On February 5, 2020 CytoSorbents Corporation (NASDAQ:CTSO), a critical care immunotherapy leader commercializing its CytoSorb blood purification technology to treat deadly inflammation in critically-ill and cardiac surgery patients around the world, reported the first published case report detailing the successful use of CytoSorb to help treat cytokine release syndrome (CRS) following the administration of CAR T-cell immunotherapy (Press release, Cytosorbents, FEB 5, 2020, View Source [SID1234553902]). In a recent publication entitled, "Multimodal Therapeutic Approach of Cytokine Release Syndrome Developing in a Child Given Chimeric Antigen Receptor-Modified T Cell Infusion", in the journal, Critical Care Explorations, a publication of the Society of Critical Care Medicine, Bottari and colleagues highlight the use of CytoSorb, in conjunction with continuous renal replacement and tocilizumab, to help treat a 14-year old boy with refractory acute lymphoblastic leukemia (ALL), who developed Grade 4 cytokine release syndrome (CRS) with progressive respiratory failure and severe acute respiratory distress syndrome (ARDS) following the administration of CAR T-cell immunotherapy.

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Dr. Joerg Scheier, Senior European Medical Director of CytoSorbents stated, "We are pleased to report the first published use of CytoSorb to assist in the rescue of a patient suffering from life-threatening cytokine release syndrome due to CAR T-cell immunotherapy. The combination of CytoSorb with continuous renal replacement therapy, and tocilizumab, was simple and safe to implement. More importantly, it led to a dramatic reversal of acute respiratory distress syndrome, one of the most deadly forms of lung injury that is a root cause of death in the Wuhan coronavirus outbreak, with a corresponding profound drop in cytokine storm and circulating inflammatory mediators. We believe this successful proof-of-concept treatment supports the consideration of this treatment regimen in future cases of CRS triggered by CAR T-cell immunotherapy."

This patient had previously failed treatment of his ALL with both chemotherapy and immunotherapy, and was enrolled into an academic CAR T-cell immunotherapy trial. However, 7 days after the CAR T-cell therapy infusion, he developed severe cytokine release syndrome (a form of cytokine storm), and the rapid progression of respiratory failure that did not respond to an initial dose of tocilizumab and low dose steroids. The patient was admitted to the pediatric intensive care unit (PICU) and placed on mechanical ventilation for profound ARDS with a PaO2/FiO2 (P/F) ratio of 45 mm Hg, and hemodynamic instability requiring vasopressors. His Grade 4 cytokine release syndrome (CRS) exhibited extremely high cytokine and inflammatory marker levels, including an IL-6 of 4,048 pg/mL and a ferritin of 146,095 ng/mL. The patient underwent five blood purification treatments with CytoSorb, changed every 12 hours for the first day, and then every 24 hours for the next 3 days, in conjunction with continuous renal replacement therapy (CRRT), with tocilizumab administered on the last 2 days of CytoSorb treatment. In the first 3 days of CytoSorb treatment, the ferritin levels dramatically decreased to normal, and the IL-6 dropped to 248 pg/mL. This improvement in control of CRS was mirrored by a gradual and progressive improvement in lung function, as measured by P/F ratio and chest X-rays. On day 12 of admission to the PICU, he was weaned off of mechanical ventilation and was discharged from the ICU a week later.

