Friday, July 31, 2009

Does Sanofi-Aventis ALREADY "Effectively Control" Merial Schering-Plough's Intervet?

Even though the final clause of of the below Section 10.4 -- at subsection 10.4.3 -- specifically disclaims control, there is a reasonable case to be made that Sanofi-Aventis tonight, through crafty negative covenantry, possesses at least a "veto right" -- as to most important business matters concerning the Intervet franchises, businesses that are (at least nominally) still now owned by Schering-Plough (and to be owned by New Merck, if the reverse merger is consummated). Surprisingly, this veto, or negative control, in favor of Sanofi, now exists over a series of businesses worth, by some accounts, over $9 billion. Any sale, divestiture, or other rearranging of any asset or liability that comprises more than one-half of one percent, in most cases, or one percent (in some other cases) is a "trip-wire" -- creating default remedies in favor of Sanofi-Aventis. The tightness of the guardrails is actually rather astonishing. These clauses are common in multinational M&A settings, but usually provide much wider dollar discretion to a target of Intervet's size, scope and scale. Fascinating.

Take a look -- again, a link to the full "call option" agreement is here, at the SEC's EDGAR window:

. . . .10.4 Conduct of the Intervet/Schering-Plough Entities

10.4.1 Except (i) to the extent required by applicable Law or the regulations or requirements of any stock exchange or regulatory organization applicable to Sellers, Sellers’ Subsidiaries and the Intervet Schering-Plough ("I/SP") Entities and their Subsidiaries, (ii) as otherwise permitted or contemplated by this Agreement or the Related Agreements, (iii) as set forth in Schedule 10.4, or (iv) as consented to in writing by Sanofi-Aventis (which consent shall not be unreasonably withheld, conditioned or delayed), during the period from the date hereof until the earlier of (A) the Closing Date or (B) the termination of this Agreement in accordance with Article 14 hereof, Sellers shall, and shall cause each of their Subsidiaries (including the I/SP Entities and their Subsidiaries) to, conduct the businesses and operations of the I/SP Business in all material respects in the Ordinary Course, and to the extent consistent therewith, Sellers shall, and shall cause each of their Subsidiaries (including the I/SP Entities and their Subsidiaries) to, use their respective reasonable efforts to (1) preserve the I/SP Entities’ and their respective Subsidiaries’ existing assets and properties, (2) preserve the I/SP Business’ business organization intact and maintain the I/SP Business’ existing relations and goodwill with customers, suppliers, distributors, creditors and lessors, and (3) comply in all material respects with Laws applicable to the I/SP Business.

10.4.2 Without limiting the generality of the foregoing, except (w) to the extent required by applicable Law or the regulations or requirements of any stock exchange or regulatory organization applicable to Sellers, Sellers’ Subsidiaries and the I/SP Entities, (x) as otherwise permitted or contemplated by this Agreement or the Related Agreements, (y) as set forth in Schedule 10.4, or (z) as consented to in writing by Sanofi-Aventis (which consent shall not be unreasonably withheld, conditioned or delayed), during the period from the date hereof to the Closing Date, Sellers shall cause each of the I/SP Entities and their Subsidiaries not to:

(i) modify or amend in any material respect any of the organizational documents of any of the I/SP Entities or their Subsidiaries;

(ii) issue, sell or otherwise transfer any Equity Securities of any of the I/SP Entities or any of their Subsidiaries (other than issuances, sales or other transfers to the I/SP Entities or any wholly-owned Subsidiary of an I/SP Entity);

(iii) split, combine, redeem or reclassify any Equity Securities of any of the I/SP Entities;

(iv) permit any of the I/SP Entities or any of their respective Subsidiaries to incur or suffer to exist any Indebtedness in excess of $50 million in the aggregate except (x) for working capital borrowings incurred in the Ordinary Course, or (y) as listed in Schedule 10.4.2(iv);

(v) enter into any Contract that would prohibit any of the I/SP Entities or any of its Subsidiaries, after the Closing, from competing in any line of business or with any Person in any geographic area, except for such prohibitions that would not, individually or in the aggregate, reasonably be expected to be materially adverse to the I/SP Business;

(vi) other than acquisitions (a) listed in Schedule 10.4.2(vi) or (b) not in excess of $10 million individually or $20 million in the aggregate, permit any of the I/SP Entities or any of their respective Subsidiaries to acquire any business by merger, consolidation or otherwise;

(vii) divest, sell or otherwise dispose of, or encumber any material asset of the I/SP Entities or their Subsidiaries outside of the Ordinary Course (other than as permitted by subsection (ii) above) except (a) as listed in Schedule 10.4.2(vii), (b) for transactions involving assets of the I/SP Entities or their Subsidiaries having a value no greater than $20 million in the aggregate for all such transfers, or (c) in connection with any waiver, release, assignment, settlement, compromise of litigation otherwise permitted under this Agreement;

(viii) permit any of the I/SP Entities or any of their respective Subsidiaries to adopt a plan or agreement of complete or partial liquidation, dissolution, or recapitalization;

(ix) permit any of the I/SP Entities or any of their respective Subsidiaries to enter into or adopt any Plan, or amend any I/SP Entities Plan other than in the Ordinary Course consistent with past practice;

(x) increase the rate of compensation, commission, bonus, or other direct or indirect remuneration payable, or agree to pay, conditionally or otherwise, any bonus, incentive, retention, change in control payment or other compensation, retirement, welfare, fringe or severance benefit or vacation pay, to or in respect of any employee, officer or director of any of the I/SP Entities or any of their respective Subsidiaries, except (a) in the Ordinary Course or (b) to the extent required by any Plan disclosed in Schedule 8.17.1;

(xi) materially delay or accelerate the payment of any account payable or other Liability of the I/SP Business other than in the Ordinary Course, materially delay or accelerate the collection of any account receivable or other amount owed to the I/SP Entities and their Subsidiaries relating to the I/SP Business other than in the Ordinary Course, or directly or indirectly encourage or require agents, distributors or other purchasers of products from the I/SP Business to purchase or commit to purchase such products in volumes or in accordance with an order or delivery schedule other than in the Ordinary Course;

(xii) make, incur or authorize any individual capital expenditures or commitment for capital expenditures in connection with the I/SP Business in excess of $20 million individually or $100 million in the aggregate;

(xiii) pay any dividend (including interim dividends or other similar forms of distribution), other than dividends or distributions that would be reflected in the calculation of the I/SP Value (as defined in the Call Option Agreement) pursuant to the Call Option Agreement;

(xiv) enter into new agreements, or modify any existing agreements, between Schering-Plough or its Affiliates, on the one hand, and the I/SP Entities or its Subsidiaries, on the other hand, that would continue to be effective following the Closing unless such agreements are substantially on an arm’s-length basis, other than customary agreements and intracompany arrangements for items such as cash management, tax sharing, data sharing and other similar ordinary course purposes with Schering-Plough or its Affiliates; or

(xv) authorize, agree, resolve or consent to any of the foregoing.

10.4.3 Nothing contained in this Agreement shall give to Sanofi-Aventis, directly or indirectly, rights to control or direct the operations of any of the I/SP Entities, their respective Subsidiaries prior to the Closing. Prior to the Closing, each of the I/SP Entities and their Subsidiaries, as applicable, shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision of its operations. Notwithstanding anything to the contrary in this Agreement, no consent of Sanofi-Aventis shall be required with respect to any matter set forth in this Section 10.4 or elsewhere in this Agreement to the extent that the requirement of such consent would violate or conflict with applicable Law. . . .

Whew. That's quite a bit of de facto veto power, or negative control, of a series of businesses worth, by some accounts, over $9 billion. And $50 million or $100 million is a trip-wire threshold amount? Yikes. Sanofi is effectively now running this Intervet show.

