On February 2, 2017 AstraZeneca, a global, innovation-driven biopharmaceutical business that focuses on the discovery, development and commercialisation of prescription medicines, primarily for the treatment of diseases in three main therapy areas – respiratory, inflammation, autoimmune disease (RIA), cardiovascular and metabolic disease (CVMD) and oncology – as well as in infection and neuroscience reported financial results for the fourth quarter and full-year of 2016 (Press release, AstraZeneca, FEB 2, 2017, View Source [SID1234517638]).

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Total worldwide product sales for the forth quarter of 2016 was $ 5,260 m USD in comparison to that of $6,207 m USD for the forth quarter of 2015. Total worldwide product sales for the fiscal year ended December 31, 2016 was $21,319 m USD whereas, full year product sales amounted to $23,641 m USD in 2015.

Total oncology product sales increased from $ 2,825 m USD in 2015 to $3,383 m USD in 2016. Total oncology product sales were $930 m USD for the forth quarter of 2016 while total oncology product sales were $716 m USD in the forth quarter of 2015.

Regional sales for 2016 equated to; US – $7,365 m USD, Europe -$5,064 m USD, Established ROW- $3,096 m USD and Emerging markets – $5,794 m USD. Total regional sales of oncology products were; US- $893 m USD, Europe – $733 m USD, Established ROW – $814 m USD and $943 m USD in Emerging Markets.

For AstraZeneca’s detailed sales figures, visit: View Source

On February 2, 2017 Bristol-Myers Squibb reported the U.S. Food and Drug Administration (FDA) has approved Opdivo injection, for intravenous use for the treatment of patients with locally advanced or metastatic urothelial carcinoma (mUC) who have disease progression during or following platinum-containing chemotherapy or have disease progression within 12 months of neoadjuvant or adjuvant treatment with platinum-containing chemotherapy (Press release, Bristol-Myers Squibb, FEB 2, 2017, View Source [SID1234517624]).

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This indication is approved under accelerated approval based on tumor response rate and duration of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in confirmatory trials.1 The recommended dose for mUC is 240 mg administered as an intravenous infusion over 60 minutes every two weeks until disease progression or unacceptable toxicity. In the CheckMate -275 trial, 19.6% (95% CI: 15.1-24.9; 53/270) of patients responded to treatment with Opdivo. The percentage of patients with a complete response was 2.6% (7/270) and the percentage of patients with a partial response was 17% (46/270). Among responders, the median duration of response was 10.3 months (range: 1.9+-12.0+ months). The median time to response was 1.9 months (range: 1.6-7.2).1

Opdivo is associated with the following Warnings and Precautions including immune-mediated: pneumonitis, colitis, hepatitis, endocrinopathies, nephritis and renal dysfunction, skin adverse reactions, encephalitis, other adverse reactions; infusion reactions; and embryo-fetal toxicity.1 Please see the Important Safety Information section below.

"Our goal to help more patients is further realized in today’s approval for Opdivo in this population and we are excited that our Immuno-Oncology therapy is now an option and potential hope for these patients," said Chris Boerner, president of U.S. Commercial, Bristol-Myers Squibb. "This is evidence of our commitment to Immuno-Oncology and to bringing therapies, like Opdivo, to more and more patients in need of additional choices."

The FDA granted the application priority review and previously granted Breakthrough Therapy Designation to Opdivo for the treatment of patients with locally advanced or mUC who have disease progression during or following platinum-containing chemotherapy or have disease progression within 12 months of neoadjuvant or adjuvant treatment with platinum-containing chemotherapy. This indication is approved under accelerated approval based on tumor response rate and duration of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in confirmatory trials.1

"Most people don’t know how common bladder cancer is and that it is the fifth most diagnosed cancer. That’s why we are dedicated to raising awareness and supporting research efforts that may offer more treatment options to patients who need them," said Stephanie Chisolm, director of Education and Research at Bladder Cancer Advocacy Network. "This approval is another exciting step forward for the bladder cancer community and provides needed hope to patients and their families."

