Good day everyone, and welcome to Merck’s first quarter 2014 earnings conference call. (Operator Instructions). At this time I would like to turn the call over to Joseph Romanelli, Vice President of Investor Relations. Please go ahead.

Thank you, Stephanie, and good morning everyone. We’d also like to say good afternoon and good evening to everyone listening outside the United States. Welcome to Merck’s first quarter 2014 conference call. Before I turn the call over to Ken, I want to point out just a couple of items. First of all there are a number of items in the GAAP results, such as acquisition-related charges, restructuring costs, and certain other items. You should note that we have excluded those items in our non-GAAP reconciliation tables and you can see them in our press release in table two. This will give you a better sense of the underlying performance. There are three tables in the press release, the first table provides the GAAP results. Table number two reconciles our GAAP P&L to the non-GAAP results for the first quarter and table three provides the sales performance for the company’s business unites and our products both on a reported basis and excluding exchange. During the call we will be referring to table two when we discuss the P&L and table three when we talk about revenue performance. Finally I would like to remind you that some of the statements we make during today’s call may be considered forward-looking statements within the meaning of the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are based upon current beliefs of Merck’s management and are subject to significant risks and uncertainties. If underlying assumptions prove inaccurate or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements. The company’s SEC filings, including Item 1A in the 2013 10-K, identify certain risk factors and cautionary statements that could cause the company’s actual results to differ materially from those projected in any forward-looking statements made this morning. Merck undertakes no obligation to publicly update any forward-looking statement. Our SEC filings can be found on the website of merck.com and you can also find our earnings release and all the tables there as well. Now since this is a busy morning for earnings and we’ll be together next week for the investor briefing in Boston we are going to have a shorter call today. Now this morning, I’m joined by Ken Frazier, Peter Kellogg, Adam Schechter, Roger Perlmutter and Rob Davis, our newly appointed CFO. So with that I like to introduce Ken Frazier. Ken?

Thank you, Joe. Good morning everyone, and thank you all for joining the call today. As expected we delivered another solid operational quarter with growth in several key brands and disciplined cost management. The fundamentals of our business remained strong which we believe will keep us on track and deliver on our full year non-GAAP EPS guidance. Looking beyond the first quarter this is an exciting time at Merck as we prepare to commercialize the next wave of innovation coming out of our labs over the next few years. Our commitment to innovation remains strong as it’s only by bringing to market new products that make a meaningful difference to patients, healthcare providers and payers that we will continue to create value for society and shareholders. This quarter we delivered on this commitment in a number of important areas including oncology where we continue the rolling submission of a BLA for MK3475, our anti-PD1 immunotherapy in advanced melanoma. MK3475 is currently being studied in 17 clinical trials estimated to enroll over 4,000 patients across more than 30 types of cancer. Earlier this month we presented pharmacy Phase II data from our investigational Hepatitis C treatments which have accelerated our path to Phase III development. We also presented Phase II data for MK1439 our investigational next generation HIV therapy which will move into Phase III development by the end of the year. Each of these candidates represents the kind of innovation that has the potential to make a meaningful difference to patients. Roger will talk more about our pipeline and the status of our regulatory applications for our near term candidates later in the call. We look forward to providing a more comprehensive update regarding these and our other promising pipeline programs at our upcoming investor meetings on May 6th at…

Thanks Ken and good morning everyone. I must say, it’s a privilege to be a member of the Merck team. I spent many years in the healthcare industry and I have long viewed Merck is a premier research company in the pharmaceutical industry. There is a strong legacy here of translating science in to medicine so when Ken called to discuss the opportunity with me, I jumped at the chance. I look forward to working with the management team and leading the financial organization. This is my fifth day on job but know am excited to be here and I look forward to seeing of you next week at the investor briefing in Boston. Ken?

Thank you, Rob. We are also excited to have you here. In closing, our strategy of focusing on our best opportunities while being disciplined about managing our costs continues to deliver bottom line performance. Our robust pipeline contains many promising candidates representing a suite of near and long-term opportunities that will continue to drive growth and shareholder value. I look forward to seeing all of you at our upcoming investor briefing where we will share more about how we are sharpening our commercial and R&D focus bolstering our innovative pipeline and preparing to launch and commercialize on many long-term opportunities. And with that I would like to turn the call the call over to Adam.

