Thursday, December 20, 2012

Ouch! Tredaptive HPS2-THRIVE Study: Fails Primary Endpoint

Well, THRIVE was a large, highly-powered study -- 25,000 subjects. This is definitive, then. And there was a signal of harm from niacin. Goodness.

Indeed, Tredaptive has had a rathered checkered submittal past at FDA -- significantly delayed in 2008; now no longer even being considered by Whitehouse Station -- for an NDA filing here in the States.

It is approved in the EU, if memory serves -- but will now likely see steep declines in revenue, since it appears that it doesn't improve CV outcomes in any statistically significant way. Here it is, per Yahoo news:
. . . .Tredaptive™ (extended-release niacin/laropiprant) did not meet its primary endpoint. Merck and the investigators are informing regulatory agencies of these results. The company is also preparing communications to health care providers in countries where the medicine is currently available, and will continue to work with regulators to provide updated information to health care providers. Based on the current understanding of these new data and until further analyses can be completed, Merck is recommending that providers not start new patients on Tredaptive. Merck does not plan to seek regulatory approval for the medicine in the United States. . . .
The Food and Drug Administration shocked legacy Merck Schering-Plough in 2008 -- by withholding approval of Tredaptive over concerns about the side effects of its key component, niacin.

That seems to have been a sensible move, now that the THRIVE results are known.

Do stay tuned  -- as Merck is off about $1.30 in NASDAQ premarket trading this morning.

Thursday, December 13, 2012

What Precipitated The Elevation Of Clark Golestani To CIO Of Merck, Last Week?

Please understand at the outset that everything that follows is simply a series of interesting coinciding events. So -- without more, from authoritative insiders at Whitehouse Station, it will be impossible to indicate if any one of these events precipitated any of the others. . . .

That said, it is interesting that the very able District Court Judge Stanley Chelser, in the US District Court for New Jersey recently wrote an opinion (19 page PDF file here) containing Footnote 2 at page 8, thus:
". . .While this might appear to be a smoking gun statement, it is not. According to the interrogatory, this statement was in regard to the position of Interim VP Global OE position, and not the VP Global OE position. As Defendants note, Plaintiff has expressly abandoned any claim for failure to hire for the Interim VP Global OE position, and the claim for failure to promote concerns only the VP Global OE position. Nonetheless, this evidence is probative of the proposition that Scalet considered Plaintiff’s maternity leave to be an important factor in making decisions about her employment – and, more importantly, a negative factor. . . ."
It is also interesting that Mr. Scalet -- at age 53 -- is no longer listed as an Executive Committee member of Merck & Co., as of at least this week.

However, at year end 2011, in Merck's SEC Form 10-K (at page 37), he was listed as the Executive Vice President, Global Services, and Chief Information Officer of Merck & Co. [See images at right.]

It is further interesting that one Clark Golestani (see at right) is now listed as Executive Vice President and Chief Information Officer of Merck & Co., on the company's website.

Interestingly, I was alerted to all of this via an SEC Form 3, filed tonight -- an initial Section 16 filing of an executive officer, of Merck -- and the event causing the filing occured December 3, 2012. In it, we learned that -- for the very first time -- Mr. Golestani was elected a Section 16 officer of the public NYSE traded parent company.

And. . . . it is interesting that December 3, 2012 is also the date that Courthouse News Service first reported Judge Chesler's ruling. More background on the case is available at that December 3, 2012 Courthouse News Service story -- do go read it all (but here's a bit):
. . . .A woman who says Merck fired her for taking a third maternity leave can sue the drugmaker for discrimination, but not retaliation, a federal judge ruled. . . . [She] started working for Merck in 1998 and was eventually promoted to senior director of its Global Operational Excellence department in 2005. . . .
When she became pregnant with her third child in 2005, then-senior vice president of global services J. Chris Scalet allegedly told Colicchio that she would not be promoted to vice president of her division because of her plans to take a six-month maternity leave. . . .
And a belated hat tip to my commenters who first mentioned the Colicchio ruling, last week. So sorry it took me so long to get to it. But this is now -- with a week's aging -- an even more interesting story -- no?

I think so.

To be fair, if anyone has solid information that would contradict the rather tenative inferences articulated here -- I'll gladly print it. Just to be fair.

