More to come in mid-March, when the Form 10-K and Proxy, proper, are filed.
passing of an important deadline for plaintiffs whose surnames start with A though I. Merck has filed its list of the plaintiffs it thinks haven't filed the required papers -- and the outcome doesn't look too terrible, overall, for plaintiffs' side.
I am trying to remember if I've ever seen (post-Sarbanes-Oxley) any public life science or health care company with a market cap of more than $2 billion where the Chief Financial Officer role (essentially the person most directly responsible for the integrity of management's financial statements, among other matters, under S-Ox) has been combined with the President's role (essentially the person most directly accountable for delivering the operational results of the company, rolled up).
Not that Mr. Hassan, et al., have ever been model citizens for good corporate governance structures, mind you -- but. . . I literally cannot recall this ever being done. Except as a temporary assignment, when the President is becoming CEO, and the CFO is the likely incumbent for the President role. [Note that life science companies inherently run on, and create, massive "binary" disclosure events: success or failure of pivotal clinical trials; FDA ordered withdrawals; sudden market obsoleting new drugs, etc., etc. -- and so, the area is ripe for "informational asymmety" securities trading -- or less politely, insider trading.]
In the case of Bausch + Lomb, Brent Saunders is clearly the lead executive officer -- and unless Fred Hassan is planning on exiting as the Chairman of the Board (not likely) -- it is very odd that Mr. Bertolini holds both a "financial control/reporting" and "direct operations" responsibility. [Indeed, some might argue that similar structural oddities just cost legacy Schering-Plough over two-thirds of a billion dollars in federal securities class action settlements.]
Twice - actually. As both Cain v. Hassan and Manson (the ENHANCE matter) involved structural role problems at legacy Schering-Plough, to one degree or another. Yes, many corporate governance experts might say the B + L announcement of yesterday contains a flashing yellow warning light: it creates an inherent tension -- between the executive's office(s): does Mr. Bertolini finance the company, or does he operate it? Is he responsible for financial reporting compliance -- or does he answer to Wall Street, for the operational results?
These are important -- and wholly-unanswered -- questions, out of yesterday's "we're putting the legacy Schering-Plough team back on the field" announcement -- at Bausch + Lomb.
But, as I say, in my experienced opinion, Mr. Hassan has never been one to worry much about the seemingly trifling matters of good governance at public life science companies. Now we will keep a close eye on that situation -- and report accordingly.
This whole goofy exercise is just a footnote -- of some historical confirmation of a repeating pattern -- to the New Merck. Even so, my guess is that the Hassan-Saunders-Bertolini led IPO will launch with an implied value of around $7 billion -- some time in the late summer of 2013. If the deal gets done at all. But that's just my guess.
. . . .Peter N. Kellogg, executive vice president and chief financial officer, Merck, is scheduled to present at the Citi 2013 Global Healthcare Conference in New York on February 27 at 9:35 a.m. EST. Investors, analysts, members of the media and the general public are invited to listen to a live audio webcast of the presentation at [the Company's Investor page]. . . .If anything truly noteworthy occurs, we will blog on it, likely in the late afternoon. So stay tuned, tomorrow.
As I reported, back in January 2010, Merck revised the label copy for Januvia® (sitagliptin) -- with FDA concurrence -- to reflect an elevated, but unquantified, risk of pancreatitis associated with taking the drug (or with taking Bristol-Myers Squibb's Byetta®). Both affect insulin production through the patient's pancreas.
. . . .“This is the first real study to give an estimate of what the risk is, until now we just had a few case reports,” said Sonal Singh, the study’s author and an assistant professor of medicine at Johns Hopkins University in Baltimore. “These drugs are effective in lower glucose, but we should also consider the risk of pancreatitis and balance the risk versus the benefit.”
Merck, the second-largest U.S. drugmaker, reported $4 billion in sales, or about 9 percent of total revenue, from Januvia last year. The daily pill blocks an enzyme that breaks down GLP-1. Janumet, which combines Januvia with the older diabetes drug metformin, generated $1.7 billion in sales last year for Whitehouse Station, New Jersey-based Merck. . . .
right here. Now one has elapsed -- let's hope no truly injured person's rights were lost, here.
