Tuesday, January 31, 2012

"Answering One Question NOT Asked," Merck & JNJ End Up In L'Oreal Patent Suits

I don't know whether to file this story under the law of "unintended consequences," or "collateral damage" -- but apparently, back when the three year-long sunscreen Lanham Act Battle Royale (between Neutrogena, a J&J brand, and Coppertone, a legacy Schering-Plough/Merck brand) was in high dungeon, an ex-Schering-Plough (now Merck) scientist, one Dr. Patricia Agin, submitted a sworn declaration, as part of Coppertone's case. I believe she was also deposed by the Neutrogena lawyers.

In her rather effusive declaration (quoted at the top of page 4 of the complaint), she explained that the process for stabilizing Coppertone sunscreen in ultraviolet radiation conditions (i.e., out in the sun) "is not, and was never patented by, exclusive to, or invented by, or created by Neutrogena. . . ."

True enough. It actually turns out that L'Oreal owns that patent.

It is in year 16 of its life, and it is a process patent, but L'Oreal of Paris owns it. And L'Oreal's patent lawyers allege that neither Coppertone, nor Neutrogena have a valid patent license from L'Oreal. Ouch. From the Bloomberg story -- a bit, and here is the complaint at law (link is a 7 page PDF file):

. . . .L’Oreal sued Merck & Co., the maker of Coppertone, and Johnson & Johnson, which owns Neutrogena Corp., for patent infringement in federal court in Wilmington, Delaware, on January 27, 2012. . . .

In dispute are parents 5,576,354, issued in November 1996, and 5,587,150, issued in December 1996. Both cover compounds used to block the skin’s exposure to ultraviolet-light damage. . . .

The "acts of infringement have caused and will continue to cause damage to L’Oreal," the Paris-based company said in court papers. L’Oreal claims it has patented a mixture of compounds that help stabilize its sunscreen. That mixture appears in so- called avobenzone sunscreens and uses the compound octocrylene, according to court papers.

Last year, L’Oreal earned 2.51 billion euros ($3.29 billion) on revenue of 20.3 billion euros, according to information compiled by Bloomberg. . . .

It may well turn out to be that both J&J and Merck have developed processes to stabilize their respective sunscreens with octocrylene, in ultraviolet conditions that do not in any way read on, or implicate the L'Oreal patents, but it is clear that the labels of each of their sunscreens list octocrylene as an ingredient.

And so -- let's call this one the "The Son of Sunscreen Battle Royale"! Should be entertaining.

We will keep you slathered in thick white gunk on this, no doubt.

Monday, January 30, 2012

21 CEOs Who Walked Away With More Than $100 MIllion: ABC News

It is good to see that more and more main stream media outlets are making a more fullsome and realistic accounting of what Ex-CEO Fred Hassan's severance package was really worth, in equity values, to him. Recall that in late 2009, it was widely reported that he was "only getting" around $50 million to leave Schering-Plough, on merger day. [UPDATING NOTE FOR GRAPHIC, AT RIGHT: Add about $4.4 million for each additional dollar of Merck NYSE stock price, above the last SGP quoted NYSE price of $28.15, on merger day, November 3, 2009 -- and with Merck at around $38.50 on the NYSE this morning, the chart at right would yield. . . yep, about $220 to $225 million for Fred Hassan.]

While ABC still isn't fully valuing the equity (by my calcuations, Mr. Hassan carted off around $225 million -- which would place him at No. 4 or 5 on the list), it does peg his exit pay at just under $190 million -- which places him at No. 7, all-time.