Thank you. Ken. Good morning everyone. This morning I will provide you with an overview of first quarter Global Human Health results. My comments will be on a constant currency basis. As we anticipated, immunology, diabetes and vaccines continue to be areas of growth. Sales growth in these areas were offset by few things, the continued impact from loss of exclusivity of several brands, product divestitures that we previously announced and the biannual price declines in Japan. We continued to take action to focus our resources on areas that provide the greatest potential for long-term growth. Those include our top markets, our core therapeutic areas and our launch opportunities. We are making critical choices and we are prioritizing our resources and you can see these efforts reflected in our reduced expenses. Let me provide more details on the performance of our core products and core markets and I will start with the Januvia franchise. The franchise has sales of $1.3 billion and 5% growth in the first quarter. In United States, sales increased by 4%. Our international market sales, which now represent about 50% of our total sales grew 6%. We drove double-digit growth in Europe and the emerging markets but we also saw the impact of customers reducing their inventory levels in Japan ahead of the April 1st price reductions. Globally, the diabetes market is significant and the macro trends support our growing markets. We will continue to focus resources around the world to ensure continued leadership in the branded global diabetes market. Moving to Isentress, we had another good quarter with Isentress with 8% global growth, that’s despite new competition. Turning to immunology, the combined immunology business consisting of REMICADE and SIMPONI grew 13% in the quarter. Sales of SIMPONI alone grew over 40%. SIMPONI is the fastest…

Thank you Adam and thank you Ken for the kind words. Good morning everyone. Our first quarter results demonstrate that we are on track in executing against our plan to reshape and refocus the company for future growth. This morning, I will provide additional color on our accomplishments in the first quarter and I will comment on re-confirming our outlook for the rest of the year. My remarks will focus on our non-GAAP financials. On this basis we earned $0.88 per share in the first quarter as compared to $0.85 per share in the prior year. EPS growth was driven by growth in key brands effective cost management and contributions from asset sales. Now I would like to walk through P&L, starting with revenues. On an ex-exchange basis, total company revenues in the first quarter decreased 2%. As expected this decline reflects several moving parts including the impacts of divestures, loss of exclusivity of certain brands, partially offset by growth in core products. Building on Adam’s discussion of Global Human Health results I will speak to the other revenue elements in the quarter on an ex-exchange basis. Animal health revenues were flat year-over-year, however excluding Zilmax sales in animal health grew 5% in the quarter. Consumer care revenues declined by 3% as a result of product divestures and the shortened allergy season in North America this quarter. Other revenues increased by approximately $85 million this year driven by proceeds from the divesture of U.S. Saphris rights. These proceeds were partially offset by the continued decline in supply sales to the AstraZeneca joint venture. Regarding the joint venture we continue to expect AstraZeneca to exercise its option which would bring the longstanding partnership to a close on June 30th. Moving to expenses and starting with product gross margin. PGM was 74.1%…

Thanks Peter. The first quarter was an especially busy one for the regulatory approvals group at Merck Research Laboratories. During the last two months we obtained FDA approval both for GRASTEK our sublingual desensitizing tablet for patients suffering from grass induced allergic rhinitis, and RAGWITEK, a similar tablet for patients suffering from ragweed allergy. Both agents developed in collaboration with our colleagues at Alcatel have demonstrated a significant efficacy in alleviating the troubling symptoms of patients suffering from seasonal rhinitis. As with some other desensitizing agents patients prescribed these drugs to have access to [ertapenem] to assure that these severely allergic patients are protective against the possibility of a hematologic reaction. Also in the first quarter the committee for additional products for human resource or CHMP or the European medicines agency provided a favorable opinion regarding the conditional approval for vintafolide for the treatment of advanced fully receptive positive Platinum-Resistant Ovarian Cancer when used in combination with pegylated doxorubicin. We are developing vintafolide in collaboration with colleagues at Endocyte, the lead responsibility for our companion imaging reagent, used to assess the degree of folate receptor expression on tumor cells. Vintafolide binds to the folate receptor and thereby delivers a cytotoxic vinca alkaloid resulting in significant tumor cell destruction. Conditional approval of vintafolide require ratification by the Europe Commission which should provide an opinion in the second quarter. Meanwhile we are making good progress advancing the review of Vorapaxar with the FDA. As you will recall, Vorapaxar an antagonist of the thrombin receptor on platelets was evaluated in a large outcome study in combination with aspirin and Plavix as a means of reducing atherothrombotic events in patients that have previously sustained a myocardial infarction and they were considered to be at high risk for subsequent events. Details of potential vorapaxar labeling…

Great. Thank you, Roger. And before we open up the call to your questions Stephanie just please as a reminder please limit your questions to one or two, so we can get to as many callers as possible. So with that, Stephanie if we can open up the line for the first caller.