BREAKING: Schering-Plough Just Disclosed the Full "Merial-Sanofi-Intervet Call" Agreement

It was just uploaded to the SEC, via a prospectus-supplement exhibit.

This is a complicated deal. I'll have more, after I digest it:

. . . .Subject to and upon the terms and conditions described in this Agreement, Schering-Plough offers herein to Sanofi-Aventis an option, and Sanofi-Aventis accepts such option (without undertaking to exercise it), to, following the completion of the Merger and the acquisition by Sanofi-Aventis of the Merial Equity Interests pursuant to the Share Purchase Agreement, cause the I/SP Entities, which would, at the Closing, collectively conduct all of the I/SP Business, to be combined with Merial (by way of contribution) upon the terms and conditions described in this Agreement, as a result of which Sanofi-Aventis and Schering-Plough would each, directly or indirectly, hold 50% of the equity interests in such combined company. . . .

And here is the main share purchase agreement, just filed, as well. I'll offer analysis, after I read it -- in the morning -- tomorrow. Done -- see above:

From the "Sublime -- to Ridiculous" Dept.: Why It's Always a Good Idea to Proof Press Releases. . . .

Seeking Alpha, a great resource site, has dutifully lifted the first version of Schering-Plough's asenapine press release, of last afternoon, to source this (below). The problem is that Schering-Plough's original press release used a would-be "New-Joisey"-homonym in place of the intended word -- "use" (erroneously substituting "youth", instead).

With the error, the sentence is wholly-unintelligible. There was no vote for approvability, of that sort, yesterday. So, I guess it is usually wise to really proof corporate press releases -- especially on one of Schering-Plough's "Five Star" candidates, now pending-action, at FDA:

. . . .in favor of Saphris (asenapine) sublingual tablets as effective and safe for the acute treatment of manic or mixed episodes associated with bipolar I disorder in adults and in favor of youth USE(!) in acute treatment of schizophrenia in adults. . . .

That was the Seeing Alpha quote, as corrected, here. It seems "the lights are all on", in Kenilworth, but "no one's home"(!). I actually thought the pronunciation of "youth", as a New Joisey near-homonym for "use" was more of a "Sout-Philly" thing. As I say -- trivial, but telling, nonetheless.

Asenapine Chronicles: WSJ Finally Discovers the Full FDA Background Materials. . . .

Well, better late than never, I guess. Jennifer Corbett Dooren, for The Wall Street Journal, has apparently found the 1,067 page PDF we've been blogging about for the last few days:

. . . .An FDA memo released in advance of the meeting said the data in support of Saphris' short-term efficacy, or effectiveness, in treating schizophrenia "are not overwhelming for this drug. . . ."

[And earlier, she wrote:]

If approved, Saphris would compete with other top-selling antipsychotic drugs like AstraZeneca's Seroquel . . . and Eli Lilly's top-selling drug Zyprexa. . . .

If nothing else, one would get the sense from The Wall Street Journal article that this is a market already crowded with best-selling, entrenched franchise names. And that -- coupled with the lukewarm-at-best official PDAC remarks -- may explain why Schering-Plough's stock actually fell into negative territory (even though it had gapped higher, at the NYSE open), after the PDAC vote news was released. For the last three NYSE Schering-Plough trading sessions, more than double the usual daily volume has crossed the tape. The smart money may be moving -- and moving, away (SGP topped the WSJ's "selling on strength" list, yesterday). We shall see. Overnight, Reuters quoted a BMO Capital analyst, thus:
. . . .BMO Capital Markets analyst Robert Hazlett boosted his sales estimates for the drug following the panel's positive vote, saying he expects Saphris to earn $25 million in 2009, $125 million in 2010 and $200 million in 2011. . . .

Only $200 million by the end of 2011. That would confirm my "already-crowded space" theory, on the drug.

Now, I guess, it is in the hands of the full Commission.

Thursday, July 30, 2009

Salmon's Latest "Asenapine Chronicles" Report -- Filed From Inside the Room. . . .

Salmon favors us with an "on the scene" report -- from inside the FDA Psychopharmacologic Drugs Advisory Committee's Hilton meeting room -- in Silver Springs, Maryland -- Thanks, Salmon!:

. . . .The PDAC meeting has ended.

Like the last few meetings on AC member wanted a third question of given that they've voted on if a drug is "acceptably safe" or not she wants to then vote on safe relative to the efficacy. To me the idea of safe has to by it's nature include a intellectual balance with efficacy. Because you can't vote on rates of AEs and safety is a judgement on rates of AEs, severity of AEs etc. as compared to the efficacy and the alterative of not treating.

Then it did come out that the AC members are abstaining on voting regarding safety if they vote no on efficacy. To me this is absurd because the way it's reported and used the abstentions are basically ignored.

Here are the tallies:
Schizophrenia Indication


Bi-Polar Indication


The way the questions are worded they only vote on safety for the 3 - 6 weeks of the studies. Even though it will likely be approved later for long term and Dr. Laughren indicated long term use will be implied by the labeling (since no one would ever switch to another drug and standard is long term use).

Based on the standards used in the meeting today thalidomide would have been approved.

You know how SP spins the financials? Well, their presentations today were the same. There was a discussion about suicides and Schering-Plough acknowledged that they were comparing six week placebo rates to one year drug rates and then ASSUMED rates were stable (bad assumption) since we know suicide is most likely to occur early with drug treatments in depression etc.

[". . .Table 181 of the Sponsor’s analysis confirms that the differences although statistically significant, may have minimal clinical significance. . . ." See page image, at right, Page 757 (of 1,067) -- as ever, click it to enlarge -- Per Salmon's later thoughts, below:]

Nice catch of Table 181 on Page 757 Organon's (now Schering-Plough's) modeling on the response in bipolar. Notice that the population mean is higher than the median and the individual model prediction and how the latter two overlap. This may be indicative of differences in response by disease severity and supports the reviewer's post hoc exploratory analysis on page 761.

You know all these companies get these drugs approved for Bipolar 1 (YMRS >/= 20) but people use them for Bipolar 2 (YMRS 12 - 19) yet the average score at the end of 3 weeks is only around 12. So you know it isn't likely to differentiate from placebo in Bipolar 2. This is probably why no company even tries to study these drugs in Bipolar 2 (hypomania). Plus you know there's got to be a minimum cutoff below which you can't show a difference and it's well known as that response in depression trials and schizo trials is related to disease severity with a positive study if sicker patients are used. So a priori the reviewer's post hoc exploration by disease severity makes sense to do. What would make sense is to confirm this is to go into FDA files and see if one sees similar patterns with other drugs in NDAs. However I doubt FDA management would like analyses about other NDAs showing up in the review of a competitor's drug. Otherwise one would see comparisons of safety across similar drugs in the NDA reviews that are released -- and we don't. FDA management might be able to say something about that, but I doubt they can totally stop someone from putting something in the review about the drug in question. Although I imagine -- based on Dave Graham, Andy Mosholder and others -- they might try to suppress it, or dismiss it, like they did by calling up the journal that Graham was trying to publish in. . . .


[Back to the main post:]

As for efficacy NO mention at all that the baseline disease severity was not comparable in study 004.

No mention at all of the concerns of PAH long term.

No mention at all regarding the possibility that efficacy in bipolar might be related to disease severity (see page 759 - 764 and especially the graph on page 761). Although there was discussion how the placebo response rate in schizophrenia has been going up over the past 20 years (likely because they're studying less severely ill people.)

They did seem concerned about long term safety and kids, but basically said the drug was safer than Zyprexa because it didn't cause as much weight gain. In spite of the fact that it appears the diabetes might be due to a toxic effect on the pancreas and not due to the weight gain.

