Friday, December 31, 2010

A More-Selective "Dow Dogs" Strategem For 2011: Pick Pfizer, Over Merck

Here on the last NYSE trading afternoon of 2010, Seeking Alpha is hosting/running a piece authored by the folks who've written a treatise on Graham & Dodd investing -- at R.W. Wentworth & Co. The thesis is to choose "Dogs of the Dow" as pairs, then toss the lower performer, thus:

. . . .[W]e take a more reasoned approach by dividing the ten "Dog" stocks (as of December 30th) into pairs, and then selecting the more attractive of each pair. If we can beat the "Dogs" group itself, we have a better chance of beating the Dow as a whole, if 2011 turns out to be a year when the "Dogs" underperform. . .:
• AT&T, 5.86%, and Verizon, 5.48%. The former telecom is now trading "wide" (with a higher yield) than the latter. That is usually not the case, so we pick AT&T.

• Pfizer, 4.57%, and Merck. 4.22%. Again, the former pharmaceutical is trading "wide" of the latter. And after a 2009 cut, Pfizer's dividend is rebounding, and will likely "grow" back to over $1 a share, while Merck's has been constant for some years. So the gap between "yield on cost" will likely widen.

• Kraft, 3.68%, and Johnson & Johnson, 3.49%. Two "marketing" companies with similar yields (although rather different products). But JNJ has the better franchise longer term, provided its current problems don't destroy its "brand." This is reflected in the fact that JNJ's current yield is high relative to its history, and Kraft's isn't. . . .

Not much of a surprise here, as I've been making this point -- repeatedly -- for about six, erh thirty months, now. In any event, Happy New Year, one and all!

Thursday, December 30, 2010

Merck To Take "Next Step" On Oral Vernakalant -- Cardiome's Phase II/III Candidate

After FiercePharma reported a scare in back in October, from an unexpected case of cardiogenic shock -- Merck seems ready to move to the next step on an oral formulation, and begin clinical trials on Cardiome's Vernakalant (MK 6621). In North America, Astellas has the rights to the IV formulation of the candidate, while outside the US, Merck has those rights (and will have the rights to any oral formulation, should that version reach market). Merck has one EU approval already in hand -- on the IV version, called Brinavess®.

From tonight's InVivo Blog, then -- do go read it all:

. . . .Vernakalant, which would be used as maintenance therapy to prevent recurrence of AF in people with a history of the condition, is important for Merck, but it's crucial to Cardiome. The Canadians have no other notable mid-to-late-stage assets in their pipeline except for the IV formulation, which this summer received EU marketing authorization under the brand name Brinavess. In the US, where it is in Phase III trials, Astellas Pharma has development and commercial rights.

Janzen said in August that Merck was being "very, very thorough," "thoughtful," and "big" -- a reasonable proposition, he said, given the $250 million estimated price tag of a late-stage global cardiovascular program and the number of internal committee reviews a behemoth requires for even a modest change of course. After all, the asset had survived the gauntlet of Merck's internal review after its acquisition of Schering-Plough.

Now Cardiome says in a release that Merck has completed another review and "informed Cardiome of its next steps in clinical development for oral vernakalant." The release didn't elaborate on what those next steps will be, but Janzen has previously observed that Merck is looking only for a first-in-class, best-in-class compound, so its trials will have to demonstrate superior heart rhythm maintenance to Sanofi's Multaq, against which it will compete. "That is the question to ask and will likely be the basis of the clinical program," he said at a Piper Jaffray conference in New York in December. Whether that program would include an outcomes study or head-to-head clinical trials, isn't clear -- but that could be where the clinical program is headed. . . .

We'll keep you posted.

Merck CEO To Be "Unscripted" Again This Year, At Goldman Sachs & Co., Next Thursday Morning. . . .

Just like last year, I'll live-blog any real news, from lower Manhattan, here:

. . . .Goldman Sachs Healthcare CEOs Unscripted:

A View from the Top

Presenting company: Merck & Co., Inc.

Thursday, January 6, 2011 11:00 a.m. ET

New York, NY. . . .


Wednesday, December 29, 2010

Part II Of IV: Chronicles Of Hassan's Pharmacia Debacle

We'll now transition into the detailed accountings of the (alleged) puffery, and hucksterish-tactics that Pharmacia, and later Pfizer, employed to flog the likes of Celebrex®, and Bextra® -- to an unsuspecting public (and their prescribing physicians) as pain-relievers, all while in possession of (self-commissioned) study results that strongly suggested the drugs were causing substantially elevated cardiovascular risks in patients on them.

Again, this story is told entirely from public court pleadings in the ongoing federal ERISA "breach of fiduciary duties" class action in the Southern District of New York. Remember that, in each case below, whenever Pfizer is mentioned, the reference would also (from March 31, 2000 -- through and including April 16, 2003) ALSO refer to Pharmacia, then controlled by Fred Hassan, and Carrie S. Cox.

[Part I of this series appears here.] Let's get to it, then:

. . . .Each of the Pharmacia Director Defendants was privy to information at the highest level of Pharmacia. Each of the Pharmacia Director Defendants [including Fred Hassan, and Executive Officer Carrie Cox] knew or should have known the true state of affairs at Pharmacia, the serious and substantial problems related to Pharmacia’s marketing of risky products (including Celebrex and Bextra) and Pharmacia’s liability for injuries allegedly related to those products. . . .

