Open Thread: Through August 14, 2011

Time for my annual two week August world-travelling vacation -- I'll out of country (and unwilling to pay for international roaming, on the iPhone!), and thus off the grid for almost all of it.

So -- continuing the new "self-publishing" paradigm, here is an open thread for all things and thinks Whitehouse Station, in the next two weeks:

. . . .Okay -- what's pn your mind -- related to Merck, legacy Schering-Plough or legacy Organon? Do let us know in the comments. . . .

See you in about 14 days. . . . be excellent to one another.

Another 12 or 13 Percent To Be Let Go By 2015. . . . R&D Trimmed (Again)

LIVE BLOG | New Merck Q2 2011 Results

▲ Vertex reported very strong Incivek launch numbers last night -- it seems clear that Vertex has north of 80 percent initial share; Merck's boceprevir has less than 20 percent, despite having announced two very high-profile (read: expensive) co-promotion partnerships in Q2 2011. Vertex is clearly going to call the shots in the new Hep C world -- posting north of 80 percent cure rates on prior non-responders. Yes, this is another legacy Schering-Plough product -- thanks, Fred and Carrie.

▲ So (sadly). . . if Merck's 20092010 year-end employee headcount was around 104,00086,000, another 12,00011,000 to 13,00012,000 of Merck's people will be let go by 2015 -- under the accelerated restructuring announced today -- initially costing it around $5 billion to $6 billion. That's staggering, on total 2010 annual revenue of $43 billion.

▲ Does it strike anyone (else) as strange that the world's No. 2 pharma concern would have over 31 percent of its Q2 2011 EPS "meets Street guidance" as NON-GAAP contributors? That sounds more like a development-stage life science company, than the world's second largest (by worldwide revenue). GAAP EPS was only $0.65, but with non-GAAP (i.e., fuzzy) accounting, that line swells to $0.95. 30/95 is about a 32 percent "addition".

▲ Q2 2011 Animal Health sales totaled $802 million -- but excluding currency translation gains (i.e., non-sustainable), that's was only 2 percent organic growth. Pretty anemic, in a segment that is reputed (by New Merck puffery) to be largely "insulated from" recessionary pressures.

▲ Q2 2011 Consumer Care showed no growth over Q2 2001. Not a great signal, given that Frazier has said he might seek a partner for this segment.

▲ Merck is using R&D spending-level adjustments to manage (or exactly match) Wall Street's expected EPS for Q2 of $0.95 -- the R&D spend will, for at least the next few quarters, either expand or contract, to meet Wall Street's EPS expectations, it would seem. Again, this makes Q2 2011 EPS pretty much an artifical (or at least highly "malliable" number) number -- if R&D spend levels are going to be the simple "plug figure" -- to reach the guidance EPS.

▲ Thus, Merck is guiding a full-year 2011 EPS range that is two pennies higher than Street consensus. Pretty much an artifical number -- if R&D spend levels are going to be the simple "plug figure" -- to make the guidance: slow, or reduce R&D a bit, if operating earnings are light. SHeesh, This makes EPS a question of whether the earnings have "quality" -- or are just temporarily juiced by slowing expenses.

First up -- pre call, courtesy of theflyonthewall.com:

. . . .Merck said it remains on track to achieve its goal of $3.5B in annual cost synergies by the end of 2012. The company said it will more aggressively reduce its cost structure. As a result, Merck announced the next phase of its Merger Restructuring Program today. As part of this next phase, the company expects to reduce its workforce, as measured at December 31, 2009, by an additional 12%-13% by the end of 2015. At the same time, Merck said it will continue to hire new employees in strategic growth areas of the business such as emerging markets. By the end of 2015, Merck now expects the overall Merger Restructuring Program to yield annual ongoing savings of $4B-$4.6B from the original estimate of $2.7B-$3.1B. . . .

Simcere: Merck's Second Large China Foray -- After The Sinopharm Deal

Regular readers will recall that back in July of 2010, Merck said it would partner with Sinopharm in China -- on an HPV vaccine (very likely a "biosimilar" -- to the very-pricey US branded Gardasil^® vaccine). (Separately, back in November of 2010, Bristol-Myers Squibb inked a partnership with Simcere to jointly develop a new cancer therapy, BMS-817378.)

Just this past week, Merck inked a similar deal with Simcere, China pharma concern -- on diabetes and metabolic (blood pressure) medicines -- some of which are facing a US patent cliff. The China deal gives Whitehouse Station an easier access path to the vast Chinese market, and allows at least middling profits on its maturing branded drugs. Here is some of the presser on the latest Merck deal:

. . . .This. . . partnership will combine the extensive resources and expertise of a global health care company and a leading Chinese pharmaceutical company in support of Merck and Simcere's goals. . . . The initial focus of the partnership will be branded pharmaceutical products for cardiovascular and metabolic diseases.

