Sunday, November 30, 2008

Interesting Cleveland Clinic Doctor's Letter to Editor

The below is a snippet from a very-cogent recent letter of response to Dr. Davidson's Vytorin analysis, as earlier-published by the Cleveland Clinic Journal of Medicine -- on what we really do -- and don't -- know about Vytorin/Zetia and the efficacy of various cholesterol-lowering mechanisms of action:

. . . .The point is that we need more data. Until we have that outcomes data we should not be saying a drug is safe as a matter of fact. Physicians need to learn the lessons we should have learned from drugs such as torcetrapib or erythropoietin and so many others. We often think we are doing a good thing by correcting lab values, but we often learn too late that we harmed the patient at a staggering ethical and financial cost. . . .

Wow. Do go read it all, over there. This, with a sincere hat tip to Marilyn Mann, an occasional guest blogger at Gooznews. If you click that link, in her name, you'll see another development has taken place on the "Silly Rabbit, Vytorin is NOT for Kids" story (see my goofy graphic, at lower-left) -- hers updates the European-end of the story, which she originally-authored over at Gooznews. Cheers!

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.

Wednesday, November 26, 2008

Next Thursday, Merck Will Webcast 2009-2010 Guidance Update

It will precede the Merck version of the R&D day, on December 9, 2008 -- much like the one Schering-Plough put on, on Monday-just past. The expectation is that Merck will reduce Vytorin/Zetia sales and profit guidance, once again, for 2009 -- per a Citi stock analyst, via the AP-wires:

. . . .Boris [at Citi] also cut sales projections -- by nearly a half-billion dollars this year and smaller amounts the following two years [for Merck, company-wide].

. . .weekly prescriptions for Vytorin and Zetia, the cholesterol drugs Merck jointly sells with partner Schering-Plough Corp., would be down by 39 percent and 33 percent, respectively, this year, with the decline partly offset by price increases. Sales of the two popular drugs have been hurt by questions about their effectiveness and a possible cancer risk still under investigation. . . . [Citi expects stabilization beyond 2009 -- echoing Credit Suisse's meme -- we'll see about that.]

. . . .Merck's conference call next Thursday, in which Merck's chief executive and chief financial officer are to provide an overview of expectations for next year and long-term financial guidance. . . .

This will be a key-window into Vytorin's actual future prospects -- I'll likely live-blog it.

The Evolving "Game Face" FDA wears -- Now Very Much in Evidence, at HQ in Raritan, NJ. . . .

After receiving an "Approvable Letter" from FDA in March 2008, Johnson & Johnson has encountered a rather significant set-back, on one candidate: JNJ will need to provide additional proof that it is appropriately monitoring the clinical investigators -- for a host of potential maladies and mischief. I strongly suspect recent headlines about hidden conflicts in research animate this letter -- though neither JNJ, nor FDA (per the usual practice of each) made the entire letter available to the public. [At right is JNJ's latest letter on DTC Ads.]

Here is the most-salient portion of the JNJ release, just this morning:

FDA Issues Complete Response Letter for Ceftobiprole for Treatment of Complicated Skin Infections

RARITAN, N.J., Nov 26, 2008 --

Johnson & Johnson Pharmaceutical Research & Development, L.L.C. (J&JPRD), today announced that it received a Complete Response letter from the U.S. Food and Drug Administration (FDA) regarding its New Drug Application (NDA) for ceftobiprole for the treatment of complicated skin and skin structure infections, including diabetic foot infections.

The FDA has indicated that they cannot approve the NDA for ceftobiprole at this time. They have asked J&JPRD to conduct additional audit work of clinical investigator sites and to address specific questions related to site monitoring. . . .

The NDA for ceftobiprole was submitted to the FDA in May 2007, and, in March 2008, J&JPRD received an Approvable Letter regarding the ceftobiprole filing. J&JPRD responded to the FDA's Approvable Letter in August 2008.

Ceftobiprole was approved earlier this year in Canada, and most recently it was approved in Switzerland. Last week, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency recommended approval of ceftobiprole in the European Union for the treatment of complicated skin and soft tissue infections. . . .

More ominously, for its part, JNJ co-development partner Basilea says the FDA is unable to review the clinical data until "issues of data integrity have been resolved. . . ." That's. Gonna'. Leave. A. Mark.

Ouch. Are you getting this, Fred?

Tuesday, November 25, 2008

What Credit Suisse -- and Others -- Are Missing About Schering. . . .

First, read Credit Suisse's money paragraphs, from today's research note:

. . . .There is much controversy over “the bottom for Vytorin”. Of course prescription volume for this franchise will be driven by prescription category growth and market share. The recent JUPITER study presented at the recent meeting of the American Heart Association should serve as an inflection point for statin prescribing, with AstraZeneca’s Crestor as the greatest beneficiary. That said our US forecast volume growth of 3.5% in 2009 may prove conservative. As to market share we assume Vytorin loses share through 2009, but does gain modest share in 2010. Our thinking is that patients [switched from Vytorin] from the ENHANCE and SEAS fall-out have largely been placed on generic simvastatin at low doses.

Accordingly, many patients are not achieving LDL-C targets and will need a more potent option. The competitive advantage of Zetia (and Vytorin) is to provide high potency (LDL-C reduction of 40% or more) with a better safety profile in regards to myopathies than many other drugs in the market. This will mean that share gains in the future are possible, a counter consensus view.. . .

I am sure these Credit Suisse folks are very bright -- I just think they have overlooked a few rather-important things:

(1) First, and most fundamentally -- to conflate simply lowering LDL-C levels -- with actual outcomes-efficacy, is a glaring scientific flaw in the above analysis. That science -- the actual statin-science -- will drive EPS growth at AstraZeneca (Crestor), but not at Schering-Plough. There is simply no science to suggest that the gut mechanism-of-action of Vytorin and Zetia is effective at reducing cardiovascular risks. Contrast this with the statin data -- it establishes that the liver mechanism-of-action does, in fact, improve outcomes. Most doctors writing scrips now understand these facts -- it seems some stock analysts. . . . don't.

(2) Even if we overlook (1), Vytorin and Zetia will never again command a three- to four-times price premium over branded statins, and they will never command a ten times premium over generics. They simply aren't ten times better.

(3) Forgetting (1) and (2) -- from 2009-2012, almost all third-party payers will be racheting back on drug costs -- agreeing only to lower average selling prices -- and opening lucrative new market-niches only for drugs with proven efficacy, in these deficit-laden times. There is simply no reasonable scenario where Vytorin returns to even 5% or 6% growth in 2010 and beyond (As the rather goofy-Credit Suisse models would suggest). It is simply a pipe-dream of one Fred Hassan.

(4) Concretely, and toward that pinched-budgetary end [in (3)] -- the state formularies (in New York, Illinois and California) are already shifting away from Vytorin. The replacement drug of choice? Any generic statin. Now, how long until the federal programs make the same shift? If (and when) so -- um, game over.

(5) Schering was -- back in the halcyon days of mid-2007 -- counting on huge Vytorin cash-flows and earnings to bank-roll all that extremely expensive ramp-up -- from pipeline, to FDA-filings, to market -- on five major drugs -- all at once. That is no longer possible -- at best, Vytorin will be hobbled by price concessions, shrinking share and (perhaps worst of all) the possibility that IMPROVE-IT will turn out to be a bust, from a scientific-point-of-view.

(6) Schering simply overpaid for Organon. And while those businesses generate pretty solid cash-flow-levels, they are not nearly the profitability engine Vytorin once was. Launching five major projects through FDA concurrently is a very expensive approach to long-term stability. I don't believe Schering can manage all of that, as the swoon in Vytorin/Zetia accelerates in 2009. Remember here that Schering has some very high-coupon debt and preferred to service, as a result of spending almost $15 billion on Organon.

