shearlings got plowed

No Surprise -- The Lead In Treating HCV/HIV Co-Infection Belongs To Incivek®

2012-03-08T07:28:00.021-05:00

First, a word of caution -- both legacy Schering-Plough's Victrelis^® (boceprevir), and Vertex Pharma's Incivek^® (telaprevir) are still "investigational" drugs -- when we speak about treating HCV/HIV co-infected patients. That is, FDA has not approved either drug for use in such patients -- the companies' drugs are only labeled to treat Hep C (or HCV), at present. [So, technically speaking, their use in co-infected patients is "off-label", but under study, i.e. -- "investigational" in FDA parlance.]

Thus, both companies are running trials to determine whether either one will be allowed to be marketed as useful for treating patients with both HIV and Hep C -- a rather common occurence in the current US patient population. So far -- as was true with the overall efficacy studies on Hep C alone -- it seems that Incivek is posting more impressive cure rates, with (thus far) no HIV viral breakthroughs.

You'll recall that a month ago, FDA specifically warned about not treating HIV/HCV co-infected patients with a combination of Merck's Victrelis, and any ritonavir-boosted protease inhibitor -- as it seemed as though that combination (in some not-well understood way) weakened the anti-HIV regimen (a statistically-significant rate of HIV breakthroughs were observed, in patients on such a combination-laden therapy). Merck has concurred with this assessment, and has openly said that Victrelis shouldn't be used in such settings.

Significantly, no such drug-interaction/side-effect has been seen in any of Vertex's Incivek trials. The two base molecules are different enough (see at right), that it would be plausible to believe that Incivek (telaprevir) doesn't suffer the same defect, structurally, that Victrelis (boceprevir) does. Of course, we don't know exactly why this breakthough effect is happening -- but it does reinforce the notion that, in the science of biology (and thus evolution), even slight variations often make significant differences, over the vast multiples of generations that are the engine of evolution. Remember that HIV virus types (and, for that matter, HCV virus types) may transition through hundreds of thousands of such "generations" in just a few weeks' time, inside a human host.

What it all means, in my opinion, is that Vertex holds the lead in current Hep C regimens -- at least for the next few years -- to early 2016 (especially since Gilead's next-gen Hep C setback). And Vertex rose over 2 percent yesterday, on the NYSE, while Merck declined throughout the day -- dropping below $37, in the early going, only to make it most of the way back to flat, by day's end.

Here is a bit of the Reuters reporting, with the data, out of the conference in Seattle, late Tuesday -- do go read it all:

. . . .Vertex said 74 percent of trial patients treated with Incivek followed by the standard regimen of interferon and ribavirin were free of the hepatitis C virus, or HCV, 12 weeks after ending treatment, compared with 45 percent of patients given interferon and ribavirin alone.

There were no instances of a rebound of HIV for patients in the Incivek trial. Side effects seen more frequently with that drug were itching, headache, nausea, rash, fever and depression. No cases of severe rash were reported.

Merck's mid-stage trial found that 63.9 percent of patients treated with Victrelis and the standard hepatitis C therapy were free of HCV at 48 weeks of treatment, compared with 29.4 percent of patients treated only with interferon and ribavirin.

Two patients on Victrelis and three in the control group had an increase in HIV. . . .

So -- will Merck's (which is actually legacy Schering-Plough's) Hep C drug, Victrelis, ever reach 20 percent share, in the US market? I personally doubt it.

More Details Emerge, On Concerns With Victrelis® & HIV Co-Infected

2012-03-06T23:20:00.008-05:00

I am tempted to offer the acidic observation that this was dumped into a 9 pm Eastern Super Tuesday results news blizzard -- perhaps in the hope it would be buried under the drama unfolding in Ohio tonight. But I won't.

More seriously, I think this is going to turn into more tough sledding for the legacy Schering-Plough Victrelis^® (boceprevir) campaign -- it may never reach 20 percent share in the United States. Vertex will benefit here. From Whitehouse Station, tonight -- do go read it all:

. . . .Merck announced results as part of a late-breaker poster session [Poster #771] from a pharmacokinetic study evaluating drug interactions between VICTRELIS and ritonavir-boosted HIV protease inhibitors in 39 healthy volunteers. In this study, concomitant administration of VICTRELIS with ritonavir (Norvir®) in combination with atazanavir (Reyataz®) or darunavir (Prezista®), or with lopinavir/ritonavir (Kaletra®) resulted in reduced exposures of the HIV medicines and VICTRELIS. These drug interactions may be clinically significant for patients infected with both chronic HCV and HIV by potentially reducing the effectiveness of these medicines when co-administered. Merck does not recommend the co-administration of VICTRELIS and ritonavir-boosted HIV protease inhibitors.

"In light of the differing results in these data sets, Merck recognizes it is important to continue to study VICTRELIS in combination therapy in this difficult-to-treat patient population," said Eliav Barr, M.D., vice president, Project Leadership and Management, Infectious Diseases, Merck Research Laboratories. "Our collaborative studies with the French National Agency for Research on AIDS and Viral Hepatitis2 (ANRS) and the AIDS Clinical Trial Group (ACTG), which is funded by the U.S. National Institute of Allergy and Infectious Diseases, will provide greater insight into the potential role of VICTRELIS in treating patients with chronic HCV genotype 1 infection who are coinfected with HIV-1. . . ."

We first mentioned this a month ago, now. This will blunt the Roche marketing muscle, I guess, as well. Tough break.

Merck Reduces Q1 2012 Guidance (Foreign Exchange); Shares Open Off $0.75 On NYSE

2012-03-06T09:39:00.014-05:00

So Peter Kim's presentation at Cowen & Co. has been completely overshadowed by the guidance update -- out of Whitehouse Station this morning.

It shouldn't surprise anyone who follows currencies, but Merck is clearly suffering the effects of a stronger dollar -- vis-a-vis the euro, and to a lesser extent, the Japanese yen. [Where is the hedging program, I wonder -- this could have been mitigated.]

Per MarketWatch.com, just now:

. . . .Merck & Co. said Tuesday it expects adjusted first-quarter profit of 95 cents to 98 cents a share, compared to the Wall Street estimate of $1.01 a share in a survey of analysts by FactSet Research. . . .

Just as I said, right here, just about three months ago. Currencies will be an important Merck headwind in 2012 -- unless the global economic balance shifts significantly in the second half of 2012.

Merck's Peter Kim To Webcast, At Cowen & Co. -- in Boston -- Tomorrow

2012-03-05T13:36:00.003-05:00

He's not likely to make any real news in Boston tomorrow, but we'll likely listen in just the same. We may liveblog any real news:

. . . .Peter Kim, president of Merck Research Laboratories, is scheduled to present at the Cowen & Company 32nd Annual Health Care Conference in Boston, Mass. on March 6 at 8:40 a.m. EST. Investors, analysts, members of the media and the general public are invited to listen to a live audio webcast of the presentation. . . .

So, do stop back by -- around 8:40 Eastern tomorrow morning. I doubt he'll discuss the ragweed allergy candidate, or the FDA complete response on "Son of Vytorin" [great tag, there Matt Herper!] -- but who knows?

FDA: "No, For Now" -- On Lipitor®/Zetia® Combo Pill

2012-03-05T10:11:00.008-05:00

Not remotely surprising -- but Merck must now either decide to double-down, and invest anew in the combo-pill (despite the vagaries experienced with the Vytorin^® combo-pill), or decide to cut its losses, and move on. Fascinating. [More of my background, here.] From the AP, then:

. . . .The Merck experimental drug combines the company's cholesterol drug Zetia with a generic version of rival Pfizer Inc.'s Lipitor, which had been the top-selling drug of all time.

Merck says company officials will talk with the FDA to determine the next steps for trying to win approval. . . .

This actually may save Whitehouse Station some money in the longer run, if it decides to moth-ball the combo. Obviously, Lipitor^® is now a cheap generic, and the jury is still out (IMPROVE-IT -- due 2014) on whether statins (of which Lipitor is one) combined with Zetia^® actually improve outcomes, or just lower the numbers, in blood levels, without any overall CV risk reduction effect.

Merck To Enter Crowded, Lower-Priced Homeopathics (Ragweed Allergy Remedies) -- By 2014?

2012-03-04T16:31:00.018-05:00

I've long believed that there are at least some homeopathic remedies that actually work, against a range of conditions and diseases. It would seem that Whitehouse Station is (becoming) a believer, as well.

The long term problem has been -- as to the homeopathics -- that they generally lack the rigorous study data FDA requires to make an allergy-relieving/health care labeling claim. Once again, it seems that Merck is looking to change that -- at least as to ragweed antigens, and grass antigens. [It will in part cannibalize the OTC versions of Claritin^®, etc. -- I guess.]

While Merck is pitching it as an alternative to allergy shots (in doctors' offices), as well, it will also have to go head to head with numerous (generally low-priced) homeopathic pills and capsules. I'll be curious to see whether the study data will support "pharmaceutical-grade" as a pricing differentiator.