. . . .Noting that the first deadline set forth in the Court's Lone Pine order, which pertained to cases in which the surname of the first named Plaintiff begins with the letter A through I, elapsed yesterday (February 20, 2013), the Court orders Merck to supply a list of the Plaintiffs who have failed to provide the information required. This list is due to the Court no later than March 7, 2013.
(Signed by Judge John F. Keenan on 2/21/2013). . . .
It will be a few months yet, in all likelihood, before the full EMEA's governing commission votes to approve HexyonTM in the EU, but that will almost certainly lead to a multi-billion dollar product, in the year after it occurs.
. . . .Sanofi’s new vaccine will compete with Glaxo’s Infanrix Hexa, one of several Infanrix products sold by the U.K. competitor. Infanrix garnered 775 million pounds ($1.2 billion) in total worldwide sales last year. The EMA had in 2005 suspended the marketing authorization for Hexavac, a previous Sanofi version of such a shot, over doubts on the protection provided by its hepatitis B component.
“Right now, Glaxo has a monopoly in this area,” Eric Le Berrigaud, an analyst at Bryan Garnier & Co. in Paris, said in a telephone interview before the CHMP opinion was announced. . . .
The logic in favor of accepting the Medicaid expansion -- in every state -- is beyond serious debate.
. . . .“While the federal government is committed to paying 100 percent of the cost, I cannot in good conscience deny Floridians that needed access to healthcare,'’ Mr. Scott said at a news conference. “We will support a three-year expansion of the Medicaid program under the new health care law as long as the federal government meets their commitment to pay 100 percent of the cost during that time.”
He said that there were “no perfect options'’ when it came to the Medicaid expansion. “To be clear: our options are either having Floridians pay to fund this program in other states while denying health care to our citizens,” he said, “or using federal funding to help some of the poorest in our state with the Medicaid program as we explore other health care reforms. . . .”
. . . .Merck already makes a few biologic medicines, including drugs to treat hepatitis B and C, an infertility treatment and its genetically engineered Gardasil vaccine against a sexually transmitted virus, HPV, that causes several types of cancer and genital warts.
The company, based in Whitehouse Station, N.J., has said it's developing an experimental biosimilar version of rituximab, an antibody-based biologic drug sold under brand names including Rituxan.
Samsung Bioepis is a joint venture between Korea's Samsung Biologics and Biogen Idec Inc. of Weston, Mass. Biogen Idec makes biologic medicines including Rituxan. . . .
. . . .Under the agreement, Samsung Bioepis will be responsible for preclinical and clinical development, process development and manufacturing, clinical trials and registration. Merck will be responsible for commercialization. Samsung Bioepis will receive an upfront payment from Merck, product supply income and will be eligible for additional payments associated with pre-specified clinical and regulatory milestones. Further financial terms were not disclosed. . . .
We will keep an eye on the electronic PACER filing window -- in the US District courthouse, in Newark, New Jersey, as well as on the SEC's EDGAR filing window.
We will do so, because at a minimum, the mechanical details of how Manson/Genessee ENHANCE Securities class members are to receive their opt-out notices, and/or payments, will be made public, once Judge Cavanaugh approves the previously negotiated terms of settlement, here.
Okay, then -- just to keep an up to date record, though -- here is a link to the SEC-filed Form 8-K I mentioned in the headline, filed after-hours tonight. The filing includes selected restated 2012 financial results, to reflect the $498 million charge to Q4 2012 earnings.
More -- as the same becomes available.
Δ Against expansion of the Prescription Drug User Fee Act, during reauthorization discussions (no specific bill)
Δ Liberalizing favorable federal income tax treatment (tax-sheltering) repatriation of foreign net profits (no specific bill), and liberalizing deferral of taxation of foreign earned income
Δ Generally, on government budget issues, including Medicare Part D rebates. Discussions and possible legislation amending Title XVIII, Part D (Medicare Part D) of SSA, including issues of "non-interference clause" and Medicare Advantage. Legislation to address physician payments issues, including SGR and related provisions to Medicare package. Health reform implementation. Independent Payment Advisory Board. Support efforts to ensure appropriate access to vaccines and preventive care. . . .
