Thursday, July 31, 2008

Wall St. J.: FDA on SEAS Cancer concerns for Vytorin -- Rep. Dingell's Latest Letter to FDA

More in a tick, but the Wall Street Journal is moving an important update on the two Congressional Committees investigating Schering's Vytorin, generally, and now, the SEAS study -- rather specifically -- and pointedly. Do go read it.

It seems Chairman Dingell and Chairman Stupak want Dr. (Sir) Richard Peto's work -- now in FDA hands, but not available to the public -- regarding his analysis of the cancer incidence data in SEAS. Some, including Dr. Harlan Krumholz, have wondered about the conclusions reached thus far largely dismissing the cancer incidence data seen in SEAS -- at least, insofar as the public documents are -- at the moment -- not complete enough to reach the conclusions mentioned by Dr. Peto, with adequate certainty, where something as momentous as a potentially-elevated risk of cancer is suspected.

All of this means FDA will need to turn over all of Schering's Vytorin/SEAS documents that mention the cancer incidence data -- in under two weeks' time. There is no doubt that these Committees have jurisdiction over FDA, in this matter. Take a look -- as ever, click it to enlarge:

Quoth the Journal:

. . . .A report called the SEAS study stunned investors and the medical community in late July, because researchers looking at Vytorin's efficacy in reducing cholesterol had unexpectedly found an increased risk of cancer and deaths from cancer in patients taking Vytorin, compared with those given a placebo.

Vytorin is made by a joint venture of Merck & Co. and Schering-Plough Inc. The companies delayed their earnings announcement on July 22 to inform investors about the SEAS findings. . . .

It seems all those people in the blogosphere, rightly complaining about the incomplete -- and thus potentially confusing -- disclosures of only selected SEAS study papers have found a friendly ear -- and so, it seems, we will all soon see most of those documents, right here.

Tuesday, July 29, 2008

EU Approval of Bridion® (sugammadex) -- about 2.4 cents ONE PENNY per share of 2008 EPS -- in the "Very Best" Case.

08.01.08 @ 8 AM EDT:


FDA declares the drug "non-approvable". Ouch! So much for that $600 million. Said another way, the about 2.4 cents I posited below in 2008 Schering EPS, just became about one single little penny, in added EPS -- for the foreseeable future at Schering. How much has been spent, thus far, to garner that one shiny penny? I dunno. Yikes.


This afternoon, Schering announced that it had received EU approval for sugammadex, its new anesthesia drug. That is good news for the besmirched pharma-company. It just won't amount to much, any time soon, in my analysis. Here is something I just wrote, albeit for another purpose. I'll clean it up a little, later -- but you'll get the gist of it, right now:

The fact is today's EU approval of Bridion®, or sugammadex, won't be enough -- enough to cover the 2008 hole Vytorin has created.

Last year, in June of 2007, pre-acquisition Organon had this to say -- putting its very best face on sugammadex's market potential (press release), to lure Schering to pay-up, on acquisition:
". . . .Organon said the global market for the drug is estimated at 400 million euros ($537 million) and could be higher. . . ."

So, Global sales of let's call it $600 million (we see a weaker dollar now) -- and, let's say it has a 30 percent margin (probably a little too generous, but so what?), then its gross WORLDWIDE contribution to pre-tax earnings (and ultimately, after-tax EPS) will be around $180 million.

But wait! -- suggamadex is not approved in the United States -- and may not be, until 2009 (if one reads the FDA tea-leaves carefully), so. . . .

Let us also assume that Europe will be about 30 percent of the gobal market (again, very generously!) -- then the gross contribution of sugmamadex will be around $54 million, max, in 2008.

Spread that $54 million over 1.637 billion common shares outstanding (last SEC Form 10-Q), and the pretax EPS is 3.3 cents a share -- after tax (assuming a 28 percent tax rate) it would be. . . .

2.4 cents per share of 2008 EPS -- the 2008 Vytorin "hole in earnings" or EPS, is something like 42 cents a share of 2008 EPS (doing the math, here, from Merck's Q1 2008 projection of $700 million of Equity Income fall-off due "solely" to the Cholesterol Joint Venture's mishaps).

So, my best guess is that sugammadex (while a nice little pick-up) will not really matter -- it won't "move the needle much" even when the US approval ultimately comes -- it won't be nearly enough to "right the good ship Schering-Plough". QED.

07.30.08 AM

Financial Analysis/Math is an acquired skill-set, folks. At a 12 times Schering-Plough P/E Multiple, then, that 2.5 cents yields 25 cents in share price increase (today's open) -- but then we must net that, against over $4.80 ($0.42 times a P/E Multiple of 12) "in the hole" [mostly owing to the uncertainties -- still to come], due to ENHANCE-Vytorin fallout. And this stock skids sideways, rather than climbs (like now). But what do I know?

Officials of Suffolk County, New York Allege Schering-Plough Committed "Indictable" Acts Under RICO -- Newly-filed Civil Suit

NOTE: This case, along with a host of others alleging consumer fraud, have now been settled by an agreed order, since approved by Judge Cavanaugh, requiring the payment by New Merck of money damages. This federal case file was thus closed, effective February 23, 2010.

However, the various putative class actions for securities fraud, and ERISA breach of duties cases, as well as the shareholders' derivative cases, and at least two Congressional investigations, and a host of civil governmental inquiries -- both state and federal -- remain open, active and ongoing.


[UPDATED -- 07.29.08 4 PM EDT: Ed, over at Pharmalot, has featured this post! Cool!

11 PM EDT: Dr. Peter Rost has also linked, and featured the graphics from this one. Perfect! Thanks!

Later, Still: The Insider, across the pond, at PharmaGossip has linked this one, as well! Geez -- I guess that's a trifecta, of sorts!

07.31.08 AM-- Chris Truelove, at the Pharma Blog Review has run a teaser on this story, at the end of his, this week. Cool.

07.31.08 PM-- Adventures in Autism has captioned her link, to mine the "Merck Mafia(!?)" -- Ouch!]

The county government of Suffolk County, New York has filed a new civil suit against Schering-Plough (and the Joint Venture, and Merck, among others), overnight, in the federal district courts sitting in Newark, New Jersey. It makes some Consumer Protection Act/False Advertising allegations, but it also takes important new strides in alleging RICO pattern activity -- calling Schering's and Merck's conduct here "indictable".

"Now, that's gonna' leave a mark!" Take a look -- click to enlarge -- see the yellow bubble, and the red underlining, here on page 25 of the complaint:

Suffolk County, New York -- a governmental entity, now -- is alleging that Schering has engaged in what it sees as indictable predicate acts, under the RICO statutes.

There are already other RICO putative class action cases pending against Schering-Plough and Merck, but this is quite significant, in my experienced-estimation -- as at a minimum, it represents a new level of gravitas in the ENHANCE litigation malestrom now beseiging Schering-Plough and its executive leadership: a local-governmental agency is now effectively swearing that Schering has committed "RICO-indictable pattern racketeering" -- in (allegedly) concealing the ENHANCE results for almost two years -- while the good people of Suffolk County, New York were forced to pay greatly-inflated prices for a drug that was no more effective than those much cheaper statins.

For those keeping score at home, the suit is captioned Suffolk County, NY v. Merck Schering-Plough, et al., (Case No. 08-3711, Complaint filed July 28, 2008, DCM-MF, U.S. Dist. Ct., NJ).

I'll keep an eye on this one, for the readership. You may count on it.

Monday, July 28, 2008

Of Rough SEAS -- And McLuhan's "You know nothing of my work. . . ." scene

[UPDATED -- 07.29.08 @ Noon EDT: The Insider, over at PharmaGossip, has named this blog (presumably, on the strength of the below-post), a "hot blog"! Cool!]

This feels a little like the scene in the movie "Annie Hall" -- where Woody Allen pulls Marshall McLuhan, almost bodily, from behind a cut-out [A Real-audio stream of that moment!], to suggest that a near-by bloviating know-it-all, in the ticket-line at the movies -- really. . . . doesn't -- Ahh, but "What the heck?", here goes:

Slide it forward, to the 2:05 mark in the clip! He~He!