Merck posseses, by license, the North American rights to a new ragweed-antigen based daily oral drug candidate developed by ALK-Abelló. It has shown moderately positive results, at least as compared to a placebo, in a Phase III trial. These studies were just reported at a conference in Orlando, Florida this weekend.

From Reuters, this morning -- just a bit -- do go read it all:

. . . .Merck & Co on Sunday said it would seek U.S. approvals next year for separate allergy pills that help tame the immune system's reaction to ragweed and grass, and the drugmaker released favorable data from a late-stage trial of the ragweed medicine.

The pills are meant to be an alternative to traditional allergy shots given in doctors' offices, which include a mixture of proteins that gradually weaken the immune system's response to ragweed, grass, foods and other allergy triggers.

The Phase III study involved 565 patients 18 to 50 years old prone to ragweed-induced allergies, with or without asthma. Patients took Merck's once-daily tablet for 52 weeks, at one of two available doses, or took placebos.

The active ingredient of the pill is Ambrosia artemisifolia, the chemical name of the ragweed allergen, or protein, that causes runny noses, sneezing and other miseries for millions of Americans. . . .

Specifically, the pill reduced allergy symptoms during peak ragweed season by 17 percent and 14 percent, respectively, at the higher and lower doses. . . .

The studies will support the thesis, no doubt -- but will they be enough to push the homeopathics to the side -- or will Merck's spend on an FDA approval backfire, and bolster demand for the homeopathics (many of which contain the very same active ingredient)? Only time will tell. At least Merck is looking everywhere, for new revenue, it seems.

Unusually Strong Hiring -- At Merck's Nascent Durham, NC Vaccines Facility

2012-03-02T15:29:00.015-05:00

Local Raleigh-Durham news outlets are reporting that the vaccine ramp-up is running ahead of schedule:

. . . .By the end of this year, Merck will grow its Durham vaccine-producing plant to 1,000 employees, higher than previous estimates and nearly five times larger than the work force at the beginning of 2010. . . .

Since 2010, the Durham facility has been partially manufacturing Varivax, a childhood vaccine to combat chickenpox, but splits manufacturing duties with a plant in Pennsylvania. Early next year, Durham hopes to receive approval to manufacture Varivax from start to finish, Wagner says. . . .

When fully licensed, the facility will manufacture parts of Zostavax, a vaccine for shingles in older adults, M-M-R II for measles, mumps and rubella, and ProQuad for measles, mumps, rubella and chickenpox.

Through the first three quarters, sales of those vaccines combined were on pace to generate more than $1.5 billion in 2011. In 2010, the vaccines had combined sales of $1.6 billion. Merck did not record any sales of ProQuad in the second or third quarters of 2011, which had made up the smallest portion of sales in the previous quarters.

Although Merck is relocating some production work from Pennsylvania to North Carolina, union leaders in Pennsylvania are not concerned, says Fred Redmond, the international vice president for the United Steelworkers, which represents 800 workers at the Merck facility in West Point, Pa. "We don’t see this as a shift to work from a unionized state to a non-unionized state," he says. "For now, we aren’t concerned. . . ."

Since construction began in 2004, Merck has invested nearly $1 billion in the Durham facility, says Cheznee Johnson, Merck’s global communications manager. . . .

We shall see, but longer term (as I've repeatedly said since late 2009), West Point probably should be concerned -- this new shop is a $1 billion, state of the art, entirely non-union plant. It is adding jobs way ahead of schedule, with numerous new FDA site approvals reaching the business end of the pipe, soon.

Cain v. Hassan, et al. Settled -- As I Reported Over Four Months Ago

2012-03-01T09:51:00.015-05:00

Back on October 19, 2011, I reported (exclusively, worldwide near as I can tell) that Cain v. [Ex-CEO Fred] Hassan, et al. would settle, based on federal (New Jersey) District Court pleadings and papers filed as a matter of public record that day.

Well, it took a while, but the AP is now covering it.

Why? Because the settlement is final (Judge Cavanaugh's non-precedential opinion PDF -- 12 pages, made public yesterday).

Here's some of my New Years' Bowl Game Day 2012 background on what is still to come:

. . . .Said another way, the insurers expect that there is only an around 5 percent chance that the $7.5 billion would be awarded by a jury. The expert, in his law review article, quotes an insurer (anonymously, for obvious reasons), thus -- particularly apt, as it refers to another pharma securities fraud case:

. . . .Pfizer has — I’m talking off the top of my head — 3 billion shares outstanding, and the stock went down 10 bucks. That’s $30 billion of damages. 5% of that is $1.5 billion. Settlement.

And you go to a judge and say, “The damages are $30 billion. We are proposing a settlement that is 5%. How can you say that is unreasonable?” And we say, “It’s unreasonable because it doesn’t reflect the liability,” and they say, “Sure it does. It’s 5% of the total, but it could happen. So it is 5-to-95 chance to win. Yes, it’s a perfect discount. . . .”

And so sometimes the numbers will in and of themselves take over, and I have that on a number of the pharmaceutical companies or large, large, jumbo-cap companies. I have it with General Motors, General Electric. The stock ticks down $2, which isn’t enormous. It’s not a free fall[. It’s] based on some news that might be innocuous, and it’s enough because that creates a damage pool that is into the billions which immediately gets the plaintiffs’ lawyers out because there [are] damages, and the case has value irrespective of the merits. . . .

If you look at the numbers, the settlement compared to the damages, you are talking anywhere from 2% to 6% of [plaintiffs’-style damages]. . . .

So, applying this to the ENHANCE facts, at legacy Schering-Plough/New Merck, we multiply $7.5 billion times 2 percent to get $150 million. If it is 6 percent, we'd yield a settlement value of $450 million. So something between $200 million, and $500 million, is the likely rough value of the cases still pending, for damages -- according to the parties' own jointly selected settlement defense expert. And that's before approaching the involved lead underwriters, in the Schering-Plough convertible securities offerings, back in August of 2007 (some $4 billion worth, in the aggregate).

Are you paying attention, here, Fred Hassan? This is what poor management and lax oversight costs a company, and its owners. . . .

There are still several ENHANCE era would be federal class action securities lawsuits pending -- though most are now either before a mediator, or a team of mediators, with views (on all sides) toward finding an agreed settlement posture.

All of those are far more likely to involve money damages, rather than corporate governance reforms, in my estimation.

In that regard, Merck's From 10-K recently disclosed (for the first time, I think -- in Footnote 12, on page 121) that it carries insurance of around $250 million for such claims. Even so, Merck says its reserves are adequate for defense costs only -- not (necessarily) potential settlement payout amounts. Interesting.

Merck Science Team To Webcast Tomorrow Morning -- At Citi/NYC

2012-02-28T21:45:00.006-05:00

Tomorrow, at 10 AM EST, Merck will make a presentation at the 2012 Citi global health care conference in Manhattan:

. . . .Luciano Rossetti, senior vice president of Global Scientific Strategy at Merck Research Laboratories, and Frank Clyburn, president of Primary Care and Women's Health in Merck's Global Human Health division, are scheduled to present at the Citi 2012 Global Healthcare Conference in New York City on Feb. 29, at 10:00 a.m. EST. Investors, analysts, members of the media and the general public are invited to listen to a live audio webcast of the presentation at: http://www.merck.com/investors/events-and-presentations/home.html. . . .

In addition, a state court trial is underway (see graphic, at right) related to claims of ONJ, allegedly caused by Fosamax^®, in Atlantic City, New Jersey this week. We will report on that, shortly.

Pharmalot's Scoop: Januvia® Deemed "Misbranded" -- And In Violation of FDA Safety Rules

2012-02-28T21:16:00.019-05:00

Ed has a great long story on the Merck cock-up of today, unduly delaying an FDA required post-marketing study, related to safety of Januvia^® (sitagliptin). Do go read all of Ed's insights, then come back here. [For my part, I'll note that, in its just filed SEC Form 10-K (table on page 49) Merck sold over $3.3 billion worth of Januvia in 2011, up almost a billion dollars, compared to 2010. This regulatory non-compliance potentially jeopardizes that revenue stream. Astonishing.]

From the FDA's warning letter to Merck, then:

. . . .FDA has not been provided sufficient information to determine whether the proposed independent study is adequate to satisfy the PMRs.

Therefore, you have submitted neither a study protocol for a new rodent study, nor a final study report for the independent study that you proposed would satisfy the PMRs. You have not provided an adequate explanation for the cause of the delay of either of the milestones in the timetable for completion of the postmarketing requirement, nor did you propose to revise the agreed-upon timeline.

As a result, you are more than 20 months late in achieving the June 15, 2010 final protocol submission milestone and more than 8 months late in achieving the final protocol submission milestone in the timetable, and you have not demonstrated good cause for these delays.