There was no discussion at all of the dose and time dependent hepatotoxicity (page 385) that appears to be due to a toxic metabolite that's formed on swallowing. Which is probably why the instructions are not to eat or drink for 10 minutes and the real reason for BID dosing and not the half-life of D2 receptor occupancy as they claimed. If BID dosing and efficacy is because of D2 receptor occupancy then why even develop a drug to block serotonin receptors and why were the early studies with low oral doses once daily.

AC members talked about Schering-Plough coming out with a 2.5 mg dose for children (as distinct from adolescents) yet admitted in practice people dose differently than labeled (which often means pushing the dose).

I can just see little kids (5 - 6 yo) given this because it's sublingual, the doc pushing the dose to the maximum adult dose (10 mg bid), and the kid swallowing the drug once the tablet disintegrates.

Personally I think we're going to be seeing a lot of liver failure in kids.

Since PAH is already being reported with the other atypicals in kids I think this one will also be problematic. We just won't know how bad until someone like Dave Graham (Vioxx) fights FDA management to let the info out.

Look for it in about 5 years.

-- Salmon

July 30, 2009 3:34 PM

[Later: Click image of Slide 34, at right, to enlarge. . . .]

Take a look at slide 34 on page 857 which contains the efficacy data for the four schizophrenia studies.

The statistician on the the AC committee voted no on efficacy for schizophrenia because he thought the efficacy for the 5 mg dose in study in 41023 could be due to chance and there were problems such as attrition rates.

Plus for study 41004 [the other 'postive study' (really failed study)] you can see where not only is the baseline for the asenapine group high but the placebo response compared to the three other studies is weak.

I think there are potential issues with both of the two so-called positive studies.

-- Salmon

July 30, 2009 5:07 PM. . . .

More "Asenapine Chronicles" -- Our Irrepressible Salmon -- Protecting All "Pharmed" Salmon, Too(!)

Even if one tried, it would be difficult to make up a stranger story, stranger than the true story: the one that leads to this moment, in the "Further Asenapine Chronicles" -- now awaiting word from the FDA's PDUC meeting -- on Saphris/Asenapine, this evening [click thumbnails of pages, at right to enlarge]:

. . . .Take a look beginning at page 963 of the asenapine PDAC background package. The OCP reviewer begins to lay out structure activity relationships and why similar toxicities may be occurring with a wide variety of drugs ( i.e. the 3D structures may allow binding to the same binding sites.)

On page 967 he looks at the antihelminic mectins (Merck and SP animal drugs) and you can see he's postulating that the effects on bones seen with the animals studies of the various antipsychotics described elsewhere in the reviews may be related to these drugs causing bone chips in the knees of race horses.

Since these drugs are also given to farmed salmon(!) this raises the possibility of these being toxins in the human food chain. [Ed. Note: Click at right -- to enlarge the image of Page 969 -- Agent Orange; Dioxin. . . .]

There's actually an article related to this in the December 2008 issue of of Drug Safety as well as another article in that issue by Dr. Zornberg the FDA team leader on asenapine that basically outlines all the OCP reviewer's concerns.


-- Salmon
July 30, 2009 12:36 PM. . . .

Wow. Keep it comin'. . . we still are awaiting word from the Hilton on Colesville Road, in Silver Springs, Maryland.

So -- "Merial to Sanofi" -- With A "Two-Step Acquisition" Option on Intervet: Sanofi CEO

I guess this makes my ". . .Or, Both?" headline, of two months ago (on June 5, 2009), not such a terrible conjecture afterall, per Reuters, this morning:

. . . .If Sanofi and the new Merck agree to join Merial and Intervet/Schering-Plough (ISP), the value of Merial would be $8 billion and $9.25 billion for ISP. Any such joint venture would be subject to antitrust approval, however.

Sanofi Chief Executive Chris Viehbacher said at a conference call he saw little duplication in the wider alliance as Merial focuses on pet animals and ISP focuses on livestock. Merial's prime brands include flea and tick product Frontline and dog heartworm prevention Heartgard.

"There is a little bit of overlap, but not very significant," said Viehbacher. "If we get the opportunity ... we could end up with a business that is better balanced between production animals and companion animals," he added. . . .

UPDATED @ 10 AM EDT -- from the Sanofi Webcast call on the transaction:

On the webcast this morning, Sanofi CEO Viehbacher referred to Sanofi's Intervet call option as a potential "two-step acquisition" of Intervet. . . . exerciseable within 100 days after of the closing of the Merck Schering-Plough merger. . . .

That is definitely the wholly-unvarnished truth -- so here is the relevant slide, from the webcast, with my commentary -- as ever, click it to enlarge:

Okay. For this first part of the deal, I'll once again admire Merck's negotiating strategy, and execution. Sanofi paid right at the top of the market, for the half of Merial it did not already own -- more than three times sales. This is an especially rich price, given the swoon I've noted -- actual sales decreases in constant currencies (of 7 percent; and 10 percent more, with currency headwinds), at least in Intervet, in this past quarter [Merck hasn't filed its SEC Form 10-Q yet]. Wow. As I said here, I would not be at all surprised to see CEO Clark raise more cash, to pay down post-merger debt, by "partnering off" a chunk, or all, of Intervet. Thus -- especially in view of Sanofi's Slide No. 9, above, we'll style this installment as "The Bust-up Chronicles", Chapter 7: ". . . .Step 3: Assess potential [additional] divestments. . . ." -- Yikes.

On the other hand, now that I think about it for a minute, the foreign currency exchange rates, at present, should be a tailwind to Sanofi, at least for now -- it is a Euro-based, and Euro-reporting entity. Thus, all the dollar sales of Merial ought to be enhanced by the present rates of foreign currency exchange. Fascinating -- might that explain part of the high price?

And yet, still we wait, for FDA's asenapine PDAC meeting news, this evening. . . . [Subsequently-created graphic, below.]

"The Blues" Sue Schering-Plough and Merck, Under federal Racketeering and Wire Fraud Statutes. . . . .

While we wait for the FDA's PDAC Asenapine Meeting developments to unfold, tomorrow -- I thought I'd just mention that last week, "The Blues", i.e., Blue Cross Blue Shield of Illinois, Blue Cross Blue Shield of Texas, Blue Cross Blue Shield of New Mexico, and Blue Cross Blue Shield of Oklahoma have collectively, via the parent entity of each of them filed a federal suit against Schering-Plough, Merck and the M-SP joint venture entity, alleging various RICO violations, wire-fraud, common law fraud and deceptive trade practices -- all related to Vytorin/Zetia, and ENHANCE results disclosure delays. The suit seeks treble damages, as is allowed under civil RICO claims.

While it is a near-certainty that this suit will shortly be transferred from the Eastern District of Texas, into Judge Cavanaugh's courtroom, and consolidated with the other 150-plus lawsuits pending, on these matters -- in the New Jersey US District Courthouse, in Newark -- I thought it worth noting. I think this one suit represents the largest group of health care insurance companies yet to file an action against the companies, and the cholesterol joint venture, related to ENHANCE.

The overpayment damages these Blue Cross/Blue Shield entities may be able to establish, in the aggretate, could easily run well-north of a half-billion dollars.

I'll keep you posted on it.

Wednesday, July 29, 2009

FDA Reviewer on Asenapine: "Schering-Plough Knew About this Toxicity and Specifically Tried to Prevent FDA Detecting it. . . ."

UPDATED: 07.29.09 @ 7:05 PM EDT -- At least one MSM news outlet is showing the beginnings of covering both sides of the Saphris (asenapine) FDA story. Well, it's a small start -- but a welcome one -- and in Greece, of all places.

Much more from the cogent keyboard of Salmon, tonight:

. . . .Here are some timelines from the background package on anemia.

Looks like the OCP reviewer got a quick look at multiple cell lines dropping and went to the medical reviewer who sidestepped the clin pharm reviewer and then surreptitiously dismissed it.