(7) In August of 2010, and as a bullet-corallary to (6) above, Schering must convert all of its Series B Preferred (some $2.5 billion worth) into common stock -- it must issue new common. All of that common must be covered by new incremental earnings, just to hold steady -- on the EPS line. Even if Vytorin unit-sales grow 6 percent -- actual reported revenue never will grow that much -- Schering will have to engage in drastic price cutting to gain share. And, by the way -- doctors generally don't return to writing scrips on drugs they've found better alternatives for. So, net, net: no way -- and, no how.

Okay, that is the negative -- what is Credit Suisse "right" about? -- Well, currency fluctuations -- and the deleterious impact of the same -- on Schering, going into 2009 (and perhaps beyond):
". . . .Schering-Plough is the most exposed to this currency risk of any company in the US pharma group. . . . a particularly high concentration of European revenues (approximately 42% per our estimate), and some dollar-based manufacturing costs for Schering that do not provide an operational hedge to the weakness associated with European revenues, translated into the consolidated P&L. These improve the European based cash flow, but hurt the translational earnings for the Company.

We agree that currency is a material negative. . . .

I simply think Credit Suisse's role in the Summer 2007 Schering offerings has colored its analysis here, and significantly -- to (an albeit pale) rosy shade. . . . Click the last two links, to read why I think so.

Monday, November 24, 2008

"Sweet Spot" of Schering's R and D Pipeline Includes Drug Candidate Being "Bounced" by FDA. . . .

At today's web-cast, Mr. Hassan highlighted Schering's top three not-yet-US-approved drug candidates -- including Bridion, or sugammadex:

. . ..We believe we're hitting the sweet spot on R&D and patent exclusivity. . . .

-- Fred Hassan,
CEO Schering-Plough,
November 24, 2008

But wait, Fred -- FDA rejected that application -- in June 2008. I know you are working on it with FDA -- just as three years ago, you predicted the launch, in 2009 to 2010 of several of the drug candidates you now "aspire" to have initially-filed with FDA. So, each of those is about three to four years behind where you earlier said each would be.

Gee, that's an oddly-shapen "sweet spot", Mr. Hassan.

Crestor adds a half-point of share IN A WEEK -- per IMS!

At least, Reuters has it this way -- if it holds up, this is a major shift -- in record time. And, it seems, AstraZeneca is taking this share from Schering's Vytorin/Zetia cholesterol franchise, among others -- will Vytorin/Zetia fall below 10 percent share (before Year-End 2008)? I now think so, and perhaps even sooner:

. . . .Crestor's share of the U.S. statin drug market in terms of new prescriptions rose to 10.7 percent in the week ended Nov. 14, up from 10.1 percent a week earlier, according to figures compiled by IMS Health and cited by several brokerages.

Its total prescription share rose to 9.8 percent from 9.5 percent. . . .

Ed Silverman, on Schering's Webcast Today: "Expectations…Low."

Thanks go to Ed, over at Pharmalot for reminding me about this non-event; webcast here. In just a few minutes, Schering-Plough will begin a four-and-a-half hour, no some-questions-asked session on what's right with Schering's R&D pipeline and its prospects. But remember, Schering will allow no press (or analysts' call-in) Q & A -- and remember (they just took a few questions), Schering doesn't give guidance or make projections (they just made some "aspirational goals" disclosures).

In other words, as Ed channels Deutsche Bank analyst, Barbara Ryan: "expectations. . . . appear to be fairly low."

Thus, as a public service, I will listen and watch -- so you won't have to. If anything truly ground-breaking [up, or down] occurs, I'll live-blog it, below:

Question-and-Answer Session:

▲ 1:28 PM -- Schering is going through a "re-tooling" in Japan (but as below, Schering will likely not get it all done until the end of the above window -- or, even beyond the end of the wondow it announced in the above slide). CEO Fred Hassan has still has not addressed the Seamus Fernandez (Leerik-Swann) questions about approaching China more aggressively -- they are simply "looking" (aggressively!) -- but don't have very many shoes in the street there.

▲ Asked "Will the TRA studies be read-out before IMPROVE-IT results are read-out?", Dr. Rick Veltri said, and Koestler confirmed that, as event-driven trials, he hopes that both come close in time to one another. That means IMPROVE-IT is running quite a bit slower than promised, as well.

▲ Dr. Koestler just said that Pegintron will be studied in combination with boceprivir -- this suggests they are more worried about Vertex's teleprevir, than they are letting on, here. Schering is looking for lots of "alternative" or back-up data, should the FDA decide to approve Vertex's candidate first. Vertex is well-ahead.

▲ The "Non-interference" (drug formulary) policy looks like it could be open to repeal -- given the new to-be-named HHS Secretary, Daschle -- and a deeply-Democratic Congress. CEO Hassan is (perhaps vainly) hopeful that "drastic" action will not be taken against pharma. Fred takes comfort that the "financial crisis" and "oil imports" will be bigger "targets" than Schering's businesses. That is not a very-reassuring answer. He is admitting to being No. 3 on the Administration's hit list.

▲ Bob Bertonlini on foreign currencies' "headwinds" -- in answer to Jamie Rubin, at Goldman Sachs -- Schering WILL face significant currency headwinds, in Q4 2008, and well-beyond. Schering's Euro-denominated debt is an "economic" hedge. However, "economic" hedges do not dampen P&L swings -- that is, profitability will be negatively impacted this year -- and beyond. This argument tells us to ignore GAAP results, and focus primarily on "growth" not GAAP-sanctioned "profitable growth". That is thus a rather-patronizing answer, to a clearly-very-able-questioner.

UPDATE: I think Fred just tried to clean up his currency answer.

▲ Carrie Cax is blaming the slower enrollments of patients in Schering's boceprevir studies on doctors "holding their patients back" -- only some 18 percent of patients are entering experimental programs. Could it be that the doctors have lost confidence in Schering's ability ot know when to "step in" and help protect patients -- if any given trial starts to exhibit troubling safety signals?

▲ CEO Hassan is now telling a Boston analyst that Schering is concerned about FDA not being "politically-independent". Ouch. He hope the Obama Administration will be able to remedy this. [Could it be that Schering has hurt its FDA credibility-levels, with Vytorin's ENHANCE?]

As the above slide demonstrates, even a good IMPROVE-IT outcome will be short-lived.

▲ 12:55 PM -- Three major projects are now at least five years away from where CEO Hassan said they would be -- just two years ago, at an earlier version of this conference. Boceprevir in particular will not receive any "quick shortcuts" on FDA approval -- that conflicts with the claimed "fast-track" status, on the below slides.


Presentation Session:

▲ Carrie Cox also just admitted that Bridion/Sugammadex will be "slowly adopted" in the Operating Suites across Europe (it is not approved in the US) -- it will need to discplace, in her own owrds, "very-well-entrenched generics" -- meaning it will have to compete on price, as well as efficacy. That is a wholly-new disclosure.

▲Carrie Cox admitted that Schering's boceprevir FDA filing will likely be 2011 or 2012. Ouch -- that would mean it may be four or five years away from market.

▲ 12:35 PM -- Carrie Cox is offering her perspectives on the "commercial potential" for these investigational candidates. Yawn.

▲ Now Veltri is on to Thrombin candidates (pre-clincial, and early-clinical) -- far future candidates.

▲ This -- the below -- Veltri's LDL-C "lower is better analysis" -- is simply "junk" science. It is religion -- not deduction or induction -- his entire Vytorin/Zetia slide-deck is infected with superstition.

▲ Every one of Dr. Veltri's slides assumes [without any evidence] that "mechanism of action" for cholesterol reduction is irrelevant.

▲ Rick Veltri is hard-selling the mantra that "lower is better" -- and just flatly stated that it "does not matter" what the mechanism of action for lowering is. This is in direct conflict with the vast majority of the data available to date.

▲ Now, Dr. Enrico Veltri is trying to debunk the cancer data in SEAS -- he said that IMPROVE-IT researchers will now only follow-up on cancer, every six-months, in the patient-population. Q: Is that wise?