Δ Improving treatment of transfer pricing of intangibles (no specific bill)
Δ Opposing unrestricted re-importation of pharmaceuticals (no specific bill)
Δ In favor of incentives for antibiotic research and devlopment (H.R. 2182); hepatitis C education (no specific bill)
Δ Alleviating pharmaceutical shortages (S. 296, HR. 2245)
Δ In favor of comprehensive tax reform (no specific bill); transfer pricing of intangibles (no specific bill)
Δ In favor of renewal and expansion of the R&D tax credit (H.R. 942); repatriation (no specific bill); territorial tax system (no specific bill)
Δ In favor of Patent law reform (H.R. 1249)
Δ In favor of Access to over-the-counter medications (no specific bill)
Δ In favor of Non-interference in Medicare Part D (no specific bill)
Δ Against Medicaid-style rebates in Medicare Part D (no specific bill)
Δ Against Independent Payment Advisory Board (H.R. 452, S. 668)
Δ In favor of increasing the number of people eligible for health insurance coverage
Δ In favor of U.S. fedeeral deficit reduction (no specific bill)
Δ Lobbying about the WTO Cotton agreement (H.R. 2112)
Δ In favor of FDA funding (H.R. 2112)
Δ In favor of ADAP funding (no specific bill)
Δ In favor of Korea, Colombia and Panama Free Trade Agreements (no specific bills)
Δ In favor of data exclusivity in free trade agrements (no specific bills)
Δ In plainer English then, Merck lobbied to oppose government negotiated prices -- on drugs purchased by government programs, beyond what already exists in the current scheme
Δ And -- of course -- implementation issues regarding H.R. 3590, the Patient Protection and Affordable Care Act. More plainly, Merck is seeking advantage as the ACA of 2010, and health care reform, more generally, continues to be implemented by the Obama administration. . . .
Here is a bit of last week's press release from Lycera:
The graphic pretty much sets out the trend line I see, here.
Capital World used to hold legacy Schering-Plough, as well, so it ended up with a temporary "double dip" holding -- in the year of the merger. It was obviously working that position, that year.
So, 2010 is an outlier in my opinion.
The 2011 and 1012 6.4 per cent holdings look to be the "new normal".
Again, as bad news hits New Merck, it is well to recall that these are some of the world's most sophisticated equity managers -- and they have about $8 billion invested in Merck, on any given morning. See this, filed with the SEC overnight.
Food for thought. [Of course, the SEC-filed Schedule 13G totals are reported as of year-end; and thus may have changed, subsequently. But I wouldn't bet on it, here.]
First -- Happy Valentines Day, one and all!
Next -- the good news: This resolves the single biggest litigation exposure New Merck faces, as a result of the bust-up of Schering-Plough, in late 2009. Perhaps immodestly, I must note that I predicted (repeatedly) that it would settle for over $500 million (as there was a veritable orgy of evidence of scienter -- allegedly, of course). It has.
Now, the sobering object lesson: Ex-CEO Hassan, Ex- No. 2 Carrrie S. Cox, Ex-CFO Bob Bertolini, Ex-GC Tom Sabatino and the rest of the top ten officers at legacy Schering-Plough walked off with more than the $498 million non-reserved charge taken today -- in golden parachute payments -- after they (allegedly) delayed a pivotal null-study result on the cholesterol management franchise for nearly two years. During that time, legacy Schering-Plough sold about $5 billion of that franchise's drugs to the public. As Dr. Harlan Krumholz of Yale said, when the study results were finally known in March of 2008 "this drug may just be a very expensive placebo. . ." So, during those two or so years -- patients did not get more effective drugs, due to the delay. In the end, the executive team busted-up Schering, sold it off, and pocketed their parachutes (with the help of an allegedly complicit Compensation Committee of the legacy Schering-Plough board).
The culture Mr. Hassan promoted as a supposed "turnaround artist" was largely antithetical to good science, and careful patient-focused care. It was all about slick marketing studies -- like ENHANCE (a study not completed until well after FDA approval of the drug being "studied"). No doubt, RMS Schering has some problems when Hassan, Cox, Bertolini and Sabatino and the rest joined in March of 2004 -- but the idea that they steered it directly into the iceberg, so that they could personally profit (and profit wildly) from its bust-up (all allegedly) should be compared with equal distain to the role of the banksters in the financial meltdown of 2008.
