want to resume growth for all key figures: sales, EBITDA pre and EPS pre. Our objectives are ambitious yet feasible since we’ve created a solid foundation.”

As already reported in early March, Merck generated net sales in 2018 of € 14.8 billion, an increase of 2.2%. EBITDA pre, the company’s most important earnings indicator, declined by -10.5% to € 3.8 billion. This was largely due to negative exchange rate effects. Earnings per share pre (EPS pre), which is decisive for the Merck dividend, decreased in 2018 by -13.9% to € 5.10. Nevertheless, in the interests of dividend continuity, Merck is proposing to the Annual General Meeting a dividend of € 1.25 per share as in the previous year. As previously announced, Merck expects moderate organic growth of Group sales in 2019. For EBITDA pre, the company forecasts a pronounced organic percentage increase in the low teens range in 2019.

The company has also clearly formulated its long-term objectives and is resolutely focusing on them. In the Healthcare business sector, as of 2022 Merck aims to achieve around € 2 billion in sales annually with newly launched medicines or compounds still in its Biopharma pipeline at the present time. In 2018, Merck generated sales of € 160 million with its two new medicines, the immuno-oncology drug Bavencio and Mavenclad for the treatment of multiple sclerosis. At the end of March 2019, Mavenclad was approved by the U.S. Food and Drug Administration (FDA) and thus in the largest single regional market for this medicine.

The firm has also filed for further approvals of Bavencio. The regulatory authorities in the United States, Europe and Japan are reviewing Bavencio in combination with Inlyta from Pfizer in the treatment of patients with advanced renal cell carcinoma. In addition, an important element of Merck’s strategy in the Healthcare sector is the alliance entered into in February with GlaxoSmithKline to co-develop and co-commercialize bintrafusp alfa (M7824), an immunotherapy from Merck currently in clinical trials. The agreement has a potential overall value of up to € 3.7 billion. Overall, eight clinical programs for this novel immunotherapy will be in progress or initiated this year.

In its Life Science business sector, Merck intends to continue to achieve above-market growth. Merck sees great potential particularly for the business with pharmaceutical companies, which is the main focus of the Process Solutions business unit. E-commerce is also playing an important role and already accounts for a large portion of Life Science sales. In addition, Merck is investing in growth fields such as bioprocessing technology for drug manufacturing. The company is forging ahead with promising new technologies, for example the BioContinuum platform. With BioContinuum, Merck wants to significantly simplify and accelerate the complex manufacturing process for biotech medicines by melding formerly separate steps into one continuous process for its customers in the coming years.

In Performance Materials, Merck intends to expand its position as a leading provider of solutions for the electronics industry. After 2019, the company is aiming to increase sales in this business sector by an average of 2% to 3% annually. On
April 12, Merck signed a definitive agreement to acquire Versum Materials for US$ 53 per share. The business combination is expected to significantly strengthen the Performance Materials business sector. The U.S. company Versum is one of the world’s leading suppliers of innovation-driven, high-purity process chemicals, gases and equipment for semiconductor manufacturing. The transaction is expected to close in the second half of 2019, subject to the approval of Versum stockholders at a Versum special meeting, regulatory clearances and the satisfaction of other customary closing conditions. “Versum will broaden our portfolio. Our competencies are highly complementary. Together, we can offer our customers more. This is very important because the digital revolution has only just begun and we want to considerably advance it further,” Oschmann said to shareholders.

Furthermore, Merck is also working to build new digital businesses beyond its three business sectors. The joint venture Syntropy, which Merck plans to establish with Palantir Technologies, wants to help scientists use scientific data better and securely. By enabling researchers to structure data from various sources and to analyze it via pattern recognition, Syntropy initially aims to considerably accelerate cancer research. Additionally, Syntropy will enable researchers to exchange and trace data reliably, with users always retaining full control of their data.

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Fight metabolic diseases
Servier collaborates with Harvard researchers

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Servier and Harvard researchers will embark on a three-year preclinical research project where the ultimate objective is to develop therapeutics targeting the microbiota for the treatment of type 2 diabetes and NAFLD. The work will be conducted by a multidisciplinary team of researchers from both parties. The research team at Harvard University will be led by Emily P. Balskus, Professor of Chemistry and Chemical Biology, and the team at Servier will be led by Philippe Delerive, Head of Research for Cardiovascular and Metabolic Diseases. The collaboration combines the expertise of Servier researchers in the field of metabolism and drug development with Prof. Balskus’ expertise in chemical discovery relating to the gut microbiome. Together, the parties hope to make important advances in understanding disease biology and to use emerging technologies to develop new treatment options for diseases with high unmet medical need.

“Gut microbiota is an untapped resource for the identification of novel targets in the field of metabolic diseases. It opens up new perspectives for the development of increasingly precise and personalized innovative therapies. The close collaboration between our researchers and academic researchers from Harvard represents a major step in this direction, for the ultimate benefit of patients,” stated Servier Group Executive Vice-President Research & Development, Claude Bertrand.

Non-alcoholic fatty liver disease (NAFLD) affects over 25% of the world’s population. The condition, in which too much fat is stored in the liver, is very often linked to excess weight and/or type 2 diabetes. This, in turn, is due to the build-up of fatty acids and scar tissue, which can lead to steatohepatitis (NASH), cirrhosis and, in some cases, to the development of liver cancer. Currently there are no therapies available to patients for this disease.

This collaboration is a project under the strategic alliance established between Servier and Harvard University in 2017. Under the terms of the alliance agreement, Servier will support multi-year research projects initiated by Harvard faculty and focused on the development of innovative treatments in its therapeutic fields of expertise. Servier selected this project through a call for proposals.

Servier has been involved in the research and development of innovative therapeutics against non-insulin diabetes (type 2 diabetes) for over 40 years. Identifying new therapeutic targets in this field is one of Servier’s priorities, as well as research of specific therapeutic solutions to diabetes-linked complications such as diabetic nephropathy or non-alcoholic fatty liver disease.

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