Just a bit from the ABC article then -- do go read it all:

. . . .21 CEOs over $100 million

Company | CEO Name | Tenure | Total Payout

1. General Electric | John F. Welch Jr. | 1981-2001 | $417,361,902

2. Exxon Mobil Corp. | Lee R. Raymond | 1993-2005 | $320,599,861

3. UnitedHealth Group | William D. McGuire | 1991-2006 | $285,996,009

4. AT&T Edward E. Whitacre Jr. | 1990-2007 | $230,048,463

5. Home Depot Inc. | Robert L. Nardelli 2000-2007 | $223,290,123

6. North Fork Bank | John A. Kanas | 1977-2006 | $214,300,000

7. Merck & Co., Inc./Schering-Plough | Fred Hassan | 2003-2009 | $189,352,324

8. IBM | Louis V. Gerstner Jr. | 1993-2002 | $189,005,929

9. Pfizer Inc. | Hank A. McKinnell Jr. | 2001-2006 | $188,329,553

10. CVS Caremark Corp. | Thomas M. Ryan | 1998-2011 | $185,415,435

11. Gillette Co. | James M. Kilts | 2001-2005 | $164,532,192

12. Target Corp. | Robert J. Ulrich | 1994-2008 | $164,162,612

13. Merrill Lynch & Co. | E. Stanley O'Neal | 2002-2007 | $161,500,000

14. U.S. Bancorp | Jerry A. Grundhofer | 2001-2006 | $159,064,090

15. Omnicare, Inc. | Joel F. Gemunder | 2001-2010 | $146,001,476

16. Wachovia/South Trust | Wallace D. Malone Jr. | 1981-2004 | $125,292,818. . . .

Fred Hassan ahead of Louis Gerstner at IBM, and Stan O'Neal at Merrill Lynch? I am sorry, but that is. . . disgusting.

To be clear, I will never begrudge Jack Welch (No. 1) his walking pay -- for whatever else one might say about the man, he truly enhanced shareholder value at GE by orders of magnitude -- not just percentages. Hassan is precisely the opposite story -- a bridge troll, and one that required payment, to get a deal done -- i.e., to cross the bridge.

What Does Thursday Morning Portend? Merck's Q4 & Year-End 2011 Earnings Call

Prior to market open this Thursday, Whitehouse Station will report fourth quarter 2011, and full-year 2011 financial results. Consensus estimates suggest Q4 EPS will come in at $0.95. Other large-cap pharmas reporting last week have just met expectations for 2011, and promised a slightly better 2012.

For his part, Chairman Ken Frazier -- at the Goldman Sachs unscripted event, in the first week of January 2012 -- suggested that 2012 would be a brighter year for Merck than 2011 was. Even so, I look for Mr. Frazier to tamp down expectations for the early part of 2012, at least until we get a sense of whether the nascent US recovery has legs, whether the euro crisis is pretty well on its way to ending, and whether the US Supreme Court upholds Mr. Obama's health care package, as an appropriate use of commerce clause, tax-levying and "necessary and proper" powers.

And so, I'd not look for any upside surprises near-term from Thursday's call.

Sunday, January 29, 2012

Excellent Observation: From A Friend Of The Blog

A close-follower of all things cholesterol management, Marilyn Mann (see her blog there), pointed out in my comment section that I missed an important sub-story this week, on the FDA-sanctioned label changes occasioned by the SHARP study. Whitehouse Station reported it as a net-positive, which I still think it is -- but there was no new indication for kidney disease sufferers. Here -- let's have Marilyn explain:

Marilyn Mann said. . . .

. . . .I was surprised that you didn't blog on the FDA's decision to turn down Merck's request for a new chronic kidney disease indication for Vytorin and for Zetia when prescribed with simvastatin.

The FDA did permit a revision to the Vytorin label (on pp. 27-28 of the label -- a large PDF file) that states the results of the SHARP trial, but without an indication, Merck won't be able to advertise the use of Vytorin for reducing the risk of cardiac events in CKD.

January 28, 2012 9:35 PM. . . .

Great point! My older background on the SHARP label application matters may be found here.

Friday, January 27, 2012

Merck's 2003 Medco Deal: Interesting (If Mistaken) "Short-Sighted" Divestiture Thesis

While The Street's research (do go read it all -- beginning on page 3) is thoroughly-vetted, and well-sourced -- I don't buy the conclusion, primarily because the metrics examined, while accurately-reported, are. . . incomplete.

In short, I think Merck was right to divest Medco -- with my more complete explanation below the pull-quote:

. . . .It meant that by the time of the [Medco] spin, 63% of overall [Merck] revenue came from Medco. However, low Medco profit margins dragged on Merck's overall share pricess, leading to a radical shift in strategy.