▲ From "The Sublime to The Ridiculous" Department: there will be a "next-generation" study -- called, hilariously, "Red Cabbage" -- started by Schering, in 2009 [Veltri hisssself named it!]:

▲ 11:45 AM -- Rick Veltri (Yes, THAT Enrico Veltri!) is up, now -- on cardiovascular products. Rick is hard-selling fear -- blaming "pillars of science" for "waiving the white flag" -- and giving up, on treating heart-disease. Ri-i-i-i-i-i-ight.

▲ Now on to a "proof-of-concept" (read: decades away from market) study, for a far-in-the-future Schering Hep C drug candidate, to be cocktailed with existing protease inhibitors. Will these numbers hold up in larger patient populations, and will these patients remain free of dangerous side effects? We'll see -- check my second "as edited" slide -- directly below, in a moment:

[NOTE: Here is the Schering presser's spin, on the above.]

▲ 10:40 AM -- Schering has moved on -- to a regurgitation of the boceprevir Hep C naive treatment data, to date. . . . [see slide above, and this, for some balance -- note that Vertex's Teleprevir is WORKING in patients that have already failed treatment on Schering's existing cocktails, among others. The significance of this fact -- from a scientific point of view -- almost cannot be overstated.]

▲ Specific scientific presentations now underway, for the very-long pipeline tail -- including a potential for using cancer anti-bodies as a form of vaccine -- most are still in animal models. This means they are at least a decade away from market, in almost all cases.

▲ Schering has just issued two press releases, the first about Asenapine, the other about treating Parkinson's here, and here.

▲ Now, a 15 minute break -- slide coming [from me, below].

▲ Asenapine is off-its-time-track at FDA (as admitted on the Q3 earnings conference call), and like Sugammadex, Schering today provides no details about when we might expect a meeting with FDA, or an end-date letter. "We are working on it with FDA," is all Schering will say. Not helpful. At all.

▲Interestingly, Schering admits, at about Slide 35, that Vytorin/Zetia will lose US patent exclusivity in 2015, and in EU/Japan in 2017 or 2018 -- yet, we won't even know if it works (to reduce cardiac event risks) before late 2012 -- that is when IMPROVE-IT will, best case, be finished. Wow. That slide lasted about five seconds -- then was deep-sixed.

▲ Koestler calls Schering's boceprevir "best in class" -- I guess that "class" reference must assume Vertex's teleprevir has already-graduated, a full year and a half ahead of Schering's own boceprevir. . . .

▲ Fred asks "Why be excited?" Indeed, Why?

▲ 8:32 am EST -- and not started yet -- not surprising. . . .

Friday, November 21, 2008

Friday to Sunday: forecast of no blogging!

At a conference all day -- off the grid.

Back online on Sunday night.

Thursday, November 20, 2008

Captains of Pharma Meet in DC; Begin "Charm Offensive" in Earnest!

Or, "We need first a seat at the table."
-- Fred Hassan,
CEO, Schering-Plough,
November 17, 2008

Now claiming that he wants to "play ball" with the reform-minded Congress and President-Elect, CEO Hassan is suddenly a "go-to guy" (or so he would have Reuters believe) -- even among Democrats. Per Reuters, overnight:

. . . .We need first a seat at the table," Schering Plough Corp Chief Executive Fred Hassan told the Reuters Health Summit in a telephone interview.

Big Pharma executives are meeting in Washington this week at a gathering of the International Federation of Pharmaceutical Manufacturers and Associations. Hassan, the group's current president, said the location was chosen in recognition of the coming political shifts. [Editor's Note: Hassan was re-elected yesterday, to another two year term as IFPhMA President.]

President-elect Barack Obama and fellow Democrats who expanded their majority in Congress vow to make an overhaul of the nation's health-care system a priority.

Democrats have attacked drug makers for high prices, excessive advertising and some manufacturers' handling of side effects.

The pharmaceutical industry, which long favored Republicans with political donations, has shifted contributions in recent years as Democrats gained more power in Washington. . . .

Except, of course, that Schering-Plough's PAC did not. [The Schering-Plough Better Goverment PAC money went about 11 to 1, in favor of Republican Committees -- and on the National Committee-arms level, from 2000 to 2008 (through July), it went about 17 to 1 Republican In 2008, though, the PAC gave equally, in Senate Races -- $15,000 to each of the Senate National Democratic, and Republican, committees. But that is not a shift in favor of Democrats, in any sense.]

But why quibble, right? Fred plainly has more important things on his mind: "I have personally been called by senior leaders on the Democrat side asking for advice and help, and that's a sign of the new industry versus the old industry," Hassan said.

Wait -- wasn't it just a few months ago that Mr. Hassan was complaining -- on the front page of the Wall Street Journal, no less, that FDA had effectively run amok -- that there was no way to know how to get an NDA approved at FDA, anymore? And, wasn't that -- in point of fact -- because his Sugammadex-candidate had been declared "non-approvable" and Hassan then felt FDA was treating Schering entirely too-shabbily (i.e., capriciously)? Yes. It was. Fast-Forward, here -- to today, now:

Ri-i-i-i-i-i-ght. Got that? Fred Hassan is the Democrats' touchstone on all matters Big Pharma. For his part, the more directly-candid and thus more-credible Dick Clark, CEO at Merck, has this to say: "I think we all have to contribute. I don't think it's fair to say that everyone else has to contribute and pharma doesn't. I think we all have to come up with the ways of helping. . . ."

I think that sentiment is exactly right (and more importantly, Kaiser Foundation CEO Halvorson, at right, does too) -- no one is asking Big Pharma to "talk Congress (or the President-Elect) off the ledge" of reform -- no, these latter two expect that Big Pharma will be willing to "give-up" some of the (perhaps unfair) advantage it presently holds. Pharma must now kick-in, and ante-up, in the more reality-based-eyes of Merck CEO Clark.

Think Medicare Part D negotiated-drug-prices -- for everyone, here. Think about no "gouge" pricing against the uninsured. Think along those lines, Mr. Hassan.

Then you'll actually be thinking the way incoming HHS Secretary Daschle does. Here endeth another sermon.

Wednesday, November 19, 2008

Is this the "End of the Line", for Dr. Feldstein's Qui Tam (False Claims Act) Suit v. Organon?

I will likely add some graphics later here, but according to a filing today in the New Jersey federal district courthouse in The United States of America v. Organon, made by Lowenstein Sandler, on behalf of Organon, it would seem that Dr. Feldstein's suit has run aground.

Today, the defendants made a motion to supplement the record in this case -- it seems a previously-sealed separate New Jersey state court employment case file -- involving Dr. Feldstein's other claims against Organon -- was unsealed on November 14, 2008.

And it would seem to contain sworn statements, made by Dr. Feldstein, himself, that are "at variance" with statements made in his federal case -- the False Claims/Qui Tam case.

Here is the brief in support of the motion to supplement the record (a PDF-file; see pages 6 and 7, particularly) -- but on its face, it would seem to be a very-large roadblock to Dr. Feldstein's recovery under the federal False Claims Act.

Yes -- this would plainly be good news for Schering-Plough, as it now owns the Organon businesses that are at the heart of these matters. It won't right any ships, but it likely patches one hole below the water-line:

Here is some background, and some more background, on this suit.

Medtronic expects to lose $700 million to $900 million from foreign exchange next year. . . .

Medtronic (a large multi-national medical device maker) will post about $15 billion of consolidated sales this year, and sells more than half of its products into non-US markets, largely in Europe, so it is very much like Schering, in size, market-exposures and geographical reach.

Look ("out below"!) at what the breakaway rise in the US dollar is doing to Medtronic results (now think about whether Schering-Plough can withstand this same reversal of fortunes).

On its latest quarterly earnings conference call yesterday, Medtronic projected a "repatriation" downturn (of sales and profits) of between $400 million and $500 million in all of 2008, and between $700 million and $900 million, for all of 2009, due to the wildly-strengthening US dollar vis-a-vis other currencies.
Here's the Medtronic AP wire story:

. . . .But the U.S. dollar has regained some strength, and Medtronic told investors Tuesday its full-year earnings and revenue could come in $400 million lower than expected as a result.