The OCP reviewer then took a closer look at the data including plotting and found progression toward neutropenia without adequate monitioring (if standard monitoring for clozapine had been started when the trend was detected then perhaps the patients wouldn't have died).

The medical review team then tried to dismiss this and Tom Laughren, the psych division director said there's no need for an advisory committee meeting (wonder why he wouldn't want to present such data for impartial adjudication).

The citations from the background package follow:

Gwen Zornberg
5/1/2008 07:16:30 PM

CMC review was completed 11 APR 2008 recommending AE. Dr. Levin reported to me today verbally that no major toxicities including cases of aplastic anemia evident in clinical data. The data supporting acute efficacy in SZ and BP appear satisfactory.

Page 481 OCP Briefing May 12, 2008

Page 850 and 851

Slides of decreases in Hematologic Cell Lines on initial lab sheets thought that might be aplastic anemia, however after plotting it appears platelets might not have been dropping fast enough, however microhemorrhages were noted in the brain on autopsy. Consequently this is definitely neutropenia with RBC anemia, with presumptive death due to agranulocytosis and possible aplastic anemia.

Page 51 6/12/08 CDTL Review Gwen Zornberg – Ex-Pfizer Employee

OCP stated in the section on “Comments Previously Provided to the Medical Review Team” on page 42 of their review that on 1 May 2008 “this reviewer went to the medical division to discuss a death in the ongoing studies. Due to workload the medical review team requested followup midweek the following week. On Thursday May 8, 2008 a followup email was sent to the medical review team informing them of a possible case of aplastic anemia.” In the data, Dr. Levin found no evidence of pancytopenia. If this were the case, as CDTL working with Drs. Levin, Laughren and Mathis and Lieutenant Commander Kiedrow, we would have used one of our reserved meeting times to review the action plan.

Page 58 6/12/08


It was decided by Dr. Laughren that there was no need to take this application to the
PDAC in terms of the clinical data, which are consistent with a typical second generation antipsychotic drug.

-- Salmon

July 29, 2009 5:21 PM. . . .

[End, Updated Portion]

This is page 885 of 1,067 -- this e-mail was sent May 16, 2008, by an FDA staff reviewer. Page 886 indicates at least one of the addressees (his supervisor?) initially deleted this email without reading it.

Click it to enlarge:

May 16, 2008

. . . .changing my recommendation for Asenapine to non-approval. . . .

information in the review indicates that Asenapine causes pulmonary arterial hypertension and cardiac effects. . . .

the sponsor [Schering-Plough] knew about this toxicity and specifically tried to prevent our [FDA's] detecting it. . . .

[At Page 936:]

. . . .In addition, the sponsor’s [Schering-Plough's] conclusions and sponsor’s labeling proposals appear to be intentionally misleading especially with respect to subjects with mild hepatic impairment and this conclusion is supported by analyses in the original OCP NDA review.

The sponsor’s signatory for this study is Larry Alphs, MD from Pfizer. Dr. Alphs was also one of the signatories to the request for the Drug Safety Monitoring Board that is contemporaneous with the SAE in the woman who may have died from agranulocytosis, but was not reported.

The information available leads this reviewer to believe that one or more individuals at Pfizer and Organon as well as others at other companies intentionally mislead the FDA as to important information regarding the safety of asenapine that would have been needed to make a decision regarding this NDA.

Based on this and Chapter 18 of the United States Code this reviewer believes that the Inspector General or another criminal investigative unit must be informed.

As this reviewer was instructed by Dr. Mehta that any such requests must obtain prior approval by FDA management, this request will be included in the recommendations. . . .

[It is important to note that this site has not independently-verified the above; and it has not sought the comment of anyone named in these materials. These documents reflect but one side of the story -- they are public documents, though, afterall.]

As Salmon was the first to flag this one, I'll let him tell the rest of the story, in the comments, below. Stupifying. While we wait for Salmon's narrative, I'll post the suggested pages we are pointed to (in green text below), by Salmon's review, thus far:

777 777 Other Safety Issues
780 780 Hepatotoxicity Study 85136 (dose and time dependent)
784 784 Study 25509
785 785 IV Study 25506
787 787 Cardiologist's Report
794 diabetes and heart attack
794 diabetes and heart attack
798 798 Table of selected Cardiac AEs
799 799 Agranulocytosis and Pancytopenia
810 810 Studies not to be reviewed per Management instructions
885 885 e-mail recommending nonapproval due to toxicity and coverups
895-898 895-898 Summary of Major Conclusions
914 Cardiopulmonary Safety Signals Time dependent > 1 year
916 - 918 especially at bottom of 918 Summary of Patients who died. Causes and preponderance with asenapine compared to olanzapine.
923 923 Beginning of section on animal data. Embryofetal studies suggesting effects consistent with neonatal pulmonary arterial hypertension (phen-fen and Vioxx like.)
932 932 neonatal effects of cis-asenapine
933 933 Conclusions regarding neonatal effects. Potential Developmental Risks.
936* 936 Larry Alphs, M.D. Pfizer (Is this possible evidence of criminal activity?)
937 937 Suspicious SAEs from 120 day safety update
945 - the long term studies for negative symptoms
945 Relative Rates of CV and Pulmonary SAEs 6.6 fold higher for asenapine in long term studies
954 basic pharmacology
954 Major Deficiencies and Reassessment of Approvability
965 bifeprunox
965 Bifeprunox causes choreoathetosis (maybe not turned down for being less efficacious as claimed)
972-973 Conclusions re: biological systems hypothesis
984 983 Phen-Fen like effects with Symbyax (Zyprexa and Prozac Combo)

Bloomberg: Merck to Sell Its 50 Percent Stake in Merial To Sanofi; Announcement Pending

Originally, this was a Reuters report, but now Bloomberg is carrying it, as well:

. . . .Sanofi-Aventis SA agreed to buy Merck & Co.’s stake in their Merial animal-health venture to help the French drugmaker weather generic competition to its best-selling drugs, said two people familiar with the situation.

The acquisition is set to be announced this week, said the people, who declined to be identified as an official announcement hasn’t been made. They didn’t disclose the price of the transaction. The stake may be worth about 2 billion euros ($2.8 billion), according to Eric Le Berrigaud, an analyst at Raymond James in Paris. . . .

We shall see. At least to my understanding, it would not preclude a deal for some parts of Intervet -- though it would make a large deal, on that front, rather unlikely.

Tuesday, July 28, 2009

Over 1,000 Pages of Saphris (Asenapine) Background Materials To Swim Through -- In Under 48 Hours

UPDATED: 07.28.09 @ 10:50 PM EDT -- This last update, a sidebar-image of an internal FDA e-mail, at right, merits its own post. Click on the image, at right, or click this link, to read more of the story.

[Page 850:]

▲ . . . .5 mg SD Pivotal BE Study: 20 of 35 healthy subjects had observed cardiac effects on telemetry; 10 subjects experienced bradycardia, 8 tachycardia, 7 sinus pause, 3 junctional escape rhythms, and 1 bradycardia with junctional rhythm. . . .

[Page 992:]

▲ The medical reviewer changed his conclusions from the original clinical review where he stated the acute schizophrenia study # 41004 was a failed study to a positive study with as asenapine differentiated from the negative control as the positive control did not.

▲ The medical reviewer’s statement is at variance with the regulatory history of the FDA going back many years. The FD&CA indicates that efficacy must be shown by ‘adequate and well controlled studies’. It is common practice in science that experiments and studies need both positive and negative controls in order to be well controlled. This is especially important with treatment for certain psychiatric diseases due to the high and variable placebo response rate, which could differ between two different placebo arms. It’s also unknown why the medical reviewer did not obtain a secondary signature for this review amendment. . . .