Specifically, in the area of cardiovascular disease, the partnership will offer a combined portfolio of selected medicines from both companies, including Zocor^® (simvastatin), Cozaar^® (losartan) and Renitec^® (enalapril) by Merck/MSD, and Xinta (levamlodipine) and Shuftan (rosuvastatin) by Simcere. In the metabolic disease area, the partnership will work to maximize access in China to sitagliptin, a DPP-IV inhibitor for the treatment of type 2 diabetes. Type 2 diabetes is increasingly recognized as a significant public health threat in China. . . .

We will keep an eye on this, but increasing Januvia^® and Janumet^® penetration in China will very-likely serve New Merck well. To be clear though, it is significant that the presser uses the non-branded chemical name to refer to the diabetes med -- sitagliptin -- not Januvia, the branded version. That strongly suggests this too will be an "authorized" biosimilar marketing arrangement -- and thus not even close to the branded price point.

Will Merck (US) Q2 2011 Most Resemble Geman Merck On Friday? Look Like Lilly? Or Like Novartis?

So, come Friday at 8 am EDT, will the New Merck post a German Merck-Serono style disappointment, an Eli Lilly-stlye yawner, or a Novartis-style winner/suprisingly strong Q2 2011?

We'll see -- and live blog it here -- and you may listen in, right here:

. . . .Merck will hold its second-quarter 2011 sales and earnings conference call with institutional investors and analysts at 8 a.m. EDT on Friday, July 29. During the call, Kenneth C. Frazier, president and chief executive officer, Peter N. Kellogg, executive vice president and chief financial officer, and Adam H. Schechter, president, Global Human Health, will provide an overview of Merck’s financial performance for the quarter. . . .

WHAT'S EXPECTED: Analysts surveyed by FactSet forecast earnings per share of 95 cents and sales of $11.81 billion. . . .

See you Friday.

Another Open Thread -- Featuring FDA Advisory Committee Formation: Fosmax® ONJ Review

Feel free to use the comment section to add your own items of interest, but Injury Board.com offers us this as a headliner -- do go read it all:

. . . .On July 11, 2011, the Food and Drug Administration (FDA) announced that it would form an advisory committee to discuss the risks and benefits of long-term bisphosphonate use for the treatment of osteoporosis. The formation of the committee comes in light of growing evidence that bisphosphonate drugs, such as Fosamax^®, prescribed to treat osteoporosis, may cause atypical femur fractures and osteonecrosis of the jaw (jawbone death). Fosamax manufacturer Merck & Co., has faced an increasing number of lawsuits from people who have suffered atypical femur fractures or jawbone death while taking Fosamax. In addition to Fosamax, the advisory committee will discuss other bisphosphonate drugs: Actonel^®, Atelvia^®, Boniva^® and Reclast^®.

Generally, the FDA convenes an advisory committee on pharmaceutical drugs to receive public input on a broad scope of complex issues including drug safety and risk. These issues typically relate to the development and implementation of a specific regulatory program or the development and implementation of a regulatory policy to approve, recall or update labeling information for a drug.

Over the past few years, there has been an increasing number of reports involving patients who suffered multiple stress fractures and low energy femoral fractures as a result of severely suppressed bone turnover potentially linked to long-term Fosamax use. Various studies have also shown that severely suppressed bone turnover may be associated with long-term Fosamax use. . . .

Now -- what did YOU see this week? Add it in the comments!

Open Thread: Week Of July 18, 2011 -- A "Science" Experiment

So, each week, you -- the readers -- are encouraged to add Merck items of interest to the comment box. Hopefully you'll be able to keep one another informed while I am off attending to my other duties. I'll try to post summaries each weekend.

To get us started, here is a Pete Loftus report on Merck's R&D spend -- and how it diverges from the Pfizer model:

. . . .Frazier said he is willing to take a "few brickbats thrown in my direction" from Wall Street because of his decision earlier this year to avoid big research spending cuts, though he acknowledged he doesn't have a blank check to pour unlimited money into research.

"I'm trying to run the company in a way that I can satisfy the short- and intermediate-term needs of investors without sacrificing really what we're about," Frazier said in an interview Friday with journalists from The Wall Street Journal and Dow Jones Newswires.

"Science and innovation are in the DNA of the company," he said. "The science will lead us to another big breakthrough."