After the spin, which gave shareholders one Medco share for every eight Merck shares, their stock prices and earnings abilities diverged. Medco's shares have gained over 500% since its Aug. 2003 initial public offering, while Merck's shares have fallen by nearly a quarter. As a result, even with Medco's subsequent stock gain, Merck shareholders have seen losses since the spin, when excluding dividend payments. . . .

Since the spin, Medco's sales are expected to have nearly doubled to $68.5 billion, while profits are expected to triple to $1.5 billion according to 2011 earnings estimates compiled by Bloomberg. Meanwhile, Merck sales have grown at the same rate, while profits have doubled, on the heels of big merger activity. . . .

[Then, for a variety of reasons,] Merck pulled the trigger on one of the biggest mergers in pharma history buying Schering-Plough for $41.3 billion in May 2009. . . .

However, with it came legal battles. In 2009, Merck and Schering-Plough settled a suit for cholesterol treatment Vytorin after allegations of withholding key clinical trial results. Merck also pleaded guilty to a criminal charge with the U.S. Department of Justice for its marketing of painkiller Vioxx before it was pulled in 2004.

In July 2011, Express Scripts announced a deal to buy Medco Health Solutions (MHS) for $29 billion in a deal to combine two of the largest pharmacy benefits managers in the U.S. However, the deal is facing antitrust scrutiny, which jeopardizes its outcome. . . .

All of the above is accurate, but the price performance disparity post-Merck's 2003 divestiture is, in my opinion, less a "short-sighted divestiture" example (the authors' thesis), and more a story about the overall decline of branded pharma margins, globally -- on the Merck side.

More directly, as the upper right graphic reminds us, and these stories (here, and here) document, the Medco relationship was fraught with conflicts of interest -- especially for a pure pharma with the visibility, scale and size of Merck. It ultimately put the company in the position of being a competitor to its customers. That will almost never work (longer term), and often leads to investigations, and scandals (as we've seen here).

A nice piece, just the same. Almost as if to undercut the authors' thesis, from their own concluding sentence on the topic (above), the ongoing anti-trust scrutiny of the pending Express Scripts/Medco tie-up would suggest that Merck was (again) right to hand this value package back to shareholders. Of course, "your mileage may vary" -- in fact, it probably does.

Thursday, January 26, 2012

The Long-Delayed Daxas® News: Merck Drops EU And Canadian Rights

As my erstwhile commenter once again notes, it wasn't likely to be a blockbuster for Whitehouse Station (as a legacy Schering-Plough candidate). . . but disappointing that UK's NICE doesn't see the cost/benefit for it, in any event.

So not one euro (or Canadian dollar) of net revenue -- from the rights to Daxas® -- will ever reach the combined Merck bottom-line. Sigh. Here is a bit of an early January edition of the pharmaletter (do go read it all), on the topic:

. . . .Japan’s largest drugmaker, Takeda Pharmaceuticals says that it has reached a mutual agreement with US drug giant Merck & Co., which is known as MSD outside the USA and Canada, to terminate their co-promotion agreement for Daxas (roflumilast) in certain European countries and Canada as of December 31, 2011.

MSD will return the rights to Daxas, a once-daily tablet for patients with chronic obstructive pulmonary disease (COPD), to Takeda in all countries covered by the agreement. Under the terms of the original deal between Merck and then independent Swiss drugmaker Nycomed, Nycomed received an undisclosed upfront fee from Merck and became eligible for certain payments based on defined regulatory and commercialization milestones for Daxas. . . .

So it goes. [I am sorely tempted to say something about Ex-CEO Fred Hassan's non-discerning eye here, but I won't; you already know the drill if you've been following along these past few years.]

I'll try to keep these items more current, from here on. Apologies.

Will Supremes' Novartis Overtime Case Settlement Mean That New Merck Will Settle, Too?

As Ed at Pharmalot reported earlier in the week, Novartis will pay $99 million to settle its long-running fight with sales reps -- over back overtime pay. Here's Ed, then -- on Novartis:

. . . .The move is significant because, until now, drugmakers have been fighting efforts by their current and former sales reps to win overtime pay. The topic has divided the courts and there have been so many conficting rulings that the US Supreme Court agreed last November to review the debate. A ruling is expected this summer. Ironically, the Supreme Court had earlier declined to review the decision in the Novartis case (here is the 2006 lawsuit filed by the Novartis reps).