Conclusion and Requested Action

Under section 502(z) of the Act [21 U.S.C. 352(z)], your product is considered misbranded because you are in violation of a postmarketing requirement (PMR) established under section 505(o)(3) of the Act. You have failed to comply with the approved timetable and periodic report submissions of section 505(o)(3)(E)(ii) of the Act and failed to show good cause for not conducting the additional testing required to further assess whether a signal of a serious risk of acute pancreatitis, including necrotizing forms, associated with the use of sitagliptin, represents a public health risk.

Failure to promptly correct this violation may result in regulatory actions by the FDA without further notice. These actions include, but are not limited to, civil money penalties. Other federal agencies may take this Warning Letter into account when considering the award of contracts. In addition, civil money penalties under section 303(f)(4) of the Act [21 U.S.C. 333(f)(4)] could be levied for a maximum of $250,000 per violation, with the possibility of additional penalties if the violation continues uncorrected. . . .

Bewteen Ed Silverman's Pharmalot, and this joint, we will keep you posted. [My September 2009 background on the Januvia^®/pancreatitis concerns.]

More Experts Weigh In, Criticizing Fred Hassan's Avon/Jung Decision

2012-02-26T10:28:00.011-05:00

More and more corporate governance experts -- usually quite careful about ciriticizing current large public company board chairmen -- are speaking openly about how Mr. Hassan's misguided loyalty to another high executive has put a company he stewards in a difficult position. [Regular readers will recall here, the echo of the Carrie Cox situation(s) -- at both Pharmacia I (and Pharmacia II), and Schering-Plough.]

Having Ms. Jung "hang around" the board simply makes very difficult the task of retaining a truly hard-nosed, effective leader -- to turn the Avon debacle around. Why would a top flight person want to try to run interference between an entrenched lead director (Hassan), and the close friendly relationship he has with Ms. Jung -- now the nominal Chairman of the Board -- for two years? There are always going to be better situations that this -- for the best people, with all the right skills, it would seem. Nicely-done (again!), Fred!

In any event, here's the concluding bit from this week's Bloomberg story -- do go read it all:

. . . .Most Avon board members have worked closely with Jung for most of her tenure. Five of the nine independent directors have served on the board for a decade or longer. They include lead director Fred Hassan, managing director and partner at Warburg Pincus and chairman of Bausch & Lomb Inc.

"The kind of compromise directors reached to keep Jung on as chairman while also recruiting a new CEO serves no good purpose for investors," Charles Elson, head of the University of Delaware’s Weinberg Center for Corporate Governance in Newark, Delaware, said in a telephone interview. "But at least the board limited Jung to a two-year contract. It’s a lot harder to terminate an executive with an open-ended contract that automatically gets renewed over and over. . . ."

Caustic -- but correct, in my view. And I've plainly said so, before -- back in December of 2011.

Can Whitehouse Station "En-Hip-[Hop]-ster" Dr. Scholls' Image?

2012-02-21T09:53:00.015-05:00

I hate to be the wet blanket here, but the idea that urban 20-something hip hop artists are going to endorse orthotic insoles seems. . . well, a stretch.

I guess stranger things have happened (witness Beyonce & Jay-Z trademarking their daughter's surname -- "Blue Ivy Carter"!). I'll keep you posted, but here's a bit from this longer Wa Po article, and if flash is enabled on your device, do watch the video below:

. . . .Dr. Scholl's wants to massage its arthritic image. The 106-year-old company began airing TV ads Monday to recast its orthopedic shoe inserts as "energizing cushions" that help people live life to the fullest. . . .

Company executives hope the new "Get Up and Go" tag line turns attention to how the inserts might enhance a wide range of lifestyles. They want to dispel the notion that Dr. Scholl's products are only for older people suffering aches and pains. One ad shows a break-dancer slipping a gel pad into his shoe before flipping in the air. . . .

Seriously? Yep (at about 22 seconds in):

No comment needed -- or adequate, here. That's all I've got this post-Presidents' Day morning -- something better, tomorrow -- I hope.

BlackRock Has Upped Its Stake In Merck -- To 5.75% -- 175,312,709 Shares

2012-02-20T09:34:00.008-05:00

Here is that latest BlackRock SEC Schedule 13 filing.

Meanwhile, the only other remaining shareholders known to beneficially own more than 5% of Merck, have each cut their holdings in the company -- one very significantly. The big seller, for the year 2011, was Capital Research Global Investors (down from 5.3%, to only 2%, or now holding 60,246,383 shares).
Capital World Investors holdings are also down -- from 6.8%, to 6.4% -- a much smaller sell-off, and it still holds 195,693,450 Merck shares.

It should be noted that these figures were only current as of December 30, 2011, as SEC Schedule 13 rules only require year-end reporting. Even so, if all holders are complying with SEC rules, this means that the number of institutional shareholders owning truly massive stakes (north of 5%) in the world's No. 4 drugmaker have been reduced from at least six in 2008 (counting both legacy companies), to two, at year end 2011.

. . . .Capital Research Global Investors is deemed to be the beneficial owner of 60,246,383 shares or 2%. . . .

BlackRock, Inc. is deemed to be the beneficial owner of 175,312,709 shares or 5.75%. . . .

Capital World Investors is deemed to be the beneficial owner of 195,693,450 shares or 6.4% of the 3,047,921,407 shares believed to be outstanding. . . .

Fascinating. For reference, here is last year's Merck proxy disclosure related to these holders.

Gilead Down 15%; Vertex Up 6.5%; Merck Up 1.6% — Hep C Wars, Rebooted

2012-02-17T14:07:00.016-05:00

I think I said, when this deal was announced, that everything needed to go perfectly, to defend the price paid (and of course, nothing ever does).

Apparently Gilead has suffered its first setback in the Pharmasset-acquired next generation (all oral) Hep C program. Gilead’s experimental GS-7977 plus ribavirin failed to suppress the hepatitis C virus in a group of difficult-to-treat patients who had also failed prior therapy, Gilead just announced, this morning.

Gilead stock is down 15 percent on huge volume.

~~More soon.~~

Per the Wall Street Journal, now:

. . . .Gilead obtained the drug, GS-7977, with its $11 billion purchase of Pharmasset last month. Gilead has billed GS-7977 as the anchor of what the company expects to be the first all-oral regimen for hepatitis C to reach the market, potentially in 2014, and analysts have predicted the drug has multibillion-dollar annual sales potential. Current standard treatments include an injectable drug.

A clinical trial of GS-7977, titled "Electron," included an arm testing the drug in patients with a form of hepatitis C known as genotype 1, who had previously seen little or no decrease in the virus after treatment with a regimen containing an older drug, interferon.

Gilead said a majority of these patients experienced viral relapse within four weeks of completing 12 weeks of treatment of GS-7977 plus another drug called ribavirin. . . .

That's bad news for Gilead -- and a much longer "leading-in-the-existing market" time, for Vertex (and to a lesser extent, Merck).

We will keep you posted, but my earlier prediction (November 2011) that this market belongs to Vertex until at least 2016, looks to be dead on. I'm not quite ready to say, definitively, that Gilead overpaid, but it sure looks like it, given today's news.

Marilyn Mann Points Us To New, Detailed Post-Hoc Vioxx® Data Analysis

2012-02-17T08:56:00.016-05:00

An abiding and constant friend of this blog has pointed us to yet another Merck-related story we missed, when it originally came out. So, we are belatedly highlighting it here, with sincere thanks to Marilyn Mann.

A blogger who studies math has spent some time corroborating one of the Vioxx^® case plaintiffs' expert data-analysis -- assembled largely from the trial work on the US Vioxx cases. Do go read it all, but here is a bit:

. . . .Yesterday I caught a lecture at Columbia given by statistics professor David Madigan, who explained to us the story of Vioxx and Merck. It’s fascinating and I was lucky to get permission to retell it here.

Disclosure

Madigan has been a paid consultant to work on litigation against Merck. He doesn’t consider Merck to be an evil company by any means, and says it does lots of good by producing medicines for people. According to him, the following Vioxx story is “a line of work where they went astray”.

Yet Madigan’s own data strongly suggests that Merck was well aware of the fatalities resulting from Vioxx, a blockbuster drug that earned them $2.4b in 2003, the year before it “voluntarily” pulled it from the market in September 2004. What you will read below shows that the company set up standard data protection and analysis plans which they later either revoked or didn’t follow through with, they gave the FDA misleading statistics to trick them into thinking the drug was safe, and set up a biased filter on an Alzheimer’s patient study to make the results look better. They hoodwinked the FDA and the New England Journal of Medicine and took advantage of the public trust which ultimately caused the deaths of thousands of people.

The data for this talk came from published papers, internal Merck documents that he saw through the litigation process, FDA documents, and SAS files with primary data coming from Merck’s clinical trials. So not all of the numbers I will state below can be corroborated, unfortunately, due to the fact that this data is not all publicly available. This is particularly outrageous considering the repercussions that this data represents to the public. . . .

As I say, it is well worth the 15 minutes or so it will take to digest it all. For those interested, here is a similar, September 2011 post on the L'Affair Vioxx, also courtesy of the same friend of the blog.