(Operator Instructions). Your first question comes from the line of Mark Schoenebaum with ISI Group.

Thanks a lot for taking the questions. First of all, hats off to Peter. Thanks for everything you have done of the biotech and now the pharma community and welcome Robert we all are looking forward to working with you. Number one, maybe on PD1 if I may, I suspect you are going to give me an unsatisfying answer to this Roger but I am going to try anyway. But we learned today that Bristol is going to file for lung cancer around the end of the year it sounds like, probably in 4Q. And I am just wondering if you could give us any kind of update, I know we’ll hear about this next week but on your potential filling timelines in lung cancer base case and upside case. And then maybe for Peter, these assets sales that helped to reduced EPS this quarter, was that something that you had planned for when you issued 2014 guidance? And then maybe for Ken just big M&A obviously what’s going on at Pfizer has created a lot discussion around the merits of big M&A. Merck’s a big company capable of doing big M&A I think it would be good time to here to get your updated views on such transformative deals.

Thanks Mark for the questions. Let me take a crack at the third question. So, our strategy is to remain true to who we are, a research intensive biopharmaceutical company that seeks to make a long-term difference through cutting edge size science. I prefer therefore to driving long term shareholder value through innovation rather than consolidation. And we believe Merck is at its best when it’s inventing new treatment such as anti-PD1. Therefore we will remain focused on those opportunities that are right before us in advancing our pipeline. We also announced a new global initiative last October as you know to sharpen our commercial and R&D focus and we are making critical choices about the areas where we look complete new investments that are required. In doing so we are also reducing our cost base by 2.5 billion and this is on top of the $3.5 billion worth of synergies for the merger. As you heard this morning the initiative is already showing progress and we are divesting assets and making structural changes to increase our operating leverage. And we are also exploring strategic options for consumer and animal health. So while we continuously evaluate external opportunities our preference is to enhance our pipeline and commercial business with smaller bolt-on acquisition versus large mergers for consolidation purposes. On the other hand of course we carefully monitor and evaluate what is happening in the industry and we’ll continue to be objective and comprehensive in our assessments. But to be clear our strategy is one of innovation.

Thanks Ken. So Roger?

Yeah Mark. With respect to non-small cell lung cancer we have a quite a lot of studies going on as you know with nearly 1,500 patients under study. We have the opportunity to go through all of that and to describe our registration strategy next week and I think that’s probably the right way to approach this. Suffice it to say that we look for every opportunity that we can to bring the benefits of MK3475 to patients who need this drug and where we see substantial evidence of efficacy we are going to pursue the most accelerated kind of registration program that we can imagine we think it’s that important.

Mark, this is Peter thanks for your comments. And so relative to the asset sales and the sale of the commercial right for Saphris, yes we did as you recall last fall we announced our strategy of focusing on growth opportunities whether it be by franchise or geography and we also at that time announced that we will be taking some of our lower prioritized areas and potentially divesting them let’s say we are better off in someone else’s hands. I mean as we put together guidance for this year we are well aware of all these transactions and we incorporated that into our guidance. And so on the one hand we are getting some benefits from the sale of the U.S Saphris rights in the other revenue line and the gain from sales of Serna in the other income expense. The flip is of course we are giving up the revenue of some of these assets that we are divesting. So just as an example for Q1 the loss of revenue on divested assets was about a $120 million and on a full year basis this year which is incorporated in our guidance the total is about $600 million based on 2013 sales. So as you implement this sort of focus portfolio strategy you are going to end up little bit of period where you are getting some reductions in revenue and the other hand you gain the impacts of the transactions in the P&L.

Great thanks Mark for the questions and Stefanie next caller?

Your next question comes from Chris Schott with JPMorgan.

