Tuesday, April 15, 2014

On Market In EU Since 2006, Grastek® Wins US Approval -- [Plus O/T Side Car: "Blood Moon" Edition]

This melt-in-your-mouth pill -- called Grazax® in Europe, and Grastek® here and in Canada (where it won approval in March of 2012) -- is finally going to be available in the US with a prescription, beginning around Mothers' Day 2014. It enters a crowded field, likely to be dominated by Stallergenes -- a French pharma concern. [Thanks to my anonymous commenters for that insight!] And still it is good news. [See the anthropological implications of a "missing" blood moon (full lunar eclipse overnight), in all of this -- below the pull-quote.]

Here is a bit from Reuters overnight. Do go read it all:

. . . .The company, which developed the tablet with Denmark's ALK Abello, said it expects to launch the drug, approved for patients age 5 to 65, in the United States by late April. . . .

An advisory committee to the FDA unanimously recommended approval of the drug in December. Panelists also called for post-approval studies to test the product's safety in children, citing side effects such as lip swelling, throat irritation and oral blistering.

Earlier this month, the FDA approved Stallergenes' immunotherapy treatment for five types of grass pollen.

The French company has said it sees a potential U.S. market of nearly 3 million patients that will eventually be worth $1 billion in annual sales for these types of drugs.

Merck's pollen treatment received regulatory approval in Canada in February and has been available in Europe since 2006 under the name Grazax. . . .

As an anonymous commenter noted two weeks back, the Stallergenes prescription-only product is likely to garner the lion's share of this market. In fact, it already is. But this is still incrementally good news for Merck. Immaterial, but incremental. I'd guess around $300 million globally in peak annual sales in 2016 -- off-grid all morning; tending to other duties.

[On the O/T paleontologist in me: The blood moon was -- among our ancient forebears -- long associated with heightened spiritual-, sexual- and hunting- prowess. Here -- very, very late last night. . . it brought only. . . snow. Yep, the lunar eclispe was obscured by heavy snow clouds overnight, so there was no blood moon in the city of big shoulders. Even so, I guess a cleansing is. . . somehow auspicious. Heh -- a bath indeed, for mother Earth.] So it goes.

Monday, April 14, 2014

Merck Proxy Now Filed With SEC; See What Top Five Made. Or Don't.

I'll not bother to analyze it in any real granular detail. All the named executives took overall pay cuts in 2013 compared to 2012.

That makes sense, given the decline in global sales. You can do all the additional analysis you like, for yourself. Click here.

Enjoy your evenings, one and all.

Mr. Frazier's Recent -- And Definitively Tiny -- Stock Sale Means... Nothing.

The clearest message here is that. . . there is no message -- we should infer nothing -- up, down or sideways -- about pending Q1 2014 Merck results, from his transaction. Why?

Well, of the most moment, the sale (the disclosing SEC Form 4 is linked here) represents less than three per cent of all his outright Merck holdings, and less than one and a half per cent of all his direct and "rights to acquire" stockholdings.

Second, just like the GC's transaction of a couple of weeks back, Mr. Frazier's was pursuant to a prearranged/automated plan. Mr. Frazier didn't control the timing here, in any meaningful sense. He did raise a half million dollars, by flipping a small bit of his options, but nothing more. Y A W N. . . Here is one press account:

. . . .Kenneth Frazier unloaded 10,047 shares of Merck & Co. stock on the open market in a transaction dated Thursday, April 10th. The shares were sold at an average price of $57.24, for a total value of $575,090.28. Following the completion of the transaction, the chief executive officer now directly owns 310,494 shares of the company’s stock, valued at approximately $17,772,677. . . .

My guess? Tax Day is tomorrow. He is paying some taxes, and only incurring capital gains rates -- on this series of sales -- so his tax burden on raising the cash is minimized. Snow is due here later this morning. Fabulous! What's on tap for you -- today? Do tell.

Sunday, April 13, 2014

Well. . . So Much For Any "Zen" Leadership Approach -- At PhRMA! Heh!

On Friday, PhRMA elected a new chairman of the trade group (and lobbying concern).

He is. . . Ian C. Read, the Chairman of Pfizer -- still the world's largest drug company by global revenue. Well, that's a return to old-school power-alley politics, sez me.

You may recall that I was suggesting a more measured, even "Zen-like" approach -- to handling India's threats of compulsory licenses -- for various Merck, Pfizer and BMS essential, life saving medicines -- each of which, at present, are completely out of reach financially for 99.9998 per cent of the ordinary people of India. Yet those same smart, hard working people of India are (to at least some extent) making these same medicines in-country for the pharma majors (and to a much greater extent, for the global generic manufacturers).