Approval Based on Notable Objective Response Rate

CheckMate -275 is a Phase 2, open-label, single-arm, multicenter study evaluating Opdivo in patients with locally advanced or mUC who have disease progression during or following treatment with a platinum-containing chemotherapy or have disease progression within 12 months of neoadjuvant or adjuvant treatment with platinum-containing chemotherapy.2 In this study, 270 patients received Opdivo 3 mg/kg administered intravenously every two weeks until disease progression or unacceptable toxicity. The recommended dose is 240 mg administered as an intravenous infusion over 60 minutes every two weeks until disease progression or unacceptable toxicity. The primary endpoint was confirmed objective response rate (ORR) as defined by an independent radiographic review committee (IRRC). The median age of patients participating in the study was 66 years (range: 38-90), and 29% of patients had received ≥2 prior systemic regimens in the metastatic setting prior to enrolling in the study. Patients were included in the trial regardless of their PD-L1 status.1

In the trial, efficacy was evaluated in 270 patients with 6 months follow-up by confirmed ORR as determined by an IRRC, Opdivo demonstrated an ORR of 19.6% (95% CI: 15.1-24.9).1 Additional efficacy breakdown by PD-L1 expression were as follows:

Outcome, % (n)

All Patients
(n=270)


PD-L1 <1%
(n=146)
PD-L1 ≥1%
(n=124)

Confirmed ORR by IRRC
(95% CI)
19.6% (53)
(15.1-24.9) 15.1% (22)
(9.7-21.9) 25.0% (31)
(17.7-33.6)
Complete Response Rate 2.6% (7) 0.7% (1) 4.8% (6)
Partial Response Rate 17.0% (46) 14.4% (21) 20.2% (25)


"As an oncologist, a nearly twenty-percent response rate in advanced and metastatic bladder cancer is extremely encouraging and clinically meaningful in this patient population," said Dr. Jonathan E. Rosenberg, MD, Memorial Sloan Kettering Cancer Center.

Selected Safety Profile

The safety of Opdivo has been studied in 270 patients in the CheckMate -275 study. Patients were treated with Opdivo for a median of 3.3 months (range: 0-13.4+). In this study, serious adverse events occurred in 54% of patients. The most frequent serious adverse events reported in at least 2% of patients were urinary tract infection, sepsis, diarrhea, small intestine obstruction, and general physical health deterioration. The most common adverse reactions (≥20%) were fatigue (46%), musculokeletal pain (30%), nausea (22%), and decreased appetite (22%). Opdivo was discontinued due to adverse reactions in 17% of patients, and 46% of patients had a dose delay for an adverse reaction. Treatment-related death occurred in four patients due to pneumonitis or cardiovascular failure.1

About Bladder Cancer

Bladder cancer, which typically begins in the cells that line the inside of the bladder, is the fifth most commonly diagnosed cancer in the United States, with an estimated 77,000 new diagnoses in 2016 and over 16,000 deaths.3 Urothelial carcinoma is the most common type of bladder cancer, accounting for approximately 90% of diagnoses.4 The majority of bladder cancers are diagnosed at an early stage, but rates of recurrence and progression are high and approximately 50-70% of patients will experience a recurrence within five years.4 The poor durability of responses in the first-line setting presents a major challenge in the treatment of metastatic disease and there are limited treatment options in the second-line setting for advanced urothelial carcinoma.5

On February 2, 2017 CytomX Therapeutics, Inc. (Nasdaq:CTMX), a biopharmaceutical company developing investigational Probody therapeutics for the treatment of cancer, reported the treatment of the first patient in the PROCLAIM (Probody Clinical Assessment In Man) CX-072 study, a Phase 1/2 clinical trial evaluating CX-072, a PD-L1-targeting Probody therapeutic, as monotherapy and in combination with Yervoy (ipilimumab) or Zelboraf(vemurafenib) in patients with all types of cancers (Press release, CytomX Therapeutics, FEB 2, 2017, View Source [SID1234517622]).