Thanks very much and Peter just want to wish you best of luck with everything. It’s been great quite working with you. So a couple of questions here. Maybe first coming back on the capital deployment priorities, there’s obviously been a lot in the press about the potential to sell the consumer franchise. Can you just give us an update of should we think about repo as the preferred use of capital to the extent that you ought to monetize one of these businesses? And the second question was on the HCV program and can you just comment on how you see differentiating your combo relative to the two primary competitors are going to little bit of a head start in terms of time to market here? And just the one would you be comment on type of market share targets that you think you will be able to take as you look to commercialize this product looking out a few years, thanks very much.

Thanks Chris I will take your first question. So as you know it’s pretty well established and we’ve said that we are going to evaluate our consumer care business and our animal health business. We’ve also been clear that we might reach very different conclusions about the two businesses. So with respect to your fundamental question that you asked. I don’t think we are positioned to comment on hypotheticals at this point. In general, our frame work for the utilization of [hatch] has not changed. First, we will allocate resources to those areas that we feel presents the highest potential growth opportunities, for example our anti PD1 program which we intend to be studying for multiple tumor types overtime. Second, we will execute on compelling business development opportunities to strengthen our pipeline and that can create value. Third, we plan to return a high level of free cash flow to shareholders through both the dividend and the stock buyback and just note that we have returned over $12 billion in cash to shareholders over the past 12 months.

Great, thanks Ken. Roger?

So with respect to the HCV combo Chris just as you have the opportunity of course to see the data that we presented at the European Meetings. 5172-8742 has very desirable properties as a fixed dose combination and in particular we showed really quite impressive sustainable logic responses in patients with – who are quite difficult to treat, those who have Cirrhosis, who are co-infected with HIV and the other thing to note about the combination of course is that that the drugs are – can be used in patients with substantial comordities which is really quite important it’s something that I mentioned before. So as a single agent in those settings I think there is quite a lot of differentiation and obviously we are looking at every possible means of accelerating the process of completing the registration enabling trials and the registration of these drugs for we have breakthrough designation. And with respect to the market share I guess I’ll speak for Adam.

No, Chris let me say that we are taking a hard look and we know this market pretty well. We think it’s a very large opportunity that’s been a play out over many years. It’s not going to play out in just one or two years and it’s going to play out over years across the globe. There are some drugs obviously that are ahead of us but we are not thinking that as a winner take all scenario in just a couple of years. So there is going to be plenty of opportunities for promising drugs in our pipeline as we move forward we will be talking a bit more about that next week.

Great, thanks Chris for the questions. Stephanie, next caller.

Your next question comes from Jami Rubin with Goldman Sachs.

Just a follow-up on some of the M&A related questions Ken. I mean what’s going on the industry is obviously very exciting companies are getting more aggressive, increasing their focus on areas that they are good at, getting out of businesses where there is less focus and you know as you said we are all anxiously waiting to see what happens to your animal health and consumer business. But beyond those two businesses which are relatively small contributors to your top line, are there other strategies that you can pursue, other carve-out opportunities that you see that would allow you to accelerate your shift and focus from primarily care to specialty biological and we are seeing a lot of this activity from many of your peers? And then secondly, Peter to you. And again I wish my congratulations to you as well and best of luck in your next opportunity. But why wouldn’t you raise at least the bottom-end of your guidance, very wide range at this point, you beat on the first quarter. Just what are – what should we be thinking about as we think about the rest of the year. You did say I think second-half would be stronger which is I think how we have always modeled it. But just wondering why you wouldn’t take the opportunity to raise the bottom end of the guidance? Thanks.

Well, thanks Jami for the questions. Let me just go back to what we have said back in October, which is that we intended to sharpen our commercial and R&D focus as we move forward. You have seen some of the things that we have already done and I think we will continue to look for those opportunities to focus in those areas where we know that we can compete and make investments, where we know we can bring forward innovation PD1 and where we think we can run in the marketplace. So we’ll continue to do that. There are going to be opportunities. And at the same time, on the other side of the ledger we are also looking to M&A to enhance our pipeline through the right types of value creating opportunity that maybe out in the marketplace.