There can be no doubt that the Merck and Schering shareholders lost far more than the two-thirds of a billion -- for which New Merck is paying today. New Merck has a blotch on its once stellar reputation (most admired company for seven straight years, in the late 1980s), thanks in large part to the "buccaneer's" attitiude -- of the legacy Schering "turn-around" executive team. People aren't as likely to think that the best treatment will be promoted by Merck, post the ENHANCE debacle.
And that's very unfortunate. Thanks Fred, Carrie, Bob and Tom!
Here's a bit from Reuters:
. . . .Merck. . . said it has agreed to pay $688 million to settle two U.S. investor lawsuits over its disclosures concerning the Enhance drug study released in early 2008.
Two federal lawsuits led by several pension funds alleged that Merck and Schering-Plough Corp knew more than a year in advance that the trial known as ENHANCE was a failure, but withheld that information from investors. . . .
Merck said it has recorded a $493 million after-tax charge for the settlements. It said this reduced previously-reported fourth-quarter profit per share to 30 cents from 46 cents. . . .
I'll be back with more local color/explanations later, but Merck can't reasonably be expected to obtain hedges in hyper-inflationary markets like Venezuela -- and because it is nearly the largest pharma (by revenue) there, it suffers greatly when Mr. Chavez devalues the bolivar, as he did last week.
No one ought to fault Whitehouse Station for this, as I say, though -- because hedging this exposure would cost several times the exposure itself. The good news is that Merck sells a lot of life saving medicine there -- and it still projects that it will make the year 2013, overall -- as to its announced guidance.
The deval makes US tourists happy -- as it makes Venezuelan goods and services less expensve, in US dollars -- i.e., more purchasing power. Conversely, though, it means Merck receives less -- for each bolivar collected for its drugs, when it brings the same home to the US -- to report GAAP sales, and earnings per share.
Here is a bit of the Bloomberg item -- do go read it all:
. . . .Earnings excluding one-time items will be 76 cents to 78 cents a share, the Whitehouse Station, New Jersey-based company said today in a statement. Analysts had been expecting 86 cents, the average of 14 estimates compiled by Bloomberg.
The devaluation of the currency won’t change Merck’s full- year earnings outlook, the company said. The Venezuelan government said on Feb. 8 that it intended to devalue its currency, moving the exchange rate to 4.30 bolivars per dollar from 6.30 bolivars per dollar. . . .
. . . .Merck & Co., Inc. CFO Peter Kellogg
at Leerink Swann Global Healthcare Conference
Wednesday, February 13, 2013 11:30 a.m. ET. . . .
Certainly Mr. Herper is always a worthwhile, incisive read, on all things Merck -- and this is no exception. Do go read it all.
That said, I do think he was a little bit too enthralled by the torpid language the buy-side analysts at Morgan Stanley, among others, had been tossing about, this week. But I guess it sells magazines.
More specifically, as I said on Monday afternoon, I think a disappointing IMPROVE-IT outcome is already largely priced into the stock. So too, do most buy-side analysts, according to Mr. Herper's own article, yesterday: ". . .83% of respondents expect that the study will show no benefit in adding Zetia to Zocor to make a Vytorin pill. . . ." And that was an October 2012 poll. It is priced in.
But the concern over Merck's latest string of pipeline delays and outright failures is real. I just don't think it will cause a long spate of sub-$40 price quotes on the NYSE. In fact, Mr. Herper and I agree that much of the excitement about Merck's future was lost in the din over Peter Kim's "Cheshire Cat" routine this week. His description, then:
. . . .What really seems to be happening between Wall Street and Merck is that investors have completely lost faith in their ability to read the company’s “body language.” If Merck executives are confident about odanacatib, should investors believe them? The problem is that Merck was confident about vorapaxar, a new blood thinner, and then it ran into trouble. It was confident about Victrelis, a drug for hepatitis C. Victrelis sold, but not as well as the rival drug Incivek from Vertex Pharmaceuticals. Many observers thought that Merck’s Tredaptive cholesterol drug would succeed, but then it failed, too. . . .