At issue is whether sales reps are exempt from overtime provisions of the Fair Labor Standards Act. The FLSA overtime compensation requirement does not apply to employees who work as outside salespeople, but the law does require employers to pay overtime for hours worked beyond 40 hours a week, unless a FLSA exemption applies. . . .

Since the time of the original Schering-Plough complaints, Novartis, New Merck (the entity now responsible for the Schering-Plough overtime claims) and many other pharma concerns have restructured their sales reps' duties, hours and roles to bolster the case that at least the currently-serving US reps are not entitled to overtime. So, this would be only a "look-back" settlement (should it occur), not a "look forward" settlement amount.

Importantly, even at $150 million, would be decidedly immaterial to New Merck. I do think the $99 million Novartis legacy sales rep settlement suggests that many of these cases (including the legacy Schering-Plough ones) are ripe for any number of agreed settlements. And Chairman/CEO Frazier has shown he is looking to put past Schering-Plough troubles very-firmly in the rear-view mirror -- by settlements.

You read it here first, if it turns out this way, friends -- perhaps even as soon as the February 2, 2012 Merck year-end results earnings call.

Excellent Daxas® Follow-Up Analysis, From An Anonymous Commenter

One of my favorite anonymous commenters offers us a great update -- and on a legacy Schering-Plough COPD candidate story that I completely missed. Of course, Pharmalot had it and I missed it there too. In any event, here it is:

. . . .I missed it too and was made aware of it today based on Pharmalot's news regarding the recent Daxas® lack of approval in the UK.

Not a big player for Merck but I also noted that Merck has also taken their CXCR2 antagonist off their clinical pipeline chart (legacy S/P compound).

The only COPD drug left is the inhaled steroid/LABA (Dulera, Zenhale and Foradil). [Which is] just a retooling of the asthma medicine.

Interesting -- I wonder if they're giving up on COPD?

January 25, 2012 11:06 AM. . . .

While I doubt that Merck is giving up on COPD meds altogether, I do think this is quite a come-down from the COPD program's status at legacy Schering-Plough, as most recently outlined here in April of 2010. That former Merck Daxas® distribution partner, Nycomed, is also where an ex-Schering-Plough GC has landed, as of November 2010 (see related graphic, at right -- I think Nycomed still handles Alvesco® -- anyone know?).

Again -- thanks to our erstwhile readership, this place is always made a better (if opinionated) resource.

Saturday, January 21, 2012

Merck's Dividend Is NOT At Risk: What Is Austin Smith Smoking? Oh. Right. He's A "Fool!"

In a generally "clue-free" piece for the Motley Fool, one Mr. Austin Smith offers a headline today that blares "The Dow's Scariest Dividend?" -- and makes Merck Exhibit A.

That notion -- to coin a phrase -- is um. . . foolish. His argument, such as it is, is that Merck's earnings levels won't support the dividend payout, because the dividend is about 110 percent of Merck's trailing 12 months' GAAP net income. Of course, to get to GAAP net income, one must deduct even one-time, non-recurring, charges. Charges like transaction-driven (think Schering-Plough bust-up, here) intangibles-and-goodwill write-downs (entirely non-cash), and headcount reduction charges (only partially a cash charge). [The dividend-payment, of course, is a cash item -- so we need be primarily-concerned about Merck's ability to throw off cash here. And that ability seems safe, for now.] Indeed, last year, several one-time largely non-cash charges reduced GAAP net income below the dividend burden by about 10 percent.


What Mr. Smith also neglects to mention is that Merck is significantly under-levered (i.e., carries a lower debt burden), compared to what would be a truly risky dividend company. Merck's debt to equity is only 31 percent; its current ratio (coverage of its current debt) is over 2 to 1. Those are the most-relevant cash-deploying metrics. And these are generally solid, on a fundamental basis (as to dividend safety, at least). It is almost. . . boring. [I actually suspect that these pieces are largely auto-written, by a piece of software that simply churns through industry-groups, and looks for pre-set, brainless trip levels, on GAAP results -- then people like Mr. Smith review, edit and sign their name to them. Every so often, one sees one of these Fool pieces in other sectors -- usually just as clueless.]

