As of this morning, 01.30.08 (according to Merck's CEO), there are now over 50 lawsuits pending, on this matter. Here are a few paragraphs from the recently-filed federal secruities fraud complaint in Manson v. Schering Plough, et al., 2:08-cv-00397-DMC-MF, US Dist. Ct., NJ (Filed January 18, 2008) -- the plaintiff seeks certification of the litigation, as a federal securities law class action: ". . . .Paragraph 58.
On January 3, 2008, defendant Hassan and Schering-Plough presented at the Morgan Stanley Pharmaceutical CEOs Unplugged Conference, that was also broadcast live. . . . when announcing Hassan and the Company’s participation, defendants also published a release that stated, in part, the following:
". . . .Schering-Plough to Webcast
Presentation at Morgan Stanley
Pharmaceutical CEOs Unplugged Conference
KENILWORTH, N.J., Dec. 27 /PRNewswire-FirstCall/ -- Schering-Plough Corporation (NYSE: SGP) will provide a live audio webcast of an informal presentation by Fred Hassan, chairman and chief executive officer, followed by a question-and-answer session, at the Morgan Stanley Pharmaceutical CEOs Unplugged Conference on Jan. 3, 2008, at approximately 8:45 a.m. (ET). Morgan Stanley hosts will moderate the informal “unplugged” presentation.
Included in Mr. Hassan’s comments will be Schering-Plough’s strategic evolution and the acquisition of Organon BioSciences N.V. (OBS). During the conference he may confirm that the company is still targeting the same accretion and synergy targets mentioned when the OBS acquisition was announced March 12, 2007, specifically that the transaction is anticipated to be accretive to Schering-Plough’s earnings per share by about 10 cents in the first full year, excluding purchase accounting adjustments and acquisition-related costs; and Schering-Plough expects to achieve annual synergies of $500 million. It is expected to take three years from the closing to reach this level of synergies.
Hassan may also reaffirm the following items as disclosed in previous Securities and Exchange Commission filings:
o Schering-Plough anticipates that sales from VYTORIN and ZETIA will continue to grow in the fourth quarter of 2007 and in 2008;
o Schering-Plough is confident in its key products; however, these products face growing competition.
o Schering-Plough will invest in its key brands to sustain their leadership position. . . .";
Paragraph 59.
The statements made by defendants at the Merrill Lynch conference, at the Credit Suisse conference and at the Morgan Stanley conference as well as those statements contained in Schering-Plough’s October 22, 2007 release and and/or contained in the 3Q:07 Form 10-Q, referenced above, were each materially false and misleading when made and were known by defendants to be false at that time. . . ."
Even good times, it is never wise to engage in free-wheeling talk with analysts this close to year end earnings announcements. It just leaves management open to exactly these sorts of charges, if "things turn out differently" than expected.
Note especially that Mr. Hassan made these remarks, and attended this Morgan Stanley conference -- while by SGP's own timeline ["Tom Koestler, EVP, learned of Enhance results on January 7, 2008 at 2:00 p.m."] -- only a few days before he learned of the Enhance results. Wouldn't have made more sense to get the Enhance results, in hand, BEFORE doing a January 3, 2008 "Unplugged" conference? It would sure seem so, now. On January 3, 2008, SGP closed at $26.67 a share.
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