Jon Secada Joins Natalie Cole, And Gregg Allman: "Tune In To Hep C" Campaign

2012-02-16T09:48:00.011-05:00

Both Vertex and Merck -- makers of cutting-edge Hep C drugs -- are sponsors of this 501(c)(3). The "Tune In" campaign uses recording artists -- and their music -- to raise Hep C awareness, globally. Here is a bit of Jon's story (modified small image of Jon, at right, courtesy the foundation) -- but go listen about it all, and read it all, at the foundation site:

. . . .My father, José, passed away in 2011 from cirrhosis of the liver. It was the result of a complication from having chronic hepatitis C infection that went untreated. Although he had been diagnosed for years, he never gave his chronic hepatitis C the attention it required and did not follow up with his doctor promptly. He didn't tell me about his diagnosis for more than a decade. My father did not understand the potential consequences of chronic hepatitis C and it cost him, and our family, dearly.

I wish I could have done more to help my father, and I wish I had known more about the disease. That's why I'm sharing my family's personal story with others.

I believe my father was living with chronic hepatitis C as far back as the 1970s when he left Cuba. He periodically had health issues, but didn't get diagnosed until the 1980s. He never really dealt with the fact that he was living with this potentially serious disease and he waited too long to do something about it. . . .

I applaud all of pharma's efforts here -- this disease is now effectively curable -- in most cases. We need to begin to do just that -- cure all those we can. And like José's story, the first step is discovery -- as it so often goes undetected, for decades. Go get tested.

CFO Kellogg To Discuss Brazil JV; New Glaucoma FDA Approval -- At Leerink Swann Conference This Morning

2012-02-15T09:33:00.011-05:00

It seems likely that topics for today's prepared remarks will include the just-announced JV in Brazil, and the FDA approval of Zioptan™, for glaucoma. What else will Peter Kellogg discuss? Probably nothing new and material, but you might want to tune in at 11 a.m. Eastern, to be sure (you'll need to leave a working e-mail address, and a name to do so):

. . . .Merck, known as MSD outside the United States and Canada, announced today that Peter N. Kellogg, Merck's chief financial officer is scheduled to present at the Leerink Swann 2012 Global Healthcare Conference in New York City on Feb. 15, at 11:00 a.m. EST. Investors, analysts, members of the media and the general public are invited to listen to a live audio webcast of the presentation. . . .

I'll catch the replay, as I am busy at that time, but will post anything significant. It would seem unlikely there would be such a development, unless he decides to describe the terms of the Cobb v. Merck settlement.

"Mediation Day" Results In Settlement Of Cobb v. Merck -- ENHANCE ERISA Class Action

2012-02-14T18:17:00.010-05:00

Back on January 18, 2012, I mentioned that yesterday would be "mediation day" -- on the ERISA federal class action related to the ENHANCE disclosure delays.

As a Valentine's Day present, we just learned that Merck's trial counsel has filed a letter with the court this afternoon, indicating that -- subject to the approval of Merck's board of directors -- an agreement has been reached to settle the ERISA matters. In short, the mediation day. . . worked. As I suggested back then:

. . . .I do think it a sign of emerging wisdom on Mr. Frazier's part -- that he no longer seeks to litigate these claims (recall his directly contrary stance, as General Counsel, on the Vioxx^® claims). First, in my estimation, there is arguable merit to each of them -- and second, even if one believes there is not -- it is high time to put the ENHANCE matter in Whitehouse Station's rear-view mirror, and permanently so. Little might be gained, even in a complete victory, here -- and each time a court date is scheduled, a rehash of the facts will likely run in the popular press. Just no longer worth it. . . .

When the specific terms of the settlement are made public, we will let you know -- for now, here is the letter from Merck's counsel (a one page PDF file).

"That's Some Box Of Chocolates!" -- Mr. Obama Just Took Pharma's $80 Billion "Voluntary" Offer. . . And Doubled It

2012-02-14T09:16:00.023-05:00

Regular readers may well recall that, back in June of 2009, I said the $80 billion that multinational pharmaceutical manufacturers had agreed to kick in -- toward rebates for the health care reform package -- was a nice start, but only a start.

The President's new 2012 budget makes that clear.

While Mr. Obama may not ultimately get the entirety of his nearly doubled ($156 billion) pharma rebate amount in his budgetary request, from Congress, here -- it is likely that he will get a goodly chunk of it.

My best guess is that the number will end up around $130 billion, when all the shouting and moaning is over. In any event, here is Ed's fine take on it all, over at Pharmalot -- and just a bit of that (do go read it all!):

. . . .The response was swift. In a statement, PhRMA ceo John Castellini lambasted most everything and warned that the “proposed mandatory rebates in Medicare Part D are a short-sighted proposition that could destabilize the program and threaten hundreds of thousands of American jobs… This is not an investment in America’s future and these proposals should not be considered.”

Drugmakers are being asked to provide $156 billion in discounts over the next decade as part of a proposal to save $362 billion. Pharma, you may recall, agreed to provide $80 billion in discounts and rebates under the 2010 health-care law. And brand-name drugmakers currently provide rebates of up to 15 percent for Medicaid, but the White House wants to cover the so-called dual eligibles, or about 9 million seniors who qualify for both programs. . . .

Meanwhile, the White House noted that the FDA budget would total $4.49 billion for the year beginning October 1, which would amount to a 17 percent boost, reflecting increased user fees, in particular. These include a new user fee totaling $299 million to support generics and another $20 million for biosimilars. Over the past five years, about a third of FDA funding was generated by industry fees, but this would increase to 45 percent in the proposed budget. . . .

Do stay tuned, here -- as the proverbial fat lady isn't even clearing her throat, just yet. It is certain, though, that Merck will pay more than the perhaps $140 million a year I had earlier predicted, now. I'll update as developments warrant.

Merck's Good News Monday -- Zioptan™ (Tafluprost, Ophthalmic Solution) Approved

2012-02-13T11:12:00.013-05:00

FDA has approved Merck's newest glaucoma treatment, per a Whitehouse Station press release:

. . . .Merck, known as MSD outside the United States and Canada, announced today that the U.S. Food and Drug Administration (FDA) has approved Zioptan™ (tafluprost ophthalmic solution) 0.0015%, the first preservative-free prostaglandin analog ophthalmic solution. Zioptan (pronounced zye-OP-tan) is approved for reducing elevated intraocular pressure (IOP) in patients with open-angle glaucoma (OAG) or ocular hypertension. Open-angle glaucoma is the most common form of glaucoma, while ocular hypertension is a condition characterized by an increase in pressure inside the eye.

"Prostaglandin analogs are often used as a first line of treatment to lower intraocular pressure in patients with open-angle glaucoma. The approval of Zioptan will provide a new, effective option to lower IOP," said George L. Spaeth, M.D., Wills Eye Institute, Philadelphia, "I anticipate using Zioptan in many of these patients in my practice."

Zioptan may gradually change eyelashes and vellus hair in the treated eye. These changes include increased length, color, thickness, shape and number of lashes. Eyelash changes are usually reversible upon discontinuation of treatment.

The FDA approval of Zioptan was based on efficacy and safety results from five controlled clinical studies of up to two years in 905 patients. Both preservative-containing and preservative-free formulations of tafluprost were used in these clinical studies.

Zioptan was shown to have powerful IOP-lowering effects. In clinical studies of up to two years in duration, Zioptan, dosed once-daily in the evening lowered IOP at 3 and 6 months by 6-8 mmHg and 5-8 mmHg respectively, from a baseline pressure of 23-26 mmHg (mmHg = millimeters of mercury, a measurement of fluid pressure in the eye). . . .

Good news -- but do see the side-effects/risk information, for prospective patients -- and do talk to your doctor. [This site is in no manner affiliated with the doctor(s) quoted, nor Merck itself. End, FDA disclaimer.]

Of Merck -- My "Told Ya' So!" Moment: IMPROVE-IT Likely Comes In 2014 -- Morgan Stanley's Analyst Report

2012-02-13T08:49:00.015-05:00

I quote this morning from Benzinga's wire stories -- which, in turn reports on an updated Morgan Stanley analyst outlook:

. . . .Morgan Stanley says, "We raise our PT on MRK from $34 to $37, based on extending our model through 2020 and pushing IMPROVE-IT-driven Vytorin cliff from 2013 to 2014. We maintain 60% odds that IMPROVE-IT fails to show Vytorin is better than Zocor. . . ."

Do go read it all, but as you can tell from my left margin graphic, I've long held (since 2008) that the effects of IMPROVE-IT won't be known until 2014 -- that is 687 days, 58 minutes and 10 seconds from the moment I write this(!).

With Whitehouse Station lately saying openly that it will get an interim look at the 75 percent of events mark (strokes, cardiac events, etc.), Wall Street seems to be betting that the 75 percent of events data will be inconclusive (as to outcome benefits) -- so, Merck will need to finish the study, and run it until all events are known. And even then, sometime in 2014, it may well be that no statistically significant outcome benefit is seen. In fact, Morgan Stanley puts the odds of that "ultimate null result" outcome at 60 percent.