Medtronic now projects fiscal 2009 revenue of $14.6 billion to $15 billion, down from previous guidance of $15 billion to $15.5 billion. . . .

Tuesday, November 18, 2008

More on Statins, "Jupiter" and Absolute v. Relative Risk Reductions. . . .

I think the New York Times (overnight, in a health-science piece, by Tara Parker-Pope -- do go read it all!) has it just about right, here -- or at least, the Times comes out about where I do (or, more precisely, where I did, last week) -- on all of this:

. . . .Although many doctors hailed the study as a major breakthrough, a closer look at the research suggests that statins (like Crestor, from AstraZeneca, and Lipitor, from Pfizer) are far from magic pills. While they clearly save lives in people with a previous heart attack or other serious heart problems, for an otherwise healthy person the potential benefit remains small.

Many doctors who believe in using statins for heart disease say they needn’t be given to healthy patients. Instead, they say, the focus should remain on encouraging healthful behavior and screening for traditional risk factors like high blood pressure and cholesterol.

“Statins have many biological effects that appear to be quite meaningful,” said Dr. Valentin Fuster, director of the heart program at Mount Sinai Medical Center in Manhattan and past president of the American Heart Association. “But I don’t think the answer is a magic drug to prevent disease. The answer is to change behavior”. . . .

The researchers sought out men 50 and older and women 60 and older who had elevated CRP but not high cholesterol. The goal was to determine whether statins could improve their health. [Editor's Side Note: Consider this slide from the AHA last week:]

But of nearly 90,000 people who were screened, only 17,802 were selected. That means 80 percent of the recruits were excluded for a variety of reasons — another inflammatory condition like arthritis, medication use, high blood pressure, a history of cancer and so on.

“If you extrapolate that, it means there are not all that many people exactly like those who were studied,” said Dr. Nieca Goldberg, director of the women’s heart program at New York University Langone Medical Center. . . .

Only 1.8 percent of the subjects who took a placebo had a major cardiovascular problem during the study period. Among statin users, 0.9 percent did. In other words, the absolute risk of a serious cardiovascular problem (as opposed to the relative risk) was reduced by less than one percentage point.

Absolute differences in risk are more clinically important than relative reductions in risk in deciding whether to recommend drug therapy,” The New England Journal of Medicine noted in an editorial accompanying a report on the study. . . .

[Emphasis supplied.]

Indeed -- I think there is a vast market for Crestor -- and statins, generally, especially generics, in this market environment -- I just don't see putting very healthy 50 year-olds on it. The perhaps smallish elevated-diabetes-risk alone would be enough for me to shy away from it.

This is simply a note of caution -- not any form of a diatribe.


Fitch Drops Outlook on Merck's Debt -- Points to Legal Risks, With Schering. . . .

Fitch Ratings Service has put Merck's credit-worthiness on its "Outloook Negative" list -- often a precursor to a credit ratings downgrade. In doing so, it pointed to the Cholesterol Franchise Joint Venture with Schering-Plough, as one major reason for the change. Let's read along, and listen in, from the overnight AP story:

. . . .Merck will have to continue getting good results from its joint ventures and its cost cuts in order to maintain a solid credit profile.

Its most significant joint venture -- a cholesterol drug partnership with Schering-Plough Corp. -- is experiencing weaker sales because test results showed the drug Vytorin was not more effective at reducing cholesterol the buildup of fatty plaque in the arteries than generic Zocor alone.

[Editor's Note: AP made the above-corrected copy for this story available today, November 19, 2008 at about 4:42 PM EST.]

Merck is facing legal risks because of the way it marketed the cholesterol drugs, Fitch said. Those risks include allegations it kept the trial data secret to boost sales. . . .

I think this is the first rating agency to actually single-out the specific legal risks posed by the [alleged] delay in disclosing the full ENHANCE results as a solid-reason for negative ratings action, at either Merck or Schering. I think Fitch finally read Senator Grassley's February 2008 letters. Wow.

So -- when will Fitch next review Schering-Plough's various credit-market exposures?

UPDATED @ NOON: I think these are the most-recent (09.30.08) Schering-endorsed disclosures of the various rating agency views, by agency (short-term debt rating/long-term debt rating -- outlook):

Moody’s Investors Service: Baa1/P-2 -- Negative Outlook

Standard and Poor’s: A1/A-2 -- Stable

Fitch Ratings: BBB+/F-2 -- Stable

In each case, these remain (albeit low-end) investment grade ratings -- though in this financial market, that may mean very little -- as borrowing (at decent spreads) is going to be tough, no matter what. During the third quarter of 2008, Fitch took Schering off of "Negative Outlook" -- moving it to "Stable". Well, we'll see about that.

Monday, November 17, 2008

Wolf: An Eye-Witness Report from San Francisco AASLD on "Those Hep C Races". . . .

UPDATED @ 2 PM EST: "Investors have been paranoid about telaprevir competition, but at this year's meeting, I think we saw that there doesn't appear to be anything more potent than telaprevir, and we still need to see a lot more data on safety [re competitors' candidates]. . . ." Cowen & Co. biotech analyst Rachel McMinn told Adam Feuerstein, in a phone conversation after AASLD.

Cowen has an "outperform" rating on Vertex.

So, it would seem Cowen & Co. agrees with Wolf's take, here.


This (Thanks, yet again, "Wolf"!) was left in the comments, below -- and deserves to be read widely -- it is a first-hand account of the Telaprevir (Vertex's) v. Boceprevir (Schering-Plough's) presentations/posters, at the big liver meeting last week, in the City by the Bay:
. . . .Last week, I returned from the San Francisco AASLD liver meeting where I had the opportunity to review first hand both the SP boceprevir and the Vertex telaprevir data.

Vertex was the clear meeting winner presenting ground-breaking evidence of telaprevir efficacy in previous treatment non-responders, the #1 unmet clinical need in hep C. With only 50% of patients responding to current therapy, a status quo that has existed for approximately 10 years, the telaprevir non-responder data opens up a huge market of already identified patients that did not respond to current therapy.

The comparative significance of the data was not lost on AASLD organizers as they chose to award an oral presentation to Vertex whereas the SP data was buried in a poster session despite the "buzz" they were attempting to generate.

[Editor's Note: Older Graphic of Stock Price
Comparisons -- this morning, SP is @ $15.35; while
Vertex is trading at $27.37. . . .]

The SP data from my perspective was "ho hum" at best. Although showing an outwardly impressive response rate in naive patients, the patient population was arguably an "easier to treat population" with a very low proportion of patients with advanced liver disease (less than 10% cirrhotic). The claim that induction dosing was providing superior response was met with dubious reaction of many liver specialists as the concept of induction dosing has been "dead" for a number of years with many trials failing to show a benefit of this therapeutic approach.

The big commercial issue for SP in my mind is that all of the data they have presented demonstrates benefit with 48 WEEKS treatment, whereas telaprevir has been shown to be effective in the same naive population with half the duration of therapy, i.e., 24 WEEKS. This is not insignificant as these molecules must be administered in combination with peginterferon injections, a therapy which is extremely difficult to tolerate (think flu, fever, hair loss, rash, tremors, depression, bone marrow toxicity, suicidal ideation etc.). With similar response rates, specialists and patients (not to mention payers) would choose a 24 week therapy compared to a 48 week therapy ever time. This presents a huge problem for SP as they will likely enter market after telaprevir is established with at best a "me-too" treatment that requires double the duration of therapy.

[For the Curious: What the above is all about.]

I am also bewildered by the SP choice to only develop bocepevir in combination with their brand of peginterferon ie. PEG-INTRON which currently holds about 35% of world share vs 65% PEGASYS (Roche). Vertex is developing telaprevir with PEGASYS. Why SP would choose to pair themselves with the market loser either demonstrates arrogance or extreme stupidity. Not only is their interferon market failing, they are likely to drag boceprevir down with it.

