Tuesday, August 26, 2014

Now At Least Two Pfizer Pembro-Collaboration Projects Are Known. . .

This from that erstwhile gent Ed Silverman, over at Pharmalot (see below, but do go read it all).

Longer term, the race will be won by the company that gets approval in the heaviest burden cancers. But both BMS and Merck are lead pipe cinches to win approval -- and likely before year end 2014, for each.

. . . .The agreement comes days after Bristol-Myers Squibb Co. and Celgene Corp. said they agreed to collaborate on a clinical study for a treatment that would combine immunotherapy and chemotherapy to combat pancreatic, lung and breast cancers.

Pharmaceutical companies are jockeying for position in the rapidly growing cancer-treatment market. Immunotherapy, which uses immune systems to fight the disease, is driving much of the expansion.

Merck said in February that it had reached three separate agreements to collaborate on studies of pembrolizumab in in combination with therapies from Pfizer, Amgen Inc. and Incyte Corp. The company has sought to test the drug for effectiveness on a wide range of cancers.

The study announced Tuesday will test a combination of Merck's investigational antibody pembrolizumab and Pfizer's crizotinib, also known as the brand name Xalkori, which is indicated for the treatment of nonsmall-cell lung cancer. . . .

As ever, we will keep an eye on the BMS-generated nivolumab progression, which has been excellent -- outstanding, in fact -- as well. Most informed watchers grant the overall efficacy nod to BMS's candidate, to be fair.

Monday, August 25, 2014

Pre-Arranged Stock Sales By Merck Executives -- Pursuant To SEC Recognized Plans -- Mean Very Little. Yawn.

Okay -- like the others (most recently, two weeks ago -- by the Chairman & CEO), this is an algorithm trade. Mr. Schechter had pre-set this trade, likely via formulae, in my experienced guestimation.

His trade executed today, August 25, 2014.

. . . .Adam Schechter Pres. Global Human Health | 22,000 shares @ $59.69. . .

This thus means. . . Nothing. And speaking of meaning nothing -- today's Reuters' rumor piece -- about the possibility of an earlier than October 28 FDA approval date for pembrolizumab, seems to be much ado about nearly nothing. When it happens, we will all know. Same way with nivolumab. I can say that no FDA Advisory Committee date has been set; and in the same breath, I can say that in this case (under applicable FDA rules) FDA could approve it without an Advisory Committee vote. Now, be safe out there.

Friday, August 22, 2014

No Real Merck News -- Silent Friday.

Absent unusual circumstances, we will return Monday.

Thursday, August 21, 2014

Small PSA -- These Nine Fosamax® ONJ Plaintiffs Should Call Their Lawyers

It seems that several plaintiffs have "opted in" -- i.e., elected to accept -- the global Fosamax® ONJ settlement, but their paperwork is -- in various ways -- deficient (or, at least Merck so alleges).

So Merck would like the very able Judge John F. Keenan, sitting in the federal trial-level courthouses in Manhattan, to give them a period of time to cure, and then if they do not -- dismiss them without any payments, from the common settlement fund.

That process began in earnest, Tuesday. The affected plaintiffs are: (1) Claudette Williams, (2) Robin Swolley, (3) Susan Sloan, (4) Audrey Minzer, (5) Naheed Khan, (6) Lowell Howell, as Personal Representative for Mildred Robinson, Deceased, (7) Doris Hanke, (8) Susan Doyle, and (9) James Corbett, as Personal Representative for the Estate of Ivy Corbett. Do contact your counsel, one and all.

. . . .ORDER: On August 15, 2014, Merck served a motion for a new Lone Pine order, this one targeted at nine plaintiffs who initially opted into the global settlement but whose paperwork is allegedly deficient.

Counsel for the affected plaintiffs are directed to file a response indicating whether they oppose the motion by August 29, 2014.

Any reply by Merck must be filed by September 5, 2014.This Order should be entered on the docket of 06 MD 1789 as well as on the dockets of the individual cases listed in the attached table. (Responses due by 8/29/2014, Replies due by 9/5/2014.)

(Signed by Judge John F. Keenan on 8/19/2014). . . .

