Lowenstein, Sandler represents many of the defendants in the Schering ENHANCE Securities Fraud putative class action. That firm also represents many of the same defendants -- in an earlier iteration of a Schering Securities Fraud class action -- the one involving manufacturing problems related to the Clarinex launch in 2001. That older piece of litigation has progressed a bit in the intervening years, leading to motions for summary judgment, filed by the Lowenstein firm.
Read the below, from one of those filings -- click it to enlarge.
Now, consider that Sen. Grassley, and many of the plaintiffs, are beginning to focus upon the idea of "functional unblinding". It was apparently one of the more important events on the plaintiffs' ENHANCE securities fraud timeline -- the "functional unblinding" of ENHANCE, as early as January 2007 -- a full year before Schering presently admits it had formally-unblinded results from ENHANCE.
If this functional unblinding theory is established by competent evidence, then every statement filed with the SEC about the Cholesterol Franchise was arguably "misleading" -- in that it ommitted what Schering already well-knew: ENHANCE had failed. That is the sort of "silence" that has been held to be misleading enough to sound in securities fraud.
That would make the highlighted statement, toward the end of the letter, above, very troublesome for Schering, Messrs. Hassan and Becherer, et al., and Lowenstein.
We'll know far more on August 1, 2008.
6 comments:
Sorry~not related to your recent post but, just curious:
what do you think of the recent findings?
Schering-Plough Corporation (SGP) Follicle Stimulant Meets Phase-III Endpoint.
It seemed to prompt the stock yesterday yet, to me it seems a niche market item and isn't going to add real volume money to the company.
BTW: keep up the detective work-it is appreciated, despite what others on Yahoo have to say.
Thanks for the encouraging words, here Anon. -- I do think yesterday's fertility end-point acheivement was a mild positive -- and I do think the stock rose " a bit too much" (up 5% ?!) for the actual potential EPS effect -- in 2010 or beyond -- that this yet-to-come niche product will eventually garner.
It is rising again today -- along with all of pharma -- and yet, I think another correction is coming.
Schering is probably still about 20 percent overstaffed, even after these cuts (measured as sales per employee), compared to its peer-group of pharma cos.
I doubt Fred has the stomach for those cuts.
Condor~
I agree with you regarding the cuts. When S/P purchased Organon, looking at Market Cap:
SGP ~36B with 55K employees
MRK ~80B with 60K employees
BMY ~43B with 43K employees
How do you justify the # of people(?). It seemed to me that reduction in staff of at least 20% was warranted. That is a lot of people. Though, very similar pattern of events happened when FH was running Pharmacia.
So, I've been wondering if the Vytorin scandal is 'now' just a cover for the real need to decrease headcount. I'm sure concessions were given to the EU countries to protect headcount in Europe for the acquisition.
Spot-on, Anon -- "Hey, that (almost) rhymes!"
I would actually disagree mildly to say that Organon will serve as a cover for headcount reductions needed even before ENHANCE -- but made unbearbly-bloated by the fact that so many reps now have nothing very useful to sell for CV market -- at least nothing that would support the margin needed (and previously generated by Vytorin sales).
But on the figures -- Schering's headcount it still 20 to 30 percent too high.
My concern is that it isn't just reps~it will be others including laboratory people. In MO, the very people you need to come up with the next Rx.
Did you see the recent comment on Pfizer at seeking alpha?
http://seekingalpha.com/article/84035-does-all-of-pfizer-s-bad-news-just-have-to-be-in-by-now?source=yahoo
Same issue.
I don't know about securities but for drug approvals failure to provide information to the FDA is a basis for misbranding and might open a drug company to criminal liability.
So by this does is SGP also implying that they withheld information from the FDA?
Maybe Congress should look into this for SGP drugs.
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