On February 1, 2005, the Boston Globe reported on the 1999 Alzheimer’s study, stating, “Pfizer, Inc, has revealed it completed a study four years ago [then known as Pharmacia] that links its painkiller Celebrex to a ‘statistically significant’ increase in heart problems. The recent disclosure. . . appears to contradict recent statements by the company”. . . .

At no time has the FDA permitted Celebrex to claim increased gastrointestinal safety over traditional NSAIDs or to otherwise maintain superiority in safety or efficacy to such drugs. Beginning with its December 1998 letter approving the Celebrex NDA, the FDA advised Celebrex’s marketers that “promotional activities that make or imply comparative claims about the frequency of clinically serious GI events compared to groups of NSAIDs or specific NSAIDs will be considered false and/or misleading without differences having been demonstrated in adequate, well-controlled studies”. . . .

When all of the CLASS data were considered, most or all of Celebrex’s purported safety advantage disappeared. Six of the seven serious gastrointestinal complications occurring during the second half of the study were in Celebrex users. . . .

The data for the final six months of CLASS became known when Pfizer and Pharmacia appeared before an FDA Advisory Committee considering a proposed GI label change in February of 2001. The results of the CLASS study were also eventually supplied to the FDA’s Arthritis Drugs Advisory Committee (“the Advisory Committee”), which reviewed them at its meeting on February 7, 2001. . . . The Advisory Committee determined that “the sponsor’s presentation of 6-month data. . . are not statistically valid or supportable,” and its gastroenterology reviewer concluded that the first six months of data did not merit separate consideration. Moreover, based on data from the entire year of the study, the Advisory Committee found that “the sponsor has failed to demonstrate a statistically significant lower rate” of serious GI complications in Celebrex as opposed to other NSAID users. In fact, during the second six months of CLASS, the risk of serious GI complications associated with Celebrex appeared to be higher than that associated with “both ibuprofen and diclofenac.” . . . .Celebrex had failed to achieve its primary endpoint of reduced “clinically significant serious gastrointestinal events.” Accordingly, the Advisory Committee recommended that the Celebrex package insert continue to contain the same gastrointestinal warnings as traditional NSAIDs, and advised that further studies be undertaken to assess the risk of COX-2 inhibitors when taken with aspirin.

The medical community condemned. . . Pharmacia’s touting of the CLASS Study results based on partial data rather than the complete data set. Dr. M. Michael Wolfe, a Boston University gastroenterologist who praised the initial CLASS results, said he was “flabbergasted” and “furious” that he had praised a study based on incomplete data, which made him look “like a fool.” In a similar vein, JAMA’s editor, Catherine D. DeAngelis, admitted to being “disheartened to hear that they [Pharmacia] had those data at the time” the manuscript of the article was submitted to JAMA. She stated she was “very upset when I found out that they had a full year’s data.” Likewise, JAMA deputy editor Drummond Rennie stated that Pharmacia, as well as the study’s authors, “were not open with us.” T. Burton & G. Harris, Note of Caution: Study Raises Specter Of Cardiovascular Risk For Hot Arthritis Pills -- Vioxx and Celebrex Marketers Dispute the Research, Sought to Downplay It -- A Spurned Appeal to JAMA, The Wall Street Journal Aug. 22, 2001 at A1. . . .

[Later] studies confirm[ed] the now well-recognized fact that Celebrex presents an increased risk of cardiovascular injury. A 2006 study reported that Celebrex doubles the risk of heart attack. B. Caldwell, S. Aldington, M. Weatherall, P. Shirtcliffe & R. Beasley, Risk of Cardiovascular Events and Celecoxib: A Systematic Review and Meta-Analysis, J. R. Soc. Med. 2006; 99:132-40 (March 2006). One of the authors of that study, Professor Richard Beasley, told Reuters that the cardiovascular risk was common to the entire class of drugs known as COX-2 inhibitors. . . .

Today, Pfizer’s Celebrex website states: “Important Information: Celebrex may increase the chance of a heart attack or stroke that can lead to death. . . .” On April 7, 2005, in the same press release in which it announced the “black box” label for Celebrex, Pfizer announced that it had been told by the FDA to remove Bextra from the market. Pfizer stated that:
Pfizer respectfully disagrees with FDA’s position regarding the overall risk/benefit profile of Bextra. However, in deference to the agency’s views, the company has agreed to suspend sales of the medicine pending further discussions with the FDA. Pfizer said it will explore options with the agency under which the company might be permitted to resume making Bextra available to physicians and patients. For now, patients should stop taking Bextra and contact their physicians about appropriate treatment options.

In response to the removal of Bextra, drug industry analyst C.J. Sylvester [then] at Banc of America said that Bextra withdrawal took him by surprise, noting it came just two days after Pfizer executives said sales of the arthritis drugs would be reinvigorated in coming months. . . .