GO see the comments, below! Amazing -- and disgusting! [I must be seeing differing pagination than Salmon, and the other anonymous commenters -- but I am trying calibrate where, in my copy, all of the pages referred to (by Salmon and others) appear. I am using the Adobe PDF Reader's master document page number, upper bar of the reader itself, not anything actually marked on these physical pages. Just FYI.]

Keep on diggin' -- one and all!


This river is vast -- deep, wide and very fast-running -- at 19.1Mb -- and 1,000-plus pages of PDF file. Only 48 hours for Salmon to swim all the way upstream, through all of it. Can it be done? I dunno.

But (to switch-up the metaphors, here) there will be golden needles, in this gigantic haystack. Let's start looking -- at page 8 of 1,067:
. . . .The sponsor presented no data pertinent to longer-term efficacy of asenapine for the treatment of schizophrenia. We [the PDAC] will seek such data as a phase 4 commitment, should we decide to issue an approvable letter for this NDA. . . .

▲ [Page 123:] In the combined Phase 2/3 studies, the most commonly reported SAE [or "significant adverse events"] were exacerbations of the psychiatric disorders under treatment. These included: exacerbation of Schizophrenia and other psychotic disorders; completed suicide; suicidal and self-injurious behaviors; mania, Bipolar disorder; depressed mood; and mood disturbances.

Less common SAE included: 1) injury, poisoning, and procedural complications; and 2) infections and infestations. Among the 11 cases of infection, there were 6 cases of pneumonia. Other reported SAE included rhabdomyolysis, syncope, bradycardia, hyponatremia, neuroleptic malignant syndrome (NMS), agitation, and dystonia. The SAE that were probably related to treatment with asenapine include: NMS, dystonia, syncope, and drug toxicity. . . .

[Pages 260-261:]

▲ 5543-125005: The subject was a 64 y.o. male with Schizophrenia who was treated with asenapine for 31 days. The subject completed suicide by unknown method. No other details were provided for the case. The investigator judged that the death was possibly related to treatment with asenapine, but it is not clear what the rationale was. . . .

▲ A7501007-51241008: A neonatal death occurred for a pregnant subject treated with asenapine. The subject, had 3 previous premature deliveries, and she delivered at 32 weeks gestation. No other details are available. The death was possibly related to treatment with asenapine. . . .

▲ P25520-241041: The subject was a 57 y.o. woman with Schizophrenia who was treated with asenapine for 470 days. She died 4 days after her last dose of asenapine. The subject developed sudden respiratory failure and required treatment on a ventilator. The cause of death was pulmonary embolism. Other adverse events reported during the study were worsening of Schizophrenia and insomnia. The death was probably not related to treatment with asenapine. . . .

▲ P25520-132017: The subject was a 44 y.o. woman with Schizophrenia who was treated with asenapine for approximately 521 days. She was found dead in her home several days after her last study visit. The precise date of death and the cause of death are uncertain. Clinical laboratory findings included a low hemoglobin concentration and hematocrit at Weeks 52 and 64 and a low WBC at Week 64. The lymphocyte count was low at Weeks 40, 52, and 64. The neutrophil counts were normal, as were the platelets, Monocytes, Eosinophils, and basophils. There was no evidence of aplastic anemia or netropenia or agranulocytosis [a potentially lethal side-effect in some patients on clozapine]. Creatinine was mildly elevated at the Week 40 visit. On an unspecified date, the peripheral blood smear revealed hypochromia, anisocytosis, and poikylocytosis. . . .

III. Completed Suicide and Suicidality Analysis

▲ There was not an excess of completed suicides in the asenapine group, compared to the olanzapine group when adjusted for exposure. There were 8 suicides in the asenapine group and 4 in the olanzapine group. There were no suicides in the other treatment groups (placebo, risperidone, and haloperidol). For the involved studies with suicides, only one study had a placebo group (A7501004: a controlled, short-term mania study). All of the other involved studies were long-term, double-blind, active-control studies, without a placebo group.

▲ The total asenapine exposure in the Schizophrenia and Mania programs was 625.5 person-years. There were 8 suicides in the asenapine group. Thus, the rate of suicide adjusted for asenapine exposure was 1.279 suicides per 100 person-years. The total olanzapine exposure in the Schizophrenia and Mania programs was 298.1 person-years. There were 4 suicides in the olanzapine group. Thus, the rate of suicide adjusted for olanzapine exposure was 1.342 suicides per 100 person-years. Thus, the adjusted rate in the olanzapine group was 1.049 times the rate in the asenapine group.

▲ For the combined Schizophrenia program, there were 7 suicides in the asenapine group and 2 suicides in the olanzapine group. The total asenapine exposure in the Schizophrenia program was 573.3 person years. The total olanzapine exposure was 234.1 person-years. Thus, the adjusted rates of suicide were 1.22 suicides per 100 person-years in the asenapine group and 0.854 suicides per 100 person-years in the olanzapine group. The rate in the asenapine group was 1.428 times the rate in the olanzapine group. . . .

[Pages 266 to 270:]

IV. Selected Serious Adverse Events and Other Adverse Events of Interest. . . .

▲ The majority of serious adverse events in all treatment groups in the asenapine program were psychiatric adverse events related to the illnesses under treatment (Schizophrenia, Schizoaffective Disorder, and Bipolar Disorder). . . . In the asenapine groups, 94% of all serious adverse events were psychiatric adverse events. . . .

▲ 25501-1. A 22 y.o. healthy volunteer with a resting HR of 58 bpm received a 30-mg oral dose of asenapine. Approximately 2.5 hours after the dose, the subject sat up in bed and felt dizzy and nauseated. The ECG telemetry strip showed a HR slowing and an 8.7-second pause. This was followed by heart block and nodal bradycardia., which spontaneously converted to sinus rhythm. He had a similar episode 2 hours later. He recovered from the episodes.

Neurally Mediated Reflex Bradycardia

The subject above probably experienced neurally mediated reflex bradycardia (NMRB). NMRB is not unexpected with a drug that has alpha-1-adrenergic antagonist properties. The Cardiorenal consultants discuss this phenomenon. The consultants agree with the sponsor’s interpretation that the cardiovascular adverse event was related to NMRB. There were several similar cases in healthy volunteers who received asenapine in the clinical pharmacology studies. There was one possible case of NMRB in a subject with Schizophrenia who was treated with asenapine. Neurally Mediated Reflex Bradycardia (NMRB) is a benign, self-limiting event, and the most common cause of vasovagal syncope. It involves central hypovolemia, vasodepression, and bradycardia. Bradycardia can be accompanied by periods of asystole that are due to either sinus pause or heart block. NMRB can occur with or without sinus pause and is typically associated with postural challenge. Healthy, young volunteers with a high resting vagal tone display a higher incidence of NMRB than do do psychiatric patients[Ed. Note: How so?]. . . .

▲ 041033-101012: The subject was a 44 y.o. healthy volunteer who was treated with asenapine (one dose) and fluvoxamine (6 doses). The subject developed bradycardia and sinus pauses during sleep while on telemetry. He was wakened and remained asymptomatic. The subject recovered. The event was thought to be related to study drug treatment. This was probably a case of neurally mediated reflex bradycardia related to treatment with asenapine. . . .

▲ A7501001-10020007: The subject was a 51 y.o. male with Schizophrenia who participated in a dedicated QT study. He was treated with one dose of asenapine. About 1.5 hours after the dose, he experienced severe bradycardia, and he was taken to an emergency room. He had ECG changes suggestive of myocardial infarction. He did not have chest pain. He was treated with oxygen, atropine, aspirin, metoprolol, tenectplase, lidocaine, and magnesium, and he was admitted to a cardiac care unit. Coronary angiogram was negative. He developed atrial fibrillation which resolved spontaneously. The event was possibly related to treatment with asenapine. This was possibly a case of neurally mediated reflex bradycardia. . . .