In any event, here is a bit of Mr. Smith's poorly-researched take, from this morning:

. . . .The first thing that jumps out at me on this list is Merck. The company has a payout ratio of 111% and it's grown its payout ratio 70% over the past five years despite an 18% retraction in net income over the same period. This doesn't actually mean it grew its dividend, though. The biggest reason is that the company maintained a roughly $0.38 dividend for the past five years despite a decline in net income. Although it has an appealing 4.3% yield, I think it's fair to call it the shakiest dividend on the Dow. Its weak five-year performance isn't encouraging, either. . . .

For dividend investors eyeing the Dow right now, I'd steer clear of Merck. . . .

That's absurd. If you aren't too concerned about near term NYSE price appreciation, Merck will always throw off a solid dividend. That much is a near certainty.

As I say, this is simply a very poor piece of financial analysis pretending to be journalism. And I've made this observation before -- (about a year and a half ago). Merck is a safe, if unexciting dividend play, even in the now nearly unimaginable deflationary scenarios.

Let me say it one other way -- Merck's board would sooner think about an in-place, consensual bankruptcy reorg, before it would think about eliminating the dividend. There are a million other levers the board could pull, before it ever considered a dividend reduction. As a result of Merck's size and scale, the board would have tons of better options to right the ship -- even in a global depression; they'd be (how should I say this? um. . .) foolish to do otherwise.

Here endeth the lesson.

Thursday, January 19, 2012

Whitehouse Station Proposes To Settle Canadian Vioxx® Cases

Not terribly surprising -- it seems the Canadian Vioxx® claims will likely settle shortly. It is consistent with the evolving approach under Chairman Frazier -- per Merck's presser, this evening:

. . . ."This agreement is structured to provide certainty and finality toward resolving Vioxx cases in Canada for a fixed amount," said Bruce N. Kuhlik, executive vice president and general counsel of Merck. "Under the agreement, there will be an orderly, documented and objective process to examine individual claims to determine qualification."

If the agreement is approved and specified conditions are met, Merck will pay a total amount of at least C$21,806,250 but not more than C$36,881,250. This would resolve all Vioxx certified class actions, putative class actions, other litigation and claims related to Vioxx in Canada.

The amount to be funded for Vioxx users in Canada will be between C$11,306,250 and $26,381,250 and will be determined by the final number of eligible claimants. Claims for myocardial infarction and sudden cardiac death will be evaluated on an individual basis by an independent administrator based on objective criteria related to various factors, including duration of Vioxx use, age and presence of risk factors. Individual awards for ischemic stroke claims will be a uniform amount not to exceed C$5,000. . . .

So -- looking pretty much like the evolving US approach -- in those later ENHANCE-era cases.

SOPA And PIPA: Crushed By The "Tubes" -- Yes Merck Schering-Plough, Your Corporate Logos Have Always Been Subject To "Fair Use" Rules

I am fairly certain that, as most-recently drafted, both of these bills (SOPA, and PIPA -- see links in quoted text) would have ultimately been held unconstitutional insofar as they purported to prohibit citizens (i.e., natural persons -- especially those not deriving any profit therefrom) from making incidental use of a corporation's identity, marks, brands, logos or other intellectual property -- when factually criticizing them (especially for the purpose of accurately identifying the maker or owner), or commenting upon matters of public concern.

Clearly, that right belongs to the people -- in our first amendment jurisprudence. As you can see (with just a casual glance around the place), my commentary touches on matters of significant public concern, and in doing so, makes liberal use of carefully-modified -- but still plainly identifiable -- corporate identity intellectual property. That is plainly my first amendment right. Thus, for 24 hours through this morning, this site carried the masthead banner at right, in solidarity -- click to enlarge.