CAR T-cell immunotherapy (Kymriah – Novartis; Yescarta – Gilead) represents a breakthrough in cancer treatment of acute lymphocytic leukemia (ALL; also called acute lymphocytic leukemia) and Diffuse large B-cell lymphoma (DLBCL) that are refractory to standard biologic therapy and chemotherapy, and has great potential in other blood cancers and solid tumors in the future. The therapy takes a patient’s own immune T-cells, genetically modifies them outside of the body with a chimeric antigen receptor (CAR) to be able to recognize and kill the cancer cells, and reinfuses these CAR T-cells back into the body where they have led to dramatic cures of what were considered irreversibly fatal cancers. However, in doing so the activated cells often trigger an inflammatory response in the patient caused by the production of high levels of inflammatory mediators called cytokines. In some patients, the levels of these cytokines can spiral upwards, creating a "cytokine storm" or cytokine release syndrome (CRS) that can rapidly cause multi-organ failure, inflammation of the brain, and potentially death if left untreated. Tocilizumab (an IL-6 receptor antagonist) and intravenous steroids are the current approved treatments for CRS but are not always successful in controlling CRS or CRES, and have the potential to immune suppress the patient, increasing the risk of serious infection. CytoSorb has the potential to fill this gap. There are currently two approved CAR T-cell immunotherapies in both the United States and European Union. According to Market Research Future, the global CAR T-cell immunotherapy market is expected to approach $9 billion in revenue by 2025.

On February 5, 2020 Kineta, Inc., a clinical stage biotechnology company focused on the development of novel immunotherapies in oncology, neuroscience and biodefense reported that Kineta’s management team has been invited to participate at the BIO CEO & Investor Conference (Press release, Kineta, FEB 5, 2020, View Source [SID1234553869]). Craig W. Philips, President, will provide a corporate overview at the conference which is being held February 10-11 at the Marriott Marquis in New York. Now in its 22nd year, the BIO CEO & Investor Conference is one of the largest independent investor conferences focused on established and emerging publicly traded and select private biotech companies.

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Presentation Details
Date: Tuesday, February 11th
Time: 10:00 AM, Eastern Time
Location: New York Marriott Marquis

On February 5, 2020 Centene Corporation (NYSE: CNC) ("Centene" or the "Company") reported that it has commenced an offering to sell $2,000,000,000 of senior notes due 2030 (the "Notes"), subject to market and other conditions (Press release, Centene , FEB 5, 2020, View Source [SID1234553903]).

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Centene intends to use the net proceeds from the offering of the Notes, together with available cash on hand, to complete a redemption of all of its outstanding 4.75% Senior Notes due 2022 (the "2022 Notes Redemption") and all of its outstanding 6.125% Senior Notes due 2024 (the "2024 Notes Redemption"), including all premiums, accrued interest and costs and expenses related to the 2022 Notes Redemption and the 2024 Notes Redemption. Pending the application of the net proceeds of the offering for the foregoing purposes, net proceeds may temporarily be used for general corporate purposes.

The Notes will be offered to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and to non-United States persons outside the United States in compliance with Regulation S under the Securities Act. The Notes have not been registered under the Securities Act and may not be offered or sold in the United States without registration or an applicable exemption from the registration requirements.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of the securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, qualification or exemption under the securities laws of any such state or other jurisdiction.

On February 5, 2020 University of Arizona Cancer Center reported is developing new strategies to prevent and reduce the risk of squamous cell carcinoma, the second most-common form of non-melanoma skin cancer (Press release, University of Arizona, FEB 5, 2020, View Source [SID1234553939]).

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Skin cancer is the most common malignancy worldwide, and one in three new cancers diagnosed is a form of skin cancer, according to the Skin Cancer Foundation. This amounts to about 5 million non-melanoma skin cancers in the United States each year.

Clara Curiel-Lewandrowski, M.D., director of the Cutaneous Oncology Program and co-director of the Skin Cancer Institute at the Cancer Center, is principal investigator for a five-year, $6.9 million grant from the National Cancer Institute (#P01CA229112), a unit of the National Institutes of Health.

"This award is both an endorsement of the scientific contributions made by the Skin Cancer Institute research team and a true opportunity to make new groundbreaking advances in skin cancer prevention and treatment," Curiel-Lewandrowski said. "This is a stamp of approval that says the University of Arizona Cancer Center is the place with quality and innovative approaches in skin cancer therapeutic prevention research nationwide."