So it goes.

When Did Merck Delete The Wavy, Windswept Hair From The Propecia® Logo?

2012-02-12T16:54:00.021-05:00

When I wrote late last week about the removal of the content from Merck's Propecia^® website, for male pattern baldness, I didn't notice that the logo had been revamped.

Look closely at the "P" in Propecia -- old and new, at right.

No more implication that the diluted-dose prostate drug would grow a full head of wavy, windblown hair, on the top of a balding man's scalp. Nope. Does anyone out there know -- when, exactly, Merck revamped the "P" in the logo? Let me know, in the comments.

It makes sense, in any event, if the FDA is getting ready to greatly revamp the label, or if Merck is considering pulling the drug altogether.

. . . .Thank you for visiting propecia.com.

This Web site is not currently available.

Click here for: Prescribing Information

Click here for: Patient Product Information

For more information or to enroll in the PROPECIA—Persistence Program, click here.

For more information about, or to download a refund request form for the PROPECIA Promise Program, click here. . . .

I strongly suspect there will be a fairly significant Propecia announcement -- and fairly soon.

We shall see.

The Full Amended ENHANCE-Era Putative Securities Class Action Complaint: 234 Pages Of PDF Goodness

2012-02-10T14:19:00.012-05:00

Since the opinion allowing the same was entered two days ago, the plaintiffs have now filed the "as newly amended" complaint. It weighs in at 234 pages. Paragraphs 356 and 357 were the last two that the defense was trying to prevent being added. The court said otherwise, so now we have the full complaint as an 890 Kb PDF file. And just one bit, here:

. . . .240. Also on January 24, 2008, Senator Charles Grassley, ranking member of the Senate Committee on Finance, opened his own probe into Merck’s and S-P’s conduct, sending a letter to Merck’s CEO, Richard Clark, and to S-P’s CEO, Fred Hassan, requesting documents and the answers to questions regarding the delay in releasing the results of ENHANCE. Senator Grassley wrote that “there is no apparent gain in health benefits from using Vytorin over the much cheaper generic statin, simvastatin” but the Companies had the study results since April 2006, more than 20 months before releasing them. Senator Grassley also wrote to ACC President James Dove, AHA CEO M. Cass Wheeler, and SEC Chairman Christopher Cox to express his concerns about the extraordinary delay in releasing the ENHANCE study results. . . .

My take: This one is simply going to have to settle (given that personal liability is at stake for the legacy Schering-Plough, and legacy Merck, officers and directors, from that era) -- and it is likely to settle for boxcar-style numbers.

Merck's Victrelis® (boceprevir) -- FDA Drug Safety Communication -- Drug Interaction

2012-02-09T21:17:00.014-05:00

An anonymous commenter has very helpfully pointed us to a WSJ blurb -- but I've decided to run the entire FDA communication, since it involves issues of patient safety, and it is not uncommon to find Hep C co-infection in HIV-positive patient populations. Without additional introduction, then (more general FDA communication):

. . . .AUDIENCE: Infectious Disease, Pharmacy

ISSUE: FDA notified healthcare professionals and patients that drug interactions between the hepatitis C virus (HCV) protease inhibitor Victrelis^® (boceprevir) and certain ritonavir-boosted human immunodeficiency virus (HIV) protease inhibitors (atazanavir, lopinavir, darunavir) can potentially reduce the effectiveness of these medicines when they are used together.

A drug interaction study showed that taking boceprevir (Victrelis) with ritonavir (Norvir) in combination with atazanavir (Reyataz) or darunavir (Prezista), or with Kaletra (lopinavir/ritonavir) reduced the blood levels of the HIV medicines and boceprevir in the body (see Data Summary below). FDA will be updating the Victrelis drug label to include information about these drug interactions.

BACKGROUND: Victrelis is a hepatitis C virus (HCV) protease inhibitor used with the medicines peginterferon alfa and ribavirin to treat chronic (long-lasting) hepatitis C infection in adults. HIV protease inhibitors are a class of anti-viral drugs used to treat HIV infection. Ritonavir is an HIV protease inhibitor used to “boost” other HIV protease inhibitors, increasing their levels in the blood and making them more effective.

RECOMMENDATION: Patients should not stop taking any of their medicines without talking to their healthcare professional. Patients should contact their healthcare professional if they have any questions or concerns.

Healthcare professionals who have started patients infected with both chronic HCV and HIV on Victrelis and antiretroviral therapy containing a ritonavir-boosted protease inhibitor should closely monitor patients for HCV treatment response and for potential HCV and HIV virologic rebound.

Healthcare professionals and patients are encouraged to report adverse events or side effects related to the use of these products to the FDA's MedWatch Safety Information and Adverse Event Reporting Program. . . .

This will only widen the revenue/market-share gulf between Victrelis^® and Incivek^®, in my opinion, to Merck's material detriment.

Dr. Shenk Leaves Merck Board -- To Found New Antiviral Therapies Company

2012-02-09T17:56:00.007-05:00

Dr. Shenk intends to "commercialize discoveries made in his Princeton University laboratory in the area of antiviral therapeutics," according to published reports -- and since these would likely compete with Merck's vaccine businesses, he has rightly decided to step down. Thus, from last year's Merck proxy statement:

. . . .Thomas E. Shenk, Ph.D., Age — 65, Elkins Professor, Department of Molecular Biology, Princeton University since 1984. Dr. Shenk was also the Chairman from 1996 to 2004.

Director, Fox Chase Cancer Center since December 2009; Fellow, American Academy of Arts and Sciences; Member, American Academy of Microbiology and National Academy of Sciences and its Institute of Medicine. Dr. Shenk was also a director of Cell Genesys, Inc. from 2001 to 2009 (biotechnology company), CV Therapeutics, Inc. from 2004 to 2009 (biotechnology company) and Merck Sharp & Dohme Corp. (formerly known as Merck & Co., Inc.) from 2001 to November 2009. . . .

So it goes.

Merck Pulls Its Propecia® Web-Content

2012-02-09T10:10:00.011-05:00

I won't engage in the speculation that the plaintiffs' bar is offering, here -- but I will note that Merck may need to revise its labeling for Propecia^® (Finasteride), according to FDA sources. Thus, removing some of the positive statements (relative to male pattern baldness) is a wise move. The rub is, though, that to remove those statements without updating the side-effects, and risks sections would be odd, indeed (and perhaps frowned upon by FDA). So -- my guess is that it was thought to be safer to simply disable the web-content (see image at right -- click to enlarge).

Sourced out of Baltimore, here is a bit from one of the more speculative, sensationalistic guesses -- as to why this has occured.

. . . .Amid growing medical evidence that its hair growth drug causes. . . [various] side effects, Merck & Co. has pulled Propecia^® content from the company’s website. (www.propecia.com)

Merck offered no explanation for the unusual move. . . .

In any event, I will keep one hairy eyeball on this one, for the readership.

ENHANCE-Era Securities Plaintiffs Allowed To Plead New December 6, 2006 Vytorin 2007 Guidance Claim: Court Opinion

2012-02-08T12:59:00.010-05:00

Two new paragraphs -- numbered 356 and 357 -- which point to allegedly material, knowing falsehoods in a December 6, 2006 legacy Schering-Plough guidance press release, and accompanying statements, related to 2007 revenue projections for Vytorin and Zetia, have been allowed by the New Jersey federal District Courts. Here is U.S. Magistrate Dickson's just-entered opinion (an eight-page PDF file). Note that this is the same set of suits that are based on up to eight confidential witnesses, each of whom were -- at the time -- employees of legacy Schering-Plough.

This latest federal District Court opinion will strengthen the plaintiffs' hand in settlement negotiations significantly.

Merck Sponsors PBS Black History Program On Pulitzer-Winning Book

2012-02-08T08:56:00.009-05:00

I whole-heartedly applaud Merck's visionary financial support of the production of this documentary. The program relies heavily, for its visuals and narrative, upon the Pulitzer-prize winning book of the same name -- do go read all about it, and watch selected clips, at the PBS.org site dedicated to promoting it:

. . . .Slavery by Another Name is a 90-minute documentary that challenges one of Americans’ most cherished assumptions: the belief that slavery in this country ended with the Emancipation Proclamation. The film tells how even as chattel slavery came to an end in the South in 1865, thousands of African Americans were pulled back into forced labor with shocking force and brutality. It was a system in which men, often guilty of no crime at all, were arrested, compelled to work without pay, repeatedly bought and sold, and coerced to do the bidding of masters. Tolerated by both the North and South, forced labor lasted well into the 20th century. . . .

For most Americans this is entirely new history. Slavery by Another Name gives voice to the largely forgotten victims and perpetrators of forced labor and features their descendants living today. . . .

Check your local listings, for the evening of Monday, February 13, 2012 -- and do watch.