Friday's election of Mr. Read likely ends any chance of a Zen solution -- at least globally, out of PhRMA. Here is the Friday release -- and a bit:

. . . .Ian C. Read, chairman and CEO of Pfizer, Inc, was elected chairman of the Pharmaceutical Research and Manufacturers of America (PhRMA) today at the trade association’s annual meeting. Also elected were Kenneth C. Frazier, chairman, president and CEO of Merck & Co, Inc., as chairman-elect of the PhRMA Board of Directors, and George A. Scangos, Ph.D., CEO of Biogen Idec, as Board treasurer. . . .

Mr. Read is the Chairman and CEO of Pfizer. He began his career with Pfizer in 1978 as an operational auditor. . . .

While Mr. Read is a capable, results-oriented executive -- he was, is and forever will be an old school "command, control and micro-manage" leader.

And permit me a moment's personal pettiness, here -- he is a very unpleasant sort, in-person, in any negotiations of meaningful moment. In short, he's (sorta') a. . . jerk.

Thus, I think the likely next window of opportunity for an India-palatable compromise (on drug IP rights -- for essential medicines) to be put forth by PhRMA. . . will be when Mr. Frazier ascends to Mr. Read's seat -- in about two years' time, all in. Of course, Ian could surprise me. But I am pretty sure he won't.

Saturday, April 12, 2014

Dr. Percy L. Julian Would Have Turned 115 Yesterday -- A Founding Father -- Of Modern BioScience/Medicine

There will always be some people, a precious few -- who succeed -- against long odds.

And then there are people like Dr. Julian. Amazing. Truly amazing. People like Dr. Julian -- who were clearly the smartest in any room they entered -- but spent a goodly portion of their life being marginalized by those too insecure to accept the undeniable existence of their "betters". And Dr. Julian was (almost) everyones' better. In every way. But he never gave anyone any outward hint of that. Certainly, inside, at least toward the end of his remarkable run -- he must have known it though. Do go read more -- at DePauw's website:

. . . .In 1920 Julian graduated first in his class and was elected to Phi Beta Kappa. Even with his outstanding academic record, however, Julian was denied an assistantship, fellowship or admission to graduate school, in the United States. [As times changed only slowly, he would complete his doctorate in Vienna -- over a decade later.] Instead, he found a position as instructor in chemistry at Fisk University. After two years at Fisk, he won an Austin Fellowship to Harvard University and earned a master's degree in 1923. . . .

[In his industry careeer at Gliden,] Dr. Julian [was the first to] synthesize the female and male hormones, progesterone and testosterone, by extracting sterols from soybean oil. His biomedical research made it possible to synthetically produce large quantities of cortisone for the treatment of rheumatoid arthritis and other inflammatory conditions. His synthesis of cortisone reduced the price from hundreds of dollars per drop for natural cortisone to a few cents per gram. . . .

Here's to Dr. Percy L. Julian -- "Lord knows, there's few like us. . . and few. . . like us!" Credit goes to the kind artists of Google's doodles, last evening -- for reminding me of his 115th. Enjoy a great Spring weekend, one and all.

[Sorry to close out here -- in a smallish burst of negative energy, but. . . I may now not write anything (more) on Secretary Sebelius. We shall see -- I must note that Tennessee Republican Shrill-Mistress Martha Blackburn ought to be ashamed of her singularly petty and childishly gloating tweets, of this week. What a purile little cyst -- on America's collective hind-quarters -- she has turned out to be. Ewww. Would somebody go get a pin, and pop that thing, already?!]

Friday, April 11, 2014

Nice Early Data At EASL -- For MK-5172 & MK-8742 -- In Tougher Hep C Cases; FDA Clearance In 2016?

Yesterday, we analyzed the likely impact of the latest Phase II data on "easier" Hep C cases -- today, the tougher ones. And to be sure, even on these smallish n's, the data Merck made public in London -- at EASL overnight -- is impressive. [But remember, there are others out there, lurking, too.]

In conjunction with ribavirin, Merck's Hep C "cure" rates stay at or above 90 per cent -- both in prior non responders, and even in those with some advanced liver tissue scarring. This clearly means Merck will proceed to Phase III studies, and pencils in an FDA approval date of early to mid 2016, for Whitehouse Station (soon to be Kenilworth). That is my guess. [For the record, Merck itself is not allowed under FDA rules, to make such prognostications, but I can -- as I am unaffiliated.] And that is good news.

