In addition, the just released Merck's income statement footnotes reflect a $950 million litigation reserve. Is that the Cain v. Hassan settlement? Oops. That's a 2010 figure footnote, not 2011. My apologies. We'll know soon.
Stay tuned.
▲ After perhaps $300 million in lavish product launch expenses alone, the year to date Victrelis® sales are $53 million (compared to $430 million in same period for Vertex's competing Incivek®). . . . Thanks a bunch, Ex-Schering-Plough CEO Fred Hassan!
▲ So -- that is looking to be close to a 90-10 split (okay, 87-13 more precisely!) of the Hep C market, AGAINST the legacy Schering-Plough star called boceprevir. [Much as I have long predicted, but most concretely -- in July of 2011.]
Ouch.
▲ The Q3 2011 release discloses an addiitonal reduction in R&D spending, $300 million less than was expected at the end of Q2 2011 -- which was reduced by $300 million in Q1 2011. Recall that the very-early 2011 R&D spend goal/projection was around $8.3 billion, then lowered to $8 billion at end of Q2 -- now it stands at $7.7 billion. Said another way, Merck is managing EPS reported to the mavens of Wall Street by reducing R&D spend -- as needed.
▲ Note that sales (net of currency-benefits) are growing in the lower single digits -- but Merck is returning its non-GAAP EPS estimate to the same level it had articulated in very-early 2011 (before withdrawing guidance) -- in part by using R&D expenses as a "backward solve" (or plug figure) for the number Wall Street wants to see on the earnings/EPS line.
▲ That is simply not a sustainable model, beyond the next three years.
▲ 8:08 AM | CEO Ken Frazier is speaking in prepared remarks now -- reciting press release highlights. . . .
▲ All of the above said, Januvia is showing a very strong quater-by-quarter growth ramp.
▲ 8:25 AM Q&A underway. Adam Schecter is explaining that Victrelis books revenue for dosing over a three-times longer period than Vertex does, because Victrelis therapy takes three times longer to deliver.
▲ Q: Jami Rubin (Goldman Sachs): What is the Victrelis actual share of new patients?
▲ A: Adam Schecter -- We think it is around 25 percent, maybe as much as 27 percent. . . .
Missed the rest of the earnings conference call due to a competing call. Ah well.
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