Perhaps the same SP strategists that worked on the release of the ENHANCE study data have now picked up boceprevir?

-- Wolf

November 17, 2008 12:02 AM

Indeed -- so it would seem, Wolf. Thanks for this. Coffee is on me -- in Philly -- if you are going to be there. . . .

Sunday, November 16, 2008

Matt Herper's Very-Sensible Article -- on Cholesterol Levels -- in Forbes. . . .

Matt Herper has done a quite-admirable job of sorting through all the latest statin-hype, this morning -- and putting together 10 plain-English slides to help ordinary people parse the whole Crestor's "Jupiter" findings v. generics v. diet-and-exercise matrix.

If [over a ten-year period, as cogently noted by Marilyn Mann] an otherwise pretty-healthy American adult has perhaps a two-in-one-hundred chance of having a heart-attack -- after age 50 -- is it really worthwhile to lower that risk to one-in-one-hundred, if the cost (at $100 per month, for life) and side-effects (potential muscle weakness, and pain) of taking statins is fully-factored-in?

I dunno. But that, I think, is what healthy patients ought to ask their doctors -- before starting a generic, or branded, statin regimen.

Do go take the Forbes-provided Reynolds Risk Calculator for yourself -- it will help you be prepared for the above-dialogue with your doctor -- Bonus: it is linked in Herper's fine ten-slide sidebar to the article, as is the Framingham assessment calculator, available directly from the NIH website, right here.

Herper's most relevant paragraph, insofar as this blog's topics are concerned, may be his last -- he is certainly spot-on, about a coming "second-wave" of Vytorin/Zetia sales declines, as the AstraZeneca-Crestor "Jupiter" tide rolls through doctors' offices, nation-wide:

. . . .There is disagreement over whether statins work just by lowering LDL or also by preventing inflammation in the arteries, which also may have a role in heart attacks. That could explain why Jupiter outperformed previous statin trials, Ridker argues, and could lead some doctors to prescribe Crestor over generics. Use of Zetia, the non-statin cholesterol drug from Merck and Schering-Plough that is also part of the combo pill Vytorin, could continue to drop, because it may not have the same anti-inflammatory effects, and there's no evidence it stops heart attacks. Pfizer could catch a tailwind as health plans fearing Crestor's long patent life encourage docs to prescribe the similar Lipitor [Editor: or generics] instead.

That leaves plenty for scientists, investors and marketers to fight over. But statins have proved their worth in 18 clinical trials stretched out over two decades. If these drugs aren't worth using widely, pharmaceutical chemists better get out of the prevention business entirely. Statins may be as good as drugs get. . . .

I might quibble, just a bit about that last line -- it may be a little over the top, but in the main, this is a tremendous article -- be sure to walk through his ten slides!

You'll be a far-better-informed "American pill-popper" for having done so.

Saturday, November 15, 2008

DOCTOR Colbert -- On Crestor -- at 2:30 in this Video-Clip!

Me? I was most entertained by the "Crest-Vaxx" -- it elevates your cholesterol levels to the point that you're allowed to buy Crestor, for $100 a month -- for the rest of your life!

Note: I saw this over at Ed's a/k/a Pharmalot, this morning, who in turn saw it on the WSJ Health Blog. . . . The portion of this 5:13 Flash video clip most-relevant to the topics that this blog covers begins at about 2:30 -- on Crestor's "Jupiter" study (use the slider bar, at the bottom of the video feed):


The more serious-minded among us may prefer to watch Dr. Harlan Krumholz, of Yale, and Dr. Mark Hlatky, of Stanford [featured in Colbert's report as the guy "who needs more Crestor pens"(!)], being interviewed by PBS's Ray Suarez, here. Cheers!

Friday, November 14, 2008

IMS Monthly Scrips for Vytorin/Zetia FLAT in October 2008

Well, a mixed IMS October 2008 monthly-bag, here: the overall market is rising albeit slightly (consider the Crestor "Juptier" effect, here!), and yet, Schering's Joint Venture is essentially flat, month over month -- (its share is now down to 10.3 percent, though) here are the raw numbers:

. . . .Total US Cholesterol Management Market

Oct 2008: 20,292

Sept 2008: 19,666

Total Merck/Schering-Plough Franchise

Oct 2008: 2,186

Sept 2008: 2,171


Oct. 2008: 1,207

Sept 2008: 1,202


Oct. 2008: 978

Sept. 2008: 969. . .

I think it unlikely that this is the actual Vytorin bottom -- we haven't begun to see the fall-off from state government "non-approved" lists, nor the switching now underway due to the clearly superior results that Crestor (a statin) boasts, via "Jupiter". Those effects ought to first really be apparent in the IMS numbers for the new year 2009.

On October 3, 2008 -- Merrill Calls Schering an "Underperform"; Today, its New Parent -- B of A, calls it a "Buy"!

So -- which should we believe?

The parent? or the child? 'Tis perplexing.

On October 3, 2008 -- when Merrill Lynch called Schering-Plough an "Underperform" stock, I argued that this had the ring of veracity, or truth -- as it was, afterall, an admission against (one's parent's) interests -- in the parlance of the federal Rules of Evidence. [B of A, astute readers will recall, helped lead the $3.8 billion public equity offerings on behalf of Schering-Plough, in August-September 2007, which, in part, financed the $15 billion purchase of Organon.]

Back on October 3, 2008, Schering-Plough's stock closed at $16.37 -- with 24 million shares changing hands. Last night, Schering closed at $16.09, essentially the same price -- but a perfectly-mirror-image (opposite) conclusion -- on the fortunes of the company?! Well. That's. Interesting.

Today, the new-parent (B of A) makes a statement that clearly reflects its (either flagging direct-holdings) interests, or its "reputational interests" with clients of the firm still holding Schering-Plough securities: it rates Schering a "Buy" at $16 -- while last month, Merrill set the very-top-price target for Schering at no more than $18 -- that's scant "room to run". Me?

I smell a need to pump, and dump, some Schering stock -- and firm up a B of A balance sheet, with some cash. This would be funny, if it wasn't the case that many retirees will end up owning this "dead cat, bouncing" -- buying in now at north of $16.25.

. . . .SGP 10:16AM ET $16.24 +0.05 +0.31%. . . .

An Intriguing, and Truly-Independent, AHA Plenary Session: SEAS "Minority Report" Emerges. . . .

Dr. Allen Taylor, and Dr. Robert Califf, of Duke, made news (once again yesterday), at the close of the American Heart Association's conference in New Orleans, as reported in Medscape Today. [Do go read it all -- much more color there.]

Squarely in the cross-hairs of this plenary session was the July 21, 2008 Schering-Plough-arranged press conference, held during the NYSE trading day, by Dr. Richard Peto -- to defend Vytorin and Zetia, in the wake of the unexpected SEAS cancer signal. Let's listen in:

. . . .Large multinational clinical trials require a "global set of standards of conduct and behavior" to ensure that outcomes reflect objective, unbiased evidence, a prominent cardiology researcher said here.

Because pragmatic clinical trials provide the foundation for clinical practice, a global imperative exists to develop internationally recognized and accepted "rules of conduct," Robert Califf, M.D., of Duke in Durham, N.C., said during a plenary session at the American Heart Association meeting. . . .

. . . .In the wake of the highly publicized SEAS episode, Dr. Califf offered a list of recommendations to remove as much bias potential as possible from the clinical investigation process.
▲ A balanced executive committee that includes representatives of the sponsor but whose majority consists of investigators. Only the sponsor's representatives should have any ties to the sponsor.

Transparent reporting of financial relationships.

▲ Identification of conflicts of interest that are not directly financial in nature (deeply held professional beliefs about a scientific issue, working for competitors, previous request for funding turned down by sponsor).

▲ Commitment to publish.

▲ Appropriate airing of differences of opinion (not in the media).

Prohibition of direct-to-consumer advertising until definitive data are available.

▲ Increased public funding of clinical trials to preempt claims of bias.