The Program Project Grant will assess, in animal models and human studies, the importance of a novel immune protein known as TLR4, which is modulated by solar ultraviolet radiation. The second focus of the grant includes characterization of a cascade of messages within skin cells recently discovered by the team that are found to promote development of skin cancer after exposure to sunlight. An impactful aspect of the award relates to the formulation and testing of topical drugs – lotions and creams, for example – that effectively can inhibit the action of these proteins ultimately to prevent squamous cell carcinoma formation.

"We are one of the few institutions that has mastered both experimental and clinical studies that effectively mimic the effect of sunlight," Curiel-Lewandrowski said. "These models allow us to test drugs that can reproducibly and accurately stop or reverse the cellular damage caused by the sun through pilot and Phase 1 clinical trials.

"This highly integrated and translational research-based program project emphasizes the importance of a multidisciplinary and precision-medicine approach for the prevention of squamous cell carcinoma of the skin," Curiel-Lewandrowski continued. "These discoveries also can serve as a model to prevent other epithelial malignancies."

"Skin cancer is a great risk to many people, especially those of us in Arizona," said University of Arizona President Robert C. Robbins. "The talented, dedicated researchers at the Cancer Center understand the importance of identifying innovative approaches for skin cancer prevention and treatment, and it is a well-deserved honor for this team to receive this prestigious grant. It is important to discover the safest ways to ensure people significantly reduce their risk of skin cancer while enjoying all the sunshine that makes our beautiful state such a wonderful place to live."

The new funding is the latest award for Curiel-Lewandrowski and the Skin Cancer Institute team, which has been a leader in skin cancer research, treatment and prevention across Arizona and beyond.

"It is important that our community knows that our Skin Cancer Institute is here for them and that our aligned vision is to prevent and cure skin cancer through research, education and clinical care," Curiel-Lewandrowski said. "We have an exceptional team in place with a common mission: To eradicate skin cancer in Arizona by decreasing skin-cancer incidence, where late diagnosis is not an option, and no lives are lost due to this preventable disease."

On February 5, 2020 Merck (NYSE: MRK), known as MSD outside the United States and Canada, reported financial results for the fourth quarter and full year of 2019 (Press release, Merck & Co, FEB 5, 2020, View Source [SID1234553870]).

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"As evidenced by our results and our 2020 guidance, Merck had an extraordinary year and is in a position of operational and financial strength," said Kenneth C. Frazier, chairman and chief executive officer, Merck. "It is this position of strength, born of our focused execution, that gives us the confidence to spin off our Women’s Health, trusted Legacy Brands and Biosimilar products into a new company, which will position us to deliver even greater value to patients and shareholders."

GAAP (generally accepted accounting principles) earnings per share assuming dilution (EPS) was $0.92 for the fourth quarter and $3.81 for the full year of 2019. GAAP EPS for the full year of 2019 reflects a $993 million charge for the acquisition of Peloton Therapeutics, Inc. (Peloton) and a $612 million pretax intangible asset impairment charge related to SIVEXTRO (tedizolid phosphate). Non-GAAP EPS of $1.16 for the fourth quarter and $5.19 for the full year of 2019 excludes acquisition- and divestiture-related costs, restructuring costs and certain other items. Non-GAAP EPS for the full year of 2019 also excludes the charge for the acquisition of Peloton and the SIVEXTRO impairment charge.

Oncology Pipeline Highlights

Merck continued to advance the development programs for KEYTRUDA (pembrolizumab), the company’s anti-PD-1 therapy; Lynparza (olaparib), a PARP inhibitor being co-developed and co-commercialized with AstraZeneca; and Lenvima (lenvatinib mesylate), an orally available tyrosine kinase inhibitor being co-developed and co-commercialized with Eisai Co., Ltd. (Eisai).