FDA has also noted a pattern of Pfizer [then known as Pharmacia] failing to disclose or minimizing the risks of Celebrex. On or about February 1, 2001, the FDA sent a “Warning Letter” citing Pharmacia for minimizing the contraindications and risks associated with Celebrex use and making unsubstantiated comparative claims of its superiority to other NSAIDs. The Warning Letter concluded as follows:
Your promotional activities described above raise significant health and safety concerns in that they minimize crucial risk information and promote Celebrex for unapproved new uses. In two previous untitled letters dated October 6, 1999, and April 6, 2000, we objected to your dissemination of promotional materials for Celebrex that. . . contained unsubstantiated comparative claims, and lacked fair balance. Based upon your written assurance that this violative promotion of Celebrex had been stopped, we considered these matters closed. Despite our prior written notification and notwithstanding your assurances, Pharmacia has continued to engage in false or misleading promotion of Celebrex. . . .

The FDA [earlier] found [that Pharmacia] materials misrepresented the safety profile of Celebrex compared to other NSAIDs, and failed to provide any risk information concerning the use of Celebrex. The marketing materials also contained “several unsubstantiated comparative claims comparing Celebrex to Vioxx. . . .” In addition, in November 2000, the FDA issued yet another letter regarding Celebrex. The FDA told. . . Pharmacia to stop running a TV commercial that suggested arthritis patients could “play in the park” as a result of Celebrex, and “overstate[d] the efficacy” of the drug. . . .

Disgusting. it is abidingly puzzling to me that Mr. Hassan is still in a position of responsibility in the life sciences industry, after the above, and then, while at legacy Schering-Plough, the Vytorin® ENHANCE study delay debacle. And Ms. Cox was right beside him, shovelling coal into the boiler, in each of these aforementioned locomotive train-wrecks.

Excellent Bloomberg Analysis: Of The Legacy Schering-Plough/New Merck Tax Avoidance Contortions

Writing for Bloomberg tonight, Jesse Drucker has an excellent analysis of the astonishing level of "sub-rosa corporate welfare" underway -- via trivially miniscule US tax payments made on transfer-priced income made by multinational pharma concerns, in tax havens like Puerto Rico, Ireland and Costa Rica. Do go read it. It did not escape the notice of Bloomberg that thus far, Schering-Plough has been the only large pharma to lose a "haven repatriation" restructuring/transactional case to the IRS. It should not excape the readers' notice here, either -- as was plainly true on several fronts, Schering's lawyers had pushed to the very edge of the enforcement envelope -- and then pushed, just a little bit beyond it. Last year, a federal judge hit the company with a nearly $500 million judgment for playing far too much tax-avoidance footsie.

Here is the background on that Schering-Plough loss, as I had previously reported back in August of 2009. [Note that Schering-Plough's then General Counsel, Tom Sabatino, was also then in favor of the idea of distorting the attorney client privilege doctrine, for certain kinds of corporate work product, well beyond the existing state of the law. And, why?

Well, because the various schemes and slides drawn up under his supervision in Kennilworth had likely cost him the case, against the IRS (to the tune of nearly a half-billion dollars). In the able federal judge's entirely non-novel view, schemes to avoid taxes (as opposed to simply minimizing them) are plans to overtly violate the law. As such, the judge had ruled that the Schering-Plough slides and schemes could not fall under attorney client protections. Mr. Sabatino has since also resigned from his most-recent employer, United Airlines.]

In any event, below is a bit of the long and well-sourced Bloomberg article -- do go read it all:

. . . .Merck. . . the second-largest drugmaker in the U.S., last year brought more than $9 billion from abroad without paying any U.S. tax to help finance its acquisition of Schering- Plough Corp., securities filings show. Merck is also appealing a federal judge’s 2009 finding that Schering-Plough owed taxes on $690 million it had earlier brought home from overseas tax-free. . . .

With the exception of the Schering-Plough case, no authority has accused Merck. . . of paying less tax than [it] should have. . . .

Last year, Merck, based in Whitehouse Station, New Jersey, tapped its offshore cash, tax-free, to pay for just over half the cash portion of its $51 billion merger with Schering-Plough, according to company filings.

At the deal’s closing, Merck’s foreign subsidiaries lent $9.4 billion to a pair of Schering-Plough Dutch units. Then the Dutch companies used those funds to repay a pre-existing loan from their U.S. parent, securities filings show. The $9.4 billion ended up with Schering-Plough shareholders as part of the cash owed under the merger, according to the company’s disclosure.

No Tax Hit

Bottom line: Merck used its overseas cash to pay the former Schering-Plough shareholders -- with no U.S. tax hit. In considering whether companies owe taxes in such cases, the IRS often asks whether payments from an offshore unit constitute a dividend, which would be taxable.

In Merck’s case, it arguably could be, said Robert Willens, who runs an independent firm that advises investors on tax issues.

“Merck was obligated to pay Schering-Plough shareholders and they tapped into the funds of their overseas subsidiaries to do it,” he said. “You’d have to be concerned about a constructive dividend there. . . .”

In the Schering-Plough case decided last year, the drugmaker brought home $690 million tax-free as a result of assigning its rights to income from a complex interest-rate swap to a foreign subsidiary in the 1990s. A judge found the company “failed to establish a genuine purpose for the transactions other than tax avoidance” and said Schering-Plough was not entitled to $473 million in back taxes in dispute. Merck is appealing the judgment. . . .