Analysts' Puzzling Merck Vorapaxar Reaction: Did They "Forget" That 2010 $1.7 Billion Write-Off?

2012-02-07T14:13:00.017-05:00

Peter Loftus is covering a head-scratcher today. While the latest top-line news on Merck's (actually legacy Schering-Plough's) vorapaxar studies doesn't represent the absolute worst case scenario, it is nearly unfathomable that Merck might now seek FDA approval for the candidate -- with a label indicating that it is only for patients with no history of strokes.

Seriously, folks -- this is a candidate that was previously shown to triple bleeding risk, and in a large study, to boot.

Think about that for a minute -- Merck already wrote off $1.7 billion, understanding that the risk of brain-bleeds would doom its prescribing chances. Will a US-licensed-doctor really write a scrip for it, saying "Well, you haven't had a stroke, so your risk of blood clots in the brain from vorapaxar is smaller than other patients. . ."?

C'mon -- given the rather-alarming data on bleed risks (in late 2010), and the presently-available drug alternatives, that simply amounts to a medical-malpractice claim, albeit "still on the hoof."

In addition, it might yet take another $100 million of new money, from Whitehouse Station, to win that "unicorn's" approval -- for a drug with essentially no realistic US market narrative.

Two words: No way. And. No how. [Even so, Merck's stock is rising slightly, on the NYSE, in a generally flat market today.]

Here is a bit of the Pete Loftus by-lined story -- do go read it all (as he is the most experienced of the writers covering it today):

. . . .[A]fter the bleeding risk was observed last year, vorapaxar was discontinued in people with a history of stroke. Patients with a history of heart attack or peripheral artery disease -- about 75% of enrolled patients -- continued to receive vorapaxar.

Tuesday, Merck said the risk of bleeding inside the skull was lower among vorapaxar users with no history of stroke.

This raises the possibility that vorapaxar could get regulatory approval for use in patients with no history of stroke.

ISI Group analyst Mark Schoenebaum said regulatory approval of vorapaxar in this patient population would represent upside from his current forecast of zero sales for vorapaxar. But he discouraged investors from assuming that this would materialize, saying more will be known when full data are presented in March. . . .

It will astound me if Chairman Ken Frazier decides to spend another perhaps $100 million to seek such a narrow label -- and aim for a non-existent market. Even Forbes' Matt Herper is suggesting (by inference) that the $1.7 billion 2010 write-off might have been premature. I am all but certain it wasn't. And in March, we will know with certainty -- as the full study results will be available to the ordinary investing public. For today, though, I's say beware the desperation narratives out of Sanford Bernstein & Co.

A Difficult Balance: How Much Drug Information Should Be "Trade Secret"?

2012-02-07T11:30:00.021-05:00

I am very late in pointing the readership to this fine article by Ed Silverman over at Pharmalot, but it asks a very important -- and difficult -- question. And, as luck would have it, the question involves Merck's Canadian operations.

Do go straight over and read Ed's piece, from stem to stern, but here is a bit of the flavor:

. . . .In a ruling that has repercussions for the pharmaceutical industry, the Supreme Court of Canada late last week issued what is being called a landmark ruling on what constitutes a corporate trade secret under the Access to Information Act. The decision involved a decade-old dispute between Merck and Health Canada over the release of information about the Singular asthma drug.

The 6-to-3 decision is seen as a victory for advocates of open government and is expected to stiffen requirements for companies that rely on exemptions to the law in order to block the release of documents they argue contain confidential or sensitive business information, otherwise known as trade secrets. . . .

[Quoting the court, now:]". . .It is particularly important to allow broad access to this sort of information in the context of the pharmaceutical industry. As the respondent points out, Health Canada systematically posts on its website reports about undesirable effects of all drugs sold in Canada. In addition, the Food and Drug Regulations require pharmaceutical companies to report adverse reactions of their drugs to Health Canada. Information about those reactions is publicly available. It is therefore difficult to see how release of such reports through an access to information request could result in harm to the third party. . . ."

As I say, it is a great, and rapidly-evolving debate: how much of the drug-innovator's "know how", processes and plans should be protectible (i.e., exempt for public release -- which of course means not available to competitors, including generic reformulators) -- balanced against the prescriber's (and public's) need to know exactly how the drug works (to the extent such a thing is knowable, at all) -- and to know what might be best for a given patient.

We should also be well-aware -- in the web-enabled age -- that whichever local jurisdiction ultimately sets the lowest bar to release of putatively "secret" drug information. . . in effect, sets the standard for the entire globe. And that is a daunting thought -- as information made available in Canada flies, without friction, and almost instantly, to India (the home to many generic manufacturers), for example.

Do go read all about it. Kudos to Ed -- for noticing it.

MRL To File Insomnia Candidate Suvorexant (MK-4305) NDA With FDA In 2012

2012-02-06T10:16:00.014-05:00

This is Exhibit A-type proof that drug development takes time -- and money. Over eight years in the making, and perhaps $400 million in expenses so far -- but still a very good sign, out of Whitehouse Station, this morning:

. . . .The two pivotal Phase III efficacy trials for suvorexant have been completed and, based on the positive results of these studies, Merck plans to file a New Drug Application (NDA) for suvorexant with the U.S. Food and Drug Administration (FDA) in 2012.

Both Phase III studies were multicenter, randomized, double-blind, placebo-controlled clinical trials that evaluated suvorexant compared to placebo in adult patients ages 18 years and older. The primary endpoint was change from baseline in subjective total sleep time and time to sleep onset, wake time after persistent sleep onset, and latency to onset of persistent sleep at one and three months. Merck plans to submit these data for presentation at major medical meetings later this year. . . .

"Suvorexant selectively targets an important pathway involved in helping to promote sleep. . . We are enthusiastic about the potential of this investigational medicine, and look forward to sharing the results from these studies with the medical community. . . ."

My hat is off, to MRL -- and the fine team led by Dr. John Renger (pictured above right -- original image of Dr. Renger courtesy the New Jersey Star Ledger). Kudos!

While perhaps 70 million Americans report trouble sleeping, only about 15 percent of those report chronic trouble -- so about $2.7 billion of sleep meds are now sold each year -- mostly low-cost generic versions of established drugs. A novel compound that would not be easily abused would be a pretty big deal, according to analysts. And MK-4305 is novel, and not easily abused. This could be a very nice mid-to-late 2013 or early-2014 revenue enhancer for Whitehouse Station. Would it ever break the $1 billion a year mark? Who knows, but if it were to do so, that would come closer to 2020, or more than eight years from now.

One Picture | One Thousand Words.

2012-02-05T13:59:00.007-05:00

Updated for 2011 (full launch year actual) sales revenue -- Merck's Victrelis^® (a supposed Ex-CEO Fred Hassan/legacy Schering-Plough "star") is getting trounced in the US marketplace by much-smaller Vertex's Incivek^® -- and the trend will not reverse, despite Merck's use of third-party marketing muscle (Roche):

Ouch.

Merck's Janumet® XR -- Still Just Chasing BMS/A-Z's Kombiglyze® XR

2012-02-04T10:56:00.022-05:00

As I first mentioned back in November 2010 (when Merck's stock took a one-day header on the NYSE, as extended release Kombiglyze^® XR won FDA approval), Merck has been -- and is still -- playing catch-up here. [See my Janumet^® XR FDA submission day post, for background, here.]

Yesterday's FDA approval -- for a once a day version of Janumet is good news for Whitehouse Station, but it is facing an entrenched competitor, with over a year and a quarter's lead in the market -- in Kombiglyze.

Here is a bit of the Boston.com piece -- do go read it all (H/t to Ed, at Pharmalot):

. . . .Drugmaker Merck & Co Inc. said Thursday it received U.S. approval for an extended-release version of its diabetes drug Janumet designed to be taken once a day, instead of twice a day.

The Food and Drug Administration approved Janumet XR to help patients with type 2 diabetes control their blood sugar levels, in combination with diet and exercise, the company said in a statement. Janumet is a combination pill that includes sitagliptin, the primary ingredient in the company’s drug Januvia, with an older diabetes drug, metformin. . . .

Again, mildly nice news -- just nothing that could possibly move the needle.

Specifically, absent some very big upside surprise, Merck's early 2012 outlook, offered on the earnings call Thursday morning all but conceded that 2012 would be a flat (dead money) year for the world's No. 4 drugmaker. [Oh. Yes. As of year end 2011, Merck lost the No. 2 spot, as Roche lept past Pfizer, to take No. 1, and Pfizer slid to No. 2 -- based on latest-projected competitor global revenue figures.]

So it goes.

Vertex Is A 84-16 Split Winner Over Merck -- In Hep C: Q4 2011

2012-02-02T18:21:00.006-05:00

I'll do an updated graphic later tonight [done!] (the one at right is a projected 2011 -- we now have actuals), but Vertex also announced its Q4 2011 results this morning, and. . . Q4 2011 Incivek sales were $456.8 million. That's better than the 80-20 split, I earlier predicted.