. . . .The SHARP and IMPROVE-IT trials will not answer questions about the unexpected cancer risk in the SEAS trial, because neither trial was designed to address that issue, said Allen Taylor, M.D., of the Uniformed Services University of the Health Sciences in Rockville, Md.

Moreover, he continued, the two ongoing trials differ in several key respects from SEAS, including type of control (positive versus placebo), age, sex, disease spectrum, and LDL levels, and length of follow-up -- not to mention the ongoing status of IMPROVE-IT and SHARP. The differences have the effect of creating a negative bias toward cancer.

Despite the negative bias, a cancer signal has emerged from SHARP and IMPROVE-IT during relatively brief follow-up, one year in the case of IMPROVE-IT, in Dr. Taylor's estimation. The Peto analysis yielded a hazard ratio of 1.34 for cancer death in patients treated with ezetimibe/simvastatin, although the difference did not quite achieve statistical significance (95% CI 0.98 to1.84, P=0.07).

"The confidence intervals suggest as much as an 84% increased risk of cancer death," said Dr. Taylor.

"When examining possible harm, is a 5% confidence limit appropriate?" he continued. "When considering an a priori hypothesis of harm, should it be 0.1 or 0.2?"

The SEAS controversy has played out against a backdrop of what is known about ezetimibe/simvastatin, Dr. Taylor continued. Excluding aortic stenosis from the event rate would result in a 25% reduction in the ischemic event rate. Compared with other recent trials, the benefit appears modest, especially given the large reduction in LDL achieved with the drug.

"One senses that ezetimibe/simvastatin was underperforming," said Dr. Taylor.

Events of the past several months have resulted in a conundrum regarding ezetimibe's net effect on health care outcomes, he concluded. The net benefit remains unmeasured, and the absence of harm is uncertain. . . .

Indeed. I wonder whether Mike Huckman, and the various Wall Street analysts factored any of this into their reports. . . if they didn't -- they should have.

The evaluation of these rigorously-documented, but "against the grain" (or, "ambiguous", even, to be fairer to Dr. Peto's views) sorts of results -- like the SEAS cancer signal -- is far-more-properly the domain of peer-reviewed scientific journals, and not hastily-convened, company-sponsored "damage control" press conferences, with only company-retained "experts" on hand to discuss the event. Here endeth today's sermon.

Thursday, November 13, 2008

An Apparently-Typical Vytorin Salesperson's Lament -- in Plain Language -- Over at CafePharma. . . .

Below appears an un-edited CafePharma post -- true, it is anonymous, but it does ring in as accurate -- and clear:

Yesterday, 03:20 PM
BY: Anonymous

Re: Zetia/Vytorin

. . . .Had a high-volume doc tell me today he is no longer prescribing Zetia or Vytorin and not to discuss these two drugs with him anymore. What the hell does SP expect me to do about this? He told me that I am a good rep and he respects me a lot, but that he no longer will prescribe or discuss these two drugs. . . .

Do go read the responses to this anonymous lament. They are enlightening, and honest.

That is all.

Wednesday, November 12, 2008

A Lively "To and 'Fro" on SEAS, and cancer, at AHA, This Afternoon. . . .

UPDATED -- 11.13.08 @ 7:30 AM EST

Mike Huckman's story on this, from yesterday afternoon, is plainly in need of updating -- why should we listen to stock analysts, over actual physicians, as to what SEAS means? True enough, the "expectations" were very low, at AHA, for Schering -- but SEAS is about whether a very-expensive drug might be linked to various types of cancer. That makes this a "doctors' debate" -- not a stock analysts' debate.

Later -- 3 PM: Now The Wall Street Journal Health Blog is on the below story. It comes out at about the same bottom line, as I did, yesterday.


At the panel discussion, Dr. Allen Taylor, quite sensibly, I think, took the position that we don't know enough to decide whether Vytorin and/or Zetia are entirely safe. Rather predictably, the people hired by Schering and Merck (to conduct other cholesterol trials, including the IMPROVE-It trial, running through 2012) took the other side of the argument -- chiefly, Dr. Rory Collins. Quoth Reuters reportage, tonight:

. . . .The panel discussion here on Wednesday brought the Vytorin cancer debate to a major U.S. medical forum. . . .

Still, the Zetia cancer discussion at the heart meeting stood in stark contrast with data presented three days earlier that demonstrated AstraZeneca Plc cholesterol fighter Crestor dramatically cut the risk of death, heart attack and stroke in a clinical trial, without serious safety issues.

"I think it is impossible to be completely certain, based upon what we currently know, that there isn't a cancer signal" with Vytorin and Zetia, said Allen Taylor, a cardiologist with Washington Hospital Center Walter Reed Hospital [Cogent RE-edit, from the pen of one Marilyn Mann, below, in comments] in Washington, D.C., who joined Collins in the panel discussion.

Taylor said until ongoing large trials definitely prove the safety and effectiveness of the Zetia component of Vytorin, doctors should avoid prescribing the drugs, except for patients who cannot tolerate other treatments.

"That's not many of your patients, but it may be some," Taylor added.

Rory Collins [an Oxford University researcher who is helping lead a large ongoing Vytorin study called Improve-It], took exception with Taylor's conclusion . . . .

Well, this would all be rather droll, if it weren't already established that we -- as a matter of pure investigational science -- cannot be sure that Vytorin, and/or Zetia work. at. all. -- to reduce heart attacks. That, my dear readers, is the object lesson of the ENHANCE trial, as Dr. Taylor taught us.

So -- does it really matter (all that much) to the fortunes of Schering -- given that Vytorin/Zetia started the day, just this morning, as a consensus third- or fourth-line of therapy?

Now, these two may be "re-elevated" to a third-line form of therapy -- where all other hope is lost (and an ambigous signal on cancer is a tolerable risk -- for someone very likely to die, if his or her cholesterol doesn't come down, and he or she cannot tolerate statins). Gee, that's reassuring. Or. not. so. much.

When the Plaintiffs Can Quote a Chinese Philosopher, Schering MUST be Losing. . . .

Let me say it at the outset -- the plaintiffs' lawyers in Polk v. Schering-Plough, et al. (the "Sales and Marketing Practices" litigation, MDL 1938, originally 08-CV-285) "give great letter"(!). Quick, often witty, always pithy -- and ever on-point, without being pedantic. Sweet.

Tonight, by way of a final letter (in an outright blizzard of them, both trivial and sublime parries and thrusts), and to gently nudge Judge Cavanaugh to "start somewhere" -- to begin, in earnest, deciding the myriad set of motions that will befall him, as this putative class action (related to securities fraud, ENHANCE, and the marketing of Vytorin and Zetia, but also including several RICO counts) gets into high gear -- the Chinese philosopher Lao-tzu is quoted, by the plaintiffs' lawyers. Thus, I can reliably opine that this means the Defendants -- Schering, its officers and directors, must already be losing. Do take a look (click to enlarge):

It seems the plaintiffs are comfortable beginning the debates anywhere -- and any time. And that is very difficult news for Schering-Plough. Judge Cavanaugh is as likely to begin in "the middle", and force Schering to fight its way out, as he is, to begin with some arcane pleading practice/rules decisions.

. . . .A journey of a thousand-miles begins with a single step. . . .

Perfect -- sublime and engaging. Dechert LLP ought to be deeply-concerned, here.

Mr. Obama: How to SAVE $25 Billion, per year -- in US Healthcare Delivery

H/T Ed Silverman, featured at late of Pharmalot, for this -- and, as this blog begins to bend toward the general topic of reforming the health-care delivery system in the Americas -- FINALLY, even the health insurance industry is ready to "name names" -- about how to reduce the waste in the United States Healthcare delivery [non-]system -- watch the first bit, particularly:

Note that the expense figures (the supposed-15 percent of all US health-care spending) for R & D are -- in fact -- very, very pliable numbers. They may be "fudged" in an almost-endless array of feats of accounting ledger-domain. And so, I'd be very skeptical about that figure being as large as claimed by pharmaceutical companies, here. In any event -- the take-away is this:
. . . .The researchers' estimate is based on the systematic collection of data directly from the industry and doctors during 2004, which shows the U.S. pharmaceutical industry spent 24.4% of the sales dollar on promotion, versus 13.4% for research and development, as a percentage of US domestic sales of $235.4 billion." Gagnon estimates that the pharmaceutical industry "spent approximately $61,000 in promotion per physician during 2004". . . .