You'll need to read my post quoting Dr. Harlan Krumholz (the noted-cardiovascular authority, of Yale University Medical School), of this past-Friday, for this to make the most sense -- but on those SEAS-related cancer incidence observations, the following took place, in the comment-box connected to that post, over the weekend. I think it deserves a much wider audience -- so I re-print it now, as its own post.
Anonymous said...

Krumholtz [sic], although respected and distinguished does not reflect the entire population of opinion. He and Nissen have always been critical of more than just Vytorin and Zetia. There are many who listen to them and do the opposite, for they have created their own political storm for themselves. For Balance, refer to Thomas Dayspring who says the news is FANTASTIC. (HE SUPPLIED HIS OWN EMPHASIS.) His newsletter, Lipidaholics is up to date and his credentials are as good if not better than Krumholtz [sic].

Remember, this population has no Tx except surgery so a Tx that offers 22% decline in events is not a bad thing. Whether the decline is due to the statin or to zetia is a good question but does not change the usefulness of this new information. The cancer incidence has been dealt with quite nicely by the experts from Oxford so I am not concerned and believe it to be unrelated to the Vytorin.

Be careful to take a completely negative opinion of SEAS. Take it in context with all other studies and advance your knowledge, not limit it. This will result in better Tx for pts and a better discussion.

July 26, 2008 4:35 PM


Harlan Krumholz said...

I appreciate being called respected and accomplished -- I do not know Dayspring and whether he is a speaker and consultant for the companies, but I take your word that he is a good source. The people in London were also the stars of the medical world and they discounted the risk. There is controversy and people of substance on different sides of this discussion. From my perspective SEAS provided no evidence to support ezetimibe (the study was negative -- but statin trials of AS have also been -- it did have a 22% reduction in risk but that is not more than what we would have expected from simva alone -- but that is an indirect comparison -- so all we can say is no supportive evidence) -- and then a question of a cancer risk -- that was strong in SEAS but unexpected -- and then there also exists an excess risk for cancer death in IMPROVE-IT/SHARP (the P value is somewhere around 0.05 and whether it is above or below may depend on what analysis you do -- but essentially it is close to 0.05). Now there is other info that would lead one to doubt the association -- but, in my opinion, it is hard to dismiss it completely. The findings from these studies would seem to reinforce the message that people should be on statins if they can take them and get to target. And for people who cannot, many will consider ezetimibe as an option but patients and doctors should know that the safety and effectiveness has not yet been established in clinical trials.

SEAS has raised a safety issue -- many are uncertain about it, were surprised by it, and have some concern about it (that is, we do not believe the evidence from IMPROVE-IT/SHARP can dismiss it). We hope it is not a true adverse effect as 3 million people worldwide are reportedly on the drug. But patients should be aware that the issue will not be settled until more data become available.

July 26, 2008 5:47 PM


Anonymous said...

Thomas Dayspring, MD, F.A.C.P. has disclosed that he is on the Speaker's Bureau for Astra Zeneca, Reliant, Abbott, Merck, Schering Plough and Sanofi-Aventis and is a consultant for Abbott and Reliant.

July 26, 2008 6:08 PM


Marilyn said...

Great article by Matt Herper on differences between statins and ezetimibe.

July 27, 2008 7:40 AM


Anonymous said...

The webcast of the SEAS trial can be viewed at with Tedje Pederson, chairman of the SEAS study, Sir Richard Peto and Rory Collins from Oxford, Eugene Brown from Harvard, Robert Califf - Duke University.

An additional worthwhile review can be seen at the National Lipid Association - where ENHANCE is reviewed in a virtual roundtable discussion, "An Examination of the ENHANCE Trial - proceedings of an expert roundtable discussion webcast"

July 27, 2008 8:04 AM



On, you can see "Surrogate End Points on Trial: ENHANCE and Other Controversies"

Also, on MedPage Today:

Researchers Debate Ezetimibe/Simvastatin (Vytorin) ENHANCE Trial, Parts 1, 2 and 3:

Indeed. Do follow the links.

Friday, July 25, 2008

The more-rigorous reviews of SEAS are beginning to appear. . . .

And, the ever-on-point PM, over at Gooznews, has done a stellar job of synthesizing them -- do go read that one, top-to-bottom, but here is one money quote:

. . . ."This drug [Vytorin] does not have sufficient evidence for it to be used as a front-line agent," [Dr. Harlan Krumholz, of Yale University Medical School] said. "Statins are the drugs of choice. The evidence is not even strong enough to say that people who cannot tolerate statins should go on it. It is an option. Right now using it is based on an assumption that you know what IMPROVE-IT will find. . . ."

[Emphasis supplied.]

Gooz, himself, had written on the cancer concerns, driven by the SEAS data release, earlier in the week. Do go read it, as well.

UPDATED -- 07.26.08 @ 10 AM EDT: Ed, at Pharmalot, has also put up a similar review -- with additional, exclusive Krumholz quotes.

Also a very worthy read on the topic.

Three Two smallish Schering-Plough litigation scheduling updates. . . .

First, the most important of the three two -- in Cain v. Hassan, et al., the putative shareholders' derivative suit, the newly-extended due date for motions in response to Schering's motion to dismiss the action is September 22 2, 2008 -- by agreement of the parties. Defendants' replies will then be due by October 15, 2008.

Second, but falling earlier on the calendar -- for those keep score at home -- is in the Clarinex® patent litigation, captioned In Re Descloratadine Patent Litigation (litigation in which Schering is the plaintiff), Orchid Pharmaceuticals' (the Defendant's) written answers, or other responsive pleadings -- to Schering's Complaint, will now be due -- on August 6, 2008 -- again, by agreement of the parties.

Finally, in the putative Securities Class Action -- Schering-Plough ENHANCE Litigation, Mason v. Schering-Plough, et al., (Case No. 08-397) the Lead Plaintiffs now have until September 15, 2008 to file an amended, Consolidated Complaint -- yes, again, by agreement of the parties.

Each of these matters is now pending in the federal district courts in Newark, New Jersey.

Dechert LLP's Philly office: A Very-Active Reader. . . .

Not a huge surprise, but perhaps the specific path is of interest -- the visit spans over six hours -- just on this one detour. Dechert, of course, represents Schering-Plough in several of the pieces of litigation that have emerged from the ENHANCE fiasco. Most recently, Dechert lost a motion to stay the Plaintiffs' discovery efforts -- in the ENHANCE/Vytorin Marketing, Sales Practices and Product Liability litigation. Might the below-visit be in preparation for defending these early, and accelerating, discovery efforts? I don't know.

There have been hundreds of others from Dechert computers. So this is but one recent example: (Dechert LLP) [Label IP Address]

Pennsylvania, Philadelphia, United States

24th July 2008 09:53:55 AM

24th July 2008 09:54:39 AM

24th July 2008 09:55:25 AM

24th July 2008 09:56:37 AM

24th July 2008 09:57:17 AM

24th July 2008 09:58:36 AM

24th July 2008 09:58:43 AM

24th July 2008 09:58:45 AM

24th July 2008 09:59:25 AM

24th July 2008 03:11:51 PM No referring link

24th July 2008 03:11:53 PM No referring link

24th July 2008 03:11:59 PM No referring link

24th July 2008 08:02:50 PM No referring link


Once More -- Awaiting CafePharma Queue Moderation. . . .

This won't make sense, unless you've read the original CafePharma thread to which it relates -- but here goes:

I don't know who the Condor is, but I can sure tell you that I know the industry, worked in it for decades, and even worked for SP for a while. If the Condor needs assistance and facts about this cesspool known as Schering Plough, there are many, many like me who will offer the info gratis. I would revel in your company's demise. You are bad for the industry, but most importantly, you are bad for patients and their medical care providers.