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"Treating the first patient with CX-072 marks a key milestone as we advance our broad pipeline of innovative Probody therapeutics into clinical development within the PROCLAIM program," said Rachel W. Humphrey, M.D., chief medical officer of CytomX Therapeutics. "Advancement of this potentially transformational treatment, derived from our Probody technology platform, would not be possible without the patients who are willing to engage with the scientific community by enrolling in clinical trials. We thank them for their participation."

About the PROCLAIM-072 Trial
The first clinical trial under the international umbrella program PROCLAIM is the open-label, dose-finding Phase 1/2 study evaluating CX-072 as monotherapy and in combination with Yervoy (ipilimumab) or Zelboraf(vemurafenib) in patients with all types of cancers. As part of the study, CytomX aims to achieve three goals as part of the PROCLAIM-072 clinical trial:

Tolerability: Demonstrate that CX-072 is well tolerated in patients and potentially improves safety, particularly in the combination setting.
Anti-cancer activity: Demonstrate initial evidence of CX-072’s anti-cancer activity as monotherapy and in combination.
Translational program and Probody platform proof-of-concept: Explore mechanistic aspects of Probody activity in patients as observed in preclinical studies.
More information about the trial is available at clinicaltrials.gov.

On February 2, 2017 Merck (NYSE:MRK), known as MSD outside the United States and Canada, reported financial results for the fourth quarter and full year of 2016 (Press release, Merck & Co, FEB 2, 2017, View Source [SID1234517619]).

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"The performance of Merck’s broad and balanced portfolio allows us to remain committed to biomedical innovation that saves and improves lives and delivers long-term value to shareholders," said Kenneth C. Frazier, chairman and chief executive officer, Merck. "The momentum behind our pipeline and key product launches, including the continued growth and expansion of KEYTRUDA into new indications and markets around the world, further reinforces our company’s strategic direction."

Financial Summary
$ in millions, except EPS amounts Fourth Quarter Year Ended
Dec. 31, Dec. 31,
2016 2015 2016 2015
Sales $10,115 $10,215 $39,807 $39,498
GAAP EPS 0.42 0.35 2.04 1.56
Non-GAAP EPS that excludes certain items1*
0.89 0.93 3.78 3.59
GAAP net income2
1,177 976 5,691 4,442
Non-GAAP net income that excludes certain items1,2* 2,470 2,608 10,538 10,195
*Refer to table on page 8.
Worldwide sales were $10.1 billion for the fourth quarter of 2016, a decrease of 1 percent compared with the fourth quarter of 2015, including a 1 percent negative impact from foreign exchange. Sales in the fourth quarter of 2016 reflect the unfavorable impact of approximately $150 million of sales in Japan, which occurred in the third quarter of 2016 rather than in the fourth quarter due to the implementation of a resource planning system. Full-year 2016 worldwide sales were $39.8 billion, an increase of 1 percent compared with the full year of 2015, including a 2 percent negative impact from foreign exchange.

GAAP (generally accepted accounting principles) earnings per share assuming dilution (EPS) were $0.42 for the fourth quarter and $2.04 for the full year of 2016. Non-GAAP EPS of $0.89 for the fourth quarter and $3.78 for the full year of 2016 excludes acquisition- and divestiture-related costs, restructuring costs and certain other items, which include a charge to settle the worldwide KEYTRUDA patent litigation.

Pipeline Highlights

Merck significantly advanced the clinical development program for KEYTRUDA (pembrolizumab), an anti-PD-1 therapy.