Yeah, thanks Jami. This is Peter. See you are right. In the guidance range we gave for this year obviously we had a lot of factors incorporated. We recognized that we will be doing a certain matter of investment to launch into the pipeline. We understood that the AstraZeneca joint venture would go away and that was included in our calculation. We did know about the divestitures that we have announced so far, that was also put in there as well as the loss of exclusivity for certain products. The bottom end of the range though is defined actually by our trying to estimate what might happen with Venezuelan bolivar. So quite frankly you can think of the high end of the range as sort of our performance ex that impact and the low end of the range is just trying to make some estimate as to what might be the case. You know you recall the last year that devaluation took place in the first quarter and it was about $0.07 per share impact on us and we have tried to make some estimate. It’s very hard to estimate what that is. So that’s why we have left the range fairly wide. And as we see what happens in Venezuela we’ll make – we’ll adjust, we’ll how kind of what that means to our P&L and if necessary or appropriate we will adjust our EPS range accordingly.

Okay, great. Thanks Jami. And Stephanie, can we open it up to the next caller please.

Your next question comes from Tim Anderson with Bernstein.

On JANUVIA it seemed a little bit weaker I guess than what we and I think consensus were looking for in the U.S., I mean I believe more than 20% in price increases at least on a list price basis, maybe you don’t report that obviously in the U.S. number. So I am wondering if you can just talk about net U.S. pricing trends going forward where the DPP-4 is. And then internationally sales seem to be on the weaker side. I am wondering what the driver was of this. And then can you talk about the timing of top lining the [Chikos] trial. Can we think about that possibly as a third quarter event? And can you discuss the what-if scenario whereby [Chikos] may show heart failure signal like we have seen with one or more other DPP-4 inhibitors in that category?

So, Tim let me start with the JANUVIA performance and ex-ForEx we had 5% growth. And if you look at the U.S. we had 4% growth. We had a couple of points that came through on price and we had some increase in the inventory as well that was partially offset by a small decline in TRX volume. If you look at TRX volume in the U.S. we have seen this month better than the last month and last month better than the prior three months. So we have certainly seen a stabilization of the TRX volume when you look it year-over-year and now we are looking to see if we can actually turn it around. If you look at new to brand share we are actually doing better and if you look at new to brand volume we have actually seen an increase in the month of March which is the first time we have seen an increase in the new to brand volume in a very long time. So it’s still early yet but we feel we have certainly stabilized the U.S. now we are looking to see if we can actually grow TRXs again. If you look outside the U.S. we had very good growth in the emerging markets and in Europe. If you look where we saw some softness it was in Japan and the reason why is because wholesalers stopped purchasing or reduced purchases prior to the re-pricing that took place and we have seen the wholesalers began to purchase again after that re-pricing occurred in March they are beginning to repurchase again in April. Overall, the diabetes market continues to show reason for strong growth. If you look at the epidemiologic incidents, if you look at governments around the world and the importance that diabetes plays in the overall healthcare expenditure the markets certainly shows why it should grow. And we continue to invest strongly in the marketplace to now with the success outside the U.S. to do everything that we can to increase the success in the U.S.

Great, thanks Adam. Roger?

Yeah, Tim. With respect to the Chikos trial you know we continue on track with that trial for [14,000] patient study but I need to point out of course that it is eventually a trial and so those events ultimately drive timing. We are not seeing anything that suggests to us that there will be an acceleration in terms of the read out of that trial earlier this year. So it continuous on track. And then with respect to any signals that one might see in that trial you know there has been an interest in the question of the specific finding of heart failure hospitalization based on other studies understandably, we have looked at it both in terms of our Pharmacovigilance activity as well as the data safety, monitoring board has looked at it with respect to the chikos trial because these adjudicated events. At their most recent meeting which was at the end of year just a few months ago they reported no reason not to continue this study as planned and we have seen no evidence of a signal on our Pharmacovigilance study so we are not seeing anything there. We will wait to see the final data we are hopeful that the trial will complete at the end of the year.

Okay, great. Thanks Tim and Stephanie next caller.

Your next question comes from John Boris with SunTrust Robinson Humphrey.

Thanks for taking the questions. Just have two. First question for Roger. If I look at your competitors PD1 clinical development plans by trying to piece those together from clinicaltrials.gov you can certainly see where there’s certainly home in some indications where you might be able to use your breakthrough designation to be able to file additional early stage data if it comes out well. So let me just focus on a couple of areas like hematology or head and neck as examples where you might be presenting data at ASCO. Is there an opportunity to potentially file those additional datasets with the FDA and by using your breakthrough status getting potentially an accelerated approval on those? Second question has to do with M&A for Ken, certainly tax inversion very important not only company issue but certainly policy issue just your thoughts about large scale M&A versus franchise enhancing, either asset swaps and/or franchise enhancing acquisitions versus large scale M&A. Just your thoughts on that and then your thoughts on tax inversion and then certainly want to wish the best to Peter Kellogg in his new endeavors and welcome Rob Davis and look forward to meet him. Thanks.