To be clear -- I was "yanking the chain" of the decidely-dim-witted anonymous poster (way above) who seems to complain about me 24 by 7, around here. That's all jake by me, though -- that is his/her right, after-all -- it is a marketplace of ideas, here.

It is odd, isn't it, though, that s/he doesn't complain AT ALL about the PRIMARY actors -- at Schering. Are the messengers really to blame? I don't think so.

I don't need to write a book. It is writing itself -- day by day, in the national newspapers -- and on various blogs. [BTW, the alluded-to "SeekingAlpha piece" is actually a syndication feed (reprint) of something originally written by a VERY pro-Schering guy (Derek's an ex-Schering science guy, in fact!) -- at Corante/Pipeline. Google it for yourself -- get "the truth. It is out there." AND, BTW -- Derek said Schering "couldn't have done more damage" to ITSELF (re SEAS), if it "had hired Professional Saboteurs". Heh.

That line made me kinda' warm and fuzzy, inside. But I digress.]

That said, I welcome the above-offer (in green).

More of Salmon's Cogent Observations -- on the SEAS/Cancer Issue "Dear Doctor" Letter

This also appears in the comment-box for the original "Dear Doctor" letter post. I felt it (like the CafePharma post itself) deserved a wider audience -- so here is our exchange -- in full:

In the US any written material provided by a companay relating to an approved drug including advertising is 'labeling'.

This is what the Food Drug and Cosmetics Act has to say about labeling:
Food, Drug & Cosmetics Act

SEC. 502. [21 USC 352] Misbranded Drugs and Devices

A drug or device shall be deemed to be misbranded. . . .

(a) False or misleading label. If its labeling is false or misleading in any particular. . . .

(j) Health-endangering when used as prescribed. If it is dangerous to health when used in the dosage or manner or with the frequency or duration prescribed, recommended, or suggested in the labeling thereof.

Now if Vytorin is paid for by Medicaid or Medicare the following is something else to consider.
18 USC § 371. Conspiracy to commit offense or to defraud United States

If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both.

If, however, the offense, the commission of which is the object of the conspiracy, is a misdemeanor only, the punishment for such conspiracy shall not exceed the maximum punishment provided for such misdemeanor. . . .


July 25, 2008 4:35 AM

Quick correction. Not only advertising but printed materials are considered labeling for determination of misbranding.
See FD&CA SEC. 201:
. . . .(m) The term "labeling" means all labels and other written, printed, or graphic matters (1) upon any article or any of its containers or wrappers, or (2) accompanying such article.

(n) If an article is alleged to be misbranded because the labeling or advertising is misleading, then in determining whether the labeling or advertising is misleading there shall be taken into account (among other things) not only representations made or suggested by statement, word, design, device, or any combination thereof, but also the extent to which the labeling or advertising fails to reveal facts material in the light of such representations or material with respect to consequences which may result from the use of the article to which the labeling or advertising relates under the conditions of use prescribed in the labeling or advertising thereof or under such conditions of use as are customary or usual. . . .

So if they only give out a letter about Cancer if requested, is this failure to reveal material facts? What about all the other clauses and the fact that it's illegal to introduce into interstate commerce a drug that's misbranded?

Discuss among yourselves.


July 25, 2008 4:52 AM


Condor said...

Salmon -- you've just gone where I was headed, next -- swimming up the very same river, it seems -- I'll likely highlight yours, in a new post, later today, and with it, predict that in perhaps only a few days' time, the FDA will "give Schering a call" about less than complete transparency -- i.e., reticence on material saftey information. . . .

Perhaps I'll caption it:

"How to help an ordinary train-wreck. . . catch fire, and explode, to boot!"

But make no mistake about it -- this looks to fit the Hassan-led Schering pattern, to a tee -- torture a very-dubious position until it is barely recognizable as attempted compliance with the applicable law -- and thus, put Schering into an even deeper hole, as opposed to digging Schering out of one.

Great post -- thanks for the research materials, Salmon!

July 25, 2008 6:32 AM

Feel free to chime in, any and or all of you wise FDA-heads looking in from Potomac, Maryland -- Host: -- ISP: Parklawn Computer Center / Dimes Hq. Seriously -- I welcome your observations. This seems right up the Agency's alley, doesn't it?

I would also welcome anonymous (or attributed) comments on any or all of this from the wise folks in Frederick, Maryland, at the National Institutes of Health (NIH) -- Host: -- ISP: National Institutes Of Health. . . .

I promise no individual's identity will ever be revealed -- similarly, I will never disclose whether someone inside (or outside) these groups posted any particular comment.

Thursday, July 24, 2008

An Anonymous CafePharma post that deserves to be seen. . . .

UPDATED: 07.25.08 @ 8:30 AM EDT -- That fine gent -- at PharmaGossip -- has linked this, and made a poignant reference to the fantastic Joseph Heller novel "Catch 22". Do go see his!

I have also set the comments, and some observations on them, as a new post, here.


Schering has prepared a "Dear Doctor" letter related to the cancer issue in its SEAS study. Here is one purported salesperson's incredulity -- given that Schering will only provide the letter to doctors who ask for it -- I thought I'd link the letter, and quote the salesperson's reaction:

Today, 01:14 PM Anonymous

Re: Is this what you were trying to show with SEAS?


Originally Posted by Anonymous

One word summary..CANCER


I just had a Physician ask me for the letter explaining the Cancer concern coming out of SEAS. He saw it on the internet. Beautiful. It actually states that we will not be automatically sending letters to all Docs, instead we will hand them a letter if they ask about it. God I have to get out of this company quick. Again SP is doing the bare minimum to inform our customers. Personally, I am going to make copies and hand one to every doctor and nurse in my territory. This shell game bullshit is another SP manipulation of our credibility and I told my DM on the phone that this is what I plan to do. Nothing but silence on the other end. I don't think she had a clue about this. . . .

Jaw-slacking. Simply jaw-slacking.

Hindsight is always 20-20 -- but why wasn't Schering-Plough's NYSE trading halted on Monday morning, when it delayed its Q2 Earnings Release?

First off -- I do recognize, from extensive experience, that no one really knows how any particular event to going to affect trading in a listed security, until the event is announced -- but the better advisors and counsellors usually have "Kentucky-windage" as to which way it will break -- before it breaks.

That is -- of course -- the main reason for NYSE Listed Company Manual Section 202.06(B), discussed last night: To seek, and receive, the considered wisdom of the NYSE (that deals in such matters daily -- as opposed to once in a blue moon, for most public companies) -- before an unwarranted trading-trainwreck ensues.

Now, I have set to thinking -- after looking at the trading on the morning of July 21, 2008 -- and knowing that Schering had chosen to delay its Second Quarter Earnings Release to post-market close (presumably for tactical advantage), from pre-market open, some time during the night/early morning on July 20-21 -- why on Earth didn't Schering ask the NYSE for a halt in trading -- until the 1 PM EDT conference on SEAS could be held -- if, in fact, there was no possibility of moving the timing of the SEAS disclosure web-cast? Why?

I am curious. Look now at the Monday morning trading -- shaded red -- click it to enlarge (graphic derived from a rather-flat Yahoo! screen-shot):

Might a lot of that awful morning's carnage been avoided if, in the wise words of NYSE Manual Section 202.06, time had been allowed for a "period of calm for public evaluation" of the SEAS news -- during a trading-halt? And, wouldn't all the buyers between 1:15 PM and 1:20 PM, EDT on Monday (at a plainly-artificially-high price) have had a chance to avoid all the losses they are now suffering (shaded in lemon-lime, above)?

I think so, in both cases.

Remember, over 108 million shares changed hands that day -- there were perhaps 7 million shares bought at the higher (1 PM) prices.