So, the next time you hear a Republican politician, or a red-faced CEO complaining about the level of cost for health care as any form of "socialist" medicine, please remind yourself that these very same multinational corporations are, and have been for decades, among the largest beneficiaries of one of America's most "socialist" of policies -- essentially free-passes, on corporate income taxes -- for the unimaginably wealthy ficticious persons we've chartered as corporations in the US. These non-people generate between $10 and $15 billion in net profits quarterly, year after year (among just the top 20!), and pay almost no tax on these profits -- decade after decade. And no one even mentions this.

If that's not wrong -- then I don't know what is. These corporations enjoy all the benefits of the most-liquid capital markets on the planet, the most-developed infrastructure on the planet, the highest standards of living (for their key executive officers, and boards of directors) -- but simply will not pay their fair share for roads, bridges and schools -- to say nothing of national defense, or humane health care, for all. And that, my friends, is simply appalling.

Tuesday, December 28, 2010

Part I: A Comprehensive Look At Pharmacia's (And Merck's) COX Inhibitor Debacles | One Common Thread?: Hassan And Cox

This story is told entirely from public documents. Everything you read here appears in the putative federal ERISA "breach of fiduciary duties" class action, presently pending in the Southern District of New York. In each case below, whenever Pfizer is mentioned, the reference would also (through and including April 16, 2003) ALSO refer to Pharmacia, then controlled by Fred Hassan, and Carrie S. Cox.

Okay, let's start here -- toward the end; when the rest of the world learned of the recalls. I'll return to the beginnings -- in the next post (with at least two more to come):

. . . .In June of 2003, Pharmacia co-authored an article on CABG Study #1. E. Ott, et al., Efficacy and safety of the cyclo- oxygenase 2 inhibitors parecoxib and valdecoxib (Bextra) in patients undergoing coronary artery bypass surgery, J. Thorac. Cardiovasc. Surg. 2003 Jun;125(6):1481-92.

The authors conceded that the “serious adverse events occurred twice as frequently in parecoxib/valdecoxib-treated patients. . . than in control patients.” Id. They downplayed the MI findings, lumping them in with other events: “The incidences of other individual serious adverse events, including cerebrovascular complications, myocardial infarctions, and renal function, were proportionally greater by not significantly different between the groups.” The MI rate between valdecoxib and placebo was 5 to 1, or 1.6% to 0.7% of their respective patient groups. Id. at 1487. The authors noted that the study was intended to direct only certain specific events and was only marginally powered to detect differences in serious adverse events. Id. at 1489. . . .

CABG Study #2 (2001)

Before submitting the NDA for Bextra, Pharmacia conducted a second clinical trial of post CABG surgery patients (“CABG Study #2”), which was [not timely] published. In 2004, Pfizer finally released information about CABG Study #2, including the finding that Bextra caused a “significantly greater incidence of events in the cardiovascular/thrombolic category” compared to a placebo (2.0% to .5%.). . . .

Information about the findings of CABG Study #1 and CABG Study #2 were not included in either the 2003 or 2004 Bextra product labels. “Cardiovascular events” were merely listed in the “Adverse Reactions” section near the end of the labeling. An accompanying table listing the percentages of specific adverse events only included data from “arthritis trials.” 2003 PHYSICIANS’ DESK REFERENCE for Bextra at 2703. . . .

The 2001 CLASS Study

In a paper published in the August 22, 2001/August 29, 2001, issue of JAMA, cardiologists Eric J. Topol and Steven E. Nissen, chairman and vice chairman, respectively, of cardiovascular medicine at the Cleveland Clinic, along with Dr. Debabrata Mukherjee, reported that the annualized myocardial infarction rate for Celebrex in the Celecoxib Long-Term Arthritis Safety Study (“CLASS”) of 0.80% was significantly higher than that in the placebo group of a recent meta-analysis of 23,407 patients in primary prevention trials of 0.52% (p=.02). The authors concluded that: "Current data would suggest that use of these so-called ‘COX-2 inhibitors’ might lead to increased cardiovascular events. . . ."

Throughout September of 2001, sales of Celebrex and Vioxx dipped. According to the Wall Street Journal, the JAMA article “appeared to exacerbate a slowdown in [COX-2] prescription growth some doctors and analysts say was occurring as the novelty of the drug wore off and patients with recurring pain sought new treatments.” S. Hensley, Pharmacia Plans to Show off its Research Pipeline Today, The Wall Street Journal, Nov. 28, 2001 at B4.

The 2004 APPROVe Study, The Withdrawal of VIOXX, and Concerns About Class-Wide Effects of COX-2 Inhibitors

In 2004, the Adenomatous Polyp Prevention on Vioxx (APPROVe) study revealed a statistically significant increased risk of confirmed cardiovascular events (principally heart attacks and strokes) in patients taking 25 mg/day of Vioxx compared to those ingesting a placebo. . . .

On September 30, 2004, Merck announced the withdrawal of Vioxx from the market. . . .

On October 8, 2004, Dr. Garrett FitzGerald published an editorial in The New England Journal of Medicine contending that the cardiovascular side effects that led Merck’s Vioxx to be pulled from the market likely affect all COX-2 inhibitors. K. Talley, Pfizer, J&J Fall, but Abercrombie Rises, The Wall Street Journal, Oct. 8, 2004 at C3. . . .