Merck's Victrelis sold just $87 million in Q4 2011. That makes the share split for Q4 about 84 percent for Vertex; 16 percent for Merck. Ouch.

The Vertex presser:

. . . .Net Product Revenues from INCIVEK:

Net product revenues for INCIVEK for the fourth quarter of 2011 were $456.8 million. Vertex reported $419.6 million in net product revenues for INCIVEK in the third quarter of 2011. . . .

Recall that Merck reported only $53 million in Q3 2011 sales for Victrelis. Thus, life to date, the split is running at about 85 Vertex, 15 Merck. And that is a legacy Hassan "star"?! Oops.

Whitehouse Station Can't Save Its Way To Greatness

2012-02-02T13:35:00.024-05:00

An anonymous commenter just relayed this, after this morning's earnings announcement:

. . . .Anonymous said...

The lead story on our [Merck's] intranet site is how office trash pickup is going to two days a week. The cost cutting has gotten to absolute absurdity but I suppose it's one way to beat the street. . . .

February 2, 2012 12:53 PM . . .

Anonymous [also] said...

After speaking to coworkers in other sites (West Point, PA buildings) it turns out this has been the norm for them for at least two years! Further, their desk side trash is collected during office hours so they are treated to the rumbling of a large dumpster through the cube farm while on teleconferences or in meetings.

They have self-regulated to throw wet trash such as lunch leftovers into the break area bins but say it is not uncommon for empty drink containers to pile high in cube cans which are left outside the cube doorways because of an alleged rule about contractors entering cube or office spaces. I bet the bouquet near those break areas isn't very pleasant, either.

It is incredible.

February 2, 2012 2:00 PM. . . .

Oh. My. Goodness.

While it may seem small -- this sort of "nickel & diming" should be of concern to Wall Street.

I'd note that Merck is showing a 47 percent down-bubble in R&D spending in the fourth quarter of 2011. One other way to look at that, is to notice that corporate overhead was rising more than anticipated, in the same period -- so Merck delayed or deferred some R&D project expenditures (some of which are truly "mission critical"). Not really a great approach. More importantly, it simply will not be sustainable -- at least not in order to beat Street expectations at the EPS line, longer term.

Some have written about the "lightness" of Q4 2011 global consolidated sales revenue. Although not fully-determinable until the SEC Form 10-K files, it would appear that a large portion of the smaller Q4 sales revenue is actually the result of a strengthening US dollar. Jami Rubin, of Goldman Sachs (at about 38:20 in the webcast) asked pointedly about this -- and mostly got a dodge, from CFO Peter Kellogg. She went so far as to suggest that if the euro stays where it is today, the revenue and EPS would come in at the lower end of the range for 2012. CFO Kellogg did not disagree with this.

In fact, with about 60 percent of all of Merck's sales revenue (post the Schering-Plough bust-up) now coming from outside the US, the stronger dollar would have chewed away about half of the expected consensus sales growth, by my back-of-the-envelope estimate, in fourth quarter 2011. So, Peter Kellogg is no longer offering a currency-adjusted forward view on the sales-line, for 2012.

Interestingly, Pfizer reported much the same, just a few days ago. Peter Kellogg did say on the call that if currencies remain where they are, there will be a 2 percent headwind at the revenue line (and that, too, tracks the rough estimates Pfizer made, just a few days ago).

Finally, on the webcast, management mentioned that Merck expects pricing pressures to drive a negative mid-single digit percentage effect at the sales line in 2012. That, with 2012 patent expiries on Singulair, currency headwinds and the ongoing decline of Vytorin sales in the US, it is easy to understand why Wall Street is taking some of the recent run up in the shares back. Merck is now off about 1 percent -- near $38.15 on the NYSE, on pretty heavy volume.

[Post Scriptum: While essentially dodging the issue, management didn't offer a whole lot of uspside certainty, even if IMPROVE-IT were to show a strong benefit in outcomes. No surprise, but that affirms Jami Rubin's comment on January 7, 2012 -- that a good outcome won't help much, but a bad one. . . will hurt more.] Ouch.

Merck Guides Slightly Lower On 2012 EPS; Touts Long-Delayed Schering-Plough Drug Candidates

2012-02-02T09:12:00.025-05:00

We shall see, but the idea that Bridion and Tredaptive are going to be headlines for 2012 is a little disconcerting. ~~Both~~ One of these, Bridion, was among Fred's (Ex-Schering-Plough CEO Fred Hassan's, that is) "Five Stars", back in late 2008-2009; both were given "please do over" reviews at FDA -- Tredaptive was previously called Cordaptive, and was an old-Merck Frosst candidate, a commenter correctly notes. [More precisely, additional study data, as to efficacy and risk profiles was required.]

Now, New Merck expects to get them through FDA in 2012-2013. I just can't imagine that, even if approved, these two will move the needle much on EPS at Whitehouse Station. They just won't be big enough.

On the sunnier side, Merck did beat the Non-GAAP 2011 consensus EPS by two pennies.

However, of additional concern is that Merck has placed its EPS forecast range for full-year 2012 in the lower middle of the bracket, compared to consensus guesses. That is to say, Merck's plus-or-minus $0.05 range around 2012 EPS brackets two cents lower than consensus. This may be refined, and adjusted upward in coming quarters, but there is no promise of that. All in all, a ho-hum year-end 2011 announcement. Per Bloomberg

. . . .The company said it expects to seek approvals of five new medicines between 2012 and 2013. They include two products that have been delayed for years by regulators: Bridion, to reverse the effects of anesthesia, and Tredaptive, a form of niacin meant to raise "good" HDL cholesterol without causing facial flushing.

Merck said it expects full-year 2012 earnings of $3.75 to $3.85 per share, excluding special items. Analysts, on average, expect $3.83 per share. The forecast reflects earnings 0.5 percent lower to 2.1 percent higher than those seen in 2011. . . .

Merck has opened off ~~about 42 cents~~ -- now off $0.50, or almost 1.5 percent -- on the NYSE, this morning.

Merck: 65 Animal Health Jobs Leaving Boxmeer, NL -- Coming To Summit, NJ Facilities?

2012-02-01T09:13:00.016-05:00

Thanks to Pharmalot, we learned that the "other shoe" has now fallen on the Dutch animal health facilities previously operated by the legacy Schering-Plough Intervet unit.

Here is a bit -- do go read it all, at NJ.com:

. . . .The plan is expected to impact about 65 jobs at the animal health site in Boxmeer, a town in the southern Netherlands.

The Boxmeer site, which has a total of 1,700 employees, will continue to have research and manufacturing operations, Merck said.

Merck Animal Health formerly operated as Intervet. . . .

This may well be some additional fallout from the scrapping of the Merial/Intervet Sanofi-Aventis deal. Even so, it does appear to be a scaled-down sub-part of the overall 2010 New Merck Dutch Oss/Organon closure plans -- plans which resulted in "relay strikes" in front of the Oss governmental offices, by the affected legacy Organon workers -- for several months, back then. Even the Oss plan was ultimately scaled back -- due to local Dutch grassroots pressure.

It is entirely unclear whether the affected Dutch employees will uproot their families to come live in New Jersey. Should they do so, there will plainly be far less job security (and stepped-layoff protections, by a "works council" process), at law -- compared to the Dutch system (from which they would transition). In the end, my bet is that New Merck fills most of these jobs with local New Jersey people -- many likely previously laid off by legacy Schering-Plough Animal Health.

Time will tell.

"Answering One Question NOT Asked," Merck & JNJ End Up In L'Oreal Patent Suits

2012-01-31T08:25:00.031-05:00

I don't know whether to file this story under the law of "unintended consequences," or "collateral damage" -- but apparently, back when the three year-long sunscreen Lanham Act Battle Royale (between Neutrogena, a J&J brand, and Coppertone, a legacy Schering-Plough/Merck brand) was in high dungeon, an ex-Schering-Plough (now Merck) scientist, one Dr. Patricia Agin, submitted a sworn declaration, as part of Coppertone's case. I believe she was also deposed by the Neutrogena lawyers.

In her rather effusive declaration (quoted at the top of page 4 of the complaint), she explained that the process for stabilizing Coppertone sunscreen in ultraviolet radiation conditions (i.e., out in the sun) "is not, and was never patented by, exclusive to, or invented by, or created by Neutrogena. . . ."

True enough. It actually turns out that L'Oreal owns that patent.

It is in year 16 of its life, and it is a process patent, but L'Oreal of Paris owns it. And L'Oreal's patent lawyers allege that neither Coppertone, nor Neutrogena have a valid patent license from L'Oreal. Ouch. From the Bloomberg story -- a bit, and here is the complaint at law (link is a 7 page PDF file):

. . . .L’Oreal sued Merck & Co., the maker of Coppertone, and Johnson & Johnson, which owns Neutrogena Corp., for patent infringement in federal court in Wilmington, Delaware, on January 27, 2012. . . .