Finally, Schering specifically chose to arrange all the elements -- and the chronological sequence of those elements -- that resulted in Monday's debacle, depicted, and on-going, above. For ease of reference, here is Section 202.07 -- on NYSE Trading Halts:

202.07 Trading Halt Procedures

Whenever the Exchange determines that trading in a listed security should be halted or delayed pending the release of a material news announcement:

* Implementation of the halt or delay will be announced and the reason for the halt or delay will be stated "news pending";

* Thereafter, the Exchange will monitor the situation closely and will commence the opening or reopening of trading in the listed security in accordance with its normal procedures as soon as the material news announcement has been made. If the announcement is not made within a reasonable time after the halt or delay is implemented, trading in the listed security may be opened or reopened in the interests of providing a liquid market. While the time period may vary from case to case as a result of the particular circumstances involved, normally if the announcement is not made within approximately 30 minutes after the delay or halt is implemented, the Exchange may commence the opening or reopening of trading in the listed security. Such action will be preceded by an announcement to the effect that trading is resuming even though the material news announcement has not been released. . . .

No one really likes trading halts -- they are scary. Unnerving to the market-makers, afterall. But, the above may be a text-book example of why a halt should occassionally issue from the NYSE. It may have been something Schering's advisors should have requested from the NYSE -- given that Schering knew what the SEAS Update foretold.

Wednesday, July 23, 2008

Did Schering-Plough comply with the terms of the NYSE Listed Company Manual when it released SEAS?

UPDATED 08.24.08 @ 2 PM EDT: The Case FOR NYSE Trading Halts -- Schering's SEAS Announcement: a Textbook Example. Obviously, I continue to be troubled by Schering's Monday NYSE trading rip-tide. Do go see why.

Earlier, PharmaLive pointed to, and linked this post! Cool! -- Thanks!


I broadly hinted at my concern about this, early on Monday morning, but I wonder whether Schering made the required "pre-event" phone call to the NYSE Department of Stock List, to solicit the opinion of the Listed Company Representative assigned to Schering -- about whether the timing of the SEAS study release (from Europe) was appropriate -- and was the best way to handle news of such gravity.

I really wonder, given the wrenching volitility the stock suffered before -- and after -- the 1 PM EDT (Mid-Trading-Day) web-cast. That was evening in Europe, by the way. What was the magic about that time? I do wonder.

Let's read from the NYSE Listed Company Manual -- these are the standards that govern NYSE-listed public companies -- like Schering-Plough (and Merck):

202.06 Procedure for Public Release of Information. . . .

. . . .(B) Telephone Alert to the Exchange

When the announcement of news of a material event or a statement dealing with a rumor which calls for immediate release is made shortly before the opening or during market hours (presently 9:30 A.M. to 5:00 P.M., New York time)*, it is recommended that the company's Exchange representative be notified by telephone at least ten minutes prior to release of the announcement to the news media. If the Exchange receives such notification in time, it will be in a position to consider whether, in the opinion of the Exchange, trading in the security should be temporarily halted. A delay in trading after the appearance of the news on the Dow Jones, Reuters or Bloomberg news wires provides a period of calm for public evaluation of the announcement. The halt also allows customers to revise the terms of limit orders on the specialist's book in view of the news announcement. Even if limit orders are not canceled or changed during the halt, the fact that trading is halted results in the reopening being considered a new opening, thereby enabling limit orders to participate at the new opening price regardless of the previously entered limit. A longer delay in trading may be necessary if there is an unusual influx of orders. The Exchange attempts to keep such interruptions in the continuous auction market to a minimum. However, where events transpire during market hours, the overall importance of fairness to all those participating in the market demands that these procedures be followed.

* Effective June 13, 1991 the New York Stock Exchange off-hours trading sessions became operational. The facility offers the opportunity to trade at NYSE closing prices after the NYSE's 4:00 P.M. close until 5:00 P.M.

(C) Release to Newspapers and News Wire Services

News which ought to be the subject of immediate publicity must be released by the fastest available means. The fastest available means may vary in individual cases and according to the time of day. Ordinarily, this requires a release to the public press by telephone, facsimile, or hand delivery, or some combination of such methods. Transmittal of such a release to the press solely by mail is not considered satisfactory. Similarly, release of such news exclusively to local press would not be sufficient for adequate and prompt disclosure to the investing public. . . .

It seemed rather strange to me, back then (and more so, now, that I have gone back to refresh my memory of the NYSE Listed Company Manual's terms), that the SEAS study presenters -- in Europe -- waited until something like 7 PM (local time in Europe) to conduct the web-cast. Why was that time chosen? Was the NYSE pre-notified?

Did Schering actually believe the results would be "immaterial", and thus did not call the NYSE -- to pre-notify, under Section 202.06(B)? That approach would have been "at variance" with the pro-offered reason for moving the time of the Q2 Earnings Conference Calls. Did Schering think it material, or not so? I do wonder.

Certainly, the SEAS release web-cast could have also been held prior to market open on Monday -- say 11 AM, local Europe time, and still have held both the Merck and Schering conference calls at the originally-scheduled time -- avoiding perhaps a half-day of market turmoil.

Tuesday, July 22, 2008

The Most Ominous Line -- for Schering -- in Merck's Q2 Press Release, tonight?

UPDATED -- 11 AM EDT: Though clearly not fully-intending to do so, the generally very-pro-Schering-Plough web site "In the Pipeline" (Derek is an ex-Schering science guy) -- seems to be throwing in the towel on the Cholesterol Joint Venture. He adds detailed credence to the thesis that the Joint Venture is coming to an end -- albeit not directly.

He writes of SEAS ". . . .put out press releases that your compound, even though it failed to work again, isn't actually a cancer risk. You really couldn't do worse; a gang of saboteurs couldn't have done worse. Of course, there's no such gang: the companies themselves authorized these trials, thinking that there were home runs to be hit. But all these sidelines -- familial hypercholesteremia, aortic stenosis -- have only sown fear, confusion, and doubt. . . . ."

[Emphasis supplied.]


From CEO Dick Clark's first full paragraph after the first two tables [emphasis supplied; link to the full release]:

". . . .Earlier today, data for the SEAS study was presented by the primary investigator," he said. "We are moving quickly to fully assess the potential implications of the data for our cholesterol joint venture. . . ."

The bolded bit could be read to suggest one possible "implication" for the Joint Venture. . . . would be its end.

Am I reading too much into his statement, here? Let me know.

Revised -- Schering-Plough: A Greek Tragedy, in Three Acts.

An update, to this one, proclaiming it all a "comical farce", also in three acts -- I sincerely apologize. That was entirely premature:

Act I

March 31 -- April 1, 2008: ACC ENHANCE Panel Discussion in Chicago -- Schering stock goes from $19.87, to $14.41 per share [Meanwhile earlier, off-stage, left, SEAS study launches -- to compare Vytorin to a placebo (i.e., stack the deck-chairs)].

Act II

Slowly recover -- to around $22 -- by late last week. . . . Then, delay Schering and Merck Q2 earnings conference calls -- to after market-close, on July 21, 2008 -- for "an important update" on SEAS: Vytorin to a placebo results*.


Fail the primary endpoint on a Vytorin study -- [Again!]

But flog an (underpowered) secondary SEAS endpoint, while ignoring some data on cancer incidence-spikes. Point to your successes in rearranging those pesky deckchairs -- dutifully ignore that icberg. Vytorin/Zetia is still more than 50 percent of all of Schering's 2008 full-year profitability -- at least before this evening, it was. . . .

Tune in tomorrow, for all [the rest] of the carnage. James Cameron is now under contract -- to direct. Shorter Condor [channeling PharmaGossip's excellent turn of phrase!]: Heavy SEAS, ahead!


* A more detailed plot synopsis, then: I just walked off my plane from the West Coast, and I am still digesting how this topsy-turvy Schering-Plough trading day ended. . . .

Over 108 million shares changing hands -- off another 3 percent in the NASDAQ after-hours session -- on about a million shares changing hands, after hours.

Yep. I think it safe to say -- "Look out below."

Add to this that Merck refused to update its full-year 2008 guidance, tonight -- CEO Clark is still studying the SEAS fallout. So, will Schering close below $18 tomorrow?