The FDA approved a supplemental Biologics License Application (sBLA) for KEYTRUDA for the first-line treatment of patients with metastatic NSCLC whose tumors have high PD-L1 expression (Tumor Proportion Score [TPS] of 50 Percent or More) as determined by an FDA-approved test, with no EGFR or ALK genomic tumor aberrations.
The FDA granted Priority Review for three additional sBLAs for KEYTRUDA, including:
Use in combination with chemotherapy as a first-line treatment for patients with metastatic or advanced NSCLC regardless of PD-L1 expression and with no EGFR or ALK genomic tumor aberrations. The PDUFA action date is May 10, 2017.
The treatment of previously treated patients with advanced microsatellite instability-high cancer. The PDUFA action date is March 8, 2017.
The treatment of patients with refractory classical Hodgkin lymphoma (cHL) or for patients with cHL who have relapsed after three or more prior lines of therapy. The PDUFA action date is March 15, 2017.
KEYTRUDA received Breakthrough Therapy Designations from the FDA for the second-line treatment of patients with urothelial carcinoma with disease progression on or after platinum-containing chemotherapy and for the treatment of patients with primary mediastinal B-cell lymphoma that is refractory to or has relapsed after two prior lines of therapy.
The European Commission approved KEYTRUDA for the first-line treatment of metastatic NSCLC in adults whose tumors have high PD-L1 expression (TPS of 50 percent or more) with no EGFR or ALK positive tumor mutations.
KEYTRUDA was approved in Japan as a first- and second-line treatment of certain patients with PD-L1-positive unresectable advanced/recurrent NSCLC.
Merck and Incyte Corporation recently announced the expansion of the clinical development program investigating KEYTRUDA in combination with epacadostat, Incyte’s investigational oral selective IDO1 inhibitor, to include pivotal studies for NSCLC, renal cell carcinoma, bladder cancer and squamous cell carcinoma of the head and neck.
The company recently completed enrollment in its Phase 3 APECS study (NCT01953601) evaluating the safety and efficacy of verubecestat (MK-8931) in people with prodromal, or mild, Alzheimer’s disease. Estimated primary completion date for the trial is February 2019.

Fourth-Quarter and Full-Year Revenue Performance

The following table reflects sales of the company’s top pharmaceutical products, as well as total sales of Animal Health products.


$ in millions Fourth Quarter Year Ended
Change Ex- Dec. 31, Dec. 31, Change Ex-
2016 2015 Change Exchange 2016 2015 Change Exchange
Total Sales $10,115 $10,215 -1% 0% $39,807 $39,498 1% 3%
Pharmaceutical 8,904 9,027 -1% -1% 35,151 34,782 1% 2%
JANUVIA/JANUMET 1,509 1,447 4% 4% 6,109 6,014 2% 2%
ZETIA/VYTORIN 873 999 -13% -13% 3,701 3,777 -2% -1%
GARDASIL/GARDASIL 9 542 497 9% 9% 2,173 1,908 14% 14%
PROQUAD, M-M-R II and VARIVAX 405 409 -1% -1% 1,640 1,505 9% 10%
KEYTRUDA 483 214 125% 128% 1,402 566 148% 151%
ISENTRESS 337 374 -10% -9% 1,387 1,511 -8% -6%
REMICADE 269 396 -32% -31% 1,268 1,794 -29% -28%
CUBICIN 119 322 -63% -63% 1,087 1,127 -4% -4%
SINGULAIR 210 273 -23% -26% 915 931 -2% -4%
PNEUMOVAX 23
238 188 27% 25% 641 542 18% 17%
Animal Health 884 832 6% 7% 3,478 3,331 4% 8%
Other Revenues 327 356 -8% 30% 1,178 1,385 -15% 15%
Pharmaceutical Revenue

Fourth-quarter pharmaceutical sales decreased 1 percent to $8.9 billion. The decline was driven primarily by the loss of U.S. market exclusivity in 2016 for CUBICIN (daptomycin for injection), an I.V. antibiotic; NASONEX (mometasone furoate monohydrate), an inhaled nasal corticosteroid for the treatment of nasal allergy symptoms; and ZETIA (ezetimibe), a medicine for lowering LDL cholesterol; as well as by the ongoing impact of biosimilar competition in the company’s marketing territories in Europe for REMICADE (infliximab), a treatment for inflammatory diseases. In the aggregate, sales of these products declined $564 million during the fourth quarter of 2016 compared to the fourth quarter of 2015.