Merck announced the following regulatory milestones for KEYTRUDA:
Approval in the United States by the Food and Drug Administration (FDA) as monotherapy for the treatment of certain patients with high-risk, non-muscle invasive bladder cancer (NMIBC) based on the KEYNOTE-057 trial;
Approval in Japan for three new first-line indications across advanced renal cell carcinoma (RCC) based on the KEYNOTE-426 trial and recurrent or distant metastatic head and neck cancer based on the KEYNOTE-048 trial;
Approval in China for first-line treatment of metastatic squamous non-small cell lung cancer (NSCLC) in combination with chemotherapy based on the KEYNOTE-407 trial; and
Approval in Europe for two new regimens of KEYTRUDA, as monotherapy or in combination with chemotherapy, for the first-line treatment of metastatic or unresectable recurrent head and neck squamous cell carcinoma (HNSCC) in adults whose tumors express PD-L1 with a Combined Positive Score (CPS) >1 based on the KEYNOTE-048 trial.
Merck presented results from an exploratory analysis of the pivotal Phase 3 KEYNOTE-042 trial that showed KEYTRUDA improved overall survival as monotherapy for the first-line treatment of metastatic NSCLC regardless of KRAS mutational status.
Merck announced that the Phase 3 KEYNOTE-604 trial investigating KEYTRUDA in combination with chemotherapy significantly improved progression-free survival (PFS) compared to chemotherapy alone in the first-line treatment of patients with extensive-stage small cell lung cancer (ES-SCLC) but did not meet the other dual primary endpoint of overall survival.
Merck and AstraZeneca announced the following regulatory milestones for Lynparza:
Approval in the United States by the FDA as first-line maintenance treatment of germline BRCA-mutated (BRCAm) metastatic pancreatic cancer in patients whose disease had not progressed on at least 16 weeks of a first-line platinum-based chemotherapy regimen based on the Phase 3 POLO trial;
Approval in China as a first-line maintenance therapy in BRCAm advanced ovarian cancer following response to platinum-based chemotherapy based on the Phase 3 SOLO-1 trial;
Filing acceptance for priority review by the FDA for a supplemental New Drug Application (sNDA) seeking approval of Lynparza in combination with bevacizumab for the maintenance treatment of women with advanced ovarian cancer whose disease showed a complete or partial response to first-line treatment with platinum-based chemotherapy and bevacizumab based on results from the Phase 3 PAOLA-1 trial. A Prescription Drug User Fee Act (PDUFA) date is set for the second quarter of 2020; and
Filing acceptance for priority review by the FDA for a sNDA for the treatment of patients with metastatic castration-resistant prostate cancer (mCRPC) and deleterious or suspected deleterious germline or somatic homologous recombination repair (HRR) gene mutations, who have progressed following prior treatment with a new hormonal agent based on results from the Phase 3 PROfound trial. A PDUFA date is set for the second quarter of 2020.
Merck and AstraZeneca announced filing acceptance for priority review by the FDA of a New Drug Application (NDA) for selumetinib, an oral MEK 1/2 inhibitor, for the treatment of certain pediatric patients with neurofibromatosis Type 1 (NF1) based on the results from the National Cancer Institute (NCI) Cancer Therapy Evaluation Program (CTEP)-sponsored SPRINT Phase 2 Stratum 1 trial. A PDUFA date is set for the second quarter of 2020.
Other Pipeline Highlights

Merck announced conditional approval in Europe as well as U.S. approval for ERVEBO (Ebola Zaire Vaccine, Live) for the prevention of disease caused by Zaire ebolavirus in individuals 18 years of age and older.
Merck announced FDA approval of DIFICID (fidaxomicin) tablets and oral suspension for the treatment of Clostridioides difficile-associated diarrhea (CDAD) in children aged six months and older.
Merck announced the adoption of a positive opinion by the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) for RECARBRIO (imipenem, cilastatin, and relebactam) for the treatment of infections due to aerobic gram-negative organisms in adults with limited treatment options.
Merck announced filing acceptance for priority review by the FDA for a sNDA seeking approval of RECARBRIO to treat adult patients with hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia (HABP/VABP) caused by certain susceptible Gram-negative microorganisms. The PDUFA date is June 4, 2020.
Merck announced that the Phase 3 VICTORIA study evaluating vericiguat, a soluble guanylate cyclase (sGC) stimulator being jointly developed with Bayer AG, met its primary composite endpoint in reducing the risk of heart failure hospitalization or cardiovascular death in patients with worsening chronic heart failure with reduced ejection fraction (HFrEF) compared to placebo when given in combination with available heart failure therapies.
Business Development