While I think the issue is largely decided, it is nice to know that no one will have to litigate the above issue, to establish this freeedom, for the rest of us -- after yesterday. Per The New York Times, this morning:

. . . .Wednesday [1.18.12], this formidable old guard was forced to make way for the new as Web powerhouses backed by Internet activists rallied opposition to the legislation through Internet blackouts and cascading criticism, sending an unmistakable message to lawmakers grappling with new media issues: Don’t mess with the Internet.

As a result, the legislative battle over two once-obscure bills to combat the piracy of American movies, music, books and writing on the World Wide Web may prove to be a turning point for the way business is done in Washington. It represented a moment when the new economy rose up against the old.. . . .

Legislation that just weeks ago had overwhelming bipartisan support and had provoked little scrutiny generated a grass-roots coalition on the left and the right. Wikipedia made its English-language content unavailable, replaced with a warning: “Right now, the U.S. Congress is considering legislation that could fatally damage the free and open Internet.” Visitors to Reddit found the site offline in protest. Google’s home page was scarred by a black swatch that covered the search engine’s label.

Phone calls and e-mail messages poured in to Congressional offices against the Stop Online Piracy Act in the House and the Protect I.P. Act in the Senate. One by one, prominent backers of the bills dropped off. . . .

One ancillary point I've not seen others make yet is this:

After Citizens United (the Super-PAC-enabling Supreme Court decision) was handed-down, and corporations were effectively handed affirmative, full-fledged first amendment political influencing rights, a logical and necessary implication will be that the same corporations must now also live by the limits of the first amendment jurisprudence, as well: these very-public "people" (business entities) must fairly be subject to commentary and criticism, even couched as fact rather than opinion -- without a right to complain at law -- except in the limited circumstance of "actual malice" falsity, or "reckless disregard" factual errors.

Buckle-up, and pucker-up, ole' Buttercup.

Wednesday, January 18, 2012

Mediation Scheduled -- In Cobb v. Merck, A Federal ENHANCE ERISA Suit

It is becoming increasingly clear that New Merck no longer intends to fight it out (". . .until the last dog is hung"), as to these now nearly four-year old allegations.

All of the federal court proceedings have been temporarily stayed as of January 11, 2012, in Cobb v. Merck, et al., a federal ERISA would-be class action, to allow for a February 13, 2012 mediation session. Cobb is a case echoing the earlier Gradone v. Schering-Plough, et al. claims -- and thus pleading the ENHANCE disclosure delay facts, as ERISA violations. Cobb personally names Merck officers and directors as defendants (including Messrs. Clark, Kellogg and Frazier), while Gradone personally names legacy Schering-Plough ones, including Hassan, Bertolini, Cox, Sabatino and Becherer.

Recall that the legacy Schering-Plough version of this suit (Gradone), is now pending a final settlement order -- in fact, on January 13th, Judge Cavanaugh signed an order granting another 60 days to finish the paperwork on that agreement in principle -- to settle the matter.

All of that said, I do think it a sign of emerging wisdom on Mr. Frazier's part -- that he no longer seeks to litigate these claims (recall his directly contrary stance, as General Counsel, on the Vioxx® claims). First, in my estimation, there is arguable merit to each of them -- and second, even if one believes there is not -- it is high time to put the ENHANCE matter in Whitehouse Station's rear-view mirror, and permanently so. Little might be gained, even in a complete victory, here -- and each time a court date is scheduled, a rehash of the facts will likely run in the popular press. Just no longer worth it.

On an at least marginally-related note, Jami Rubin opined -- in the form of a leading question, to Ken Frazier, about ten days ago, at the Goldman conference -- that there could be no real stock upside to even a complete "win" in the IMPROVE-IT outcomes trial (see left side bar for background on that). While Mr. Frazier suggested that there might be some upside left, he also essentially conceded that anything short of a clear win would present new downside risk for the Vytorin® franchise (now clocking about $3.8 billion in annual sales).

So it goes.

Tuesday, January 17, 2012

Goldman Keeps Merck At "Neutral", With Current NYSE-Quoted Prices Around $38

Given that Chairman/CEO Frazier gave a very thoughtful, and yet candid presentation last week, it must be more than a little disappointing that Goldman kept its non-favored stance on the Whitehouse Station company:

. . . .Goldman, Sachs & Co. reiterates "Neutral" rating on Merck. . .