▲ 25525-101029: A healthy subject developed atrial fibrillation during treatment with asenapine and paroxetine as part of a drug-drug interaction study. The event was probably related to treatment with either one or both drugs. The subject had chemical cardioversion and recovered. . . .

▲ 25517-247010: The subject was a 43 y.o. female with Schizophrenia who was treated with one dose of asenapine 5 mg. She experienced nausea, vomiting, dizziness, syncope and angioneurotic edema on the same day. The syncope occurred approximately 40 minutes of the dose. The subject did not have any known drug allergies or significant medical history. The investigator concluded that the events were probably related to treatment with asenapine. . . .

More to come, as I work my way through. The two sidebars are images for the original asenapine FDA IND -- in November of 1996. Do click each, to enlarge -- they are self-explanatory.

Again, let me repeat that: Paging Dr. Salmon -- Dr. Salmon, to the FDA Reading Room -- Stat. Per a comment below, Salmon is now on the case. Cool. Salmon is right -- this will take weeks, not 46 hours -- and counting.

A Year Later -- And Now, One-Quarter Of All Visits Are "Habitual"

Back In August of 2008 (see left-side image), I did a little stat-digging, and was pleasantly surprised to learn how sticky the eyeballs regularly are, on this site:

. . . .I am frankly amazed that almost a quarter of the visitors have been here more than just casually -- five to ten times -- and beyond -- and still keep on coming back. . . .

Now, a year later (give or take), that same one-quarter of all visits are "habitual" -- from people who've made more than ten visits to the site (see image, at right). That is gratifying. It is also gratifying that the smallest group of visitors is comprised of the only-mildly-curious: the five to ten visits crowd -- it pretty consistently runs at less than nine percent of my aggregated stat totals.
On each side here then, I've set year-by-year comparison graphics (again, the most current one is on the right; older on the left -- click to enlarge each).

Thank you each and every one -- for stopping by, and by, and by, and by. . . .

[This is also my 700th post, here -- so the above seemed particularly-appropriate content.]

Monday, July 27, 2009

Jim Cramer: Funny, And "Fact Free" -- on SGP! (Schering-Plough)

This is a time-waster, really -- of scant moment, as no one believes Jim Cramer's take on his neighbor's pharma company, any longer (and, lest we forget -- in September 2008, even he didn't believe his own take, any longer). In any event, here's a little "best of" list, I've cobbled together:

. . . .Jim Cramer said:

July 21, 2009: Schering-Plough CEO Fred Hassan came to the company "when the stock was around $15, $16 and swore that he would make money for you," Cramer said. "He tied up with Merck, and a lot of people felt that maybe that was a mistake." But Cramer said that the stock is up 10 points -- "a pretty good price." "During a period when the drug stocks have been absolutely terrible," Cramer said, Hassan "deserves our plaudits. . . ."

[Ed. Note: No, Jim -- he swore he would "turn it around", and "stay independent". He did neither, Jim. But he is your neighbor -- so I understand why you can't see the truth.]

September 3, 2008 -- NYSE Close $19.16: Mad Mail - Schering-Plough: Although Cramer felt bad about selling Schering-Plough, he stood by his comments on Tuesday's show that the negative press surrounding the company will limit any upside. . . .

January 24, 2008 -- NYSE Close $19.76: Now that they're down, buy . . . Schering-Plough (SGP Quote), Jim Cramer said on CNBC's "Stop Trading!" segment Friday. . . . Just so you know, I just issued an alert. . . . You should buy it here (around $19.75)," he said of the cosponsors of Vytorin, which made headlines today after the Food and Drug Administration said it would issue early communication on the drug. He's reminded of Bausch and Lomb, Bristol-Myers Squibb and other pharmaceutical companies that experienced exaggerated stock-price dives on bad news. Those situations, Cramer said, represented buying opportunities. "The headline risk in drugs is also far worse," Cramer said. "This is what happens with drug stocks. Everyone panics at the same time. They get knocked all the way down." "This is just unbelievable to me," Cramer added, saying that to cut shares of Schering-Plough so much, investors would have to believe the FDA was going to pull Vytorin. . . . This is a classic headline overreaction. . . ."

[Ed. Note: FDA didn't "pull 'em"; but Schering-Plough fell all the way down to $13.47, and saw its US market share, for those drugs, fall 46 percent, in under a year and a half.]

December 17, 2007 -- NYSE Close $26.44: Cramer's Take: Buy This Stock Now:

Schering-Plough's selloff today signifies an important one-time buying opportunity, says Jim Cramer. . . .

[Ed. Note: Apparently, not. . . . That is about where it closed tonight, and Cramer sees that as a "plaudit-deserving performance" -- when he felt it was "severely undervalued" at this same level a bit ago.]

Hilarious. Something more weighty, soon. I promise.

EXCLUSIVE Animal Health "Auction" Observer: -- Second Round Saw "Two Strong Bids"

Citing an anonymous source obviously familiar with the matter, but a source unable to "go on the record" because the source is not authorized to speak for either of the companies, I can confirm the following:

". . . .A LOT of work was done by several of the bidders, and there were at least two bidders who made serious Phase 2 bids. . . .

There was -- at least from what I saw -- a lot of due diligence material prepared and disclosed. . . . I heard the first round of bids were strong. The second round had two strong bids, and there continues to be a lot of follow-up activity in response to specific questions from the bidders. I don't have experience in this sort of thing, but Reuters' use of the word "farce" seemed pretty strong. Maybe that quote came from someone whose bid didn't make the cut. . . .

Well, perhaps Sanofi-Aventis doesn't have quite the upper hand Reuters was told it does. Is it thus possible that Reuters' story was sourced through/by Sanofi agents? That seems a strong possibility. As ever, more to come.

What Is "The Truth" About Schering-Plough's Animal Health Businesses?

On page 31 of the just-filed SEC Form 10-Q, Schering-Plough attributes the weakening sales in Intervet to "intense competition" and "frequent introduction of generic products", thus:

. . . .Animal Health global net sales totaled $677 million in the 2009 second quarter, a 17 percent decrease as compared to $818 million in the second quarter of 2008. Excluding the unfavorable impact of foreign exchange of 10 percent, Animal Health sales would have been down by 7 percent as compared to the second quarter of 2008. The sales decline was a result of the overall economic environment, difficult comparisons against the 2008 launch of bluetongue vaccine and the impact of 2008 product divestitures. For the six months ended June 30, 2009, Animal Health sales decreased by 15 percent from $1.5 billion to $1.3 billion. The Animal Health segment’s sales growth rate is impacted by intense competition and the frequent introduction of generic products. . . .

On the other hand, Schering-Plough executives regularly feed, and encourage, the analysts' mantra that animal health businesses see few generic product introductions, and that "people will pay (almost) anything" when it comes to their pets. See this, as but one recent example:
. . . .As large pharmaceutical companies look for ways to diversify and defend against generic drug rivals, they are finding animal health offers consistent growth and limited competition. . . .

So, which version is the truth? The former -- not the latter -- of course. And Schering-Plough very-well-knows this.

But at the moment, Schering and Merck very much need to sell one or more Animal Health businesses -- to clear the FTC, and Hart Scott Antitrust review. So the spin wears thin -- and thinner -- out there in the financial (flogging) press outlets. Sometimes, the MSM seems to be a simple stenography pool, no?

FDA Should Have Background Materials Up on Asenapine -- Um, Now.

UPDATE -- 07.28.09 @ 8 AM EDT: FDA's PDAC Materials are now posted -- it is a daunting 19.1 Mb download; 1,067 pages. Paging Salmon. . . .

We have a new working thread on it, for your collective observations.


