Merck & Co., Inc. Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good day, everyone, and welcome to the Merck conference call. Today's call is being recorded. At this time I would like to turn the floor over to Mr. Michael Rabinowitz, Executive Director of Investor Relations. Please go ahead, sir.

MICHAEL RABINOWITZ, EXECUTIVE DIRECTOR IR, MERCK & COMPANY, INC.: Thank you, Lisa, and good morning to everyone. Thank you for joining us today. Many of you may have just listened to our 9 AM press conference, but to those who have just called in, I want to make sure that you're aware that Merck has e-mailed the press release to our investor audience and posted it on Merck.com concerning our voluntary withdrawal of Vioxx, which is the subject of this call.

Before I introduce those with me today, I want to review the Safe Harbor language. During the call, we may discuss certain subjects that may contain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties which may cause results to differ materially from those set forth in the statements. The forward-looking statements may include statements regarding product development, product potential or financial performance. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected.

Merck undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements in this call should be evaluated together with the many uncertainties that affect Merck's business, particularly those mentioned in the cautionary statements in Item 1 of Merck's Form 10-K for the year ended December 31, 2003, and in its periodic reports on Form 10-Q and Form 8-K, which the Company incorporates by reference.

Ray Gilmartin, Chairman, President and Chief Executive Officer; Dr. Peter Kim, President of Merck Research Laboratories; and Judy Lewent, Executive Vice President and Chief Financial Officer and President Human Health Asia are with me today to help you understand why Merck has decided to voluntarily withdrawal Vioxx and address your concerns regarding its implications.

Kenneth C. Frazier, Senior Vice President and General Counsel will also be available for the Q&A. As some of you were unable to call into our 9:00 media call, I will ask Ray and Peter to repeat their earlier comments. Ray will summarize our decision. Peter will review the rationale, and Judy will then discuss the impact to our financials before we open to your questions. Please limit your questions to those directly related to Vioxx and the implications of this voluntary withdrawal, as we have our scheduled third-quarter conference call on October 21st to discuss other Merck issues.

Let me now introduce Merck's Chairman, President and CEO, Ray Gilmartin.

RAY GILMARTIN, CHAIRMAN, PRESIDENT & CEO, MERCK & COMPANY, INC.: Thank you, Mike, and good morning. Thank you for joining us today. This morning Merck is announcing a voluntary worldwide withdrawal of Vioxx, our COX-2 inhibitor for arthritis and pain. This decision is a result of new data from a 3-year placebo-controlled study, which was designed to evaluate the possible use of Vioxx in preventing the recurrence of colon polyps. The study also collected data on the long-term cardiovascular safety of Vioxx. Importantly, in the first 18 months of the study there was no difference in the risk for heart attack or stroke in patients taking either Vioxx or placebo. Beginning after 18 months, however, the risk of a cardiovascular event did increase among those on Vioxx. Accordingly, we are voluntarily withdrawing Vioxx, effective today.

We are taking this action because we believe it best serves the interest of patients. We believe it would have been possible to continue to market Vioxx with labeling that would incorporate these new data. However, given the availability of alternative therapies and the questions raised by the data, we concluded that a voluntary withdrawal is the responsible course to take. We encourage patients who are currently taking Vioxx to contact their health care providers to discuss discontinuing use of Vioxx and possible alternative treatments. Additional information for both patients and physicians can be found at Merck.com, at Vioxx.com, or by calling our toll-free number at 1-888-36VIOXX. We have informed the FDA, as well as other regulatory authorities around the world, of our voluntary withdrawal. We have also begun to notify health care practitioners in the United States and other countries where Vioxx is prescribed of our decision.

Our voluntary withdrawal of Vioxx also had financial ramifications for Merck with regard to financial guidance. Prior to today's announcement, Merck remained comfortable with its 2004 earnings per share guidance of $3.11 to $3.17. As a result of this decision, the Company currently expects earnings per share to be negatively affected by 50 cents to 60 cents. At this point, it is uncertain which of these costs will be recorded in the third quarter and which will be recorded in the fourth quarter. Therefore, at this time, we are retracting our third-quarter guidance. We believe the decision we are announcing today reaffirms Merck's commitment to patient safety. And now I would like to ask Dr. Peter Kim, the President of Merck Research Labs, to provide additional details about the science behind today's announcement.

DR. PETER KIM, PRESIDENT RESEARCH LABS, MERCK & COMPANY, INC.: Thank you, Ray. Good morning everyone. I would like to take a few minutes to explain why we have decided to voluntarily withdraw Vioxx. As you have heard, Merck initiated a 3-year study known as the APPROVe Trial to determine whether Vioxx would be effective in preventing the recurrence of colon polyps. The APPROVe Trial, although primarily focused on the efficacy of Vioxx in preventing…