On October 15, 2004, Pfizer sent out a “Dear Doctor Letter” warning physicians that Bextra might increase the risk of heart attacks or stroke in coronary artery bypass surgery patients. However, Pfizer’s press release reassured that the, "available clinical information for Bextra suggests that there is no increased risk of cardiovascular thromboembolic events in people treated for osteoarthritis (OA) and rheumatoid arthritis (RA). . . ."

Pfizer was publicly criticized for not issuing this warning letter sooner because it was based on CABG Study #1, which had been completed in the spring of 2001. . . .

Meta-Analysis Presented to the American Heart Association

On November 9, 2004, Dr. FitzGerald presented a paper to the American Heart Association regarding the CABG studies and Bextra. The meta-analysis of the clinical trials showed increased heart attacks or strokes among patients given Bextra compared with those given placebo. Dr. FitzGerald stated that “the magnitude of the signal with Bextra is even higher than what we saw in Vioxx. This is a time bomb waiting to go off.” A colleague of Dr. FitzGerald who participated in the study, Dr. Curt Furberg, stated, “Basically, we showed that Bextra is no different than Vioxx, and Pfizer is trying to suppress that information.” G. Harris, New Study Links Pfizer's Bextra, Similar to Vioxx, to Heart Attacks, The New York Times, November 10, 2004. . . .

The FDA Requires a Black Box Label for Bextra

On December 10, 2004, the FDA approved a new label for Bextra, which included a “black box” warning regarding cardiovascular risks for patients who recently had coronary artery bypass graft surgery and updating the warning on Stevens-Johnson Syndrome. . . .

Again, for the sake of clarity, recall that through mid-April 2003, all the references to "Pfizer" above apply equally to Pharmacia, and to Hassan and Cox, personally, as the two primary parties in control of Pharmacia (which company Pfizer acquired April 16, 2003).

In the next post, I'll lay out the number of times -- after late-2001, but before the withdrawal of Bextra Celebrex [correction credit: commenter Marilyn Mann], and the "Black Box" warning on Celebrex Bextra -- that legacy Pharmacia made aggressively, and materially misleading statements about the safety of these two drugs. It even filed these statements with the SEC, thus arguably affixing securities fraud liability to them -- long after the alarming cardiovascular event risk results from CABG Study No. 1 were known within many inner-circles of Pharmacia/Pfizer -- and thus presumably equally well-known to Hassan and Cox.

And if these results were not known to them, they were both under a continuing duty to inquire, and inform themselves, before speaking to the press or Wall Street analysts -- or making any filings with the SEC. More later -- of the singular "hype machine" that was Pharmacia under "Fast Fred" Hassan, and Carrie S. Cox, from at least 2000, through 2003.

So do stay-tuned, but you will see why it is no wonder that this chain of interwoven events resulted in the largest criminal fine in corporate history.

I've A Longer Retrospective Piece In Process | Of Hassan & Cox | Sorry For the "Outage"

I am working up a rather longish historical survey of several astonishingly "coincidental" timeline-intersections -- related to the aggressive marketing, regular SEC-filed safety reassurances, and ultimately, the abrupt withdrawals of various COX inhibitors -- primarily Celebrex®, Bextra® and Vioxx®. The first two were brought to market by Fred Hassan and Carrie S. Cox, while still at Pharmacia -- the last by prior management at legacy Merck. Of course, Fred and Carrie went on to an ignomious "Act II" -- at legacy Schering-Plough (which is now "New" Merck).

I think you'll find it fascinating. Bear with me as I generate several graphics depicting these three notorious drugs -- and do look for that post either later tonight, or sometime on the 29th or 30th -- as my holiday duties subside.

Friday, December 24, 2010

Merck's Dr. Thomas A. Musliner's Likely Connection To Fosamax® Trials: 1998 JAMA Article

". . .Among those whose femoral neck T scores were more than −2.0, more fractures occurred in the treatment group (n = 22, 3.3%) than in the placebo group. . . ."

-- JAMA (1998)

We'll see -- but I suspect Dr. Thomas A. Musliner's notes and files, related to this article he co-authored -- are at the heart of the current Graves Fosamax® ONJ Bellwether dispute. Note that -- as early as 1998, this JAMA published study concluded (among other matters) that:

. . . .Alendronate sodium reduces fracture risk in postmenopausal women who have vertebral fractures, but its effects on fracture risk have not been studied for women without vertebral fractures. . . .

The effect of treatment on the risk of clinical fractures depended on initial femoral neck BMD [bone mineral density] (P = .01 for the interaction) (Table 3 and Figure 4). Alendronate significantly reduced the risk of clinical fractures by 36% (RH, 0.64; 95% CI, 0.50-0.82; placebo-treatment difference, 6.5%; NNT, 15) in women whose initial femoral neck T score was −2.5 or less. However, 4 years of alendronate did not significantly affect risk of clinical fracture in those with higher BMD. We observed a 22% lower risk of clinical fracture in those whose T scores were more than 2.0 SDs below the normal mean (RH, 0.78; 95% CI, 0.65-0.94; placebo-treatment difference, 3.3%; NNT, 30) (Figure 4). Alendronate did not decrease the risk of fracture among subjects whose initial T scores were greater than −2.5 (RH, 1.08; 95% CI, 0.87-1.35). . . .