It is the policy of FDA that the Advisory Committees release background materials for committee meetings two business days prior to meeting date. The Saphris (asenapine) meeting is July 30 2009. So, I expect that sometime during the day -- perhaps whilst I am off the grid, attending to other matters -- FDA will post the asenapine materials right here.

Until that happens, do go take a look at the latest installment of Salmon's "Continuing Asenapine Chronicles" -- right here, in the comments. Do go read all of his, but here is a teaser, to encourage you to follow that link:
. . . .Found a little bit of info on this study at [Medical News Today]:
". . . .In the study, SAPHRIS was significantly more effective than olanzapine in the reduction of negative symptoms as measured by change from baseline to Day 365 in the NSA-16 total score, the primary endpoint of the study. By using a mixed model for repeated measures (MMRM), least square mean changes in the NSA-16 total score were -15.8 for SAPHRIS vs. -11.0 for olanzapine (P=0.015). Full results of the trial, including efficacy, safety and tolerability data, will be submitted for presentation at a medical meeting at a later date. . . ."

Another report for up to 6 months shows no difference in effect but a higher incidence of EPS with asenapine but less weight gain (possibly a "side effects" wash):
". . . .There was no difference in effect between olanzapine and asenapine on negative symptoms at 6 months. This study continued things for another 6 months and found a statistically significant difference at 12 months. There was also a lot more weight gain reported with olanzapine. . . ."

[The] study uses MMRM (mixed modeling of repeated measures) as a statistical technique. My experience with this is that you need to know what is making people drop out of the study and account for each different reason. In practice even when attempted you can't get reliable data for this and so you have to impute the reasons and that's not a very good assumption because what is true for one drug is not necessarily true for another.

When I see MMRM I immediately know the statistical analysis is likely based on a bunch of fudge factors that are likely wrong.

Plus without a placebo and knowing the scale it's hard to interpret whether this is of any real benefit.

Lastly, even if it is real it may imply that there's poorer efficacy on the positive symptoms and may be why 3 of 4 pivotal trials in support of the acute treatment of an acute psychotic episode in schizophrenia were negative.

FDA needs to be more transparent in the future and release all reports and data. . . .

[And, From A Later Update from Salmon:]

. . . .So if we see a summary written by FDA management without individual reviews or without individuals reviews in clinical pharmacology, and pharmacology/toxicology or these reviews are redacted (they shouldn't be at all) then I would say something fishy is going on.

And I know fishy.

-- Salmon

Indeed. If the background materials happen to show up while I am away, feel free to comment on them in this thread. [I suppose it is a possibility that -- though rather unlikely -- the FDA Advisory Committee meeting on Schering-Plough's Saphris (asenapine) has been postponed, and thus the materials are not posted.]

Sunday, July 26, 2009

Will Reuters Turn Out to Be Right -- About Animal Health "Auction"?

Did Schering-Plough file its Form 10-Q quickly to avoid having to put together significant "discontinued operations" disclosures related to Intervet? Or, will it turn out that Rueuters' sources are right -- and Merck's Merial will be the divested Animal Health businesses -- most-likely to Sanofi? We shall see:

. . . .The Intervet business drew scant bids by the July 15 deadline, fetching one bid from a large private equity firm and one from a large European pharmaceutical company, the sources said. Merial bids were due at the same time but it was unclear who had bid.

Intervet failed to attract many offers since the bidders believed that business ultimately will be kept by Merck and Schering, sources said.

"The Intervet auction was a farce. The bidders felt used even participating since the real auction is for Merial and there's only one logical winner there -- Sanofi," said the source familiar with the talks. . . .

So, will we find out what really happened, perhaps as early as tomorrow? Who knows.

Saturday, July 25, 2009

Schering/Merck US Cholesterol Market Share Now Only 8.6 Percent

Down from 10.1 percent, at year end 2008 -- according to the Form 10-Q Schering-Plough filed overnight (at page 27). Updated graphics when I am finally off the road at right (click to enlarge):

. . . .As of June 2009, total combined prescription share for VYTORIN and ZETIA in the U.S. was down versus December 2008 from 10.1 percent to 8.6 percent. . . .

[Prior 10-Q, page 24:]

. . . .As of March 2009, total combined prescription share for VYTORIN and ZETIA in the U.S. was down versus December 2008 from 10.1 percent to 9.1 percent. . . .

In addition (as I guessed it had) during Q2 2009, Schering-Plough absorbed $79 million of what used to be $111 million of receivables owed to it, from the cholesterol joint venture (primarily undistributed income), at the end of Q1 2009.

It sure looks like the reported cholesterol franchise results would have been even worse, had the receivables balance not been dropped to $32 million, from $111 million. The comparable figure at year-end 2008 was $130 million. Looking back at prior Forms 10-Q, Schering-Plough has never drawn down receivables in that magnitude, and paid itself that much in a quarter. Canopic jars, anyone?

Friday, July 24, 2009

Over 150 Suits, Two Congressional Investigations, SEC and DoJ Matters Remain Unresolved. . . .

Despite the proposal to settle the merger suits in advance of the vote on August 7, the vast bulk of Schering-Plough's pending legal matters remain open, and unresolved.

Perhaps $2 billion in contingent liabilities are still left to be resolved, as well as potential consent decrees -- to reform governance, and disclosure practices, at Schering-Plough.

More, if I can source Some reliable WiFi -- from the road. . . .

Asenapine Study Fails? Just Mix In Some New Measures -- Then Run it Longer

Back in April, asenapine missed a primary endpoint. Schering-Plough's solution? Run it longer, and add some longer term measures, all to prepare for the FDA Advisory Committee session on July 30, 2009.

Take a look:

. . . . These results follow those of a previously reported clinical trial in this patient population using the same study design and protocol in which both asenapine and olanzapine reduced negative symptoms after one year of treatment, but the difference between the two was not statistically significant. . . .

This study was a 26-week extension of a randomized, double-blind, multicentered, multinational 26-week clinical trial evaluating the efficacy and safety of SAPHRIS compared to olanzapine in the treatment of patients with stable predominant, persistent negative symptoms of schizophrenia. Patients were initially randomized in the core study to SAPHRIS 5 to 10 mg twice daily or olanzapine 5 to 20 mg once daily for 26 weeks. In the core study, both SAPHRIS and olanzapine reduced negative symptoms over the 26-week treatment period, but the difference between the two was not statistically significant. Patients who continued after six months were maintained on the same double-blind treatment regimen for the 26-week extension study. In the extension study, SAPHRIS demonstrated statistically significantly greater change in NSA-16 total score from the core study baseline after one year of treatment, the primary prespecified endpoint of the extension study. A total of 468 patients were randomized in the core study, 195 of whom entered the extension study, with 146 completing a total of one year of treatment. . . .

Thursday, July 23, 2009

Funny Thing: Motley Fool Just Saw "Unicorns" -- Over At Pfizer!

Yesterday, I held forth, in a rather sarcastic tone, about why valuing a company, or its stock price, using non-GAAP EPS, feels a little like chasing after, and then herding unicorns. This, I said, was doubly true at companies about to merge (like Schering-Plough & Merck).

This afternoon, Jim Mueller, of The Motley Fool finds several unicorns -- in Pfizer's recently-reported "as adjusted EPS" (i.e., non-GAAP EPS). Funny thing. Pfizer is in the midst of acquiring Wyeth -- and I bet the same analysis I offered yesterday -- applies. In any event, do take a look at The Fool:

. . . .The real question, though, is whether Pfizer, Wall Street analysts, and investors should rely so heavily on those "adjusted" numbers. Clearly, investors like what they're seeing; the stock rose more than 1% yesterday following the earnings report, and was up even more sharply in today's session.