Separately (and perhaps immodestly -- I'll report that) overnight, the National Law Journal has picked up my scoop on the Incretin Mimetic MDL discovery/adverse event source documents spat. Safe travels all day, one and all, as well.

Wednesday, August 20, 2014

Incretin Mimetic Drugs MDL Wends Its Way Forward, In Southern California USDC

We will start to cover this bit of litigation more regularly now. It seems that over the course of the last year and a half, in the Southern District of California, in the federal courthouses, there have been various prodeedings in a multi-district litigation concerning the risks allegedly associated with so-called incretin mimetic drugs like Merck's Januvia®. [My March 2013 backgrounder. I still think the outcome (if any) in this litigation will not materially impact the franchises' sales revenue. On the other hand, various other developments may -- including certain provincial Canadian reimbursement machinations, and the appearance of India-sourced generics -- of the same class. So keep an eye on those narratives, as we will too.]

Back to the main topic here -- the litigation has progressed to the point that motions to compel the disclosure of adverse events documents (required to be collected by the manufacturers, and in certain circumstances, filed with FDA) are now pending.

The despositive hearing on those motions will occur at 2 PM PDT, in Los Angeles, on October 9, 2014 -- unless Merck and the other manufacturers agree to deliver the documents, without an order. We will check in again on the 26th, to collect, read and analyze the reply brief -- but here is the entire briefing schedule:

. . . .ORDER by Judge Battaglia, Set briefing schedule as to Motion to Compel Discovery of Adverse Event Source Documents and Databases.

Oppositions due by 8/26/2014

Replies due by 9/9/2014, no sur-replies will be filed.

Motion Hearing set for 10/9/2014 at 2:00 PM in Courtroom 3B before Judge Anthony J. Battaglia. . . .

As ever, we will keep a weather-eye on this, for the readership. Stay cool in the that southern heat, now.

Tuesday, August 19, 2014

UPDATE: The New Jersey Law Journal Is Running My Scoop

The MSM outlet -- New Jersey Law Journal -- adds a nice new level of detail, going into additional background on the motion, here. Do go read it all -- but below is a bit.

The article is not as clear as it could be in distinguishing the femur cases from the ONJ (and all other) ones. This motion applies only to the femur cases.

. . . .The court should order all remaining plaintiffs to show cause why their claims should not be dismissed on federal preemption grounds, in light of the court’s ruling in Glynn’s case, Merck said in its brief. Alternately, any remaining cases in which plaintiffs used the drug after the 2011 label revision should show cause why their claims should not be dismissed for reasons stated by the court in Gaynor’s case, Merck said.

Although Gaynor’s case was decided based on laws of the state of New York, where Gaynor resides, the ruling “is based on fundamental principles that all states recognize—most notably, that a plaintiff cannot prevail for failure to warn if the warning label at issue warned of the very injury she allegedly suffered,” Merck said in its brief.

Following ruling in Glynn’s case, Pisano granted Merck’s motion to dismiss roughly 650 cases involving alleged injuries occurring before Sept. 14, 2010 on preemption grounds. Merck said in its Aug. 15 brief that its prior motion was limited to that group of cases on the assumption that plaintiffs who claimed later injuries would base their claims on the contention that the revised warning label issued in January 2011 was inadequate. However, earlier this year, plaintiffs lawyers in the case indicated that “no plaintiff alleges that the January 2011 label was a proximate cause of his or her injury,” Merck said. . . .

We will -- of course -- watch this for the readership. There were about 1,280 femur cases still pending as of the end of Q2 2014, according to Merck's latest SEC filed Form 10-Q.

Monday, August 18, 2014

Merck Moves To Dismiss All Remaining Femur Fracture Fosamax® Cases -- Claiming Preemption/FDA Warning Label Adequacy

In the aftermath of the Supreme Court's Wyeth v. Levine decision, we will likely see more of this sort of argument. [And one of my many earlier 2014 backgrounders.]

Merck's lawyers -- as of last Friday -- formally moved to dismiss all remaining Fosamax® femur claims by suggesting that prior to 2011, Merck was prohibited from changing an older warning/FDA label, by then applicable law, without FDA's prior written approval. And it could not get FDA approval for the change, at the time. Then, over a year later, the FDA approved Merck's changes, and Merck made the changes -- essentially pre-empting all remaining warning claims, under the Supreme Court's reasoning (if not actual holding) in Levine. Here is the full 36 page PDF filing, from Merck's trial counsel.