Merck's approach to research spending has diverged from that of rival Pfizer, which said earlier this year it would slash such spending and put more money into share repurchases. . . .

Feel free to add whatever news on Merck, Schering-Plough, Organon or Warrick (or the current and former executives of each) you'd like -- below, in the comment box. Feel free to do so completely anonymously, as well. I don't -- and won't -- track these things, unless your post clearly violates applicable law (not likely).

Okay -- what did you see this week? Post it below.

Merced, CA Pays $1.5 Million in Federal Chromium 6 Public Contamination Case

Some time next year, it is likely that the final phase of these proceedings -- the phase in which a new federal jury will be asked to decide whether punitive damages should be assessed against Merck (and, potentially, the municipal government of Merced) -- if it is found that the Chromium 6 levels were injurious to public health around the old Baltimore Aircoil plant -- a Merck acquisition (and subsequent divestiture). Here is some local reporting (via HuffPo) on the latest city settlement -- do go read it all:

. . . .The Merced settlement – which was finalized in March but wasn't immediately reported – will go to more than 2,200 plaintiffs.

Merced city attorney Greg Diaz said the settlement was spurred by economic reasons, not by any liability involving chromium on the part of the city.

The city was a defendant in the original case, in which allegations included a wide variety of contaminants in the floodwater, including chromium, Diaz said.

However, he said the city's possible liability was limited to household waste that enters the sewer and storm water systems. . . .

Merck officials acknowledged during the first phase of the trial that hexavalent chromium contamination occurred but denied that any of it left the confines of the plant at levels that could have harmed the health of residents.

Merck first found hexavalent chromium at the plant site in 1984 and was issued a violation in 1987. But according to court documents, the company did not start remediation until 1991.
In the second phase of the trial, a new federal jury will determine which of the plaintiffs may have been harmed by the chemical exposure and determine possible punitive damages. . . .

We will keep you posted -- but as is apparent, my other life-responsibilities have now eclipsed my ability to post here more than once a week, or so. Look for at least a weekly posting -- and probably concentrated during the weekend timeslot.

This week, I'll experiment with an "open thread" concept: the idea is that each of you -- the readers -- will be able to post New Merck (or legacy Schering-Plough) news items, in the comments to the open thread post. Look for it above, in a moment.

Kudos To CEO Ken Frazier -- New Merck's Study Transparency Measures

Even though this item was dumped into "the memory hole" (released late on a holiday Friday), this news deserves mention -- and significant praise. It is progress. Incremental progress, but progress just the same.

Merck will now make the various statistical analysis packages from all studies available to all -- not just to those people who write in to request 'em (and then, as under prior practice, only to those Merck deemed worthy). Every little bit helps, right?

Right -- here it is

. . . .Today Merck said the company is strengthening its publications policy as part of its continuing, voluntary commitment to increase transparency about how it conducts business.

Effective July 1, when Merck submits a manuscript on a study of an investigational or an approved medicine or vaccine to a biomedical journal, Merck will include the protocol and statistical analysis plan as part of the submission package. Merck previously supplied this material only upon request. Upon a journal’s acceptance of the manuscript for publication, Merck will provide the journal with the opportunity to post on its web site, at journal's discretion, the key sections of the protocol, including the objectives and hypotheses, patient inclusion and exclusion criteria, study design and procedures, efficacy and safety measures, the statistical analysis plan, and any amendments relating to those sections.

To ensure that information proprietary to the company is not made available publicly, Merck will require that certain sections, including the “background” and “rationale” sections of the study protocol be redacted prior to posting. The company will, however, always provide the full, non-redacted protocol to journal editors.

“It’s our responsibility to make available important information about our products and the science on which they are based, and do so in an objective, accurate and balanced way," said Michael Rosenblatt, M.D., Merck executive vice president and chief medical officer. "Proactively sharing our study protocols will enhance the exchange of ideas within the scientific and medical community, and ultimately lead to a better understanding of the benefits and risks of our products among health care professionals and patients. . . ."

Quite so -- and good show, Whitehouse Station.

Merck's Q2 2011 Earnings Call: July 29, 2011 -- 8 AM EDT -- Live Blog

We'll live blog it here -- and you may listen in, right here:

. . . .Merck will hold its second-quarter 2011 sales and earnings conference call with institutional investors and analysts at 8 a.m. EDT on Friday, July 29. During the call, Kenneth C. Frazier, president and chief executive officer, Peter N. Kellogg, executive vice president and chief financial officer, and Adam H. Schechter, president, Global Human Health, will provide an overview of Merck’s financial performance for the quarter. . . .

Check back here then.