These declines were largely offset by growth in oncology, hepatitis C, diabetes and vaccines, which include the ongoing launches of KEYTRUDA and ZEPATIER (elbasvir and grazoprevir), a medicine for the treatment of chronic hepatitis C virus genotypes 1 or 4 infection. Additionally, the ongoing launch of 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, generated sales of $139 million during the fourth quarter of 2016.

Growth of KEYTRUDA reflects the company’s continued efforts to launch the product with new indications, particularly as a first-line treatment for NSCLC and for previously treated recurrent or metastatic head and neck cancer in the United States, and as a second-line treatment for NSCLC globally.

ZEPATIER sales growth was primarily driven by the ongoing launch in the United States, as well as ongoing launches in emerging markets and the launches in Europe and Japan. In the fourth quarter of 2016, sales of ZEPATIER were $229 million.

Pharmaceutical sales also reflect an increase in the diabetes franchise of JANUVIA (sitagliptin) and JANUMET (sitagliptin and metformin HCl), medicines that help lower blood sugar in adults with type 2 diabetes, driven by sales growth in the United States, partially offset by lower sales in Japan due to the timing of shipments.

Growth in vaccines resulted from higher sales of PNEUMOVAX 23 (pneumococcal vaccine polyvalent) in the United States due to the adoption of recently issued vaccination guidelines from the Centers for Disease Control and Prevention; and GARDASIL 9 (Human Papillomavirus 9-valent Vaccine, Recombinant) and GARDASIL [Human Papillomavirus Quadrivalent (Types 6, 11, 16, and 18) Vaccine, Recombinant], vaccines to prevent certain cancers and other diseases caused by HPV, due to increased pricing and demand in the United States. On Dec. 31, 2016, Merck and Sanofi Pasteur ended the Sanofi Pasteur MSD vaccines joint venture. As a result, beginning in 2017, Merck will operate its vaccines business in Europe and will record vaccine sales in the 19 European countries previously part of the joint venture.

In April 2017 the company will lose market exclusivity in the United States for VYTORIN (ezetimibe/simvastatin), a medicine for lowering LDL cholesterol, and anticipates a significant decline in U.S. VYTORIN sales thereafter. Full-year 2016 U.S. sales of VYTORIN were $473 million.

Full-year 2016 pharmaceutical sales increased 1 percent to $35.2 billion, including a 1 percent negative impact from foreign exchange. Growth was driven by sales in oncology, vaccines and hepatitis C products, partially offset by sales declines of $887 million due to the loss of U.S. market exclusivity for NASONEX and CUBICIN, and the impact of biosimilar competition for REMICADE in the company’s marketing territories in Europe.

Animal Health Revenue

Animal Health sales totaled $884 million for the fourth quarter of 2016, an increase of 6 percent compared with the fourth quarter of 2015, including a 1 percent negative impact from foreign exchange. Worldwide sales for the full year of 2016 were $3.5 billion, an increase of 4 percent, including a 4 percent negative impact from foreign exchange. Sales growth in both periods was primarily driven by an increase in sales of companion animal products, particularly the BRAVECTO (fluralaner) line of products that kill fleas and ticks in dogs and cats for up to 12 weeks.

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

The tables below present selected expense information.


$ in millions
Acquisition- and
Divestiture- Restructuring Certain Other
Fourth-Quarter 2016 GAAP
Related Costs 3
Costs Items
Non-GAAP 1
Materials and production $3,332 $756 $32 $– $2,544
Marketing and administrative 2,593 22 4 – 2,567
Research and development 1,720 (33) 9 – 1,744
Restructuring costs 265 – 265 – –
Other (income) expense, net 721 35 – 654 32

Fourth-Quarter 2015
Materials and production $3,850 $1,194 $81 $– $2,575
Marketing and administrative 2,615 47 8 – 2,560
Research and development 1,797 (24) 18 – 1,803
Restructuring costs 233 – 233 – –
Other (income) expense, net 905 47 – 707 151

$ in millions
Acquisition- and
Divestiture- Restructuring Certain Other
Year Ended Dec. 31, 2016 GAAP
Related Costs 3
Costs Items
Non-GAAP 1
Materials and production $13,891 $4,035 $181 $– $9,675
Marketing and administrative 9,762 78 95 – 9,589
Research and development 7,194 222 142 – 6,830
Restructuring costs 651 – 651 – –
Other (income) expense, net 810 47 – 648 115