What I imagine this leaves for the injured plaintiffs, should Merck prevail here -- is a claim against the prescribing doctor, only. A smaller pot. True enough, in the end, the doctor ought to be responsible for keeping up with the evolving literature showing increasing risk of "brittle bones" injuries on long term Fosamax therapy, I suppose. We will track the progress of this motion in the New Jersey federal District Courts. A tough Monday, all the way around.

Sunday, August 17, 2014

Sunday Fare: What's Up On August 20, At The Federal Propecia® MDL Hearing?

On August 20, 2014, in the Eastern District of New York, Merck's lawyers will appear to defend it at this federal MDL status conference on the 1,280 some Proscar®/Propecia® (mostly) sexual dysfunction lawsuits.

Probably the most significant item on the agenda is setting a discovery and trial calendar order. We will keep you posted.

. . . .The parties jointly submit the following agenda for this Court’s August 20, 2014 Status Conference.

1. Argument on Plaintiffs’ Motion to Compel;

2. Exhibit A to the Proposed Common Benefit Order;

3. Proposed Discovery and Trial Plan Procedures and Practice Order; and

4. Defendant’s Administrative Motions to Dismiss. . . .

Off to workout and -- after that -- eat a big southern breakfast. Do get out, and enjoy these dog days of August. And. . . we will certainly meditate, in the evening -- for a largtely-peaceful night to pass, tonight, in Ferguson, Missouri.

Saturday, August 16, 2014

O/T 2: "Open Carry Texas" Schedules -- Then Abandons -- A Long Guns Fest/March, Into Largely Black Houston 5th Ward

I'll simply note that there can be no other reasonable construction of the motives behind this now cancelled event, than to intimidate people of color. Open Carry Texas is overwhelmingly white.

And when the New Black Panthers arrived at a sit down this past Thursday, to suggest that the OCT white guns. . . would be met with Black Panthers' long guns, in turn. . . on the streets of the Fifth Ward, come Saturday -- OCT cancelled their march, as of last night. Local Texas online press:

. . . .The controversial Open Carry Texas group has postponed their planned march through Houston’s Fifth Ward. The group planned to march through the historically African American neighborhood on Saturday, but many neighbors and the New Black Panther Movement said they were not welcome. . . .

Separately, while there was sporatic looting last night in Ferguson, in the main, calm prevailed. My take? We need a dialogue on de-militarizing the police -- nation wide. Have a peaceful weekend, one and all.

Friday, August 15, 2014

O/T Friday: This Is Not 1963. But It Does Feel A Bit Like It.

At the outset -- I confess to simmering all week -- on this topic. . . in a slow angry boil. . . We, as Americans, do have a right to know the identity of any agent, acting under color of government authority -- who shoots an unarmed citizen (especially a young one) dead.

It is five days late in coming, but now we know. How much tear gas could have been avoided, had the police chief of Ferguson simply done his constitutional duty in a timely fashion? Would the second shooting have been avoided? Who can say? But this is not 1963 -- even as the Gray Lady shows us images which eerily echo that awful time (at right, with permission). Her its editorial page is spot on:

. . . .Higher authorities wisely stepped into the St. Louis suburb of Ferguson, Mo., on Thursday after a night that startled the nation with images of police overkill: flash grenades, rubber bullets and huge clouds of tear gas fired at demonstrators protesting the police shooting Saturday of an unarmed black teenager.

Gov. Jay Nixon — after keeping a low profile for too long — made an urgent tour of the town and replaced local police officers with the Missouri State Highway Patrol. He gave the Highway Patrol an order that should have been given over the weekend: Let protesters who are angry about the shooting protest peacefully, without aggressive demands to disperse, as is their constitutional right.

It’s time to make sure, he said, “that we allow peaceful and appropriate protests, that we use force only when necessary, that we step back a little bit and let some of the energy be felt in this region appropriately.”

