Tuesday, October 12, 2010

An Arbitration Decision -- Regarding Simponi®/Remicade® -- Could Come Any Day Now

UPDATED: 10.14.10 -- Merck just filed an SEC Form 8-K disclosing that it will be 2011 before a decision is announced.


This Hoovers online "Bizmology" blurb -- from yesterday afternoon (signed by Anne Law), gets almost every important fact about the mechanics of the dispute wrong, but it reminds me that a Remicade®/Simponi® decision could be announced at any time, and is likely to come within the next 33 days (give or take). [See countdown clock, near the top left margin.]

The Hoovers writer apparently doesn't perceive the difference between litigation and arbitration. In addition, there are no "federal arbitrators" here -- only a panel of three retired federal judges, serving as private arbitrators. No matter, she is right that the outcome will likely be big -- and that a settlement would seem unlikely, now:
. . . .J&J historically shared [actually, it was Centocor, a J&J subsidiary] marketing rights to arthritis drug Remicade with Schering-Plough, which was acquired by Merck & Co. last year [actually, Merck would tell us that Schering-Plough acquired Merck -- thus the phrase she might have chosen would better have been "did a deal with"]. Merck structured the acquisition as a reverse merger [True] (meaning that Schering-Plough was the surviving legal entity but was renamed Merck after the deal) — a move that was widely perceived to be a blatant attempt to wiggle past a change-of-control contingency in the Remicade agreement [True].

J&J has, of course, filed suit [actually, Centocor commenced final, binding non-appealable arbitration proceedings] objecting to the move, and if courts [arbitrators] decide that the acquisition did constitute a change in control. . . .

J&J could also very well succeed in taking full control of the products [True]; however, there is still a slim chance that the firm will choose to negotiate with Merck, which could create a settlement agreement. . . .

Slim indeed. If J&J wanted to settle, the incentive to do so was most present before it spent perhaps $5 million in legal fees on the arbitration. Now there is almost no additional downside to J&J/Centocor -- they bought their tickets -- they may as well stay and enjoy the show. The third reel has just been mounted.

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