So it goes.

Friday, January 13, 2012

Merck Files Cain v. Hassan Settlement Notice With SEC

Just as I said it would, tonight (dumped into the memory hole, after-hours on the beginning of a long King Day holiday weekend), Whitehouse Station filed the notice of settlement for Cain v. Hassan -- right here.


. . . .Any current New Merck shareholder who was a New Merck shareholder as of December 21, 2011 who objects to the Settlement, the judgment to be entered thereon, or the award of attorneys’ fees and expenses to Plaintiff’s Counsel, or who otherwise wishes to be heard, may appear in person or by his or her attorney at the Fairness Hearing and present any evidence or argument that may be proper and relevant, provided, however, that any shareholder who wishes to object or be heard must follow the following procedures: The shareholder must, by no later than February 8, 2012, file with the Court a written objection, stating all supporting bases and reasons for the objection, including the identification of all witnesses, documents or other evidence that are to be presented at the Fairness Hearing in connection with the objection and a summary of the substance of the testimony to be given by any such witnesses, and submit documentary evidence of the shareholder’s continuous ownership of New Merck common stock since December 21, 2011. This submission should be addressed as follows:

Clerk of the Court
United States District Court for the District of New Jersey
Martin Luther King, Jr. Federal Building and U.S. Courthouse
50 Walnut Street
Newark, New Jersey 07101. . . .

So it goes.

Wednesday, January 11, 2012

EXCLUSIVE: Court Sets Final Cain v. Hassan Settlement Hearing -- February 28, 2012

The notices to all affected shareholders will be in the mail shortly; Merck will soon file an SEC Form 8-K (and post the notice on its external investor relations webpage). The deadline to file any objection in the New Jersey federal District courts is in the first week of February 2012 -- all according to an order signed by the very-able Judge Cavanaugh yesterday, and filed overnight in Newark.

So the shareholders' derivative suit is set to settle, in exchange for governance changes -- and $5.1 million in very well-earned plaintiffs' legal fees.

Still pending are several ENHANCE-era would-be federal class action securities suits, for monetary damages.

Tuesday, January 10, 2012

Not Much New -- From CEO Ken Frazier, At The JP Morgan Confab

It was largely a rehash of all the same old Powerpoint slides -- save one (click to enlarge):

From his transcribed remarks (a PDF file), on this slide, then:

. . . .We've significantly decreased our field force in the US and in the European Union while, at the same time, rethinking what our sales representatives need to be doing for their customers.

At the same time, as you can see from this chart, we have sharply increased our investments in the emerging markets, especially in China where we've increased the size of our sales force 60% over the past few years. . . .
While the above looks backward, it certainly confirms what so many ex-Merckies felt most acutely, at Christmas this year: Merck was the "job cutting-est" major pharma, in 2011. This (touting the "savings" from job-cuts), coupled with this morning's off-the-cuff suggestion of looking to "buy" Hep C franchise leadership, could be some significant cause for concern.

As a general rule, very large multinational pharma concerns can neither "buy", nor "save" their way to long-term, sustainable greatness. No. . . they must invent it.

Merck Licensing Chief -- Off The Cuff, At JP Morgan Conference -- Too Optimistic, On Hep C Prospects?

Roger Pomerantz, the guy in charge of in-licensing at Whitehouse Station, just told a Bloomberg reporter that he expects Merck will be a Hep C leader. And Merck's stock just opened -- up.

The wrinkle in the rosy statement is that Merck is still losing the current battle, at least 80%-20%, to the more effective Vertex treatment, anchored by its Incivek® (see graphic, at right) combo-therapy. For what it's worth, here's the Bloomberg quote:

. . . ."Our goal is to be a leader in hepatitis C, and we will do what it takes to get there," Pomerantz said in an interview at the J.P. Morgan Healthcare Conference in San Francisco. "We would consider small deals to large deals, whatever is necessary to lead in hepatitis. . . ."