Earlier in the day, President Obama denounced tactics of “excessive force” by the police and the “bullying” and arrest of journalists trying to cover the news. He said the federal investigation into the incident, which began earlier this week, must determine exactly what happened to Michael Brown, the 18-year-old shooting victim.

Local authorities, including the police, have “a responsibility to be open and transparent about how they are investigating that death and how they are protecting the people in their communities,” Mr. Obama said, noting the “violent turn” in street confrontations that have been seen on screens around the world. . . .

Restoring a sense of justice will not be an easy task in the town of 21,000, which is 69 percent black yet remains under white government leadership. While authorities have the right to respond forcefully to looting and violent rioting, the unyielding use of military tactics and abusive behavior have widened that rift. Once the tear gas has dissipated, Mr. Nixon and Mr. Obama have an obligation to ensure that a real dialogue begins in Ferguson and other racially segregated areas, in hopes of keeping armored vehicles off the streets of America. . . .

On Monday night, a man was shot with a tear gas canister when he would not "immediately vacate" his own back yard. His own property. Every citizen has a right to peacefully stand safely on their own property -- even in protest -- and yes, even to heckle the police, so long as no call for violence in made. And, let's be honest -- he would not have even been there -- in all likelihood, shouting -- had the police chief done his duty -- and released the name. We as a nation need to remember that.

UPDATED 08.15.2014 @ 5:00 PM EDT:This is deeply disturbing -- if Officer Darren Wilson did not know this when he shot Mr. Brown, what possible reason is there for releasing the security camera footage? It cannot "justify" the shoot -- in any manner: . . .Police Chief Thomas Jackson said the officer did not know the teen was a robbery suspect at the time of the shooting and stopped Michael Brown and a companion "because they were walking down the middle of the street blocking traffic. . . ." There is simply no excuse for using deadly force -- to clear even a crowded street -- in a traffic stop. NONE. And this one wasn't at all crowded.

UPDATED 08.15.2014 @Noon EDT: It would seem that the local police have released stills from a store security camera suggesting that the decedent may have earlier been involved in what amounted to stealing several packs of Swishers (retail value about $15), from a convenience store. It would also seem that the decedent was identified by the officer who ultimately shot him to death, while driving northbound on West Florissant, as matching that description.

Even assuming all of the above is true, there is (in my experienced opinion) no arguable basis for the use of deadly force, and certainly not in the manner as described by three separate eye-witnesses on the scene, in real time.

Deadly force -- used, and used repeatedly, as the man was surrendering -- with his hands up, facing the officer -- and the officer kept firing? For $15 worth of Swishers!? This cannot be the America I was raised in. This IMO is not going to calm the fears of most of the people living in the community -- that there are two standards of policing in Ferguson -- one for white people -- one for brown and black.

So it goes. Let tomorrow be a better day in America -- for us all. We are all much better than this. Much better.

Thursday, August 14, 2014

A Sharpened Focus -- Exactly Why Merck Thinks Gilead Owes Up To $22.5 Billion(!) In Patent Infringement Damages, On Sovaldi® Sales

As of Monday afternoon, in the federal District Court for the Northern District of California (San Jose), Merck and Gilead had filed their joint statement of the areas on which they agree -- and disagree -- in principle, about how to construe claims in the patents under which Merck asserts a running-royalty right from, or an infringement claim against Gilead -- on Sovaldi® (sofosbuvir). [June 2014 backgrounder, here -- and again, Kudos to Marilyn Mann, for alerting us to this whole narrative line -- about a year ago, now.]

Perhaps unsurprisingly, they only agreed on one construction of one term. And it seems the chief argument, over the terms in dispute here, is whether a naturally-occuring, in vivo (or "inside" the human body) transformation of a compound or prodrug into another metabolite form -- is properly patentable, and then, is covered by the Merck/Idenix patents in suit.

May an inventor (Merck & Idenix) claim patent rights -- on how the human body transforms a compound? Doubly so, where -- as here -- the reactions inside our bodies occur naturally, and in all humans, apparently. Moreover, if Merck (and Idenix) did not expressly claim a patent on these metabolite transformations inside a human body, once the compound is ingested, may Merck & Idenix nonetheless claim that Gilead owes a royalty, on the way Sovaldi transforms -- inside the human body?