I honestly need to do some math -- but all of these are at least possibilities "in play", at the moment. [Had the analysts really taken all of the 2008 Vytorin profits out of their models, before last Friday? I doubt it.]

I am genuinely saddened -- for the Schering rank and file -- to have been so terribly right, over the last few weeks. That $22 was truly a suckers' rally.

So, it would seem SEAS missed the primary end-point (bad enough), but wait! There's more! The big "C" -- However, since no similar cancer incidence results have been seen in IMPROVE-IT (thus far, apparently) -- this should "only" mean that Vytorin is largely ineffective at improving cardiac outcomes -- not "inherently a dangerous drug", per se.

And, while it is also true that the secondary result (flogged by CEO Hassan, tonight) was a "positive", that positive is underpowered possibly the result of a confusing variable -- the statin's presence in the compound. [Edit: Thanks to the loyal fanbase, MM, for the edit -- I did misuse the term of art: "underpowered"!] That is, it should have been significantly better than it was, if it was NOT (quite likely) an artifact.

So, tomorrow we will know -- by the close of the market -- whether Wall Street's analysts had really factored Vytorin sales to be near zero by mid-2009. If so, Schering should be flat, to slightly rising, tomorrow. I. don't. think. so.

I expect it will be off sharply, and on very heavy volume, again. I cannot see how there is a significant market for a combo pill that costs at least triple what a plain statin does -- but can't beat a placebo. Sell me that one, please.

Where is the [revised] business model for this drug? I say this fully-aware that I am simply ignoring the cancer-incidence data. (Will your family doctor do the same?) And -- still, I genuinely ask -- what is the "value proposition" this drug now offers? At any price. What?

I don't see it. I don't think Wall Street will, either.

Monday, July 21, 2008

SEAS -- A Comical Farce, in Three Acts. . . . Sponsored by the Odd Folks at Schering-Plough

[UPDATED 08.24.08 @ 2 PM EDT: The Case FOR NYSE Trading Halts -- Schering's SEAS Announcement: a Textbook Example.]

Act I:

Compare Vytorin to a placebo (i.e., stack the deck).

Act II:

Schedule Schering and Merck Second Quarter 2008 Earnings Calls for pre-market-open on July 21, 2008.

Act III:

Delay both calls -- to after market-close, on July 21, 2008 -- for "an important update" on SEAS: Vytorin to placebo.

H I L A R I O U S L Y. . . . bad theatre! Why?

Well, what is missing from the above plot-synopsis is this: According to paragraph two of Schering-Plough's press release, the SEAS update will be published around 1 PM EDT today -- during the trading day.

Were this "Norway Update" truly material, it would not be published during the trading day, as at a minimum (and more fully-discussed here), an NYSE Halt-Trading process would be invoked -- with a "News-Pending" flag on the stock's ticker symbol. If Schering opens (at all) this morning -- on the NYSE -- in about 20 minutes' time, then this is all a stunt.

My prediction, then: There will be no Earth-shatteringly-positive actual news from the SEAS update -- out of Sweden.

You read it here, first.


I was mistaken. A Greek tragedy, in three acts. . . .

PharmaGossip, and PharmaLaw each featured this post, earlier today -- while I was off the grid. PharmaGossip apparently even shoved a link to it, onto the WSJ's Healthcare Blog! Wow! -- Thanks!


▲ Schering-Plough's common stock has opened very-badly on the NYSE — off 5.7 percent in the first few minutes of trading — falling through $20.20 now.

▲ Half a million shares in the first ten trades.

▲ I’d say that the market has sniffed-out a pig, despite its lipstick. Strictly "Bread and Circus" stuff, out of Kenilworth these days. . . .

▲ Now falling through $19.65 (Down 8.68 percent). Heavy volumes. Gee this looks to have been a real swell idea, Mr. Hassan.

▲ Now $19.54 (Down 8.86 percent) 2.86 million shares changing hands in the first 40 minutes.

▲ Now $19.34 (Down 9.8 percent) 3.4 million shares changing hands in the first 50 minutes.

▲ Just fell through $19 support floor: $18.73 (Down 12.3 percent) 4.4 million shares changing hands in the first 58 minutes.

▲ Now it's a 13 percent "down bubble". And still diving:
Ensign: "Approaching crush depth, Captain Hassan."

Chief of the Boat: "Orders, sir?"

Captain Hassan: "Grant me more stock options (at $18.85) -- only that will right the ship, men!"

▲ I've got to jet. Good luck, folks.

You did read it here, above, first.

Sunday, July 20, 2008

Once again -- while I wait for CafePharma's moderation que. . . .

I posted this, over at a Cafepharma discussion -- and it is still awaitng moderation, so I set it forth, in full here:

I think this has slowly-evolved into a well-intentioned (if occasionally spirited) discussion -- one that finally focuses on Schering-Plough -- and not so much on me. And, that is a good thing.

So, if I might -- I, too, believe the vast majority of Schering's rank-and-file (like the rank and file, anywhere) are very decent, hard-working and honest people. I have been on record -- for more than three months -- with that sentiment: "The Vast-Majority of Schering employees are honest hard-working. . . ."

That is why the (lack of ethical) "tone at the top" is so unfortunate -- it tars all employees with the bad-choices of a very-few, highly-placed, influential actors. But to suggest we should look the other way, simply because lower-level employees will "lose their jobs" if/when all that was hidden -- is revealed -- is simply illogical. If you don't face the sunshine, you are an agent of the darkness.

So, lose your job -- or wear an orange suit -- as a "co-conspirator", if you choose to "be a good corporate loyalist" and help cover-up the misdeeds?

You get to decide. That is the beauty of this moment in Schering's history.

I'll vanish again now -- for a while -- I'm largely off-the-grid, here on the West Coast (on other business) -- until the Merck and Schering earnings calls, tomorrow morning, of course.

Be well.

Friday, July 18, 2008

Dechert LLP loses -- Plaintiffs get "Early Discovery" win from Magistrate Mark Falk -- in Polk v. Schering-Plough, et al.: July 18, 2008

Well, we'll have to wait and see what, exactly, this early "limited" discovery order will actually allow, but as I predicted just a few days ago, the Dechert LLP letter -- filed in MDL 1938, the Vytorin/Zetia Marketing, Sales Practices, and Products Liability consolidated litigation -- seeking a stay of discovery -- has not carried the day. I did not "pop-over" to Newark, to hear the arguments on this motion (now I wish I had!), so I don't yet know how much early discovery will occur, but I do know that this is very bad news for Schering. . . .

Such bad news, in fact, that Dechert LLP may well move for reconsideration before Judge Cavanaugh. Dechert might even appeal any adverse ruling there (should one be entered by the judge) to the Court of Appeals. But that strategem risks "poisoning the well" with the very people who will ultimately be called upon to try one's case -- and, after-all, if Schering really has "nothing to hide," it should want depos to be taken sooner, rather than later, so that its executives' memories will still be very current, right? R-i-i-i-I-i-ight.

Note that what has been granted here is a very important "early-look": at least for some purposes, factual discovery -- perhaps including depositions of officers and directors -- may begin very shortly. Take a look at the image of the order -- do click it, to enlarge:

Things are going to start poppin' -- on all of this -- pretty quickly, now. . . .

Note that the Magistrate has ordered Schering's lawyers to meet, and confer to start working out the schedules for sharing documents [and the taking of depositions(?)]. . . .

So, were I one Hans Becherer, I'd take my vacation (in Europe?), in the next two weeks -- after that, it may be back-to-back for quite a while, defending all those compensation decisions -- in depositions, day-after-agonizing-day. . . .

Oh, and, "Buckle-up," Mr. Hassan -- Monday's earnings call may get very "interesting".