. . . .Merck today announced that Duane Cramer, an acclaimed photographer and HIV advocate, is joining the national HIV education campaign I Design. Duane has partnered with Project Runway star Mondo Guerra, who served as the voice of the campaign in 2012, to help empower people living with HIV to work with their doctors and approach HIV treatment “through their own lens.” The I Design campaign traveled the United States in 2012, and is embarking on its second year on the road this National Black HIV/AIDS Awareness Day,including the launch of interactive digital tools to help with HIV management on www.ProjectIDesign.com.
“As a person who has lived with HIV for a long time, I’ve learned that self-expression is incredibly important, especially when it comes to working with my doctor on a treatment plan,” said Cramer. “I am thrilled to join Merck and Mondo on theI Design campaign and to be kicking off the second year of this successful initiative on National Black HIV/AIDS Awareness Day. I look forward to helping people living with HIV understand the importance of an open and ongoing dialogue with their healthcare provider to manage this chronic disease.”
An internationally known photographer, Duane has lived with HIV for nearly two decades. He is also a passionate activist for HIV awareness and education, particularly for the African-American community, who are disproportionately affected by the disease. . . .
. . . .MSD makes intention to sell any of the production parts in Oss, Active Pharmaceutical Ingredients (API)
February 4, 2013
MSD has announced its intention to become one of the production parts, Active Pharmaceutical Ingredients (API), in Oss sell to the South African pharmaceutical company Aspen Pharmacare. This company is a leading supplier of branded and generic medicines. The intention is that the API manufacturing facility in Oss and remains that all the MSD employees shall be transferred to the new company as an agreement is reached. The plans are currently being further discussed and coordinated with both the Employees and trade unions. It is expected that in the coming months more clarity can be given about the progress of the plans.
API is one of the production components of MSD in Oss. The other two production units, Pharmaceutical and Biotech Operations continue with the Development Center, part of MSD Oss and are not part of the discussions.
The MSD manufacturing API makes about 55 different active ingredients for medicines in the field of Women's Health (contraception and fertility), Endocrinology, Psychiatry, Anesthesia and Hematology. These raw materials except for medicines from MSD for other pharmaceutical companies produced. At present there are about 950 employees for the MSD manufacturing API.
Responding to the question in the interest patients
The proposed sale is the result of an extensive study opportunities to meet the increased demand for active ingredients (APIs) that are made in Oss. Despite the substantial efficiency improvements in recent years have made, MSD concluded that the sale to be a reliable partner in making high-quality raw materials is central, the best choice is to also in the long term supply of these important products protection. Aspen Pharmacare has extensive experience in the production of medicines and has manufacturing locations worldwide including South Africa, Australia, Latin America and Germany.
The intended sale is in line with MSD's strategy focused on the process (and therefore do not produce) of active ingredients and the trading of own drugs still under patent are. The production of APIs in the innovative pharmaceutical industry often largely outsourced. In addition, the API business in Oss mainly produces MSD medicines whose patent has ended. At Aspen Pharmacare are medicines like central and fits into their business strategy.
MSD customer will be to provide the necessary resources to take off. It is expected that some yet to be determined
MSD products also part of the agreement.
The existing supply of raw materials to third parties will not be affected by this proposal and both MSD and Aspen Pharmacare guarantee supply to these customers.
Maintaining employment prerequisite for the future
Securing employment for workers in the API Oss is a very important principle in achieving these plans and acquisition is an important condition in the now ongoing discussions with Aspen Pharmacare. It is also important that the API raw material production in Oss is guaranteed, making it important for patients who are dependent on drugs with these materials are made, not undermined.
Consultation with Employees and unions
The plans will be further developed in close consultation and coordination with both the Works Council (OR) and the unions. The Supervisory Board of Merck Netherlands is involved in the process.
The details of the acquisition plans are currently MSD and Aspen Pharmacare further. It is expected that in the coming months more clarity can be given about the progress of the plans.
MSD in Oss
If the proposed sale continues, reserves MSD in Oss two production departments (production pharmaceutical and biotech production) and the MSD Development Center (Development Center Oss) and support functions with a total of over 2,000 employees. This MSD reserves even after passage of the proposed sale a large office in Oss.
~~~~~~~~~~~~ [ORIGINAL] ~~~~~~~~~~~~
MSD maakt voornemen bekend tot verkoop van één van de productieonderdelen in Oss, Active Pharmaceutical Ingredients (API)
4 februari 2013
API is één van de productieonderdelen van MSD in Oss. De andere twee productieonderdelen, Pharmaceutical Operations en Biotech blijven samen met het Development Center onderdeel van MSD Oss en maken geen deel uit van de besprekingen.