Well thanks for your questions John. You know I just have to repeat what I’ve said before for us the major consolidation of the industry type has actually is not our preferred strategy. The best way for us to create sustainable value is through innovation and that’s why we are focused on value added bolt-on opportunities as a priority for us. With respect to the policy implications of inversions and business implications I think we’ll just all have to wait and see how that plays out. And I don’t have any particular comments on the strategies of the companies or what the government’s reactions might be. So I think that’s it from me.

Okay John again as I said before in response to Mark Schoenebaum, that we are eager to bring the benefits of MK-3475 to patients wherever we can demonstrate them. We have breakthrough designation in the Melanoma setting, based on the data that we obtained in patients who had advanced small number of refractory to other therapies. That’s not a broad breakthrough designation for any cancer. And nevertheless opportunity exists always to pursue an accelerated approval where the results are favorable, where you have patients who are refractory to other treatments have no other options and where you can bring something of real benefit, meaningful benefit rapidly to the market place. So we’ll continue to look at that. We’ll have the opportunity and talk about the totality of our program next week at the business review and we’ll touch on a lot of these issues that you raised particularly with respect to squamous carcinomas, head and neck and homological exigencies.

Great thanks, John. Stefani next caller.

Your next question comes from the line of Seamus Fernandez with Leerink.

Thanks for the questions and again congratulations Peter and good luck in your future endeavors. Just very quickly as it relates to Roger, the question around HCV is there any chance in your view to see this product actually achieve an 8-week duration? And is there a material difference in your opinion between an 8-week and a 12-week duration for an HCV dual combination? Second question, can you help us understand why you chose to work with Agenus for these Merck targets. So may be if you can just walk us through the Agenus transaction and help us understand why Merck wouldn’t be the one generating those targets internally. And then lastly is there anything written into your immunotherapy collaboration announced earlier this year with Pfizer, Incyte and Amgen that will allow you to continue working together? And why I am asking this question is do you have something written into these agreement to prevent a pharma set like outcome where one company helps generate lots of great data and then another companies swoops and basically prevents you from advancing those combinations? Thanks.

Okay. Let me try and get out these here. First of all with respect to HCV treatment you know I think we are always, we and the entire community are always looking for more rapidly affected regiments that can in these patient populations and of course there are a lot of patients infected with hepatitis C virus. You know a sustained biologic response that can be achieved rapidly is a good thing, we and the entire community have moved that back substantially from where we were previously and we have the expectation that we are going to be able to continue to drive that process using our drugs and we’ll have a chance to talk about the additional molecules that we have in the HCV space as the business review next week. So I think that will be a good time to get into that. You asked about the Agenus transactions which we announced earlier this week. We’ve been talking for some time now or quite a lot time with 4-Antibody which is a Swiss company that Agenus acquired in February. So the transaction really was one that we spent a long time talking with 4-Antibody about. They have a technique that enables them to generate human antibodies of high affinity against a variety of different targets and we have worked with them to look at that technology and to see if we could apply it to some of the more difficult targets in the immuno-oncology space. This goes back a while that we’ve been doing this. And so we were prepared to go forward with them to try and explore whether or not those antibodies could actually be used for, they of course were acquired by Agenus and that led to the transaction that was announced but no other special details I think to be concerned about there. And then with respect can some one swoop in and take the data, I guess is the question from our ongoing collaborations with respect to combination parts. Really I don’t think so. I mean these data will give us the opportunity to ultimately see which kinds of combination can be most effective with MK3475. And we hope if there are some very effective ones to commercialize MK3475 in combinations in those indications. So no special things were written in that would have an impact on that.

Okay. Great thanks Seamus for the questions. And Stefanie I think we have time for two more callers.

Your next question comes from the line of Steve Scala with Cowen.