However, in the mean time, Gilead will have had this next gen Hep C market to itself -- at least until BMS and AbbVie arrive -- likely in mid to late 2015. So, that puts Merck as a likely fourth market entrant -- on the timelines as they now stand. And Merck will make money -- just nothing like the likely $15 billion Gilead's Solvadi® will garner in 2015. Nothing like it. Perhaps a tenth of that (in peak year 2018) -- but with some obvious price competition, from AbbVie and others -- perhaps even Gilead. Do go read it all, though, for yourself. Here's a bit:

. . . .Viral suppression (HCV RNA levels less than 25 IU/mL) was demonstrated for treatment-naïve patients with cirrhosis, prior-null responder patients with and without cirrhosis and HIV/HCV co-infected patients by Treatment Week (TW)12. These levels were maintained at rates between 90 and 100 percent across patient subgroups through the completion of dosing and at the four-week treatment follow-up time point (FU4). . . .

Okay -- perspectives on departing HHS Secretary Sebelius will be a weekend post -- now, do go enjoy a stellar Friday, one and all! And so, "eventually, all things merge into one. . . and a river runs through it. . . ." I'll spend time on a quiet river this evening (albeit with steel and glass canyons, on either side -- as opposed to the Sawatch range). . . . as Spring is finally fully here. Sweet.

Thursday, April 10, 2014

Merck Shows Impressive (If Smallish) "Easy Patient" Phase II Data In London -- For "Next Gen" Hep C Candidate MK-5172 -- Tougher Data Due Friday

Recall that we have said right along (since at least November of 2013) that Gilead has a two year lead on Merck with its Solvadi® regimen.

This Next Gen Hep C cure space is evolving at break-neck speed right now.

Do also recall that there are other competitors out ahead of Merck -- aiming to meet Gilead -- and they may arrive in about a year -- or mid 2015. Finally recall that today's data (an impressive 98 per cent "cure" rate) reflect only the easiest to treat patients: treament naive, and no cirrhosis of the liver. Oh, and this is only a sample size of 50.

Even so, this is good news for Whitehouse Station. Here is a bit of Reuters UK on it, overnight -- reporting onsite at the EASL confab now underway in London -- do go read it all:

. . . .Results of the study called C-Worthy were presented on Thursday at the annual meeting of the European Association for the Study of the Liver (EASL) in London. Researchers are due on Friday to present results of how the Merck pills fared in more difficult to treat patients, such has those who failed to be helped by prior treatments and those with more advanced liver disease. . . .

Gilead Sciences Inc, AbbVie and Bristol-Myers Squibb Co are also developing a new generation of all-oral hepatitis C treatments that in previous trials have demonstrated cure rates in excess of 90 percent, while cutting treatment duration to 12 weeks with few side effects.

Gilead, which later this year could have a one pill, once a day two-drug regimen approved in the United States, is widely perceived by Wall Street to be the best of the bunch with some analysts forecasting annual sales of $9 billion or more. . . .

I find myself unable to stop grinning this fine Spring morning. Can't imagine why. . . .

Wednesday, April 9, 2014

"Told Ya' So" Department: Consumer Health -- Latest Rumors

This is only a tiny update, actually. I'll simply note that the latest rumors being reported by Reuters UK have it that the likely front runner on the Consumer Health deal is Reckitt -- a UK firm. I said such a firm could afford to pay more for the assets. And they likely will. Moreover, Reckitt faces a lower antitrust bar than many of its potential co-bidders.

The other incremental journo-reported rumor update is that a final decision may be made by Merck as of April 16. Lord only knows when -- even if that is accurate -- the world at large would be told of the outcome. I still see a spin- or split- as a real possibility.

Housekeeping note: may be spotty coverage here today -- kinda busy off-grid, traveling, etc. . . .

With Sen Wyden Asking After The $2.1 Trillion In Parked Overseas Earnings -- I'll Mention Colorado Idea Again

Yes, you read that right -- over $2 trillion. With a "T". So that is $2,100 billions, or $2,100,000 millions. . . .

Overnight, several news outlets indicated that Congress is once again considering action on the staggeringly massive cache of untaxed (from a US tax perspective) foreign earnings of US companies, for the moment "permanently" parked overseas.