Year Ended Dec. 31, 2015
Materials and production $14,934 $4,869 $361 $– $9,704
Marketing and administrative 10,313 436 78 – 9,799
Research and development 6,704 39 52 – 6,613
Restructuring costs 619 – 619 – –
Other (income) expense, net 1,527 54 – 1,125 348
GAAP Expense, EPS and Related Information

On a GAAP basis, the gross margin was 67.1 percent for the fourth quarter of 2016 compared to 62.3 percent for the fourth quarter of 2015. The increase in gross margin for the fourth quarter of 2016 was primarily driven by lower acquisition- and divestiture-related costs and restructuring costs noted above, which negatively affected gross margin by 7.7 percentage points in the fourth quarter of 2016 compared with 12.5 percentage points for the fourth quarter of 2015. The gross margin was 65.1 percent for the full year of 2016 compared to 62.2 percent for the full year of 2015. The increase in gross margin for the full year of 2016 was primarily driven by lower acquisition- and divestiture-related costs and restructuring costs, which negatively affected gross margin by 10.6 percentage points in the full year of 2016 compared with 13.2 percentage points for the full year of 2015.

Marketing and administrative expenses were $2.6 billion in the fourth quarter of 2016, a 1 percent decrease compared to the fourth quarter of 2015. The decline primarily reflects lower acquisition- and divestiture-related costs. Full-year 2016 marketing and administrative expenses were $9.8 billion, a 5 percent decrease compared to the full year of 2015. The decline reflects lower acquisition- and divestiture-related costs, the favorable impact of foreign exchange and lower direct selling costs.

Research and development (R&D) expenses were $1.7 billion in the fourth quarter of 2016, a 4 percent decrease compared to the fourth quarter of 2015. The decline reflects a reduction in expenses resulting from a decrease in the estimated fair value of liabilities for contingent consideration, partially offset by higher in-process research and development (IPR&D) impairment charges. R&D expenses were $7.2 billion for the full year of 2016, a 7 percent increase compared to the full year of 2015. The increase primarily reflects higher IPR&D impairment charges, clinical development spending and restructuring costs, partially offset by a reduction in expenses resulting from a decrease in the estimated fair value of liabilities for contingent consideration.

Other (income) expense, net, was $721 million of expense in the fourth quarter of 2016 compared to $905 million of expense in the fourth quarter of 2015 and was $810 million of expense for the full year of 2016 compared to $1.5 billion of expense for the full year of 2015. Other (income) expense, net for the fourth quarter and full year of 2016 includes a $625 million charge to settle the worldwide KEYTRUDA patent litigation. Other (income) expense, net for the fourth quarter and full year of 2015 includes $161 million and $876 million, respectively, of foreign exchange losses related to the devaluation of the company’s net monetary assets in Venezuela and a $680 million net charge to settle the Vioxx shareholder class action litigation.

GAAP EPS was $0.42 for the fourth quarter of 2016 compared with $0.35 for the fourth quarter of 2015. GAAP EPS was $2.04 for the full year of 2016 compared with $1.56 for the full year of 2015.

Non-GAAP Expense, EPS and Related Information

The non-GAAP gross margin was 74.8 percent for the fourth quarter of 2016, the same as the fourth quarter of 2015. The non-GAAP gross margin was 75.7 percent for the full year of 2016 compared to 75.4 percent for the full year of 2015. The increase in GAAP gross margin for the full year of 2016 reflects lower inventory write-offs.

Non-GAAP marketing and administrative expenses were $2.6 billion in the fourth quarter of 2016, comparable to the fourth quarter of 2015. Non-GAAP marketing and administrative expenses were $9.6 billion for the full year of 2016, a 2 percent decrease compared to the full year of 2015. The decline reflects the favorable impact of foreign exchange and lower direct selling costs.