In post hoc analyses, alendronate reduced the risk of hip fractures by 56% among women with a femoral neck T score of −2.5 or less: 18 (2.2%) in the placebo group vs 8 (1.0%) in the alendronate group (RH, 0.44; 95% CI, 0.18-0.97; placebo-treatment difference, 1.2%; NNT, 81). There was no reduction in risk among those whose femoral neck T scores were more than −2.5: 6 (0.4%) in the placebo group vs 11 (0.8%) in the alendronate group (RH, 1.84; 95% CI, 0.70-5.36).

The effect of alendronate on the risk of wrist fractures also varied by baseline femoral neck BMD. There was no significant reduction among women with a T score of −2.5 or less: 38 (4.7%) in the placebo and 34 (4.2%) in the alendronate group (RH, 0.88; 95% CI, 0.55-1.40). Similarly, we observed no reduction in risk among women with T scores of −2.0 to −2.5: 20 (2.8%) in the placebo group vs 27 (3.7%) in the alendronate group (RH, 1.33; 95% CI, 0.75-2.4). Among those whose femoral neck T scores were more than −2.0, more fractures occurred in the treatment group (n = 22, 3.3%) than in the placebo group (n = 12, 1.7%; RH, 1.9; 95% CI, 1.0-4.0; placebo-treatment difference, 1.6%).

Stratification of the results by BMD of the total hip, spine, or other sites indicated that alendronate consistently decreased the risk of nonspine fractures among women with BMD T scores of −2.5 or less but not among women with BMD T scores of more than −2.0. The apparent threshold for a significant effect of treatment on risk of clinical fractures varied by BMD measurement site from a T score of −2.5 or less at the femoral neck and spine to less than −2.0 at the total hip. . . .

In women with low BMDbut without vertebral fractures, 4 years of alendronate safely increased BMD and decreased the risk of first vertebral deformity. Alendronate significantly reduced the risk of clinical fractures among women with osteoporosis but not among women with higher BMD. . . .

Note here that (as a Merck employee!) Dr. Musliner would have -- as of 1998 -- signed on to the idea that there is no reduction in fracture risk, for women who do not have full-on osteoporosis -- i.e., women with "osteopenia". If the fracture risk reduction benefit doesn't exist in women with osteopenia -- and that fact was known to a Merck employed medical expert by 1998 -- this could be a game changer.

It is, I recall, undisputed that Mrs. Graves -- when first put on Fosamax -- had only osteopenia. I think this is the sort of evidence the plaintiffs are driving toward. We'll know by January 3, 2011:

Stay tuned.

An Evolving Fosmax® Mystery: Does Dr. Thomas A. Musliner Still Work For Merck?

See the earlier post, of this morning, for background. What does a Vioxx® (rofecoxib) study1 from back at the turning of the Millennium have to do with today's various Fosamax® ONJ Bellwether trials? We'll soon know -- by January 3, 2011.

That is, I want to amplify one point here -- it seems that, at least as of March of 2000, Dr. Thomas A. Musliner was a Merck employee (see the list of affilations at the bottom of that article -- the topic isn't relevant to Fosamax -- just that Dr. Musliner was then a Merck expert):

. . . .Ms. Gumbs, Mr. Ebel, Dr. Quan, Mr. Larson, Dr. Schwartz, Dr. Musliner, Dr. Gertz, and Dr. Yao are employees of Merck and Co., Inc. . . .

As of two nights ago, lawyers for Judith Graves were seeking to admit material found in Dr. Musliner's files -- as some form of newly relevant evidence -- in her Fosamax ONJ trial.

Since Musliner was presumably a Merck employee when he authored whatever this evidence might be, it will be presumptively relevant in ALL Fosamax ONJ bellwether trials, if it is relevant in Mrs. Graves' trial.

Clearly, we'll know by January 3, 2011 -- but this may change the shape of the to-come Secrest, Hester and Boles III jury trials.

We will keep you posted -- even if it isn't the basis (in Graves v. Merck) for an immediate new trial, in the learned view of Judge Keenan -- it is almost certain to make a showing in Hester (May 2011) and Secrest (March 2011). The Boles III damages-only jury trial should be underway some time in the first quarter of 2011, as well.


1. And -- not entirely incidentally -- why were 15 patients given a 5 to 20 times too strong dose of Vioxx -- and thus (arguably) allowed to have their renal functions compromised?

Newly Discovered Relevance -- In "Old" Evidence, For Graves' Fosmax® ONJ Case (And, Potentially, Other Cases)?

You'll likely recall that Merck won the Graves Fosamax® ONJ trial last fall. It is now the subject of a pending appeal. It subsequently appears (from a December 22, 2010 electronic filing) that one of the grounds for appeal will be the lately-discovered relevance of evidence in the files of one Dr. Thomas A. Musliner, apparently a Merck expert. The substance of what Dr. Musliner's files contain will be made public by January 3, 2011 -- see below:

. . . .In consideration of letters received by the Court from the Plaintiff on December 17 and 22, 2010 [not yet available in the PACER/ECF filing system] and from Defendant on December 21, 2010 [ditto], the Plaintiff is granted leave to move pursuant to Rule 60 of the Federal Rules of Civil Procedure for relief from the November 23, 2010 Judgment.