Of course, the reality is that nothing will happen in an election year, and the corollary reality is that any move to tax those amounts would have to be coupled to an overall reform of the US tax code (to avoid some obvious macro-economic damaging of our still nascent US recovery). [For reference, my May 2013 backgrounders are here, and here -- on the whole topic more generally.]

An overall tax code overhaul last happened in 1986, under Reagan. So -- don't hold your breath, here. However, with Merck among the top six or so US companies with such parked cash, I thought I'd remind readers of the relatively sound (and therefor likely unpassable!) idea out of the Senator from Colorado. I mentioned it last in early March.

The idea is that GE, Merck, Google, Microsoft and Apple and Abbott will buy (actually, Dutch-auction bid upon) US infrastucture bonds -- and thus commit essentially to the rebuilding of roads, bridges and schools, nation-wide -- and in so doing -- be granted a "tax holiday," for a like (or slighly lesser) amount of the permanently-foreign cash earnings, sitting anywhere in the EU, Japan, Northern Ireland, or the Caymans -- depending on the company. So. . . Merck could bring home all the ex-US cash it wanted, tax free, if it put it all to work, here in the US -- on rebuilding infrastucture, via a federal bond progam. In about 10 years' time, when Merck has collected the interest on the bonds it bought -- the principal would be repaid by the US Treasury, and be repatriated earnings free of tax. Just a time lag -- that's all. And the whole program is dyed deeply-blue in patriotism. I love it.

And, like I say -- small chance of passage. And certainly not this election cycle. Finally, for those of us who have done a lot of this sort of structuring, there is always a tax-advantaged way (or two!) to bring the cash home. I'd expect Merck to do so -- maybe as early as 2015 -- for at least a part of the parked earnings. Here endeth the prognostication(s).

Tuesday, April 8, 2014

Tough Talk, On Price, From Walgreens' Partner, Express Scripts. . .

I am off-grid, at a seminar this early morning -- so chew on this until I return -- Express Scripts is firing shots across the bow of big pharma -- this is new, indeed.

Per the Wall Street Journal's health care blog, then:

. . . .“Never before has a drug been priced this high to treat a patient population this large, and the resulting costs will be unsustainable for our country,” warns Express Scripts chief medical officer Steve Miller, in a statement. “The burden will fall upon individual patients, state and federal governments, and payers, who will have to balance access and affordability in way they never have had to before. . . .”

As Dr. Miller sees it, though, Sovaldi is actually part of a larger trend in recent years in which so-called specialty medicines, a category that often includes biologic medicines that are injected or infused, are priced at ever-higher levels that are not sustainable. “The current pricing mentality around innovative products,” he cautions, “is unprecedented and unreasonable. . . .”

Merck is called out by name in the article as well. Do go read it. This is solid encouragement of US price competition -- spurred by the ACA of 2010's rolling implementation, in action. And that is a good thing -- for the system, overall. Be excellent to one another.

Monday, April 7, 2014

Merck Affiliate Is In -- At Next Round Of Funding -- For Daktari, In The Boston-Area

In the past year, Daktari's amended SEC Form D discloses that it has raised just under $20 million -- from 27 different investors (not just the $13 million in the below article), in a still-ongoing private placement. Backgrounder here.

We do think we know that in early 2012, Merck affiliated entities kicked in the vast bulk of $10 million -- and we are told that Merck has come in for some part of this latest round. Here is the local press report, of this afternoon:

. . . .Bill Rodriguez, co-founder and CEO of the 55-employee company, said in an interview that the money will go to commercialize the company’s CD4 system, which is used to monitor white blood cell count in patients diagnosed with HIV. . . .

He said the company, which is housed in the building that formerly was home to Wyeth Pharmaceuticals in Porter Square, has grown significantly from just 25 employees a year ago to support the launch of the first product. Most of the 55 employees work in Cambridge. Tests for other diseases, such as malaria and tuberculosis, are in the works, he said. . .

In February, Daktari was one of several local companies to receive a tax incentive award from the Massachusetts Life Sciences Center. The $347,000 in tax breaks from the MLSC is contingent on the company adding 17 new jobs in the next year. . . .

The $13 million was disclosed in a filing with the Securities an Exchange Commission. It represents the closing of the company’s C round of funding, said Rodriguez, and lead investors were Merck’s Global Healthcare Innovation fund, Norwich Ventures and the Partners Innovation Fund. . . .

Just for those of you keeping score at home -- this is an HIV diagnostic play -- for the future, and primarily in the still-developing world.