Non-GAAP R&D expenses were $1.7 billion in the fourth quarter of 2016, a 3 percent decline compared to the fourth quarter of 2015. The decline reflects lower licensing costs. Non-GAAP R&D expenses were $6.8 billion for the full year of 2016, a 3 percent increase compared to the full year of 2015 reflecting increased clinical development spending.

Non-GAAP EPS was $0.89 for the fourth quarter of 2016 compared with $0.93 for the fourth quarter of 2015. Non-GAAP EPS was $3.78 for the full year of 2016 compared with $3.59 for the full year of 2015.

Non-GAAP other (income) expense, net, was $32 million of expense in the fourth quarter of 2016 compared to $151 million of expense in the fourth quarter of 2015, primarily reflecting the receipt of a milestone payment. Non-GAAP other (income) expense, net, for the full year of 2016 was $115 million of expense compared to $348 million of expense for the full year of 2015, reflecting lower foreign exchange losses.

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


$ in millions, except EPS amounts
Fourth Quarter Year Ended
Dec. 31, Dec. 31,
2016 2015 2016 2015
EPS
GAAP EPS $0.42 $0.35 $2.04 $1.56
Difference4
0.47 0.58 1.74 2.03
Non-GAAP EPS that excludes items listed below1 $0.89 $0.93 $3.78 $3.59

Net Income
GAAP net income2 $1,177 $976 $5,691 $4,442
Difference 1,293 1,632 4,847 5,753
Non-GAAP net income that excludes items listed below1,2 $2,470 $2,608 $10,538 $10,195

Decrease (Increase) in Net Income Due to Excluded Items:
Acquisition- and divestiture-related costs3 $780 $1,264 $4,382 $5,398
Restructuring costs 310 340 1,069 1,110
Charge to settle worldwide KEYTRUDA patent litigation 625 – 625 –
Net charge to settle Vioxx shareholder class action litigation – 680 – 680
Foreign exchange losses related to Venezuela – 161 – 876
Gain on divestiture of certain ophthalmic products – (147) – (147)
Gain on divestiture of certain migraine clinical development programs – – – (250)
Other 29 13 23 (34)
Net decrease (increase) in income before taxes 1,744 2,311 6,099 7,633
Income tax (benefit) expense5
(451) (679) (1,252) (1,880)
Decrease (increase) in net income $1,293 $1,632 $4,847 $5,753
Financial Outlook

Merck expects its full-year 2017 GAAP EPS to be between $2.47 and $2.62. Merck expects its full-year 2017 non-GAAP EPS to be between $3.72 and $3.87, including an approximately 2 percent negative impact from foreign exchange. The non-GAAP range excludes acquisition- and divestiture-related costs and costs related to restructuring programs.

At mid-January 2017 exchange rates, Merck anticipates full-year 2017 revenues to be between $38.6 billion and $40.1 billion, including an approximately 2 percent negative impact from foreign exchange.

The following table summarizes the company’s 2017 financial guidance.


GAAP Non-GAAP 1

Revenue $38.6 to $40.1 billion $38.6 to $40.1 billion**
Operating expenses Higher than 2016 by a low-single digit rate Higher than 2016 by a low-single digit rate
Effective tax rate 22.0% to 23.0% 21.0 % to 22.0%
EPS $2.47 to $2.62 $3.72 to $3.87
**The company does not have any non-GAAP adjustments to revenue.
A reconciliation of anticipated 2017 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 2017

GAAP EPS $2.47 to $2.62
Difference4 1.25
Non-GAAP EPS that excludes items listed below1 $3.72 to $3.87

Acquisition- and divestiture-related costs $3,600
Restructuring costs 600
Net decrease (increase) in income before taxes 4,200
Estimated income tax (benefit) expense (750)
Decrease (increase) in net income $3,450
The expected full-year 2017 GAAP effective tax rate of 22.0 to 23.0 percent reflects an unfavorable impact of approximately 1 percentage point from the above items.

Total Employees

As of Dec. 31, 2016, Merck had approximately 68,000 employees worldwide.