So Merck is clearly signaling that it might buy its way into a future leadership position. However, given the spate of recently very pricey Hep C candidate acquisitions, there is a reasonable probability Pomerantz will get caught. . . overpaying.

[Schering-Plough, anyone? Merck's Hep C treatment is anchored by a second-in-class legacy Schering-Plough candidate, boceprevir -- branded as Victrelis®.

More to come, tonight, after CEO Frazier makes his formal JP Morgan presentation.] In any event, for at least the next three to four years, I think the lead is clearly Vertex's -- to lose. Again, it is my opinion that a price of $40 for Merck seems too high, given all that is presently known (and unknown).

Your mileage may vary. In fact, it probably does.

Merck Chairman & CEO Frazier -- At The JP Morgan-Chase Healthcare Conference

He doesn't speak (at the Westin St. Francis, in San Francisco) until long after the markets close this afternoon, in New York, so don't expect any update here (should he say anything materially new and different), until pretty late this evening.

All of that said, if he does have some news, it will be right here. Alternatively, you may listen in, yourself, in real-time (after 6 pm EST, or 3 pm PST today), by simply supplying an email address to New Merck.

Monday, January 9, 2012

As If Dancing A Minuet, In Time -- Jefferies Drops Merck To "Hold". . .

Ironic -- all I needed to do, to update my graphic of 15 months ago, now, was add one dollar to the target price -- since way back on September 16, 2010, Jefferies started Merck at "Hold", with a $39 price target.

I can't resist pointing out that on just this past Friday, I noted that Merck's NYSE price was approaching the post Schering-Plough apogee.

Coincidence? You decide.

Here is a bit of the latest Benzinga blurb -- do go read it all:

. . . .Jefferies & Co. has downgraded Merck & Co. from Buy to Hold. . . .

So it goes. It is, afterall, Merck's stock price that strikes the beat -- in 3/4ths time.

UPDATED: Merck just announced that Kenneth C. Frazier, chairman and chief executive officer will present at the 30th Annual J.P. Morgan Healthcare Conference in San Francisco tomorrow (at 6:00 p.m. EST). Expect a re-tooling of his Goldman talk, of last week, i.e. ". . .Merck's 2012 will be better than its 2011 was."

Friday, January 6, 2012

Two Years Later, Merck's NYSE Share Price Approaches Immediate Post-Merger Euphoria

The beginning of a new bull-run, or just a temporary (year-end bounce) high water mark? Who knows?

CEO Frazier says he expects 2012 will be better than 2011, but that doesn't imply a price above $40, in my estimation. So. . .

Will 2012 see an eclipse of the highest NYSE prices, set immediately post the Schering-Plough bust-up transaction? We shall see.

Thursday, January 5, 2012

Merck Chairman Frazier, Live: On Legacy S-P Consumer Health And Animal Health Partnering Opportunities

As predicted, Merck Chairman and CEO Ken Frazier didn't say much that was new on his webcast from Goldman Sachs' offices in Manhattan this morning, as his company is already in the self-imposed "quiet period", leading up to the annual earnings release, early next month.

That is to say -- on a nearly daily basis -- more and more 2011 financial reporting data (presently kept on a country by country, and business by business basis) is being aggregated from around the globe, and loaded into a set of consolidated financial statements, in Whitehouse Station. And so, with each passing day, the risk increases that anything the CEO might say, related to a financial matter might prove to be wrong, as the actual data rolls in, and is rolled up.

So, not much was said (of a "ground-breaking news" nature).

Evan so, toward the end of the webcast, Mr. Frazier did reiterate his support for the legacy Schering-Plough consumer health and animal health businesses, but took pains to mention the differing path Pfizer has taken related to Animal Health. . . and then repeat forcefully that he has a duty to look at partnering and other opportunities -- for consumer health and animal health, "on an ongoing basis," thus:

. . . .I will continue to look at [other opportunities to partner, or unlock value in] the Consumer Health and Animal Health businesses at Merck, given Pfizer's [prior decisions, and announcements]. . . .

Again, not new -- just an amplificaiton of statements last clearly made when the complex series of Merial-Sanofi joint-venture divestiture then re-acquisition deals cratered, primarily on US and EU antitrust concerns. There you have it.