[And from the Humana video:] Wider adoption of generic drugs would save the United States some $25 billion, annually. . . .

Tuesday, November 11, 2008

Vertex is Presenting NOW at Deutsche Bank Boston Biotech Confab. . . .

This November 11, 2008, 3:35 PM EST web-cast [Click that to listen in!] confirms, in part, what "justrpaul" had reported, over at the Yahoo! stock chatboards, below:

. . . .PROVE-3 (the study for which Vertex had offered interim data at AASLD) will be presented -- formally to FDA very early in the first-quarter of 2009 -- with a very wide-open label copy indication. . . .

First Quarter 2009 -- and very wide field of indicated-patient profiles -- Schering is plainly very far behind Vertex, in this horse-race. No doubt. Perhaps more than two years, even.

More Very-Suspicious Schering Research "Math" on Boceprivir, at AASLD

This one comes to us by way of "justpaul", a quite-cogent observer over at Vertex's Yahoo Stock Message Board -- it seems the latest poster, at AASLD, on Schering's SPRINT trial (for its next-generation Hep C candidate, Boceprivir) is sporting some highly implausible "math".

Now, perhaps more importantly, a professor at Harvard is clearly saying that Vertex's Teleprevir will convince FDA of its superior efficacy, and thus likely enjoy at least a two-year US market-lead over Schering's boceprivir:

. . . .I am told by a reasonable source that Professor Chung of Harvard Medical School gave an audio interview with Rodman and Renshaw about AASLD. Based on the 24/28 week results, he would definitely recommend telaprevir over boceprevir. And he was very skeptical of the boceprivir 44/48 week results. He didn't mention math problems but stated that there was no real logical reason for a 4 week lead-in in a 48 week trial to provide much of an advantage and that the 74% number was likely an irreproducible outlier. He felt telaprevir would be approved and have a two-year monopoly.

Second hand info, I admit. If anyone can verify or post a transcript, please do. . . .

UPDATED: Here is at least some confirmation. Wow -- the only surprise there -- is that because it is Schering, there is no surprise. . . there.

Monday, November 10, 2008

Flash VIDEO-feed! -- "Jupiter" Investigator Inverview from AHA in New Orleans

But first, from the AHA Presentation slide-set:

. . . .Among apparently healthy men and women with elevated hsCRP but low LDL, rosuvastatin reduced by 47 percent incident myocardial infarction, stroke, and cardiovascular death.

Despite evaluating a population with lipid levels widely considered to be “optimal” in almost all current prevention algorithms, the relative benefit observed in JUPITER was greater than in almost all prior statin trials.

In this trial of low LDL/high hsCRP individuals who do not currently qualify for statin therapy, rosuvastatin significantly reduced all-cause mortality by 20 percent.

Benefits of rosuvastatin were consistent in all sub-groups evaluated regardless of age, sex, ethnicity, or other baseline clinical characteristic, including those with elevated hsCRP and no other major risk factor.

Rates of hospitalization and revascularization were reduced by 47 percent within a two-year period suggesting that the screening and treatment strategy tested in JUPITER is likely to be cost-effective, benefiting both patients and payers.
The Number Needed to Treat in JUPITER was 25 for the primary endpoint, a value if anything smaller than that associated with treating hyperlipidemia in primary prevention. . . .

If that does not work, click here. . . .

Sunday, November 9, 2008

But Before You "Go Long, All In" on AstraZeneca, Pfizer, or the Other Statin-Makers. . . .

Consider what this NEJM editorial-source, released on the web, just this morning, had to say:

. . . .The aphorism "prevention is better than cure" makes perfect sense when applied to healthy habits such as following a sensible diet, maintaining an ideal body weight, exercising regularly, and not smoking. But increasingly, prevention of cardiovascular disease includes drug therapy, particularly statins to lower cholesterol levels. Statins were first tested in subjects at high risk for coronary events, and the limits of treatment have subsequently been expanded to include persons at progressively lower risk. The results of the Justification for the Use of Statins in Primary Prevention: an Intervention Trial Evaluating Rosuvastatin (JUPITER; number, NCT00239681 [] ), reported by Ridker et al. in this issue of the Journal,2 might push the orbit of statin therapy outward to include even more of the general population. Before pharmacologic treatment for primary prevention is expanded further, however, the evidence should be examined critically. . . .

. . . ."Jupiter" provides yet more evidence about the effectiveness of statin therapy in reducing cardiovascular risk, even among persons who would not currently be considered for pharmacotherapy. Guidelines for primary prevention will surely be reassessed on the basis of the JUPITER results, but the appropriate size of the orbit of statin therapy depends on the balance between the benefits of treatment and its long-term safety and cost. . . .

Note -- as ever -- doctors are far more likely to suggest vigorous, regular exercise, and a healthy, low-fat diet, to the vast bulk of the targeted United States population -- the population of US men over 50, and US women over 60 -- typically the age/gender groupings where heart-attacks begin to show-up as a significantly elevated risk-factor in overall life-expectancy. . . .

Diet, and exercise. Not some "take this, daily, for the rest of your life" pill, at least not for otherwise healthy, stable-weight and BMI Baby-Boomers. So -- again -- diet and exercise. Sometimes (and most times, in science), the simplest answer tends to be the correct one.

UPDATED -- More cautionary commentary, about over-applying these Jupiter results -- from today's panel of the AHA:
. . . .“This study demonstrated a significant reduction in heart attacks and strokes in treating this group, selected from an initially screened group of more than 89,000. However, it was not designed to answer the question of whether the impact on risk was due to a reduction in inflammation (marked by hs-CRP) or a reduction in LDL,” said Timothy Gardner, M.D., president of the American Heart Association.

“Statins lower both LDL cholesterol and hsCRP. Thus, the findings presented today cannot determine whether lowering cholesterol, reducing inflammation, or a combination of both is responsible for the effects seen in this paper.”

In a study by Wilson, et. al., published today in Circulation: Journal of the American Heart Association, researchers concluded that circulating levels of CRP do help to estimate risk for initial cardiovascular events and may be used most effectively in persons at intermediate risk for vascular events, offering moderate improvement in reclassification of risk. These results agree with the 2003 AHA/CDC scientific statement about the use of markers of inflammation such as hs-CRP. In the Wilson study, using the Framingham data, CRP did also offer some ability to reclassify individuals at lower risk.

In the 2003 statement the American Heart Association and the Centers for Disease Control and Prevention concluded that measurement of CRP is not useful for broad screening of the entire American adult population. Rather, at a physician’s discretion, it was suggested to be useful for people at intermediate risk, to determine the specific preventive measures that might be employed. For those at high risk, treatment should already be aggressive. The new studies raise the question of how much CRP measurement will help define treatment for people at low risk, and these studies will be included in the ongoing updating of guidelines for prevention. . . .

Indeed, it is certain that statin use will now expand -- and expand significantly (compared to the vastly-expensive placebo of Vytorin/Zetia) -- but it is not at all clear that most, or all, otherwise-healthy 50-plus-year old Americans will be taking statins, effectively for the rest of their lives.

Here endeth the sermon.

The Swan Song for Vytorin/Zetia Begins, in Earnest. . . .

or, Crestor's "Jupiter" Study is a three bagger!

It's very hard to imagine why anyone would, after today, pay for a three- to ten-times more expensive placebo, when 48 percent reductions in CV event risks are being achieved on statins (albeit a rather pricey, branded statin). In my estimation, plain old generic statins are sure to benefit from this data, as well. So, stick a fork in Vytorin/Zetia -- that barbeque is over:

. . . .“Compared to those who received placebo, patients receiving the drug rosuvastatin also had a 48 percent reduction in stroke, a 46 percent reduction in the need for interventions to reopen blocked blood vessels and a 20 percent drop in all-cause mortality,” said Paul M. Ridker, M.D., lead author of the study and director of the Center for Cardiovascular Disease Prevention at Brigham and Women’s Hospital, Boston, Mass. . . .

