Will There Be News On Remicade®/Simponi® Arbitration As Early As Tuesday?

If the previously-announced timeline hasn't been derailed, either by progress on an agreement to settle, or a widening dispute over delivery of discovery materials, the companies should still be marching toward a late September 2010 arbitration hearing date. We do know all the arbitrators have been selected, and seated. After the September hearings end, it may well be a few months after that, before the arbitrators' ruling is announced.

Here's a part of Merck's Q1 2010 SEC disclosures:

. . . . As part of the arbitration process, Centocor will take the position that it has the right to terminate the Distribution Agreement on the grounds that, in the Merger, Schering-Plough and the Schering-Plough subsidiary party to the Distribution Agreement were (i) "acquired by a third party or otherwise come[ing] under “Control’ (as defined in Section 1.4) of a third party" and/or (ii) undergoing a "Change of Control" (as defined in Section 8.2(c)). A hearing in the arbitration is scheduled to commence in late September 2010. . . .

Sales of Remicade^® recognized by Schering-Plough in 2009 prior to the Merger were $1.9 billion.

The Company is vigorously contesting Centocor’s attempt to terminate the Distribution Agreement as a result of the Merger. However, if the arbitrator were to conclude that Centocor is permitted to terminate the Distribution Agreement as a result of the Merger and Centocor in fact terminates the Distribution Agreement, the Company’s subsidiary would not be able to distribute Remicade or Simponi. In addition, in the arbitration, Centocor is claiming damages, "in an amount to be determined", that result from Merck’s alleged non-termination of the Distribution Agreement. If Centocor were to prevail in the arbitration, Merck could be liable for the net damages, including any offsets or mitigation, that the arbitration panel finds Centocor incurred as a result of non-termination and the Company would suffer an impairment charge. An unfavorable outcome in the arbitration would have a material adverse effect on the Company’s financial position, liquidity and results of operations. . . .

We may learn something new about the timeline, though, as early as this coming Tuesday morning (at 8:30 AM EDT) on J&J's Q2 results investor webcast.

Then exactly ten days later, New Merck will follow suit -- on its Q2 call/webcast (July 30, 2010 @ 7:30 AM EDT). We'll see if there's news on this now-approaching $4 billion a year arthritis frnachise.