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The company also said that it remained on track to deliver long-term double-digit compound annual earnings per share growth from 2005 to 2010, excluding one-time items and restructuring charges. Merck said that it intends to have four products in Phase III development by mid-year 2007 as also three NDA filings in 2007. Further, the company reaffirmed its earnings outlook for fiscal years 2006 and 2007.

The Whitehouse Station, New Jersey-based company said that its CEO and President, Richard Clark, would inform investors and analysts on Tuesday at the Merck Annual Business Briefing on the new growth strategy. Commenting on the new strategy, Clark said, "We've successfully launched five novel medicines and vaccines; advanced promising products through every phase of our pipeline; and driven the continued success of our in-line products. We've accomplished this even as we're executing on a new strategy, reinvesting to support our success and making our cost structure lean and flexible.

During 2006, we have gathered the momentum we need to continue towards the performance goals we established last year: delivering double-digit compound annual earnings per share growth, excluding charges and one-time items, by 2010 from our 2005 base." Merck said that it expected three NDA filings in 2007, building on the five FDA approvals it received in 2006. The three expected NDA filings include MK-0518, a first-class HIV integrase inhibitor; Gaboxadol, a compound from the company's alliance with H.

Lundbeck A/S for treatment of insomnia; and MK-0524A, an extended-release niacin combined with a flushing pathway inhibitor. The company noted that these filings are in addition to the three products currently under review by FDA, which include Janumet for the treatment of type 2 diabetes; EMEND IV intravenous therapy for chemotherapy-induced nausea and vomiting, and ARCOXIA, a Cos-2 inhibitor for osteoarthritis. Merck said that it intends to have four products in Phase III development by mid-year 2007.

These include MK-0524B, MK-0364, MK-0974 and MK-0822. The company noted that MK-0524B combines the approach to raising HDL-C and lower triglycerides from MK-524A with proven benefits of simvastatin, with potential to reduce coronary heart disease risk. The compound is currently in Phase III development and the company expects to file an NDA with the FDA in 2008.

Merck further said that it intends to file an NDA for MK-0364, a highly selective cannabinoid-1 or CB-1 receptor that proved to be efficient in weight loss compared to placebo in early clinical studies. The company said that MK-0974 utilizes a new mechanism for the treatment of migraines and added that it expects to initiate its Phase III program during the first quarter of 2007. The company further said that it anticipates filing an NDA for the compound in 2009.

Merck also anticipates beginning the Phase III program in mid-2007 for MK-0822, an inhibitor of Cathespin K, which treats osteoporosis through decreased bone resorption. It expects to file an NDA for the product in 2011. The company's two additional compounds are in Phase II development.

These include MK-0859, an inhibitor of the Cholesterol Ester Transfer Protein or CETP and MK-0457, an inhibitor of Aurora kinase. Merck said that its pipeline includes 28 distinct therapeutic programs in Phase I and 21 in Phase II, as of December 12, 2006. In addition, five programs are currently in Phase III and three submissions are currently under FDA review.

The company noted that it originally committed to a nine-month reduction in late-stage cycle time with a seven-month reduction by the end of 2006, over the 24-month period from 2005 to 2007. The company said that it exceeded the 2006 goal by the three months and expects to achieve more than a one-year cycle time reduction by the end of 2007. Merck said that it would broaden its engagement with customers and scientific leaders, leverage alternative channels to complement the effectiveness of its sales force, as well as drive growth in key markets.

The company noted that its new commercial model is expected to lower spending per primary care brand by 15-20% in the U.S. by 2010 while supporting the anticipated launches of a number of new products.

The company noted that it reduced the number of sales representatives promoting the primary care brand by up to 50% in 2005 and into 2006, thereby decreasing the number of representatives among the major in-line pharmaceutical brands by 1,500. Merck noted that the strategy enabled it to redeploy the representatives to support its launches of Gardasil, Rotateq and Januvia in 2006, while keeping the number of representatives flat. The company reaffirmed its earnings outlook for 2006 and said that it expects reported full-year earnings in the range of $2.