Merck acquired ArQule, Inc., diversifying its oncology portfolio with the expansion into targeted therapies that treat hematological malignancies with the addition of ARQ 531, a novel, oral Bruton’s tyrosine kinase (BTK) inhibitor currently in a Phase 2 development, among other candidates. The acquisition closed in January 2020.
Merck entered into a strategic oncology collaboration with Taiho Pharmaceutical Co., Ltd., and Astex Pharmaceuticals focused on the development of small molecule inhibitors against several drug targets, including the KRAS oncogene, which are currently being investigated for the treatment of cancer.
Merck Animal Health acquired Vaki, a leader in fish farming monitoring equipment and real-time video monitoring technology to advance fish health and welfare. The acquisition closed in December.
Fourth-Quarter and Full-Year Revenue Performance

The following table reflects sales of the company’s top pharmaceutical products, as well as sales of animal health products.

Pharmaceutical Revenue

Fourth-quarter pharmaceutical sales increased 7% to $10.5 billion, excluding the unfavorable effect from foreign exchange, sales grew 8%. The increase was driven primarily by growth in oncology, partially offset by the ongoing impacts of the loss of market exclusivity for several products. Additionally, fourth quarter 2019 sales were reduced by $120 million due to a previously disclosed borrowing of doses of GARDASIL 9 (Human Papillomavirus 9-valent Vaccine, Recombinant) from the U.S. Centers for Disease Control and Prevention’s (CDC) Pediatric Vaccine Stockpile. Sales in the fourth quarter of 2018 were increased by $125 million due to the replenishment of previously borrowed doses of GARDASIL 9.

Growth in oncology was largely driven by sales of KEYTRUDA, which were $3.1 billion for the quarter, reflecting strong momentum from the NSCLC indications as well as continued uptake in other indications, including the recently launched RCC and adjuvant melanoma indications. Additionally, oncology sales reflect alliance revenue of $132 million related to Lynparza and $124 million related to Lenvima, representing Merck’s share of profits, which are product sales net of cost of sales and commercialization costs.

Performance in vaccines for the fourth quarter reflects the negative impact of borrowing doses of GARDASIL 9 from the CDC Pediatric Vaccine Stockpile as discussed above, partially offset by higher demand in Europe and China, as well as higher demand and pricing in the United States. Excluding the borrowing-related activity in both periods, GARDASIL [Human Papillomavirus Quadrivalent (Types 6, 11, 16 and 18) Vaccine, Recombinant] and GARDASIL 9 sales grew 15% in the quarter, including a 1% negative impact from foreign exchange.

Performance in hospital acute care reflects higher demand globally, particularly in the United States, for BRIDION (sugammadex) Injection 100 mg/mL, a medicine for the reversal of neuromuscular blockade induced by rocuronium bromide or vecuronium bromide in adults undergoing surgery; and the ongoing launch of PREVYMIS (letermovir), a medicine for prophylaxis (prevention) of cytomegalovirus (CMV) infection and disease in adult CMV-seropositive recipients of an allogeneic hematopoietic stem cell transplant.

Pharmaceutical sales growth for the quarter was partially offset by the ongoing impacts from the loss of market exclusivity, including for NOXAFIL (posaconazole), EMEND (aprepitant), ZETIA (ezetimibe) and VYTORIN (ezetimibe/simvastatin), CUBICIN (daptomycin) and REMICADE (infliximab). A generic entrant of NUVARING (etonogestrel/ethinyl estradiol vaginal ring) in the U.S. also negatively affected sales for the quarter and will continue to negatively affect sales in the future. In addition, the decline in sales of JANUVIA (sitagliptin) and JANUMET (sitagliptin and metformin HCI) reflects continued pricing pressure in the United States, which more than offset higher demand globally.

