Saturday, November 29, 2008

One-in-Eleven "Free" Schering Common Shares: Now "Shorted" -- Pre-Sold!

More importantly, that's about triple its near-peers.

Methodology: As of mid-November 2008, about 83 percent of Schering-Plough's common stock was institutionally-held (this is a very stable figure). These shares rarely change hands, except in large, off-exchange, block transactions -- so the actually-liquid, free-floating number of shares of common stock of Schering Plough are the inverse proportion of this number, or about 16 percent of the 1.61 billion total "floated" Schering shares outstanding.

That figure, then, is about 258 million shares "on the loose" -- over the NYSE, and to a lesser extent, the various international exchanges.

Of those, fully 23 million Schering shares are shorted -- and that is just about level with the October 2008 shares-shorted figure -- which came in just over 23 million shares. See this Yahoo! stock summary chart, for that back-up detail. So, 23/258 equals a ratio of about 9 percent "free-shares-shorted".

This ratio is vastly out-of-whack -- especially compared to all other pharma companies in Schering's peer group. The analogous free-to-short ratios for Pfizer, Merck and Johnson and Johnson are 2.6 percent, 3 percent and 2.1 percent, respectively. Schering? More than triple these.

And so, I would suggest that the overall market "knows" something not reflected in Schering's recent rise from around $14, to a little over $16, in a shortened NYSE session, of yesterday.

That something is not going to be good, post December 31, 2008.

1 comment:

Anonymous said...

In addition to the Vytorin news if you've been following Ed over at Pharmalot, there has recently been quite a bit of news about off-label prescribing of antipsychotics in children and how Biederman a child psychiatrist and key opinion leader who has been driving this very lucrative market is cooperating with Senate Finance Committee investigations.

News from the Senate Finance Committe on this began to filter out in press releases back around last May, yet in the last couple of weeks these press releases and other news has become louder and louder and more and more frequent.

Antipsychotic drug use has been one of the few growth areas for US income for Pharma in the last few years (other than raising prices). Plus increased usage in children has been driving most of this growth, as reflected in info from BMS on Abilify. At $450 to $500 / month AWP for orally melting Abilify tablets this is not surprising.

Recently SP released news on another 6 month maintainance study of asenapine in schizophrenia. I've got to say my thoughts are similar to what I said previously regarding a 6 month maintanance study in bipolar, and how studies like this are typically used to dilute a safety signal. The numbers are small and the duration at 6 months is much to short to give any sort of statistical validity to support safety especially with long term use, i.e. > 1 year. Plus by now there has got to be at least few people who have been on > 1 year so if anything is showing up there it means very high rates and confirmation of anything from preclinical or seen in a few highly susceptable people in shorter term studies.

The main difference with the bipolar maintanance study is that for schizophrenia is that in previous press announcements SP claimed that one of their phase III studies was a "failed" study, i.e. the control didn't work so the study can't be used to support approval. Consequently a relapse study may provide some supporting evidence of efficacy, although there are problems with this scientifically and from a regulatory view as FDA may not want to open the door on that.

Consequently, even if SP should get asenapine approved, which I'm not sure will happen. The sales are not going to be what SP has estimated due to the likely lower prescribing in kids, and especially considering what might be yet to come out in these Senate investigations.