These look to be the central questions in the almost unimaginably gargantuan patent war -- literally $2 billion to $2.5 billion at stake, late next year -- if Merck prevails in securing a 10 percent royalty, on even the first three years' of sales -- and say triple that over the life of the patents; and triple that once again (or, 9 X $2.5 billion = $22.5 billion), if the infringement is found to be "willful". [In my experienced estimation, it would seem those last two embody a whole "lot of iffy statements", however.] Here's a bit of how Gilead would read Merck's patents (via the court filing) -- essentially saying the patents can only be understood to claim synthetically created metabolites, not naturally occuring ones in the human body, and only those synthetics that were expressly claimed in the invention the patent teaches. Here's the full PDF version of that filing, just for complete reference.

. . . .providing a compound of the invention or a prodrug of a compound of the invention to the individual in need without reference to in vivo transformations of those compounds or prodrugs. The phrase “prodrug of a compound” means those prodrugs that are expressly claimed. . . .

The term “compound” refers to synthetically produced compounds only. . . .

This will be a fascinating lesson in negotiating, as each party's position is far from a clear winner. And I suspect neither party will be willing to risk an "all-or-nothing" outcome, at trial. So -- I foresee some negotiated settlement. Do stay tuned.

Wednesday, August 13, 2014

Suvorexant (Now Branded As Belsomra®) Clears FDA -- Good News For Whitehouse Station -- But Still Highly Likely To Be A Schedule IV Controlled Substance

The line quoted below -- in navy blue -- may sound like a punch line -- "while having sex. . ." but that is exactly the kind of thing Merck will be concerned about. Suvorexant has -- as many Schedule IV drugs do -- the real potential to be abused (even as a would be date rape drug). So, I'd not expect Belsomra® to become a higher level multi billion dollar a year drug. Not likely. [Valentine's Day 2014 backgrounder, here.] Schedule IV drugs are kept under extraordinary security (beyond the usual lock and key), at pharmacies and in hospitals, and are subject to rigorous record keeping and evidentiary trails -- while in transit. Makes really deep -- and wide -- dispensing a little less likely.

In addition, the US Drug Enforcement Administration has not finally decided that suvorexant will be Schedule IV, though it seems highly likely. In any event, Merck cannot begin to sell the drug in the US until the DEA announces its final decision. From the FDA presser of this afternoon, then -- a bit:

. . . .Like other sleep medicines, there is a risk from Belsomra of sleep-driving and other complex behaviors while not being fully awake, such as preparing and eating food, making phone calls, or having sex. Chances of such activity increase if a person has consumed alcohol or taken other medicines that make them sleepy. Patients or their families should call the prescribing health care professional if this type of activity occurs.

Belsomra will be dispensed with an FDA-approved patient Medication Guide that provides instructions for its use and important safety information. Belsomra is a controlled substance (Schedule-IV) because it can be abused or lead to dependence. . . .

Really?! While having sex?!

I really couldn't make this stuff up, even if I tried. I promise -- I couldn't. And I don't mean to make light of a potentially life altering experience. At a minimum, Merck may be sued for unwanted pregnancies -- where the allegation will be that he -- or she -- (or both!) didn't fully realize they were engaging in baby making behavior. "The Belsomra did it!"

Celltrion Files For US FDA Biosimilar License On Infliximab (Remicade®); It Won't Change Merck's Share Price

J&J, on the other hand, should begin to worry about feeling a pinch -- in its Janssen unit (which controls the brand -- and the patents, in the US).

Regular readers will recall that the settlement of the massive (potentially $41 billion deal killing) spat occasioned by Mr. Hassan's mostly-goofy footed attempt at a reverse merger -- to avoid a Remicade® rights "walk-off" by J&J (from Schering-Plough), related to jointly marketed monoclonal antibody products (including Simponi®) -- led to then "New" Merck settling and surrendering all its US rights to a share of those revenues. So, here in the US, the revenue belongs to J&J -- as does this potential downside.