18-$2.25 per share. The outlook does not reflect the establishment of any reserves for any potential liability relating to the Vioxx litigation as well as the impact of any potential acquired research expense relating to the anticipated Sirna Therapeutics acquisition.

The company also reaffirmed its outlook for earnings per share in the range of $2.48-$2.52, excluding the restructuring charges related to site closures and site eliminations.

On average, twenty-one analysts polled by First Call/Thomson Financial estimate the company to report earnings of $2.51 per share for the year. For fiscal year 2007, the company provided earnings outlook on a reported basis in the range of $2.

36-$2.49 per share. Excluding restructuring charges related to site closures and position eliminates, the company forecast earnings in the range of $2.

51-$2.59 per share. Street expectations of earnings for the year are $2.

56 per share. The company's new and in-line pharmaceutical products as well as vaccines are expected to drive revenue at a compound annual growth rate of 4-6% from 2005 to 2010, including 50% of the revenues from joint ventures from which the company derives equity income. Further, the company said that it expects bottom-line earnings growth to begin in 2007, excluding restructuring charges and the impact of any potential acquired research expenses on the Sirna Therapeutics acquisition.

Merck said that it continues to expects the initial phase of the cost reduction program announced in 2005 to yield cumulative pretax savings of $4.5-$5 billion from 2006 through 2010. Of this, approximately $2 billion is expected to result from the implementation of the company's new manufacturing supply strategy announced in November 2005.

Merck further said that it continues to expect the savings in manufacturing to enable its gross margin after 2008 to return to levels consistent with gross margins in the period prior to the loss of U.S. market exclusivity for Zocor.

Merck said that it remained on track to eliminate 7,000 positions by the end of 2008 as part of its global restructuring program announced in November 2005. Further, the company said that it expects pretax costs of the restructuring to be in the range of $900 million-$1 billion in 2006, and in the range of $300-$500 million in 2007. The company expects cumulative pretax costs of restructuring activities announced in November 2005 to be in the range of $1.

9-$2.2 billion through the end of 2008, on substantial completion of the initial phase of the restructuring program. Merck said that it anticipates a reduction in capital expenditures to $1.

1 billion in 2006, from the previously announced $1.3 billion. For 2007, capital expenditures are expected to be $1.

2 billion. Merck also provided an update on the Vioxx litigations. As of November 30, the Company noted that it was served or was aware that it was named as a defendant in approximately 27,200 Vioxx Product Liability Lawsuits, that include approximately 45,900 plaintiff groups alleging personal injuries resulting from the use of VIOXX, and in approximately 265 putative class actions alleging personal injuries and/or economic loss.

The company said that approximately 8,250 of these lawsuits are slated to be in the federal MDL and approximately 16,600 lawsuits are included in a coordinated proceeding in New Jersey Superior Court. In addition, the company said that as of Nov. 30, 2006, approximately 14,100 claimants had entered into Tolling Agreements with it, which halt the running of applicable statutes of limitations for those claimants who seek to toll claims alleging injuries resulting from a thrombotic cardiovascular event that results in a myocardial infarction or ischemic stroke.

The company added that the claims of over 3,000 plaintiff groups have been dismissed as of Sept. 30, 2006, excluding the Vioxx Product Liability lawsuits. Among the company's peers, Pfizer Inc.

( | | | ), earlier this month reaffirmed its financial guidance into 2009. The company said it continues to expect revenues in 2007 and 2008 that are comparable to 2006, a return to revenue growth in 2009, and high single-digit average growth in adjusted diluted earnings per share over the next two years. Pfizer also announced a pipeline of 169 potential products in 11 therapeutic areas, launching six new products a year starting in 2011.

Earlier, the company had revealed plans to slash 20% of its U.S. sales force, numbering around 2,200 workers.

In Tuesday's regular trading session, MRK is currently trading at $43.96, down $0.05 or 0.

11% from Monday's close. In the 52-week period, the stock has been trading in the range of $27.99-$46.

37.