Monday, January 6, 2014

Merck's Year End Earnings Call Is Just A Little Later, This Year: 02.05.2014 [With An A-Z/Nexium® Venture Update?]

I don't expect anything other than a largely in-line Q4 -- and year, come then. However, we all may get a newly refined glimpse into what AstraZeneca might do -- about the Nexium®/Prilosec® jointly shared income streams -- the "limited venture partnership" that has been around since 1998, in one form or another.

I think A-Z is still due to give Merck a notice near that date, about exercising an option to acquire the rights, for a cash payment (see page 103, of the last SEC Form 10-K). And, I think AstraZeneca has the option to purchase Merck’s interest in the entity holding the venture, based in part on the value of Merck’s interest in Nexium and Prilosec.

If memory serves, AstraZeneca’s option is exercisable between March 1, 2014 and April 30, 2014. AstraZeneca makes a payment to Merck of $327 million, if it exercises the option -- an reflecting estimated value of Merck’s interest in Nexium and Prilosec. This portion of the exercise price is then subject to a true-up in 2018 -- based on actual sales from July 2014 to June 2018. The payments to Merck also include a cash bonus, equal to a multiple of ten times Merck’s average 1% annual profit allocation in the venture -- for the last three years. Merck has said that it is likely that AstraZeneca will exercise this option in 2014. So, we might get some more precise Kentucky Windage" -- on how much that all might add up to -- come February 5.

Look for the earnings webcast in the link, here -- that's from Merck's presser:

. . . .[Merck] will hold its fourth-quarter 2013 sales and earnings conference call with institutional investors and analysts at 8:00 a.m. EST on Wednesday, Feb. 5. During the call, company executives will provide an overview of Merck’s performance for the quarter.

Investors, journalists and the general public may access a live audio webcast of the call on Merck’s website at Software needed to listen to the webcast is available on Merck’s website and should be downloaded prior to the beginning of the webcast. A replay of the webcast will be available at approximately 11:00 a.m. EST on Feb. 5 and will remain on the website for 12 months. The quarter's sales and earnings news release and supplemental financial disclosures also will be available in the Newsroom and Investor sections of the company's website at . . .

We will timely alert you to any material developments, including the above mentioned possibilities, come the morning of February 5, 2014. Stay indoors, out east, overnight, and throw some more logs on your fire. . . keep it burning through -- to tomorrow!

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