Full-year 2019 pharmaceutical sales increased 11% to $41.8 billion; excluding the unfavorable effect from foreign exchange, sales grew 14%, primarily reflecting growth in oncology and vaccines, partially offset by the ongoing effects from the loss of market exclusivity for several products and continued pricing pressure in diabetes.

Animal Health Revenue

Animal Health sales totaled $1.1 billion for the fourth quarter of 2019, an increase of 8% compared with the fourth quarter of 2018; excluding the unfavorable effect from foreign exchange, Animal Health sales grew 10%. Growth for the quarter was mainly driven by livestock products due to the Antelliq acquisition.

Worldwide sales for the full year of 2019 were $4.4 billion, an increase of 4%; excluding the unfavorable effect from foreign exchange, sales grew 9%. Full-year sales growth was mainly driven by livestock products due to the Antelliq acquisition, along with higher sales of companion animal products, primarily the BRAVECTO (fluralaner) line of products for parasitic control.

Animal Health segment profits were $366 million in the fourth quarter of 2019, a decrease of 5% compared with $387 million in the fourth quarter of 2018, primarily driven by unfavorable product mix and higher investments in selling and product development, partially offset by higher sales. Segment profits were $1.6 billion for the full year of 2019, a decrease of 3% compared with $1.7 billion in 2018, primarily driven by the unfavorable effects of foreign exchange.3

Fourth-Quarter and Full-Year Expense, EPS and Related Information

GAAP Expense, EPS and Related Information

Gross margin was 69.1% for the fourth quarter of 2019 compared to 70.1% for the fourth quarter of 2018. The decrease reflects unfavorable manufacturing variances, inventory write-offs, higher amortization of intangible assets related to collaborations, the unfavorable effects of pricing pressure and restructuring costs, partially offset by favorable product mix and lower acquisition- and divestiture-related costs.

Gross margin was 69.9% for the full year of 2019 compared to 68.1% for the full year of 2018. The increase in gross margin for the full year of 2019 reflects a charge in 2018 related to the termination of a collaboration agreement with Samsung Bioepis Co., Ltd., favorable product mix and lower acquisition- and divestiture-related costs, partially offset by unfavorable manufacturing variances, inventory write-offs, the unfavorable effects of pricing pressure, higher amortization of intangible assets related to collaborations and higher restructuring costs.

Selling, general and administrative expenses were $2.9 billion in the fourth quarter of 2019, an increase of 9% compared to the fourth quarter of 2018. Full-year 2019 selling, general and administrative expenses were $10.6 billion, an increase of 5% compared to the full year of 2018. The increase in both periods reflects higher administrative costs, acquisition- and divestiture-related costs, and promotion costs primarily in support of strategic brands, partially offset by the favorable effects of foreign exchange.

Research and development (R&D) expenses were $2.5 billion in the fourth quarter of 2019, an increase of 15% compared with the fourth quarter of 2018. R&D expenses were $9.9 billion for the full year of 2019, a 1% increase compared to the full year of 2018. The increase in both periods primarily reflects higher expenses related to clinical development and increased investment in discovery research and early drug development. In addition, the increase for the full year of 2019 was driven by a $993 million charge for the acquisition of Peloton. The increase in R&D expenses for the full year of 2019 was partially offset by charges in 2018 including $1.4 billion related to the formation of an oncology collaboration with Eisai and $344 million related to the Viralytics Limited acquisition.

Other (income) expense, net, was $223 million of income in the fourth quarter of 2019 compared to $110 million of expense in the fourth quarter of 2018 primarily reflecting income from investments in equity securities in 2019 compared with losses in 2018. In addition, the fourth quarter of 2018 included goodwill impairment charges. Other (income) expense, net, was $139 million of expense for the full year of 2019 compared to $402 million of income for the full year of 2018 driven by lower income from investments in equity securities and higher net interest expense.

The effective income tax rates were 15.3% for the fourth quarter and 14.7% for full year of 2019. The effective income tax rate for the full year of 2019 reflects a net tax benefit of $364 million related to the settlement of certain federal income tax matters, partially offset by the unfavorable impact of the charge for the acquisition of Peloton for which no tax benefit was recognized.