But I don't like that "certain significant items" includes such things as "major non-acquisition-related restructuring charge[s]" which Pfizer announced just a couple of quarters ago, "sales of products or facilities that do not qualify as discontinued operations," and "certain intangible asset impairments" or amortization. To me, it's beginning to look as if company executives are cherry-picking what to include in the numbers they want everyone to pay attention to. . . .

Listen up, Fools. Looking past currency fluctuations can be an important way to see how a business is faring. And Pfizer is doing all right on that front.

But generally accepted accounting principles, for all their faults, are meant to provide transparency in the reporting of results by the companies in which we invest. And that means the cost of doing business includes the cost of things like "non-acquisition-related restructuring." When management starts throwing around things like "adjusted this" and "don't include that," turn up your skepticism meter and take a deeper look. Then decide if you really want to invest in that company. . . .

Indeed -- couldn't have said it better, myself. Ooh, wait! Check that. I did.

Merck Rising on NYSE -- As Januvia Likely Won't Face US Taketa Competition, Near Term

For solid scientific reasons, FDA is giving the Taketa diabetes drug candidates program the slow-roll, per Reuters' Matthew Goldstein, a few minutes ago:

. . . .[Taketa's] Alogliptin, which belongs to a new class of diabetes drugs called DDP-4 inhibitors, has been positioned by Takeda as a successor to Actos, which will lose U.S. patent protection in 2011.

"The approval process for alogliptin by itself is separate from that of the fixed-dose combination," said Takeda spokeswoman Hisako Nagata.

"But it is difficult to think that the combination drug would receive approval prior to alogliptin by itself," she said.

There is currently only one DPP-4 diabetes drug on the U.S. market, Merck & Co's Januvia. . . .

This development is likely behind the over 3 percent increase in Merck's shares on the NYSE, this morning -- while Schering-Plough, via the coming exchange ratio, is rising about half that much, on the NYSE, this morning.

House Chairman Waxman Holds To His "Tough, But Fair" Pharma Stance, Overnight

Duff Wilson, in The New York Times (do go read it all) has a very interesting set of counter-developments laid-out -- countering, by pushing back, still seeking even more ambitious reforms. This should be seen, in some measure, as the progressives' answer to the President's speech of this evening. Here's a snippet, covering House Chairman Waxman's views on the matter:

. . . .For starters, Mr. Waxman wants the drug industry to give up an additional $63 billion over the next decade. That would come by reversing a 2006 policy change that removed millions of low-income elderly from Medicaid drug coverage and had them pay higher prices for the same drugs under Medicare — a move he has called a “windfall for drug companies.”

Billy Tauzin, head of the drug industry’s main trade group, said that his members could not support that change. "What Waxman is trying to do, you not only break the deal, you break the bank for us," said Mr. Tauzin, president of the Pharmaceutical Research and Manufacturers of America.

But Mr. Waxman said in an interview Wednesday night: "I know they have a deal with the Senate, and I think they do have a deal with the White House, but I don’t know how pinned down it all is. But they don’t have a deal with us — the House."

Mr. Waxman is also looking for a much tougher bargain with drug makers on another pivotal piece of the cost puzzle — the effort to allow generic competition in so-called biologic drugs, which represent the most expensive and fastest growing part of the market. The drugs, many of them used against cancer, can cost tens of thousands of dollars a year. . . .

There is much more in the full NYT article -- do go read it all.

Wednesday, July 22, 2009

Merck CEO Dick Clark -- Lobbying at The White House, in March and May 2009

In response to public pressure from CREW, a citizens'-advocacy group, President Obama's White House Counsel has just released a letter (the full-text full PDF file), listing March 24, 2009 and May 11, 2009 visits by Merck CEO Dick Clark. CREW, for its part, reiterated tonight that it will continue to seek the full-text of all White House (and Vice Presidential residence) visitor logs on the topic.

The letter released tonight also lists all of Billy Tauzin's [imaged, at right] visits, as President of PhRMA, and his in-person contacts -- at the White House, presumably all on health care reform initiatives, per Sharon Theimer, for the AP Newswires:

. . . .lobbyist Billy Tauzin, a former Louisiana congressman who heads the drug industry lobby, the Pharmaceutical Research and Manufacturers of America [PhRMA]. . . . went to the White House on March 5, the day of a summit on health care, and again on May 11, 19, June 2 and June 24, 2009. . . .

Current Hep C Regimens -- Either Current Drug Will Do -- Except, Of Course, If You're Black. . . .

Even though Schering funded the IDEAL study (reported tonight in The NEJM), it turns out that neither the Schering-Plough currently approved drug, nor the Roche Holding AG one differ much -- in treating Hep C. Sadly, neither drug does a very good job in treating people of color -- for reasons (as yet) unknown.

The IDEAL results must be at least a mild disappointment to Kenilworth, as they also appear to suggest that using less of either drug still causes a significant decrease in viral loads.

Finally, this study says nothing about the so-called next-generation of Hep C candidates -- those still awaiting FDA filings and apporvals. The lead in that next gen race clearly belongs to Vertex's teleprevir. It is theirs to lose. Perhaps teleprevir will show improved efficiacy in people of color -- where the current regimens are doing a particularly poor job. In fact, I'll try to go track down some information on that, for a future post -- it would be a very-welcome development.

I suppose I am, personally, very frustrated about the racial disparity in treatment success -- as it has been widely known, and widely-reported, in The Wall Street Journal, even, going back to at least 1991. African Americans -- although only about 13 percent of the United States population -- are disproportionately hard-hit by this disease.

And yet -- here we sit -- almost two full decades later, with very little in the way of any actual data, or even operating assumptions -- as to what might work for them, as a group -- or even, why this sad state of affairs continues to exist.

Perhaps this would change, if there were a greater financial incentive (i.e., health care coverage for all) -- given that a disproportionate number of people of color tend to be under-, or un-insured -- and given that Hep C disproportionately presents, hand in hand, with poverty, more generally.

Unfortunate, in the extreme. From the NEJM synopsis, then:

. . . .Consistent with previous observations14,15,16,17,18,19,20 a sustained virologic response was less frequent among blacks. . . .


[Click to read some of the prior findings, depicted above.]

. . . .14. Muir AJ, Bornstein JD, Killenberg PG. Peginterferon alfa-2b and ribavirin for the treatment of chronic hepatitis C in blacks and non-Hispanic whites. N Engl J Med 2004;350:2265-2271.

15. Myers RP, Patel K, Pianko S, Poynard T, McHutchison JG. The rate of fibrosis progression is an independent predictor of the response to antiviral therapy in chronic hepatitis C. J Viral Hepat 2003;10:16-22.

16. Soresi M, Tripi S, Franco V, et al. Impact of liver steatosis on the antiviral response in the hepatitis C virus-associated chronic hepatitis. Liver Int 2006;26:1119-1125.

17. Reddy KR, Govindarajan S, Marcellin P, et al. Hepatic steatosis in chronic hepatitis C: baseline host and viral characteristics and influence on response to therapy with peginterferon alpha-2a plus ribavirin. J Viral Hepat 2008;15:129-136.

18. Bronowicki JP, Ouzan D, Asselah T, et al. Effect of ribavirin in genotype 1 patients with hepatitis C responding to pegylated interferon alfa-2a plus ribavirin. Gastroenterology 2006;131:1040-1048.

19. Moucari R, Ripault MP, Oul├Ęs V, et al. High predictive value of early viral kinetics in retreatment with peginterferon and ribavirin of chronic hepatitis C patients non-responders to standard combination therapy. J Hepatol 2007;46:596-604.

20. Yu ML, Dai CY, Huang JF, et al. Rapid virological response and treatment duration for chronic hepatitis C genotype 1 patients: a randomized trial. Hepatology 2008;47:1884-1893. . . .

Yep -- at least six prior studies observed the same thing (per the numbered footnotes, above). Yet here we sit.