Monday, July 21, 2008 will be a busy day for various developments at Schering-Plough -- including Clarinex®

I'll be out-of-pocket -- in Northern California, for a quick in-and-out, on various meetings -- but (owing to the time differences), I intend to live-blog highlights of the Merck, and the Schering Q2 calls, on Monday morning, from my hotel. We should learn quite a bit more from Merck's call, as Merck will likely need to update its projection of $700 million in lost 2008 profits, solely from the Vytorin Joint Venture with Schering, due to these latest Schering-provided, IMS-generated, monthly scrips disclosures.

Will Merck CEO Dick Clark simply ante-up, and re-set it at a nice, round $1 billion? We'll know a lot more -- on Monday.

[An aside -- today Citigroup initiated coverage on Schering. And, before you ask -- the answer is "Yes". Yes, yes, yes -- Citi-controlled entities had over $860 million at stake in the August and September 2007 Schering public offerings it helped co-lead -- offerings priced at $27.50 -- Hmmmmm. . . just how independent is that coverage? I wonder. You should, too. But I digress. . . .] UPDATING, here: I just noticed that Citi initiated at "Hold" -- that is a very-ominous sign -- it would suggest that Citi sees almost no upside from here. It would suggest Citi thinks Schering is now fully- to over-, valued. Wow. And this, from a bank already showing a $5.50 per share (albeit unrealized) loss on its clients' earlier purchases in the Schering public offerings, in Q3 2007.

I'll have much more on what it will all mean for Schering, proper, on Monday, but now the real reason I foresee a log-jam of events:

I have been (quietly) watching the numerous pieces of Descloratadine (marketed as Clarinex® tablets) patent litigation (particularly Case No. 06-04715 against Zydus) that Schering brought against various would-be generic manufacturers of Clarinex®-equivalent tablets -- back in 2007, and in some cases, back as far as 2006. These have now progressed to an important series of deadlines -- many of which also fall on this Monday morning. Odd convergence, eh?

On Monday, the Briefs in Opposition -- to Watson Laboratories, Inc.'s and Watson Pharmaceuticals, Inc.'s Motions to Dismiss chunks of Schering's patent infringement suit -- are due, from Schering's Counsel, McCarter and English. Also on Monday, responsive pleadings and motions -- as to other defendants in these Schering-intitiated lawsuits (now consolidated with the suits against Orchid, Sun, Barr, Sandoz, Watson and other would-be generic manufacturers -- in the face of Schering's claims about the broad coverage, and applicability of its so-called "Patent No. '274"), will be filed.

[Oh, and fascinatingly, Winston and Strawn has beefed up its defense team, adding lawyers from its Chicago office (on behalf of Sun, one of the other generic companies sued by Schering) to its roster, last night -- which often suggests an imminent, and large, filing -- authored by one (or more) of those newly-added lawyers. We'll see.]

Finally, the decision of the federal District Court, in Newark, New Jersey -- from United States Magistrate Judge Tonianne J. Bongiovanni, on Schering's attempt to hide from public inspection most of its substantive papers in these consolidated actions -- actions Schering, itself, brought -- was earlier-scheduled for Monday, as well, but will now be held over until September 2, 2008, thus:

". . . .Motion to Seal certain materials submitted in Opposition to Defendants Watson Laboratories, Inc.'s and Watson Pharmaceuticals, Inc.'s Motion to Dismiss for Lack of Subject Matter Jurisdiction.

Motion Hearing set for September 2, 2008 before Magistrate Judge Tonianne J. Bongiovanni. . . .

We may decide to file some sort of amici materials, on this issue -- these are public documents [the federal courts are presumtively open to all, regardless of some usually-remote potential for business advantage, or dis-advantage -- the Clarinex® (descloratadine) patents at issue, here, are likewise entirely public documents -- as are the formulae by under which Schering (and the generic companies) make the tablets] and, except for the relatively-few paragraphs that might contain core Clarinex® trade secrets, there is little legal basis for Schering-Plough to seal papers in a suit it made a conscious-choice to bring.

I may not get to a lot of this until I return, on Tuesday-evening, July 22, 2008.

But I can confidently predict there will be a lot of new information on whether Orchid Pharmaceuticals (based in India) will be in a position to attempt an "at-risk", late-2008, launch of its generic version of Clarinex® tablets. If nothing else, it should all be rather droll -- entertaining fare -- assuming the court orders at least the non-trade-secret portions of these presumptively-public documents to appear in the electronic court files -- and soon.

At the moment, one of Schering's heftiest briefs is visible only as a summary -- the actual brief (or statements of, and arguments on, the laws -- entirely public laws) is now sealed, temporarily, from the public's prying eyes (and iPhone®-G3's). Heh.

Thursday, July 17, 2008

June 2008 IMS scrips -- Bottom line: Vytorin/Zetia STILL losing share -- in a "shrinking" US Market. . . .

These are moderate declines, compared to two motnhs ago (still, close to a 5 percent, month-over-month sequential decline), but it is an especially ominous sign that the overall "cholesterol market" in the U.S. is "shrinking" -- in this economy, that might well-mean that the under-, and un-insured have stopped taking their meds, altogether.

Or, it could mean that people are being counseled to adopt healthier lifestyles before trying any drug -- statin or other -- at all.

Overall, a 26.6 percent decline since the start of the year. Wow. [Click to enlarge.]

This is not good news. Meanwhile, 1.09 million shares traded -- essentially flat, after-hours -- on the NASDAQ, thus far.

Kaiser CEO testimony today, before Congress -- George C. Halvorson. . . .

The entire PDF is well-worth reading, but here are some highlights:

. . . .I am sad to say that health care in America is a disorganized, weakly coordinated, inadequately linked, $2.3 trillion care infrastructure that is currently our country’s fastest growing industry. . . .

It is an industry that will not be reformed without intervention by public policymakers and purchasers. . . .

. . . .Major studies show huge inconsistencies in care delivery across this country. For example, diabetics consume over 32 percent of the total costs of Medicare, and reliable studies show that the U.S. health care infrastructure provides the right care for diabetics less than 10 percent of the time. . . .

We are missing critical linkages among clinicians and we are missing systematic, patient-focused care. One key element of the solution is to have vertically linked clinicians functioning in teams to deliver care, supported by a secure electronic medical record (EMR) that gives each clinician the relevant information about each patient in real time at the point of care. . . .

Another key element of the solution is to have special computer systems –- care registries –- that analyze data from the electronic medical record and give doctors and other clinicians reminders and prompts to recommend what the best scientific evidence and expert opinion would agree is necessary and optimal care for each patient. . . . Only a few places in this country will be able to achieve the full electronic medical record supported by an up-to-date care registry in the immediate future. . . .

What Kaiser Permanente and other multi-specialty groups such as Group Health Cooperative, Intermountain Healthcare and Geisinger can accomplish is to set the gold standard with a sophisticated electronic medical record and a fully integrated system. But the rest of the health care system is not vertically integrated and does not have appropriately aligned financial incentives. However, as a country, we can decide to move towards virtual integration and to create payment structures that reward good care, rather than the quantity of services delivered.

Most American patients will need another pathway to computer supported care. That second pathway is possible. We don’t need algorithms for hundreds of diseases in order to transform care. We do need algorithms and support systems for the five chronic conditions (congestive heart failure, asthma, diabetes, coronary artery disease, and depression) and for the five percent of the total population who drive 50 percent of the care costs in this country. . . .

If we want care to get better for those patients, we need to insist that all chronic care patients with serious co-morbidities have their care supported by electronic care registries –- and that clinicians who choose not to interact with those registries should be financially affected by their decision.

What happens when care is fully supported by electronic panel support tools? The outcome improvements can be huge. We should set a national goal to decrease hospitalization for asthma patients by 50 percent. We should also reduce congestive heart failure crisis by 50 percent. We should reduce kidney failure by 50 percent.

The electronic medical record alone does not do the work. EMR is a great thing, but an EMR all by itself is not enough. The EMR must be supported by panel management tools that scan the data and give advice to clinicians about needed care. . . .

My advice for you today is this: Our nation’s current non-system -- depending on siloed and separate paper medical records and providing perverse financial incentives that directly reward sub-optimal care and discourage efficiency –- will never reform itself. It will also never magically become a “system.”