I have two questions. On the Q4 our call the company said that H1 EPS would be lower than H2 and of course that was repeated today. But at that point it was also said that Q1 would be the lowest quarter of the year. Is Q1 also still expected to be the lowest quarter of the year? Or if not is Q2 now expected to be the lowest quarter of the year? And secondly I am just curious what are your plans for full Remicade data what meeting is being targeted and will we get important new data at the meeting next week? Thank you

So Peter why don’t you go ahead.

Thanks Steve, for the question. Steve, everything you said is correct relative to second half still remains at the higher EPS quarter. Really what happened in the first quarter was that our expenses came in even more favorably than we anticipated. I think everything else was pretty much in line with our plans and our thinking. Some of those are true efficiencies that will help us and some of them will be things that is timing related that will show up in the second half of the year. Very specifically to your second question which is Q2, we didn’t actually provide any specific update on that, so I am going to hesitate to do it right now. But in general I think you can kind of see that the operating expense benefit allowed Q1 to look a little better and so I think we are very much on track to be in the range for the full year. So we haven’t given specific guidance for Q2.

Great thank you Peter. And Steve with respect to Remicade we do have the full dataset in house. And so we are in the process of now looking through that, cleaning up that dataset and evaluating it with – assuming things go well, I hope we will be in a position where we can say something at the business review about it because we have the data set and that’s what we are trying to do and then we’ll be able to give a full discussion of what our plans are with respect to that molecule book. We need to make our decisions here first.

Great thanks Steve. And I think Stefanie we have time for one last caller.

Your final question comes from Mark Goodman with UBS.

Peter congrats from me as well, good luck. Just a follow on to the last comments you are making about expenses. Can you give us a flavor for the beat was more in efficiencies or was it that your timing of things, can you, was it 50-50. Just give us a sense on how we should think about the spending and the gating throughout the year will be helpful. And then on the allergy tales I was kind of curious what the strategy was for that product. I mean no one really talks about the product and then your level of excitement and obviously the doctors make money on these shots, I was curious how what the strategy is with this product?

So let me take your OpEx question first Mark thanks. So there is lot of moving parts obviously in the operations of companies the size of Merck. Let me take first R&D I think R&D in general Rogers’ managing quite a broad portfolio. I think there is probably more timing related. That said he’s still targeting to be below prior year overall but he is got a lot of – so there is – I won’t speak up for Roger but a lot of things gearing up in the focus areas both in oncology as well as hepatitis, there is lot of clinical work going on. In SG&A I think we have made a lot of effort that we announced last fall to take to kind of retune our cost structure and take headcount out as well as take some operating expenses out that’s a very global effort. I think that we made a big effort to try to move ahead of schedule if you will, we went through this year. So I think so that’s very broad based in SG&A. That said as we go through this year we do anticipate we already know we’ve got a couple of launches we anticipate perhaps more and so we are recognizing we have to make the investments to really launch these products extremely well. So I would think in terms of overall efficiency in SG&A and then some very focused efforts to drive growth opportunities as we go through the second half of the year.

And Mark to answer your question regarding GRASTEK and RAGWITEK our launch strategy is really focusing on introducing those two products to specialist audience of allergists and – doctors. We are trying to do that where we get access quickly with the payers and we have some education and market development work that we have to do. I think that we missed the grass season this year so we’ll have to try to do a lot of work to get ready for the grass season next year. But as you look at the overall market there is about 25 million people that have severe allergy, moderate allergies in the United States and only about 3 million people get immuno-therapy shots today. But if you look at that there’s still we estimate about 3 million people that refuse shots all together. So the 3 million that refuse shots are definitely a target for us. But of the 3 million that get shot it’s estimated about 50% of those stop getting their shots after one year. So that will be another target audience for us as we move forward. So every launch is important to us. I am actually heading up to a launch meeting this week and we are looking forward to doing a lot of market development work as we go through this year to prepare for next.

Great, thanks Adam and I turn it over to Ken.

Let me just summarize very quickly. So in the first quarter we ended up more or less where we expected to be and we are on track for the full year. We saw a solid growth from Januvia immunology vaccines and Isentress and we are also seeing strong progress on our initiative to sharpen the focus on our commercial and R&D expenditures including evaluating what assets are core to our strategy. So more exciting thing for us as we look to the future we see steady and substantial progress in the pipeline. And so we are looking forward to meeting all of you at the business briefing on May 6th so that we can talk about our future in more detail. Thank you very much and we look forward to seeing you.

Thank you. This concludes today’s conference. You may now disconnect.