Plaintiff is directed to file the motion and a support memorandum by close of business on January 3, 2011, and to affix copies of the above-mentioned letters to the memorandum. Defendant is directed to respond by the close of business on January 18, 2011. If Plaintiff chooses to reply, Plaintiff must do so by the close of business on January 24, 2011.

Plaintiff's December 22 letter admits that the central issue of this motion is not evidence newly discovered from the files of Dr. Musliner. Rather, according to the Plaintiff, the issue is when the materiality of the evidence became apparent. Therefore, Plaintiff's request to depose Dr. Musliner is denied. There is no need for oral argument on this motion.


/s/ Judge John F. Keenan,
December 22, 2010
United States District Judge

This motion is likely to lead to an order from Judge Keenan, saying that the Musliner evidence cannot now be admitted, post trial. And that expected ruling will, in turn, be a substantial part of the basis for Mrs. Graves' appeal of the defense verdict.

A Vigorous New Institutional-Investor-Plaintiff To Lead Consolidated ENHANCE Derivative And Securities Class Actions?

As you may recall, Judge Cavanaugh has authorized the appropriate Hague Convention paperwork to allow the sworn deposition of Dr. Kastelein (the principal investigator on the singularly ill-starred Vytorin® Enhance study) to be taken in the Netherlands.

Now, via an overnight electronic filing in Judge Cavanaugh's chambers, it seems that a significant institutional investor will take over day to day case management and decision-making duties from Mary Cain. Unfortunately, Mrs. Cain is ill, and her husband has passed away, leaving her essentially confined to being cared for, in her home.

Enter the Plymouth County Contributory Retirement System, a holder of at least 13,000 New Merck shares. It will likely handle the duties of pursuing these seven consolidated matters, on a go-forward basis, once Judge Cavanaugh grants the order. Here is a bit from the motion to intervene (an 11 page PDF file):

. . . .This above-captioned shareholder derivative action was filed by Plaintiffs Mary E. Cain and James D. Cain, as joint owners of Schering stock, on behalf of Nominal Defendant, Schering, and all Schering shareholders. The Cains are represented by the [same law firm as the Retirement System]. According to the Amended Complaint filed by the Cains (Docket Entry 13 in Cain v. Hassan, Civil Action No. 08-1022), this action is brought against the Board of Directors and certain officers of Schering, for breach of their fiduciary obligations of loyalty, and good faith by (i) unconscionably manipulating or disregarding the manipulation of unfavorable results of a critical clinical trial, called ENHANCE, involving Schering’s principal product, VYTORIN; (ii) engaging or allowing false, deceptive and unethical marketing practices; (iii) engaging in or turning a blind eye to $45 million of insider trading [by Cox and Sabatino]; and (iv) awarding the CEO [Fred Hassan] who orchestrated the misconduct with excessive executive compensation [with the assent of Hans Becherer, Schering-Plough Board's Compensation Committee chairman. The Cain v. Hassan action has been consolidated with the two securities class actions, the two ERISA cases and the other shareholder derivative action that have been brought against Schering and Merck arising out of the Vytorin clinical trial.]

The ENHANCE clinical trial was completed in April 2006, but Schering waited until January 14, 2008 (21 months) to release the results. The Defendants’ misconduct ignited investigations in both houses of Congress, the Food and Drug Administration, the Department of Justice, numerous state attorney generals, and a raft of private class action lawsuits involving various aspects of Schering’s business operations. In fact, Schering, along with its joint venture partner Merck & Co., Inc. (“Merck”) in conducting the ENHANCE trial, settled a consolidated consumer class action involving ENHANCE-related allegations for $41.5 million in August 2009. The settlement resolves some 145 lawsuits pending in this Court that were seeking class action status to represent consumers and insurers who purchased, used or paid money toward the purchase of Vytorin or Zetia. Despite the decimation to Schering’s stock price, reputation and exposure to litigation and investigations, Schering failed to initiate any claims against the directors and officers responsible for the clinical trial while pocketing nearly $45 million in insider trades. . . .

Unfortunately, Mr. Cain recently passed away, leaving Mrs. Cain as the sole owner of Schering stock in her household. Regrettably, Mrs. Cain is in poor health and has many medical concerns that limit her to her home. After Mr. Cain’s passing, it has been difficult for Mrs. Cain, who is under constant care, to remain current with the case and to correspond with her counsel.

The Retirement System is a pension fund overseeing investments worth hundreds of millions of dollars. As set forth in the attached Affidavit of William R. Farmer, the Retirement System first purchased shares of Schering in 2002, it retained its ownership through the Schering-Merck merger, and it currently holds more than 13,000 shares of New Merck. . . .

Stay tuned (and Merry Christmas, to Cox, Hassan, Becherer and Sabatino!), as the under-oath Netherlands depositions -- of Drs. Kastelein and Bots get underway. These doctors are likely to significantly improve the plaintiffs' evidence of at least questionable delays -- in releasing the materially bad news -- of what was essentially Enhance's null result (Vytorin's non-inferiority, over simvastatin alone).

Thursday, December 23, 2010

A Polite (And Partial) Dissent -- To Jim Edwards' Latest Piece. . . .

That gentleman, Jim Edwards writes, this afternoon that:

. . . .A recent insider trading case regarding executives at Sequenom might have given you the impression that illegal stock trades in the drug business occur when folks inside a company realize big news is coming up and leak it to their friends ahead of time. But the feds’ recent sweep of insider traders in the healthcare business — uncovering unfair trades related to the stock of Pfizer, Merck. . . among others — shows that it is investment banks and hedge funds that drive most insider trading in healthcare, not executives inside pharmaceutical companies. . . .