De MSD productiefaciliteit API maakt ongeveer 55 verschillende actieve grondstoffen voor geneesmiddelen op het gebied van Women’s Health (anticonceptie en fertiliteit) , Endocrinologie, Psychiatrie, Anesthesie en Hematologie. Deze grondstoffen worden behalve voor medicijnen van MSD ook voor andere farmaceutische bedrijven geproduceerd. Op dit moment werken er ongeveer 950 werknemers voor de MSD productiefaciliteit API.
Tegemoetkomen aan de vraag in het belang patiënten
De voorgenomen verkoop is het gevolg van een uitgebreide studie naar mogelijkheden om tegemoet te komen aan de toegenomen vraag naar actieve grondstoffen (API’s) die in Oss worden gemaakt. Ondanks de flinke efficiencyslagen die in de afgelopen jaren zijn gemaakt, is MSD tot de conclusie gekomen dat de verkoop aan een betrouwbare partner waar het maken van hoogwaardige grondstoffen centraal staat, de beste keuze is om ook op de langere termijn de levering van deze belangrijke producten te waarborgen. Aspen Pharmacare heeft uitgebreide ervaring met de productie van geneesmiddelen en heeft wereldwijd productielocaties in onder andere Zuid-Afrika, Australië, Latijns-Amerika en Duitsland.
Het voornemen tot verkoop is in lijn met MSD’s strategie die gericht is op het verwerken (en dus niet zelf produceren) van actieve grondstoffen en het verhandelen van eigen geneesmiddelen die nog onder octrooi staan. De productie van API’s wordt in de innovatieve farmaceutische industrie vaak grotendeels uitbesteed. Daarbij komt dat de API business in Oss hoofdzakelijk voor MSD geneesmiddelen produceert waarvan het octrooi is beëindigd. Bij Aspen Pharmacare staan dit soort geneesmiddelen centraal en past het in hun bedrijfsstrategie.
MSD zal klant worden om de benodigde grondstoffen af te nemen. Naar verwachting zullen enkele nog nader te bepalen MSD producten ook onderdeel van de overeenkomst zijn.
De bestaande levering van grondstoffen aan derde partijen zal niet worden beïnvloed door dit voornemen en zowel MSD als Aspen Pharmacare garanderen de levering aan deze klanten.
Behoud van werkgelegenheid belangrijke voorwaarde voor de toekomst
Het behoud van werkgelegenheid voor de API-werknemers in Oss is een zeer belangrijk uitgangspunt bij het realiseren van deze overnameplannen en is een belangrijke voorwaarde in de nu lopende besprekingen met Aspen Pharmacare. Daarnaast is het belangrijk dat de API grondstofproductie in Oss wordt gewaarborgd, waardoor het belang voor patiënten die afhankelijk zijn van de medicijnen die met deze grondstoffen worden gemaakt, niet in gedrang komt.
Overleg met Ondernemingsraad en vakbonden
De plannen worden verder uitgewerkt in goed overleg en afstemming met zowel de Ondernemingsraad (OR) als de vakbonden. Ook de Raad van Commissarissen van MSD Nederland is bij het proces betrokken.
De details van de overnameplannen worden momenteel door MSD en Aspen Pharmacare verder uitgewerkt. De verwachting is dat de komende maanden meer duidelijkheid gegeven kan worden over het verdere verloop van de plannen.
MSD in Oss
Als de voorgenomen verkoop doorgaat, behoudt MSD in Oss twee productieafdelingen (farmaceutische productie en Biotech-productie) evenals het MSD ontwikkelingscentrum (Development Center Oss) en ondersteunende functies met in totaal ruim 2.000 medewerkers. Daarmee behoudt MSD ook na doorgang van de voorgenomen verkoop een grote vestiging in Oss. . . .
tonight's SEC-filing) is a decidedly significant counter-point to the Morgan Stanley and Leerink Swann opinions offered earlier this week.
. . . .BlackRock, Inc. | Aggregate amount beneficially owned by each reporting person: 191,262,292 shares. . . Percent of class represented by amount. . . 6.29%. . . .