We need to focus on the areas of the greatest potential - and we need to put computerized support systems in place as soon as that work can be done. . . .

[Emphasis supplied.]

LIVE VIDEO! -- July 17, 2008 -- Yet Another Health-Care Reform-themed Hearing -- Senate Finance Committee

FLOATED: 07.17.08 AM

[Originally posted: 07.15.08 PM]

I'll have a archived live, streaming video feed in an embedded window, here, of the entire hearing -- the feed will go "live" at about 9:50 AM EDT, on Thursday July 17, 2008. Be sure to check back at this space, then. Here are the hearing particulars:

"The Right Care at the Right Time:
Leveraging Innovation to Improve
Health Care Quality for All Americans

July 17, 2008, at 10:00 a.m.,
in 215 Dirksen Senate Office Building

Member Statements:

Max Baucus, MT

Charles Grassley, IA

Witness Statements:

Peter Orszag, Director, Congressional Budget Office, Washington, DC

Richard Hillestad, Ph.D., Principal Researcher; Professor, RAND Graduate School, Santa Monica, CA

George C. Halvorson, Chairman and CEO, Kaiser Foundation Health Plan, Inc., Oakland, CA

Gail R. Wilensky, Ph.D., Senior Fellow, Project Hope, Bethesda, MD

I'll also have links to all testimony, anchored to the witnesses' names, above, a few days after the hearing (most-likely as PDF files).

If this one really starts rockin', I may live blog it, below:

See you Thursday, bright and early!

Wednesday, July 16, 2008

Dechert LLP's latest -- in the Sales Practices consolidated suit -- comes up "a day late, and [more than a] dollar short". . . .

Overnight, Dechert LLP, on behalf of Schering-Plough, filed a letter in MDL 1938, the Vytorin/Zetia Marketing, Sales Practices, and Products Liability consolidated litigation, arguing essentially that no discovery should occur in that case, until the motions to dismiss now pending in the securities action, and any other related action (could that possibly mean the Organon Qui Tam action?), are decided.

[This all becomes very interesting since Arent Fox has effectively given all these various bunches of plaintiffs an avenue to take early discovery in the Organon Qui Tam case -- as I earlier noted -- a week or so before Lowenstein, Sandler replaced Arent, Fox as Schering's counsel of record in the Organon matter.]

In doing so, Dechert quotes cases interpreting the Private Securities Litigation Reform Act for the proposition that ERISA case discovery may be stayed while a pending securities law motion to dismiss is pending -- as well as any discovery based on a state law claim or theory, in order to effectuate the intent of Congress in enacting the PSLRA, and the subsequent amendments to it. Take a look at this, from Dechert's letter, at Page 5 (click to enlarge):

Now, what Dechert LLP wholly-fails to mention, in its letter to United States Magistrate Mark Falk, is that the express language of the PSLRA, at 15 U.S.C. § 78z-1(b)(1), provides that "in any private action arising under this subchapter, all discovery and other proceedings shall be stayed during the pendency of any motion to dismiss, unless the court finds, upon the motion of any party, that particularized discovery is necessary to preserve evidence or to prevent undue prejudice to that party. . . ."

In short, unless Dechert demonstrates that the current litigation was filed to thwart the stay provisions of the PSLRA, discovery in the MDL Case No. 1938 may well move forward.

ANOTHER fact Dechert fails to mention is that Cain v. Hassan, et al. is pending. It is a purported shareholders' derivative suit, and the express terms of PSLRA, at 15 U.S.C. § 15 U.S.C. § 77p(f)(2)(B) specifically exempt shareholders' derivative actions from these automatic stay provisions.

So, it would seem that, in order to "preserve evidence" -- chiefly, the now-fading memories of the involved officers, directors and underwriters -- the Magistrate Falk, or the court itself -- in the person of Judge Cavanaugh -- ought to find Dechert's letter unpersuasive. But don't trust me -- read the cases, and you'll agree. Quoting from Romero v. Career Education Corporation, Civil Action No. 793-N (Delware 2005), a memorandum opinion, now:

. . . .At the motion to dismiss stage where all inferences must be drawn in plaintiff's favor, I am not convinced that [plaintiff]'s purpose is to circumvent the PSLRA's proscriptions. The purposes identified in support of [plaintiff]'s May 26 Demand, for example, include investigating whether the [defendant] Board or officers breached their fiduciary duties by "actively participating in, or failing to make a good faith effort to detect, investigate, prevent and correct, violations of the Ethics Codes." It is certainly conceivable that any resulting claim for violation of fiduciary duties under Delaware law would be entirely different from the pending federal claims against [defendant] or its agents. . . .


Footnote 16: 15 U.S.C. § 77p(f)(2)(B); City of Austin Police Ret. Sys. v. ITT Educ. Serv., Inc., 2005 WL 280345, slip op. at *10 & n.2 (S.D. Ind. Feb. 2, 2005) ("[T]he PSLRA and SLUSA were not intended to protect corporate management from shareholder derivative claims. Those are left to state law."). . . .

So, the-above letter, from Dechert, seems to have earned the sharholders. . . nothing, inasmuch as all the money Schering-Plough spent to have it researched, and drafted will lead no effect whatsoever.

And as I said yesterday -- that is also a waste of scarce judicial resources. Unfortunate.

An aside -- from CNBC's Mike Huckman -- on Schering's Levitra. . . .

Well, we all know that Schering-Plough earns some decent revenue from Levitra -- which, in the words of the above Mr. Huckman, is "an also-ran, me-too ED drug. . . ." Truer words were never typed.

It is what follows the-above comment, though, in his post, that most interested me:

". . . .But I do know one new Levitra convert. A certain co-worker, who will remain unnamed, recently told me he spent more than 300 bucks to fill a Levitra prescription his neighbor wrote for him. Mr. Anonymous said he'd grown frustrated with his primary care physician who would only write him tiny, apparently insufficient, prescriptions for Viagra. . . ."

Wow -- that seems like a dangerous recipe -- at least if it's all for one man -- perhaps his co-worker is looking to be an "off-license distributor" of erectile dysfunction (or, "ED", for short) drugs. Heh.

Let us (fairly) assume he isn't. A dosing at that sort of size might have profound cardio-vascular implications -- even for an otherwise-very-healthy young[er] man.

Now, what if the "anonymous co-worker" is a 40-something "weekend-warrior", whose primary care physician knows about a history of heart-disease in the family, or in the co-worker, himself?

No doubt this is a dangerous thing -- even if the "neighbor-Doc" admonished him to stay at the low-end of the daily-dosing on the label. Wow. What a sad "pill-poppin' public" story that makes.

Thanks for the candor, just the same, Mr. Huckman. This sort of thing needs more sunshine, not less. Seriously. Thanks.

Senate Finance Committee Testimony of Stanford Law Professor John H. Barton, Yesterday, on Pharma IP. . . .

John H. Barton, the George E. Osborne Professor of Law, Emeritus, Stanford Law School, testified before Congress on a broad array of global intellectual property (or "IP", for short) issues, yesterday. [Ed. Note: for a far more detailed look at the issues he discussed yesterday, do also read this 2005 JAMA article he authored.]

I found his remarks on global pharma IP to be quite enlightening -- as he set the very-legitimate question of protecting property rights into the broader framework of whether there is a moral -- if not legal -- duty to provide life-saving medical developments across economic, and continental divides -- at something other than the highest possible price -- especially in the case of HIV meds -- where it is literally the choice between a death-sentence, or life-saving "commutation", if you will, hanging in the balance. I'll leave you with the most intriguing of his, below, but do go read it all -- quoting the professor's testimony (PDF File), then [emphasis supplied]:

. . . .The area of current political tension is in the middle income nations. These nations are the growth pharmaceutical markets of the future, so that patent protection is of great importance to the future of the pharmaceutical industry’s business model. At the same time, these nations still have many poor people and thus view themselves as reasonably benefiting from the Doha Declaration. South Asia, for example, has more very poor people than Sub-Sahara Africa. Moreover, several, including Brazil and Thailand, have undertaken public programs to supply antiretrovirals to their HIV-affected populations, an expensive task whose overall cost depends heavily on the price of the drugs.