Just A Little More Data -- Out Of AACR, In San Diego -- On Merck's Pembrolizumab (MK-3475)

I might be tempted to rather snarkily suggest that the San Diego press release -- on a Sunday afternoon -- was (in part intended as) an "innoculation" against (and to counteract) the Sunday front page NYT story -- listing $133,000 for one dose of Merck's Remicade®, here in some for-profit outpatient infusion clinics. But I would also note that the conference in San Diego has breaking news on several other oncology candidates, too. So, worthy of reading those abstracts, too.

In any event, here it is, out of a rather general purpose MIT online tech journal -- do go read it all, but a bit follows:

. . . .Merck’s compound is an antibody, a Y-shaped biological molecule that grabs onto a specific protein. The target protein normally prevents immune cells from attacking cancer. By blocking the activity of that protein, the antibody frees the immune cell to fight the disease. Roche, GlaxoSmithKline, Bristol-Myers Squibb, and others are also developing antibodies to release such brakes on the immune system. . . .

The immune system can be a powerful ally for doctors, but they must tread carefully. “We know the immune system is capable of killing any cell. If we aren’t careful, we could trigger systemic autoimmune disease of major consequences,” says [Merck's Roger] Perlmutter. . . .

So far, the treatments have been tested on only a subset of cancer types -- mostly melanoma but also lung cancers and breast cancers, among others. Researchers will have to test the treatments on more cancer types to know how wide a range of malignancies they can attack, and whether certain targets, or even combination of targets, are needed. “It may be that in different tumor types, different immune modulators will have different importance,” says Deborah Law, who heads one of Merck’s biologics research units. “Combination approaches might be most effective,” she says. . . .

I'll remind the readership that BMS's Nivolumab is the very-likely leader, here. It should come as no surprise that at least under Dr. Perlmutter, Merck has suddenly become much more "chatty" -- about its in-process programs -- than it had ever been in the past. In contrast, meanwhile, BMS continues to adhere to that "old school" more taciturn approach -- on its clinical trial programs.

That means we saw no news on nivolumab, at the San Diego confab -- but that doesn't mean anything other than that BMS is keeping its powder dry, for June 2014. . . . And so, now we wait for June -- and Chicago's ASCO.

Sunday, April 6, 2014

An Excellent Bit Of Commentary -- On Some Of The Many Remaining "Cost Anomalies" In US Health Care Delivery

Once in a while, a commenter drops by -- largely out of the blue -- to offer such an excellent set of perspectives, that the same merits a new post.

The below is plainly one of those. [I even made a custom graphic at right, for the occassion, while I watched an on demand replay of the Kentucky-Wisconsin thriller!] And so, without any additional ado -- here is an anoymous take on my cost of drugs story (a la Remicade), of this very morning:

. . . .Anonymous said. . .

About a year ago (nearly to the week) Time devoted an entire issue to the high cost of US Healthcare.

Here is a Forbes article comparing profit margins of hospitals to other industries, making it look not SO bad; but, there is no breakout between for profit and not-for-profit institutions.

I worked for a spell at a not-for-profit insurance carrier. Ironically I was making my exit just as this Time piece came out. At this particular firm, the largest provider in my, and many other, states, you'd be amazed at the perks, salaries and job titles going around. And, yes, the Medical Loss Ratio (MLR) from the ACA definitely has affected business by way of subscriber refunds each year it has been in effect. However, the popular thinking in this particular place is to keep the VPs and above (woo, you should see those salaries and bennies) -- while demoting directors (where those platinum bennies start) -- and thinning out the lower ranks.

The amount of money these plans hold in reserves is often dozens of times higher than what their state boards of insurance require. Some argue this is just a way for these insurance companies to keep raking in premiums at higher than necessary costs, even under the ACA. There are also many class action lawsuits against these federated insurance plans who are often the only game in town because of their 'local' presence.

Sorry to drone on here but there are pah-lenty of places to streamline and economize in the chain of healthcare.

April 6, 2014 at 7:55 PM. . . .

Absolutely agree -- spot on! Thank you so much, Anon. -- do stop back by -- and please feel free to share any time, one and all!

The POTUS BHO 44 Out-Pointed Me -- On The 'Gators Loss: Bracketology Concluded

Well. . . he beat me by 16 points. Neither of us have a team still in contention. So it goes. . . .

I'll take Kentucky to win it all, now.

Great tourney! That's a wrap!