While I agree in general, this latest round has -- thus far -- focused on the leaks from banks and expert network advisors and consultants, let's not forget the (alleged) contribution of one James W. Self (late of Merck vaccines).

Mr. Self is, and remains, presumed innocent -- until his trial (or consent decree) is completed, but he was (until he suddenly retired, the day that he was named by the SEC) in charge of business development (primarily deal-doing), in the vaccines business at Merck.

It looks like his connection was through the Galleon investigation, but that is where (supposedly) most of this all began, for Preet Bharara, the U.S. Attorney for the Southern District of New York. So, in at least one case -- it was an executive in pharma (allegedly). [I guess the case of Arthur Cutillo wouldn't technically count here, either.]

We'll keep you posted -- but Jim Edwards also neglects to mention that JP Morgan actually advised Merck (and rendered a fairness opinion to its board) in the March 2009 mega-deal (a deal process that is almost universally suspected of springing various information leaks between late February 2009, and early March of that year).

Toronto Sun: Quebec Coroner Won't Rule Out Gardasil® -- In Girl's Death

The Toronto Sun has a fairly important story, this morning -- do go read it all -- but here is a bit:

. . . .[A 14 year old Montreal girl] had an adverse reaction after her first shot in October 2008. A few days following the immunization, she began experiencing dizziness and memory loss. The symptoms were so severe she was transported to a Montreal hospital for tests.

But two months later she received the necessary second immunization.

Coroner Michel Ferland's report concludes Morin died from drowning [after slipping into an unconscious state in her bathtub, a few days after her second (of a planned three) vaccine doses]. But while there is no evidence the shot killed the teenager, he is refusing to rule out a link between Gardasil and her death.

Ferland is recommending Health Canada, along with provincial and municipal health agencies, better inform patients about the vaccine's side effects.

He also noted the National Vaccine Information Center, a U.S. immunization safety watchdog group, links 78 deaths to the Gardasil vaccine south of the border.

The coroner said he'd like to see further studies carried out in Canada. . . .

In general, I believe Gardasil® has a role to play in public health immunizations, for girls who are openly sexually active, or are considering being active.

That said -- I do feel it has been aggressively pushed, in part through "Astroturfing" efforts, to an age range where it becomes an inappropriate risk -- in many, many 12-1/2, 13 and 14 year old girls. Girls who are not even considering being sexually active -- and know they aren't. In those cases, the potential for even rarely-appearing but serious side-effects is simply an unwarranted (even if small) risk for parents to assume, on behalf of their children. Parents and children should have the right to vaccinate -- but they also should have a completely informed consent, first. [It protects against only four of the at least eighteen strains of HPV, and it carries a small, but occasionally ferocious side effect profile -- a profile that cannot be predicted (with any existing test), based on other factors.] H/T to Ed, at Pharmalot.

Wednesday, December 22, 2010

FDA Additional Indication Approval For Gardasil® Won't Move Needle

While this was something Whitehouse Station was actively pursuing, most analysts know it won't move the needle (much) -- on US Gardasil® sales. Per tonight's presser, then:

. . . .In the United States, an estimated 75 to 80 percent of males and females will be infected with HPV in their lifetime. For most, HPV will clear on its own. However, for those who don't clear certain types, HPV can cause cervical, vaginal and vulvar cancers in women and anal cancer and genital warts in men and women. There is no way to predict who will or won't clear the virus.

Gardasil helps protect against the four types of HPV, specifically types 6, 11, 16, and 18, that cause the most disease. . . .

Good news, to be sure -- but (arguably) not material, or only barely material. I think Merck (in a joint venture with CSL) is still awaiting regulatory approval for this indication, in Australia.

More Of Hassan's Retained Schering-Plough "Yes Men" Parachute In To Bausch + Lomb

My Spider-sense is tingling -- that a bust-up, spin-off, or other value destroying transaction will occur -- and that likelihood grows with each of these "Hey! -- we're gettin' the band back together!" announcements. Per Zenopa (a recruiters' portal site), this morning:

. . . .Bausch and Lomb has announced the appointment of Rick Heinick as its new corporate vice-president for global human resources and transformation.

Mr. Heinick takes up the role from January 4, 2011 onwards and will be tasked with helping the medical device company to become a more competitive organisation.

Prior to this, he served as a senior partner with consultancy firm Schaffer, providing advice for a number of leading healthcare companies including CR Bard and Johnson and Johnson, as well as Bausch and Lomb.

He also acted as an advisor to Merck Sharpe and Dohme during its $41 billion (26.5 billion pounds) merger deal with Schering-Plough last year.

Brent Saunders, chief executive officer at Bausch and Lomb, said: "Rick has demonstrated great success in helping drive positive transformations within distinguished companies worldwide."

Last month, the company announced that Charl van Zyl has become corporate vice-president and commercial leader for its Europe, Middle East and Africa operations. . . .

Wow. What sort of train-wreck will the B + L rank-and-file see, as Bumblin' Brent's, and Fast Fred's deal goggles fog over? We'll keep you posted.