Also here in the US, Celltrion is seeking a declaratory judgment that the Remicade patents are invalid and unenforceable. Here's a bit of that spat (a 27 page PDF file). So -- this morning's Pharma Times report of the FDA biosimilar filing will really only affect J&J's revenue, as Merck already suffered its correlative generics entrance revenue hit, almost exactly a year ago, in the EU and Japan -- when the Celltrion biosimilar product was aproved in those geographies. Celltrion's lower-priced competing anti-inflamatory antibody product is now sold in 50 countries around the globe.

We will keep an eye on this, just the same. By their terms, the relevant patents expire in 2018 -- but a ruling invalidating the patents altogether, here might bring additional competitors into the EU and Japan, beyond the current Hospira and Celltrion biosimilar offerings. This is perhaps Merck's second most important franchise, behind only Januvia®/Janumet®. So, we will monitor that Massachusetts federal District Court litigation. Now, go out and enjoy the bright sunshine -- we've gotcha' covered -- in sunscreens.

Tuesday, August 12, 2014

Mr. Frazier Has Reduced His SEC Section 16 Reportable Stock Ownership By A Little Over 5,900 Shares. Yawn.

First -- these sales are under a pre-arranged trading plan. Second, they are from the exercise of stock options -- set to expire in the next 24 or so months. Finally, Mr. Frazier holds over 335,500 shares (as calculated under the Section 16 rules, so he's sold less than two per cent of his holdings, in the past month).

Thus, nothing may really be inferred from his sales, this week. Here is his latest SEC Form 4 [08.11.2014], and a quick reconciliation to the July 10, 2014 one he had earlier filed:

. . . .Was holding: 07.10.2014 | 341,487 Shares

Now holding: 08.11.2014 | 335,504 Shares. . . .

Oh, and for the sake of a complete record here: the Chief Corporate Communications Officer also sold a modest number of shares. Now you know. Great rainy Summer's evening, here -- perfect. . . sleeping weather!

Resetting IMPROVE-IT Countdown Clock At Left -- To 97 Days, From 109 Days!

Dr. Larry Husten has the scoop at Forbes -- IMPROVE-IT will be revealed on November 17, 2014.

Finally. So I was off by a few days (I was guessing December 2014); not bad though, on a six-year horizon. Here's a bit -- do go read it all:

. . . .Results of the eagerly-awaited and highly controversial IMPROVE-IT trial are finally going to be revealed. The American Heart Association has announced that the trial will be presented by Chris Cannon on November 17 at 11:51 AM (central time) in Chicago at the group’s annual scientific sessions . IMPROVE-IT compared the effect on cardiovascular outcomes of the statin simvastatin with Vytorin (the combination of simvastatin and ezetimibe, manufactured by Merck) in more than 18,000 patients with acute coronary syndromes. . . .

We will report on that -- yep, for certain I'll pop over there, for the live press conference -- on 11.17.2014. I was there the morning ENHANCE clanked, also in Chicago, on Sunday, March 30, 2008, too. I personally think this is likely to be the end of the line -- for this war horse.

Next Propecia®/Proscar® Status Hearing Date In The E.D.N.Y. M.D.L.: August 20, 2014

While the two sides wrangle about what portions of Merck's "privilege logs" should be viewable by the plaintiffs' lawyers (documents with redactions, or just notes about what each document covers -- and which ones), the next larger status hearing is on the morning of August 20, 2014. At that hearing, a schedule to move toward bellwether trials may be set.

Here is the latest summary from Merck's SEC Form 10-Q (at page 21):

. . . .As previously disclosed, Merck is a defendant in product liability lawsuits in the United States involving Propecia and/or Proscar. As of June 30, 2014, approximately 1,280 lawsuits involving a total of approximately 1,550 plaintiffs (in a few instances spouses are joined as plaintiffs in the suits) who allege that they have experienced persistent sexual side effects following cessation of treatment with Propecia and/or Proscar have been filed against Merck. Approximately 45 of the plaintiffs also allege that Propecia or Proscar has caused or can cause prostate cancer or male breast cancer. The lawsuits have been filed in various federal courts and in state court in New Jersey. The federal lawsuits have been consolidated for pretrial purposes in a federal multidistrict litigation before Judge John Gleeson of the Eastern District of New York. The matters pending in state court in New Jersey have been consolidated before Judge Jessica Mayer in Middlesex County. The Company intends to defend against these lawsuits. . . .