NYT's "Exhibit A" Piece -- On Why All US Govt. Payers MUST Be Allowed To Negotiate For Better Drug Pricing

The New York Times has a very very cogent, and very long article -- on the front page, center -- this Sunday morning, on "cost" of chronic diseases in the US. And the bulk of the article is about the cost of Medtronic's Type I diabetes pump solution (not Merck's sitagliptin injection for Type II). [And, to be sure, "cost" may be too gentle a word here -- "profiteering" might be more apt -- go read it all.]

The article does a comprehensive job of explaining "what all is broken" (and that is still, post the ACA of 2010, a very long list of things) with the "profiteering" underway in chronic diseases -- here in the US, as compared to the United Kingdom, or the EU -- primarily how the sky-high "costs" of the same are only partially covered in the US system.

Moreover, to reinforce the point that this is not an abberation related only to Medtronic's pump set -- the article makes specific note of the Remicade®/Simponi® product line -- to which Merck still holds the US selling rights, post the arbitration settlement, out of the Schering-Plough bust-up faux pas (not that one -- no, the choosing of the wrong structure to avoid triggering a $500 million in an upfront arbitration settlement).

It also mentions the cost of Crohn's disease management -- which is a legacy Schering Plough program (but doesn't mention the name of that treatment). Do go read it all -- but here is a bit:

. . . .For Kristen Bailey, 28, of Colorado Springs, who has Crohn’s disease, an intestinal disorder, that meant not marrying her fiancée so she could continue to qualify for drug company assistance programs that provide, at no cost, two medicines with list prices of more than $16,000 a year in the United States. . . .

For Jeffrey Kivi, 51, a chemistry teacher at Stuyvesant High School in New York, it meant recently giving up an intravenous drug that, as an outpatient, he had had infused every six weeks for years to keep his psoriatic arthritis at bay. Before taking that drug, [Merck's US distributed] Remicade, Dr. Kivi was on high doses of steroids for debilitating joint pain that left him unable to walk at times.

But when his last three-hour infusion at NYU Langone Medical Center’s outpatient clinic generated a bill of $133,000 — and his insurer paid $99,593 — Dr. Kivi was so outraged that he decided to risk switching to another drug that he could inject by himself at home. That is true even though his insurer did not require him to make up the difference.

“I cannot, in good conscience, continue to force my insurance company to pay $100,000 to NYU each time I get a Remicade infusion,” Dr. Kivi, who was a drug company researcher for many years, wrote to the hospital. “That’s insane. . . .”

A good portion of that astronomical Remicade infusion cost above was driven by the place -- the specific out-patient for profit clinic affiliated with a teaching hospital -- at which the patient in question received the Remicade injections -- and even so, I think we all recognize that one hospital's clinic is not 100 times better than another, in the US. Not for simple infusions. Maybe twice as good -- but not 100 times better. . . yet that was the treatment cost differential -- one-hundred fold. Astonishing. And in need of some rather aggressive additional reform, in my mind. Buckle up, Merck adn J&J -- and all you for profit hospital chains.

Saturday, April 5, 2014

Merck's GC Realizes About $2.4 Million -- Via Automated Plan's Cashless Exercises Of His Options: No Real Tea Leaves There

Message One: Don't be alarmed, all you Merck longs. Why? Well, because Mr. Kuhlik had no discretion, in the moment, as to these trades (see Footnote 1 to the SEC Form 4 linked there). So, very little may be inferred from them. [But permit me to blather on for a moment here -- speculating about it, anyway! Net, net -- the executive simply added, and subtracted an equal number of shares -- thus he returned to the level of stock ownership he last had at February 2014, post these transactions. So he is standing pat.]

What we do know is that the EVP and General Counsel of Merck had previously adopted an algorithm (or set of instructions) -- in writing -- and left them with his broker or financial advisor. [See Sullivan & Cromwell's SEC rule 10b5-1 letter of comments, on such trading plans.] We also know that whatever those pre-authorized plans provided, as to Merck stock options, yesterday all the pre-approved wires were tripped. That is, at some level, at some time in the past, Mr. Kuhlik had determined that $56.50 would be fully valued -- as a Merck common stock NYSE selling price.

And so, three large traunches of his previously-vested stock options were liquidated yesterday. Understand that the benefit of a 10b5-1 trading plan is that an executive may acheive a sale, even while in possession of material non-public information.