I believe that we must attempt new approaches in dealing with these nations. It is in our national interest to facilitate their growth in health. That may call for low, i.e., generic prices for at least some drugs for some people. This might be an exception for a limited time. In another approach, GSK is developing mechanisms for differential pricing within poorer countries based on charging a generic price to certain public or nonprofit distribution channels while charging a higher research-reimbursing price to others. Might the approach be extended?

But there will need to be reforms beyond prices. For example, in a number of nations, including China, much medical care is effectively financed through pharmaceutical sales by doctors and hospitals -– a process that certainly creates terrible incentives toward price markup to patients and toward overprescription. In India, the poor are not effectively served by the medical system. And some of these nations are pharmaceutical exporters at the same time that they have many needy citizens. Compromise seems reasonable; it will necessarily be more complex than a pure IP arrangement.

In approaching such a compromise, it is worth noting that price controls are likely to be the key topic for future international negotiations with developed nations in the pharmaceutical area. The importance of such controls is exemplified by the current European disputes over Roche’s anticancer drug, Avastin, as well as by the inclusion of price-related provisions in the 2004 U.S.-Australia Free Trade Agreement and the great attention paid to the issue in the 2008 USTR Special 301 Report. Moreover, at some point, price controls will almost certainly be an issue in our own country -– health care reform may increase the role of the government in purchasing pharmaceuticals, and it is hard to envision continued significant government purchasing of pharmaceuticals without pressure toward price controls. Unless the price controls are applied thoughtfully, the result will be to decrease incentives for research. Such harm may already have occurred in the U.S. childhood vaccine industry. In approaching health care reform and international trade both, we will need to define effective decision-making standards and procedures to maintain optimal incentives for research in medical technology. These various trends suggest to me that it is important to moderate our IP focus and to recognize that IP is only part of a broader package of pharmaceutical trade goals.

All nations want greater access to health care; all want to contain the cost of that health care; all want more advanced technologies. These are goals that have to be balanced; and the details of the balance may reasonably be different for nations at different income levels. . . .

Indeed. Hopefully the folks in Kenilworth are watching

Tuesday, July 15, 2008

Despite Presidential Veto, Medicare Improvements Act becomes law

The United States Senate and House of Representatives have overridden a Presidential veto to improve Medicare for seniors, soldiers and low-income Americans.

All the details are here -- but it is time for pharma to get out in front of this, and "stop sticking its collective head in the sand. . . ."

Just for the record, that italicized pull-quote, immediately above, was offered the other day by Billy Tauzin [yes, that Billy Tauzin], the President of the most influential U.S. pharmaceutical trade group -- PhRMA. Gee, now where have I previously quoted language like that, before? Oh. Yes. Right. Quite-so. The Chairman of the Fed.

Shearman and Sterling LLP to defend Schering's Ex-Cadre of Securities Underwriters, jointly. . . .

This morning, the New York office of Shearman & Sterling LLP entered its appearance (through Sills Cummis & Gross, locally in New Jersey), to represent all of the various securities underwriter-defendants from the August and September 2007 public offerings of Schering-Plough securities (by each severally, but not jointly). These public offerings, which delivered over $3.8 billion to Schering (at $27.50 per share, used to partially-fund the Organon acquisition) are in issue in In Re Schering Plough Corporation/ENHANCE Securities Litigation. All similar such cases are presently "travelling" under a single Lead Case No. 08-397, before Judge Cavanaugh.

Nominally, the filing was placed in the electronic court file for the Arkansas Teachers' matter. Do take a look -- click to enlarge:

This could very-well suggest that the interests of Schering, and its officers and directors, on the one hand, and its various underwriters (named above), on the other, are not nearly-as-tightly-aligned as might have once been presumed by traders on Wall Street.


UPDATED: 07.16.08 @ 11 AM EDT -- Via an agreed order, the plaintiffs in this consolidated securities action will now have until September 15, 2008 to file the amended, consolidated complaint. The old deadline was August 1, 2008. A very long, cold summer indeed.

Monday, July 14, 2008

A Review of Schering's Motion to Dismiss Cain v. Hassan, et al., shareholder derviative action -- Lowenstein Sandler PC, and Mayer Brown, LLP

Ordinarily, a motion of the above-sort reveals a fair bit about the defendants' strategy and tactical advantages/disadvantages -- in a shareholders' derivative action. This time?

"Not. so. much."

These two firms, representing essentially Schering-Plough's whole board, and several
officers of Schering, in Cain v. Hassan, et al., take about 32 pages, proper (and well-over 120 pages, if one includes exhibits) to essentially ask "a big nothing" of the lawyers for Ms. Cain -- other than that they send a simple demand-letter to the board. A demand letter like this one, one on the very-same predicate facts, that the board admits it had received back in early-February of 2008. Click image, at right, to enlarge. [Also, remember to vote in the new poll on this, at left!]

I say so because, despite Schering's lawyers' positioning the filing made today as a "Motion to Dismiss" -- it would seem rather unlikely that it would achieve anything more than a few months' delay in the Cain v. Hassan derivative action, or some substantially identical one (as yet unfiled, by Roy L. Jacobs, on behalf of Steven Waldman -- see at right) -- moving forward.

While so-called "demand futility" is an important concept in the law here applicable, it can hardly be said that Schering's directors would have been "taken by surprise" when Ms. Cain filed her action in the federal court-house in New Jersey. Indeed, counsel for Schering admits that Schering's board had, by the time the Amended Complaint in Cain was filed, apparently formed an allegedly independent special committee to investigate Mr. Jacobs' letter, above. Note that (in orange highlighting, at top) Fred Hassan's office, or Mr. Hassan himself, routed it to legal ("SW" is undoubtedly Schering Corporate Secretary Susan Ellen Wolf) with a handwritten note, and it was stamped "received" by some assistant in his office February 7, 2008. Where a special committee was already meeting on this topic (by the time of the amended Cain complaint filed), it should come as no surprise that Ms. Cain's lawyers might want to know about these developments -- especially if Schering, in good faith, was in fact seeking a reasonable resolution of the Cain matter. Yet only now -- Mid-July 2008, as part of a Motion to Dismiss, does Schering make this fact known. To be clear, that course of conduct is clearly permissible -- it just seems rather inefficient -- if the overarching goal here is to conserve the shareholders' resources (and reduce the associated legal fees).

If, on the other hand, the goal is actually only to protect the directors. . . . then, I think the futility of demand is evident from this little thumbnail of a chronology.

I just checked, and as of this afternoon, Mr. Jacobs had not filed a derivative action, at least not in the New York or New Jersey federal court-houses -- despite having asked for a 60-day turnaround on his letter -- which would fairly suggest that he is in negotiations with Schering-Plough about whether he will have to file such a suit, or whether he will have his demands met without having to do so. [He -- Jacobs -- is one of the lawyers listed on the Grand Theft Auto videogame securities litigation matters.]

In any event, it would seem highly likely that someone's derivative action will move forward, in a few months, in the federal District Courts sitting in Newark, New Jersey. Said another way, is it likely that Schering's directors and officers will personally return to the company all these losses? -- that is over $10 billion of market-capitalization. No, that's not likely to happen, voluntarily.

And so -- this simply looks a bit like 120-plus pages of delay, at least to my experienced eye.

Your mileage may vary, but I'd bet the plaintiffs' firm in Cain v. Hassan will solve this purported "problem" by sending a letter, like the one Mr. Jacobs sent.

Should Judge Cavanaugh grant the motion filed today, he almost certainly would do so only in part -- only insofar as he would grant Cain leave to make a specific demand, and further leave to re-file the action, should that demand actually prove to be futile.

Sheesh. what a waste of time -- judicial resources -- energy and talent, here.