Friday, November 7, 2008

Look for Crestor's "Jupiter" to Rock Schering -- on Sunday (and Monday, on the NYSE). . . .

I'll have There now is much more here come Sunday, the 9th, but know now that Crestor is -- acoording to many Wall Street analysts -- widely expected to double its market share (~$3 billion per year in 2008, to ~$6 billion per year by 2012), as a result of the huge success of AstraZeneca's "Jupiter" study.

And it is very likely to take almost all of that share from Schering -- and Vytorin/Zetia.

More here, on Sunday -- from Louisiana.

The "New" Goldman Sachs "Restarts" Schering-Plough -- at "Neutral". . . .

About a two and a half years ago (March 20, 2006), the bad, old Goldman Sachs -- when its fancy Bank Holding Company structure (and thus regulated by, and eligible for bailouts from, the Fed's trough) wasn't even a glimmer in its eye, had started Schering as "Inline Perform". . . .

Press Fast Forward: Now, as the Sunday-morning hangover fog from "bonuses-for-massive-failures-of-judgment" clears away -- the shiny new Goldman has, in conjunction with rating Pfizer a "Sell", called Schering a "Neutral". A Volvo sedan, if you will -- a beige Volvo sedan.

In other words -- no change since March of 2006. Really -- there has been "no change" in Schering, since March of 2006? Color me. . . um, beige, as to that particular proposition. A very-curious beige, though.

More seriously, I might suggest that every factor that led Goldman to rate Pfizer a "Sell" -- would apply with equal, or greater force -- to Schering's plight. To be fair, on Goldman's side of the table, there is the argument that Schering does not face as precarious a near-term patent "cliff" as Pfizer, but Pfizer also has far more cash, and more than triple the size, to weather the storm, or to "go shopping" -- to buy fillers for its pipeline -- in selected, promising areas of therapy, and clearly, in emerging markets.

The fact is, Schering faces (now -- and through 2010) a similarly massive incursion of generics -- to be fully realized in the new year -- into over half of all its profitability -- on the Vytorin/Zetia flagship. There is no question that generic statins, particularly (at one-tenth the price), and branded statins, generally (at one-third the price) will shear off perhaps a little more than half of all those profits, and cash-flow, next year -- in 2009. Schering, and Merck, have all but said so in their SEC filings. Schering is simply too small, and too poorly managed, at this point -- to weather that storm successfully (contra examples: Pfizer and Merck).

Oh. Right. Did I mention already that Goldman Sachs might still have a little less than $800 million reasons NOT to list Schering as a "Sell" (and thus place even more pressure on Schering's price per share)? Yep -- either directly, or through "reputational exposures" to its private wealth clients -- it might. Hmmmmm. Interesting.

Looking for something to sell? Sell Schering. Short. Here endeth the sermon.

Thursday, November 6, 2008

Why Would Anyone (With Real Cash) Aquire Schering-Plough?

Schering-Plough -- just this morning -- is being hailed as a low- to no-growth pharma, by Jack Hough at the Wall Street Journal. He feels $14.50 ($0.50 below yesterday's close) is still "too high" a price to pay for Schering common stock. [Recall here, that -- in recent times -- to be approvable by most shareholders, any buyout-offer ought to come-in at least a 20 percent uptick from the current price per share -- or, $18 minimum.]

By Jack Hough's (overly optmistic future earnings, IMO) calculations, Schering is trading at nine times its future EPS, today. And still he thinks it too-pricey. Many other pharmas are around 12 times future EPS, as to current-market valuations.

I'd actually put Schering's current price per share at something more like 14 times its sustainable future EPS figures -- so, again, over-priced -- relative to its peers. Different path, same conclusion:

Glaxo (oft' rumored -- if it buys any other pharma) will likely buy-in, on a more attractive price-to-performance ratio. At antoher company. That is, no one with real hoards of cash, and a working fore-brain, is going to pay "premiums" in this market environment, for Schering.

So -- I'd put the possibility of a save-the-day buyout for Schering at "remote". Quoing Hough, at the Journal, now:

. . . .Schering-Plough offers the reverse proposition: lackluster growth potential, but at a cheap price. . . . the stock's price of nine times 2008 earnings seem sufficiently discounted. But the deal is soured by a 1.8% dividend yield -- too skimpy for such a mature company. . . .

Tuesday, November 4, 2008

Merck Tells the WHOLE Vytorin Truth -- in its Q3 Form 10-Q -- Schering? Not so much.

Compare the below, to what Schering swore was true -- that "media reaction" caused the 2008 declines in the Cholesterol Management Joint Venture's equity income.

SEC Forms 10-Q are essentially sworn statements, by the CEO, CFO and Controller -- sworn to, before the SEC -- an agency of the federal government. Statements to which civil and criminal liability for fraud attaches. This Merck well-understands -- so, it chose to tell the WHOLE truth about Vytorin/Zetia equity income trend-lines (on Form 10-Q, page 38):

. . . .The decrease in equity income from the Merck/Schering-Plough joint venture is a result of lower revenues of Zetia and Vytorin related to the ENHANCE and SEAS clinical trial results. . . .

[Wmphasis supplied, above -- Now, quoting from the top of Page 40 -- regarding SEAS results:]

. . . .There also was no significant difference in the key secondary end point of aortic valve events; however, there was a reduction in the group of patients taking Vytorin compared to placebo in the key secondary end point of ischemic cardiovascular events. Vytorin is not indicated for the treatment of aortic stenosis. Vytorin contains two active ingredients: ezetimibe and simvastatin. No incremental benefit of Vytorin on cardiovascular morbidity and mortality over and above that demonstrated for simvastatin has been established. In the study, patients in the group who took Vytorin 10/40 mg had a higher incidence of cancer than the group who took placebo. There was also a nonsignificant increase in deaths from cancer in patients in the group who took Vytorin versus those who took placebo. Cancer and cancer deaths were distributed across all major organ systems. The Company believes the cancer finding in SEAS is likely to be an anomaly that, taken in light of all the available data, does not support an association with Vytorin. The Company, through the MSP Partnership, is committed to working with regulatory agencies to further evaluate the available data and interpretations of those data; however, the Company does not believe that changes in the clinical use of Vytorin are warranted. . . .

[And -- more on this, in a later post -- a potential block-buster: ENTIRELY UNDISCLOSED BY SCHERING! -- on Page 21 (filed on September 10 -- so well before Schering filed its Form 10-Q!) -- we now learn that the DoJ is formally investigating potential violations of the federal False Claims Act, related to the sale of Vytorin and Zetia:]

. . . .Finally, on September 10, 2008, the Company received a letter from the Civil Division of the U.S. Department of Justice informing it that the DOJ is investigating whether the companies’ conduct relating to the promotion of Vytorin caused false claims to be submitted to federal health care programs. The Company is cooperating with these investigations and working with Schering-Plough to respond to the inquiries. In addition, since mid-January 2008, the Company has become aware of or been served with approximately 140 civil class action lawsuits alleging common law and state consumer fraud claims in connection with the MSP Partnership’s sale and promotion of Vytorin and Zetia. Certain of those lawsuits allege personal injuries and/or seek medical monitoring. . . .

In my opinion -- Schering's officers did not tell the whole truth, when each signed, and filed Schering's Form 10-Q, here.

Both companies witnessed the exact same events -- yet one attributed it to "study results" -- while the other attributed it to the "media reaction" to those same study results.

Yes -- I do see this as tantamount to '34 Act fraud, Messrs. Hassan, Bertolini and Sabatino.

[A sincere hat tip to PM, for alerting me to the fact the Merck had filed its 2008 Q3 SEC Form 10-Q, overnight.]