Wednesday, December 12, 2012

Merck CEO Frazier Joins Other CEOs: Taxes On Top Earners Not A Job-Killer

Count Merck Chairman Kenneth Frazier -- a lawyer, by training -- as yet another among the growing chorus of Fortune 50 Chairmen and CEOs who've come out in favor of Mr. Obama's plan to allow the marginal income tax rate on the wealthiest two percent of US earners to rise -- return to the pre-Bush-era tax cut rates.

Earlier last week, the Chairmen and CEOs of Catepillar, Goldman Sachs,GE and Honeywell, among many, many others -- through the Business Roundtable -- expressed the view that what the top one or two percent of US earners pay in federal income taxes (at least within the limits of currently-contemplated proposals) will not be a significant drag on the continued economic recovery, or job-creation, in the US.

This increased individual tax equity -- is both a just and sensible policy -- and would provide more flexibilty in closing the looming fiscal gaps. So, Kudos here go to Merck's Mr. Frazier.

From Financial Times reporting, then:
. . . .[T]he fate of expiring tax cuts on the top 2 per cent income bracket has been a sticking point in the negotiations between Republicans and Democrats. Mr Frazier said that allowing taxes to rise on the wealthy and taxing capital gains income was less important for the US economy than making changes to the corporate tax code. “The big problem for US companies is not what you tax people on the top end or capital gains,” Mr Frazier said. “It’s that US companies are disadvantaged in the world in terms of supply chain and global capital if you have a tax system that is not a territorial tax system, where you pay taxes twice on money that is made outside the US. . . .”
Quite so.

Hassan-Led Co. Hires Goldman Sachs To Conduct Auction; Shelves IPO Plans

Back in July 2012, various financial press outlets were reporting that B + L would likely IPO by year end.

That no longer seems to be the case as Ex-CEO of Schering-Plough (the company that became New Merck, in a complex reverse merger), one "Fast" Fred Hassan, sitting in his current role as Chairman of B + L, has retained Goldman, Sachs Group, Inc. to seek strategic buyers. As we parse likely pricing, don't forget that B + L loaded its balance sheet with around $3.2 billion of debt, when it acquired ISTA. So, I color me slightly skeptical about a $10 billion final intact company valuation, athough that is reported to be what one person familiar with the rumors claims will be the ask.

Certainly these potential buyers will haircut the price, to compensate for that extra ISTA leverage I mentioned. And, in any event, with the current IPO market looking choppy (at best), I'm not so sure a Bausch & Lomb initial public equity offering would attract enough interest -- at the prices Mr. Hassan needs, at least -- to satisfy his Warbug Pincus backers. It was only 2007, afterall, when they took it private for $3.7 billion.

Then, as I say, Warburg layered on $3.2 billion of incremental leverage. And while they've streamlined some operations, B + L remains one of several second-tier players, in this space. As ever, we shall see.

From Bloomberg overnight, then -- a bit -- do go read it all:

. . . .Warburg Pincus bought the Rochester, New York-based company for $3.7 billion in September 2007 after the eye-products maker was marred by accounting errors, lawsuits and the recall of one of its contact lens solutions. Goldman this month contacted health-care companies such as Sanofi, GlaxoSmithKline Plc and Merck & Co., one person said. Other companies, such as Abbott Laboratories, also will be contacted, according to that person. Warburg Pincus had talked to financial advisers about taking Bausch & Lomb public, the person said. The New York-based private-equity firm chose Goldman Sachs to run a limited sales process, and if a buyer can’t be found Warburg Pincus may pursue an IPO, according to the person. . . .
Do stay tuned -- Fred's deal goggles are back on -- with a vengeance!

Tuesday, December 11, 2012

Merck Agrees To 60 Percent Haircut On Cardiome's Debt Obligation, Post Vernakalant

Back in September 2012, due to other responsibilities, I failed to cover the fact that Merck terminated the license for an I.V. formulations of Cardiome's Vernakalant. This morning, the two companies agreed to restructure (deeply discount) the debt obligations between them. Clearly immaterial to Merck, this is really more about righting the ship at Cardiome -- and giving it a chance at a life after the Merck agreement ended. Per the NASDAQ market wires, then:
. . . .Cardiome agreed to pay Merck $20 million on or before March 31 to settle its outstanding debt of $50 million owed to Merck. The payment will be made from the Canadian biopharmaceutical company's existing cash balance, which totaled $53.6 million at the end of September. The agreement also will terminate a $100 million credit facility Merck had made available to Cardiome. "Complete resolution of our $50 million debt obligation to Merck removes a significant financial and operational overhang for Cardiome," said William Hunter, Cardiome's interim chief executive. In September, Merck agreed to return the global marketing and development rights for both the intravenous and oral formulations of vernakalant. . . .
In March of 2012, Merck passed the the oral formulation (graphic at right). So it goes.