In point of fact, the August 20 hearing will be in the federal MDL.

Separately (in part in a fond memory of Robin Williams), do go out -- and have a great adventure on this fine day, wherever you are! Namaste!

Monday, August 11, 2014

Jefferies & Co. Slightly "Slows Its Roll" -- On Whitehouse Station

Not a big deal, here on a quiet news day, because Jefferies had been a little ahead of the rest of the pack, earlier this Spring, in predicting a $63 handle for Merck.

Now, the Jefferies analysts are falling back into the middle -- in choosing a $60 handle. That's the revised 12 month target -- with a continuing neutral rating.

As I say, consensus (among the major, first rate Wall Street houses, at least) is somewhere around $60.50 at the moment.

Now. . . do go get it. . . all nice -- and tanned up! It is sunscreen season!

Various Hep C Chargeoffs Including Victrelis®; Saphris® (Asenapine) Chargeoffs And Preladenant Chargeoffs: Rationalizing The Balance Sheet

I'll not just complain about Mr. Hassan's role in touting what became (i) Victrelis® (Boceprevir); and (ii) Preladenant (SCH 420814) here. Nope. I won't.

What I will say is that it is good news that Merck is writing off programs of impaired value. It frees up the balance sheet for other leverage. So -- from lemons -- lemonade. Per pages 15 and 16 of the SEC Form 10-Q, then:

. . . .In connection with mergers and acquisitions, the Company measures the fair value of marketed products and research and development pipeline programs and capitalizes these amounts. During the second quarter and first six months of 2014, the Company recorded intangible asset impairment charges of $660 million within Materials and production costs related to certain products marketed by the Company for the treatment of chronic HCV. Of this amount, $523 million related to PegIntron and $137 million related to Victrelis. Sales of PegIntron and Victrelis are being adversely affected by loss of market share or patient treatment delays in markets anticipating the availability of new therapeutic options. During the second quarter, these trends accelerated more rapidly than previously anticipated by the Company, which led to changes in the cash flow assumptions for both PegIntron and Victrelis. These revisions to cash flows indicated that the PegIntron and Victrelis intangible asset values were not recoverable on an undiscounted cash flows basis. The Company utilized market participant assumptions to determine its best estimate of the fair values of the intangible assets related to PegIntron and Victrelis that, when compared with their related carrying values, resulted in impairment charges noted above.

During the second quarter and first six months of 2013, the Company recorded an intangible asset impairment charge of $330 million within Materials and production costs resulting from lower cash flow projections for Saphris/Sycrest due to reduced expectations in international markets and in the United States. These revisions to cash flows indicated that the Saphris/Sycrest intangible asset value was not recoverable on an undiscounted cash flows basis. The Company utilized market participant assumptions and considered several different scenarios to determine its best estimate of the fair value of the intangible asset related to Saphris/Sycrest that, when compared with its related carrying values, resulted in the impairment charge noted above.

In addition, during the second quarter and first six months of 2013, the Company recorded $234 million and $264 million of IPR&D impairment charges within Research and development expenses. Of these amounts, $181 million related to the write-off of the intangible asset associated with preladenant as a result of the discontinuation of the clinical development program for this compound. In addition, the Company recorded impairment charges resulting from changes in cash flow assumptions for certain compounds. The remaining impairment charges for the first six months of 2013 related to pipeline programs that had previously been deprioritized and were subsequently deemed to have no alternative use in the period. . . .

To be sure, Mr. Frazier is reaching the end of his clearing the decks sweepup. . . and positioning Merck for a solid new run -- as a leaner, more tightly focused ocean-liner. But it takes perhaps two years to pivot an ocean liner of this girth.

Schering-Plough Merger/Yard Sale Aftermath: Fire 27,670 Employees; Charge Off $7.5 Billion To $8.2 Billion. Ugh.

To be clear, the $7.5 billion in writeoff figures listed in the just filed SEC Form 10-Q will not include several of the various closed or abandoned research programs which we have separately discussed (primarily the ones that were straight asset sales; no employees).