In dispute are parents 5,576,354, issued in November 1996, and 5,587,150, issued in December 1996. Both cover compounds used to block the skin’s exposure to ultraviolet-light damage. . . .

The "acts of infringement have caused and will continue to cause damage to L’Oreal," the Paris-based company said in court papers. L’Oreal claims it has patented a mixture of compounds that help stabilize its sunscreen. That mixture appears in so- called avobenzone sunscreens and uses the compound octocrylene, according to court papers.

Last year, L’Oreal earned 2.51 billion euros ($3.29 billion) on revenue of 20.3 billion euros, according to information compiled by Bloomberg. . . .

It may well turn out to be that both J&J and Merck have developed processes to stabilize their respective sunscreens with octocrylene, in ultraviolet conditions that do not in any way read on, or implicate the L'Oreal patents, but it is clear that the labels of each of their sunscreens list octocrylene as an ingredient.

And so -- let's call this one the "The Son of Sunscreen Battle Royale"! Should be entertaining.

We will keep you slathered in thick white gunk on this, no doubt.

21 CEOs Who Walked Away With More Than $100 MIllion: ABC News

2012-01-30T09:46:00.020-05:00

It is good to see that more and more main stream media outlets are making a more fullsome and realistic accounting of what Ex-CEO Fred Hassan's severance package was really worth, in equity values, to him. Recall that in late 2009, it was widely reported that he was "only getting" around $50 million to leave Schering-Plough, on merger day. [UPDATING NOTE FOR GRAPHIC, AT RIGHT: Add about $4.4 million for each additional dollar of Merck NYSE stock price, above the last SGP quoted NYSE price of $28.15, on merger day, November 3, 2009 -- and with Merck at around $38.50 on the NYSE this morning, the chart at right would yield. . . yep, about $220 to $225 million for Fred Hassan.]

While ABC still isn't fully valuing the equity (by my calcuations, Mr. Hassan carted off around $225 million -- which would place him at No. 4 or 5 on the list), it does peg his exit pay at just under $190 million -- which places him at No. 7, all-time.

Just a bit from the ABC article then -- do go read it all:

. . . .21 CEOs over $100 million

Company | CEO Name | Tenure | Total Payout

1. General Electric | John F. Welch Jr. | 1981-2001 | $417,361,902

2. Exxon Mobil Corp. | Lee R. Raymond | 1993-2005 | $320,599,861

3. UnitedHealth Group | William D. McGuire | 1991-2006 | $285,996,009

4. AT&T Edward E. Whitacre Jr. | 1990-2007 | $230,048,463

5. Home Depot Inc. | Robert L. Nardelli 2000-2007 | $223,290,123

6. North Fork Bank | John A. Kanas | 1977-2006 | $214,300,000

7. Merck & Co., Inc./Schering-Plough | Fred Hassan | 2003-2009 | $189,352,324

8. IBM | Louis V. Gerstner Jr. | 1993-2002 | $189,005,929

9. Pfizer Inc. | Hank A. McKinnell Jr. | 2001-2006 | $188,329,553

10. CVS Caremark Corp. | Thomas M. Ryan | 1998-2011 | $185,415,435

11. Gillette Co. | James M. Kilts | 2001-2005 | $164,532,192

12. Target Corp. | Robert J. Ulrich | 1994-2008 | $164,162,612

13. Merrill Lynch & Co. | E. Stanley O'Neal | 2002-2007 | $161,500,000

14. U.S. Bancorp | Jerry A. Grundhofer | 2001-2006 | $159,064,090

15. Omnicare, Inc. | Joel F. Gemunder | 2001-2010 | $146,001,476

16. Wachovia/South Trust | Wallace D. Malone Jr. | 1981-2004 | $125,292,818. . . .

Fred Hassan ahead of Louis Gerstner at IBM, and Stan O'Neal at Merrill Lynch? I am sorry, but that is. . . disgusting.

To be clear, I will never begrudge Jack Welch (No. 1) his walking pay -- for whatever else one might say about the man, he truly enhanced shareholder value at GE by orders of magnitude -- not just percentages. Hassan is precisely the opposite story -- a bridge troll, and one that required payment, to get a deal done -- i.e., to cross the bridge.

What Does Thursday Morning Portend? Merck's Q4 & Year-End 2011 Earnings Call

2012-01-30T09:03:00.014-05:00

Prior to market open this Thursday, Whitehouse Station will report fourth quarter 2011, and full-year 2011 financial results. Consensus estimates suggest Q4 EPS will come in at $0.95. Other large-cap pharmas reporting last week have just met expectations for 2011, and promised a slightly better 2012.

For his part, Chairman Ken Frazier -- at the Goldman Sachs unscripted event, in the first week of January 2012 -- suggested that 2012 would be a brighter year for Merck than 2011 was. Even so, I look for Mr. Frazier to tamp down expectations for the early part of 2012, at least until we get a sense of whether the nascent US recovery has legs, whether the euro crisis is pretty well on its way to ending, and whether the US Supreme Court upholds Mr. Obama's health care package, as an appropriate use of commerce clause, tax-levying and "necessary and proper" powers.

And so, I'd not look for any upside surprises near-term from Thursday's call.

Excellent Observation: From A Friend Of The Blog

2012-01-29T13:29:00.013-05:00

A close-follower of all things cholesterol management, Marilyn Mann (see her blog there), pointed out in my comment section that I missed an important sub-story this week, on the FDA-sanctioned label changes occasioned by the SHARP study. Whitehouse Station reported it as a net-positive, which I still think it is -- but there was no new indication for kidney disease sufferers. Here -- let's have Marilyn explain:

Marilyn Mann said. . . .

. . . .I was surprised that you didn't blog on the FDA's decision to turn down Merck's request for a new chronic kidney disease indication for Vytorin and for Zetia when prescribed with simvastatin.

The FDA did permit a revision to the Vytorin label (on pp. 27-28 of the label -- a large PDF file) that states the results of the SHARP trial, but without an indication, Merck won't be able to advertise the use of Vytorin for reducing the risk of cardiac events in CKD.

January 28, 2012 9:35 PM. . . .

Great point! My older background on the SHARP label application matters may be found here.

Merck's 2003 Medco Deal: Interesting (If Mistaken) "Short-Sighted" Divestiture Thesis

2012-01-27T09:42:00.024-05:00

While The Street's research (do go read it all -- beginning on page 3) is thoroughly-vetted, and well-sourced -- I don't buy the conclusion, primarily because the metrics examined, while accurately-reported, are. . . incomplete.

In short, I think Merck was right to divest Medco -- with my more complete explanation below the pull-quote:

. . . .It meant that by the time of the [Medco] spin, 63% of overall [Merck] revenue came from Medco. However, low Medco profit margins dragged on Merck's overall share pricess, leading to a radical shift in strategy.

After the spin, which gave shareholders one Medco share for every eight Merck shares, their stock prices and earnings abilities diverged. Medco's shares have gained over 500% since its Aug. 2003 initial public offering, while Merck's shares have fallen by nearly a quarter. As a result, even with Medco's subsequent stock gain, Merck shareholders have seen losses since the spin, when excluding dividend payments. . . .

Since the spin, Medco's sales are expected to have nearly doubled to $68.5 billion, while profits are expected to triple to $1.5 billion according to 2011 earnings estimates compiled by Bloomberg. Meanwhile, Merck sales have grown at the same rate, while profits have doubled, on the heels of big merger activity. . . .

[Then, for a variety of reasons,] Merck pulled the trigger on one of the biggest mergers in pharma history buying Schering-Plough for $41.3 billion in May 2009. . . .

However, with it came legal battles. In 2009, Merck and Schering-Plough settled a suit for cholesterol treatment Vytorin after allegations of withholding key clinical trial results. Merck also pleaded guilty to a criminal charge with the U.S. Department of Justice for its marketing of painkiller Vioxx before it was pulled in 2004.

In July 2011, Express Scripts announced a deal to buy Medco Health Solutions (MHS) for $29 billion in a deal to combine two of the largest pharmacy benefits managers in the U.S. However, the deal is facing antitrust scrutiny, which jeopardizes its outcome. . . .

All of the above is accurate, but the price performance disparity post-Merck's 2003 divestiture is, in my opinion, less a "short-sighted divestiture" example (the authors' thesis), and more a story about the overall decline of branded pharma margins, globally -- on the Merck side.

More directly, as the upper right graphic reminds us, and these stories (here, and here) document, the Medco relationship was fraught with conflicts of interest -- especially for a pure pharma with the visibility, scale and size of Merck. It ultimately put the company in the position of being a competitor to its customers. That will almost never work (longer term), and often leads to investigations, and scandals (as we've seen here).

A nice piece, just the same. Almost as if to undercut the authors' thesis, from their own concluding sentence on the topic (above), the ongoing anti-trust scrutiny of the pending Express Scripts/Medco tie-up would suggest that Merck was (again) right to hand this value package back to shareholders. Of course, "your mileage may vary" -- in fact, it probably does.