Monday, December 10, 2012

Merck Foundation -- Sitting On The Correct Side of History, Now.

Not a huge surprise here, after Merck signed an amicus brief in the latest US Supreme Court case favoring inclusion (diversity as a factor permitted in admission, hiring and promotion decisions), but welcome news just the same. Merck joins Intel, and UPS among other names, in taking a stand in favor of ending the discriminatory policies of the Boy Scouts of America, per CBS Marketwatch, this morning:

. . . .[The Merck Foundation] will pull all funding for the Boy Scouts of America due to the youth organization's discriminatory policies toward gay and lesbian Americans. "Merck Foundation has suspended all funding to the Boys Scouts of America," a spokesperson told the group, Scouts for Equality. "The Merck Foundation will consider funding the BSA again when the organization's inclusion criteria has been expanded. . . .
This is both wise business -- and morally-correct thinking -- in Merck's public philanthropy.

History will certainly now judge the BSA's current policies to be on the wrong side of this question, in my estimation.

Saturday, December 1, 2012

Emerging C. Diff. Franchise: Could Merck Have Avoided About $270 Million In R&D Expenses?

It has been more-than occasionally said that one clear mark of truly-revolutionary scientific innovation is that it seems intuitively obvious -- once the innovation is fully-revealed. File the below story under that heading.

First the back story: it seems that in the Spring of 2009, Merck Research Laboratories agreed to pay up to about $250 million to in-license a Medarex Phase II candidate based on the quite-promising antibodies for C. Diff. Since then, it is likely that MRL has spent another $20 million or more on that development program.

But Merck isn't the only major pharma with the potential for egg on its research face, here. Not to be outdone, Sanofi had already made a costly bet on a vaccine against clostridium difficile -- and in all probability spent much more than MRL on its own program. To my eye, however, it looks as though this "low-tech" approach is achieving response rates that equal or exceed those seen in the more-formal Phase II antibody trials conducted by Medarex.  And with 3 million cases per year, the burden of the disease here is staggering. So too would be the benefit from an inexpensive, reliable and low tech cure.

True enough, the "ick" factor should not be underestimated as a potential dampener/barrier to patient acceptance -- but for sufferers who've seen no improvement from other approaches, I suspect this approach will be worthy of a shot. And it makes sense -- if C. Diff. appears in the gut/colon when other antibotics knock out the "good" bacteria strains that keep C. Diff at bay -- then a re-introduction of "good" bacteria, via a donated stool sample, ought to do the trick. From a Bangor, Maine news outlet, overnight, then -- a bit -- but do go read it all:
. . . .For patients hit hardest by the bacterium Clostridium difficile, getting a “stool transplant” could become a standard treatment within just a few years. Just as blood banks and sperm banks are now commonplace, stool banks may soon dot the landscape.
About 3 million Americans are infected annually with the bacterium — also known as C. diff — which spreads mainly through hospitals, nursing homes and doctors’ offices. . . .
Costly treatments from Merck & Co and other drugmakers, and a vaccine from Sanofi, are on the horizon. But growing numbers of gastroenterologists are more excited about the use of human stool transplants, which in experimental settings have consistently cured 85 percent to 90 percent of patients who have had multiple episodes of C. diff.

“Until recently, fecal transplants have been on the fringes of mainstream medicine,” said Dr. Cliff McDonald, an epidemiologist with the U.S. Centers for Disease Control and Prevention. “It could become the primary mode of therapy within a year or two for patients with multiple recurrences. . . .”
We will keep you informed, but this -- if one can get past the "ick" factor -- bears the mark of scientific genius: it seems so completely obvious, once someone explains it.

Even so, I doubt it will ever reach the status of blood and bone marrow donation -- as a "public-good" program. But I could be wrong about that, too. FYI -- here is my 2009 backgrounder on the MRL in-licensed program.