For example, it would not include the asset impairment charge of $1.7 billion related to the repeated vorapaxar "clanks." It would include the "cash" people costs, thought -- the firings. SO -- at $7.5 billion, Hassan's value-destruction is likely understated here, perhaps by 30 per cent. To be fair, his damage creation/accretion index, at Schering-Plough, must be a little over $10 billion. And that's before he took $235 million in compensation, all in over the six years, for himself. And before he (allegedly) caused a $688 million securities fraud settlement to be paid out.

I just think it worthwhile to remark that -- without any serious doubt then -- Mr. Hassan truly was (and is!) the most heartless CEO in America. His handiwork continues as his minions play the same games at other public pharma companies. You know their names. You've all seen their games. Here's to you Fred -- from pages 5 and 6 of the Merck SEC Form 10-Q for the second quarter of 2014:

. . . .Since inception of the Merger Restructuring Program through June 30, 2014, Merck has recorded total pretax accumulated costs of approximately $7.5 billion and eliminated approximately 27,670 positions comprised of employee separations, as well as the elimination of contractors and vacant positions. Approximately 4,890 position eliminations remain pending under this program as of June 30, 2014, which include the remaining actions under the 2008 Restructuring Program that are being reported as part of the Merger Restructuring Program as discussed below. The non-manufacturing related restructuring actions under the Merger Restructuring Program were substantially completed by the end of 2013. The remaining actions under this program relate to ongoing manufacturing facility rationalizations, which are expected to be substantially completed by 2016. The Company expects the estimated total cumulative pretax costs for this program to be approximately $7.9 billion to $8.2 billion. The Company estimates that approximately two-thirds of the cumulative pretax costs relate to cash outlays, primarily related to employee separation expense. Approximately one-third of the cumulative pretax costs are non-cash, relating primarily to the accelerated depreciation of facilities to be closed or divested. . . .

As irony would have it, Mr. Hassan recently wrote about the things one should highlight on one's resume, to get invited to be on a company's board of directors. [That blog post looks to be likely "mostly ghosted" by his crony, Ken Banta.] I wonder if these above items appear as dot points, on his resume -- as he seeks public company board seats. [He is so brash a fibber, I'm betting yes -- but with each "recast" as how he triumphantly thinned out the "affected" company.]

Perspective: I'm sure we will find other, less dank, matters to mention in the 10-Q. Back later, with those. Namaste -- as the day gig beckons.

Saturday, August 9, 2014

At Least One NuvaRing® Opt-Out Plaintiff Seeks Remand To "Questionable" Texas State Court Venue

It is clearly within the rights of any given plaintiff, in a products liability action, to bring that action wherever jurisdiction exists, and venue may be properly laid. Having said that, judges often consolidate (at the defendants' request) cases in a single district, where the factual issues between claimants vary only slightly. So it was, with the NuvaRing® MDL -- consolidated in Kansas City, Missouri federal District Court.

But, now, as the MDL winds down, a handful of plaintiffs have elected to reject the settlement, and press on individually, in the same ways they started. In one of those cases, the plaintiff's lawyer seeks remand -- out of federal court, and back into the the state court system of Texas. But not just any state court in Texas, no. That plaintiff seeks a remand order to Cameron County, Texas. I mention this bit of detail only because that is a local court system with a documented, published history of corruption -- and a national reputation for being an overly plaintiff-friendly "hellhole" -- among pharma defense lawyers. I have no reason to believe that Merck will not draw an impartial lot in these local courts (should the able Judge Sippel grant remand), but I suspect some it its defense counsel do. So they are opposing a return to the very bottom of Texas, for this case.

Some recent coverage of the problems in this court system -- from a local paper, in Southwest Texas, then:

. . . .[U.S. Dist. Ct. Judge] Hanen also issued an order in May during Villalobos’ trial, writing, "This court has heard over the last two weeks of trial and throughout pretrial hearings a troublesome and disturbing tale of unethical conduct involving judges, lawyers and laypersons. . . ."

"This state of affairs was exacerbated by the fact that it has lasted over a number of years and affected numerous cases," he added.

Hanen said that the court had heard witnesses and seen exhibits that show uncharged illegal acts and violations of disciplinary rules. . . .

We will keep an eye on this case, for the readership. Here is the paperwork seeking remand -- in the above mentioned opt-out case.