GAAP EPS was $0.92 for the fourth quarter of 2019 compared with $0.69 for the fourth quarter of 2018. GAAP EPS was $3.81 for the full year of 2019 compared with $2.32 for the full year of 2018.

Non-GAAP Expense, EPS and Related Information

Non-GAAP gross margin was 72.6% for the fourth quarter of 2019 compared to 75.0% for the fourth quarter of 2018. Non-GAAP gross margin was 74.9% for the full year of 2019 compared to 75.4% for the full year of 2018. The decrease in both periods reflects unfavorable manufacturing variances, inventory write-offs, the unfavorable effects of pricing pressure and higher amortization of intangible assets related to collaborations, partially offset by favorable product mix.

Non-GAAP selling, general and administrative expenses were $2.8 billion in the fourth quarter of 2019, an increase of 8% compared to the fourth quarter of 2018. Full-year 2019 non-GAAP selling, general and administrative expenses were $10.5 billion, an increase of 4% compared to the full year of 2018. The increase in both periods primarily reflects higher administrative costs and higher promotion costs primarily in support of strategic brands, partially offset by the favorable effects of foreign exchange.

Non-GAAP R&D expenses were $2.4 billion in the fourth quarter of 2019, a 12% increase compared to the fourth quarter of 2018. Non-GAAP R&D expenses were $8.7 billion for the full year of 2019, a 10% increase compared to the full year of 2018. The increases in both periods primarily reflect higher expenses related to clinical development and increased investment in discovery research and early drug development.

Non-GAAP other (income) expense, net, was $193 million of income in the fourth quarter of 2019 compared to $66 million of income in the fourth quarter of 2018, primarily reflecting income from investments in equity securities in 2019 compared with losses in 2018, partially offset by higher net interest expense. Non-GAAP other (income) expense, net, for the full year of 2019 was $200 million of income compared to $609 million of income for the full year of 2018, primarily driven by lower income from investments in equity securities and higher net interest expense.

The non-GAAP effective income tax rates were 16.9% for the fourth quarter of 2019 and 16.8% for the full year of 2019.

Non-GAAP EPS was $1.16 for the fourth quarter of 2019 compared with $1.04 for the fourth quarter of 2018. Non-GAAP EPS was $5.19 for the full year of 2019 compared with $4.34 for the full year of 2018.

A reconciliation of GAAP to non-GAAP net income and EPS is provided in the table that follows.

At mid-January 2020 exchange rates, Merck anticipates full-year 2020 revenue to be between $48.8 billion and $50.3 billion, including a negative impact from foreign exchange of less than 1%.

Merck expects full-year 2020 GAAP EPS to be between $4.57 and $4.72. Merck expects full-year 2020 non-GAAP EPS to be between $5.62 and $5.77, including an approximately 1.5% negative impact from foreign exchange. The non-GAAP range excludes acquisition- and divestiture-related costs and costs related to restructuring programs.

The following table summarizes the company’s full-year 2020 financial guidance.

*The company does not have any non-GAAP adjustments to revenue.

**EPS guidance for 2020 assumes a share count (assuming dilution) of approximately 2.54 billion shares.

A reconciliation of anticipated 2020 GAAP EPS to non-GAAP EPS and the items excluded from non-GAAP EPS are provided in the table below.

$ in millions, except EPS amounts
Full-Year 2020

Earnings Conference Call

Investors, journalists and the general public may access a live audio webcast of the call today at 8:00 a.m. EST on Merck’s website at View Source Institutional investors and analysts can participate in the call by dialing (706) 758-9927 or (877) 381-5782 and using ID code number 8583879. Members of the media are invited to monitor the call by dialing (706) 758-9928 or (800) 399-7917 and using ID code number 8583879. Journalists who wish to ask questions are requested to contact a member of Merck’s Media Relations team at the conclusion of the call.