And that is why very little may be inferred from his plan sale. As of the close of Q1 2014, Mr. Kuhlik likely had inside information about the level of interest, and likely prices, for the Consumer Health businesses. He now very likely knows what Merck executive management (in consort with its bankers) will recommend to the board -- on the topic. Yet -- because he set up these trading rules long ago, while not in possession of that information -- the plan sells, and he has a safe harbor from insider trading liability -- for the trades at the SEC. Clever. And fair.

Said another way, it is quite possible, that -- based on what he NOW knows -- $56.50 is far too low a price.

We won't ever know. He could also think $56.50 unduly rich, based on today's inside information. So don't infer too much, at all -- from his trades.

However, if my wild (spinco) guess proves right -- that the bids are on the low side, and a spinoff might occur as to Consumer Health assets. . . then maxing out the exercise of stock options -- as his plan did yesterday -- is very smart. Stock options (that haven't been exercised) are not entitled to receive shares of the newco -- unless, of course, the Merck participant exercises the options and accepts full-voting common stock in return. That's what he did yesterday. [If one is holding options of Merck, and ends up as an employee of the as-yet mythical new Consumer Health spinco, one would receive an equitable adjustment on those Merck options -- converting them into newco ones. Not so, if one is staying with mother Merck -- as I am certain the GC would be most likely to do. The Merck employees will see a decrease in exercise price, and an slight increase in the number of Merck shares under option -- but will not be entitled to spinco shares, absent exercise of the underlying options.]

So -- that is about all we know -- or can guess at -- related to this $2.4 million sale. It is also possible that Mr. Kuhlik is buying some sweet weekend real estate -- somewhere on the southeastern seaboard -- and just paid it off. We. just. don't. know. Be excellent to one another!

Friday, April 4, 2014

Reuters Has An Exclusive Scoop -- On Merck's Zilmax® Reintroduction Snags. . .

To be fair to that erstwhile news outlet -- I'll just give you a link -- and will only reprint an excerpt tomorrow, after the world has digested it. MONDAY 04.07.14 -- NOON UPDATE: Here's a bit of the copy, FYI:

. . . .Merck plans to conduct the biggest ever test of its kind in an effort to reintroduce the weight-adding drug into the United States and Canada after suspending sales last August. A test herd of this size is currently worth up to $500 million.

Feedlot owners, however, are reluctant to participate in the study until they get a guarantee that slaughterhouses will be willing to buy the Zilmax-fed animals.

Snags with the study, whose size was confirmed to Reuters by Merck, have not been previously reported.

"I'd be happy to sign up, just as soon as Merck tells me who is going to pay me after they're done," said a feedlot owner in Texas. "It's been a horrible time, with the drought. I can't afford to give away a steer, let alone hundreds. . . ."

I wouldn't bet on a 2014 reintroduction, now in the US, at least.

Be excellent to one another -- have a great weekend!

Making A Biologic At Scale -- A Challenge Uniquely Suited To REAL "Big Data" Analysis

As anyone who has worked around a vaccine shop of size knows, there may be no scientific task more daunting, than growing a perfectly-uniform batch of organisms, from scratch, in the multiple hundreds of thousands of doses scale.

Imagine trying to simultaneously grow upwards of six hundred thousand purple pansies -- not one of them with a single blemish, on any petal. At all. Now imagine having to do that over and over, 52 weeks a year. Oh. And yes -- every single bit of contaminant, biological or substrate -- must vanish before these mythical purple pansies are packed and shipped.

But that is the eye of the needle through which vaccines -- and many of the other newer biologic agents -- must be passed. In the early 2000s, Baxter could not keep a steady flow of its anti-hemophiliac biologic blood factor reliably streaming from the end of the line of its clearly state of the art facility in Europe, no matter how hard it tried. Similarly, in the 2010 to 2012 timeframe, Merck and MRL could not reliably keep the supplies flowing, on certain vaccines (like its Hep B vaccine) -- and likely considered exiting the market altogether.

So. . . unlike a lot of the bluster about uses for big data crunching -- this infinitely variable biological problem set is truly an in the wild environment where massively relational computing might help tease out real root causes of production anomalies. Cue the Info-media machines -- yes, a feature story follows -- on Merck. Diagnosing a vaccine problem, using real big data approaches. Nice. Do go read it all -- but here is a bit:

. . . .By early 2013, a Merck team was experimenting with a massively scalable distributed relational database. But when Llado and Megaro learned that Merck Research Laboratories (MRL) could provide their team with cloud-based Hadoop compute, they decided to change course.

Built on a Hortonworks Hadoop distribution running on Amazon Web Services, MRL's Merck Data Science Platform turned out to be a better fit for the analysis because Hadoop supports a schema-on-read approach. As a result, data from 16 disparate sources could be used in analysis without having to be transformed with time-consuming and expensive ETL processes to conform to a rigid, predefined relational database schema.

"We took all of our data on one vaccine, whether from the labs or the process historians or the environmental systems, and just dropped it into a data lake," says Llado. . . .

And in the end, they figured it out. Amazing. Know that the next biologic production slowdown (and chaos theory posits that such events are a near certainty, over a large enough n. . .) will likely turn out to be due to the confluence of twenty or thirty wholly-new, and very subtle, biological shifts. . . even ambient external plant humiditiy for example. So I salute the REAL "big data" hunters and gatherers here.

And remember -- unlike the competitive gardener, who only loses "best in show", if her pansies are blemished. . . people may die, if even one vial -- of 600,000 doses or so, of a given vaccine is biologically inactive -- or contains any form of particulate. The idea that we -- in the main -- see a safe, stable supply of any widely available modern biologic -- is a BIG science. . . miracle. Yes, I think that the right noun. I plainly do intend to mix cosmology and mysticism here -- with pure inductive scientific reasoning. It is a modern miracle. Thank you, MRL -- and Baxter.

[And. . .what the heck did they put in MY coffee? Wow.]

Thursday, April 3, 2014

I Think It Important To Note That Merck Leads The DJIA To This Moment In 2014

Okay. I pretty regularly point out when, where -- and how -- I think Merck could do a better job, here in my tiny little electron-filled wood-shed. And so, I want to now loudly, and proudly, note the other side of the coin -- going into a quiet Friday.

Quiet, that is -- except that the jobs report is due out tomorrow. So, before that roils the markets in the morning (either up or down), let me take a moment on this smoothly peaceful evening to salute Merck: it has led the DJIA, on the NYSE, for all of 2014, through the first three months. Up over 13 per cent in 2014. Nice. [A long while ago -- mid- to late- 1960s -- the Dow had a club it called "the nifty fifty" -- and Merck was usually the leader of that brat pack. And so it is, once again -- at least for the moment. Sweet.]

To be sure, piloting a long-submerged, massive leviathan -- like Merck, on a 13 per cent up-bubble -- is no mean feat. So this is no April Fools -- kudos, Mr. Frazier, and team. Take a bow. Nicely turned.

Looks Likely That Settlement Talks Are Afoot -- In The "Son Of" Sunscreens Battle Royale

The readership may well recall that back in early February 2014, I had read an inadvertently un-redacted motion to amend the complaint in this battling sunscreen makers' patent fight.

Based on what I read there (i.e., allegations of significant inequitable conduct), I would have guessed that the patent holder might be considering settling. Why? Because if the allegations set forth in that motion were to turn out to be based upon solid evidence, the patent holder would be in significant peril, on several fronts, here. So I waited for some sign that concilliatory talks were underway.

Then just yesterday, in the federal District courthouse in Delaware, the able Judge Skleet disclosed that he had entered an oral order on April 1, 2014, pushing that morning's status call to June 2, 2014. The push was agreed to in advance by counsel for both sides. Given that the parties have completed the vast bulk of taking discovery depositions, in my experience, the longish delay (two months) would likely be. . . to discuss settlement. Each side now likely pretty well understands the other's positions, arguments, defenses and claims.

So, now we wait for "some white smoke, from the Vatican" (that a final settlement agreement has been reached) -- but here is the text of that oral order:


. . . .Pursuant to the request of counsel, IT IS HEREBY ORDERED that: the status teleconference set in this matter for today is RESCHEDULED to 6/2/2014 at 02:30 PM before Judge Sherry R. Fallon. . . .

We shall see -- and should it occur in the way I am rather brashly guessing -- then the settlement will arrive just in time for summer sunscreen selling season. Good for both parties. [Now, if you want to know more about what the whole five year long fights are about, both patent invalidity and Lanham Act claims, just put "Royale" in the upper left search box. I think there are around 25 posts on various aspects of both battles.]

I do wonder aloud anew, as I first did in February, whether J&J will think about reopening the settled original sunscreen battle royale, if it looks like the patent holder has capitulated, here. [To be clear, most settlements of this sort cannot be reopened, absent some later discovered affirmative fraud -- in the explicit factual representations -- upon which the settlement was pinned. So. . . a high bar, to be sure -- but maybe one J&J could clear.] Worth at least a $1 bet, anyway.