Saturday, May 31, 2014

At ASCO 2014: Quite A Bit Hangs In The Balance For AZ, As Well, On Monday. . .


This is a moment when science advances -- or it does not.

This is also a moment when poker-draws -- into the hundreds of billions of dollars. . . are revealed.

And, if AstraZeneca shows really robust immuno-oncology data on Monday, it likely can permanently put Ian C. Read in its rear-view mirror. That is the size of this burgeoning market opportunity -- and is the central "organic operational" reason Pfizer wanted AZ: for its cancer "breakthrough" candidates' potential. High drama -- indeed, all dressed in the lingua franca of. . . science. Here's a bit from Yahoo! News -- do go read it all:

. . . .After thwarting a $118 billion takeover approach from Pfizer Inc, Britain's AstraZeneca Plc will again take the spotlight this weekend when the biggest annual medical meeting for cancer doctors convenes in Chicago. . . .

Industry watchers see the new data due at the American Society of Clinical Oncology meeting as the next test of AstraZeneca's ability to remain independent. . . .

At an analyst meeting on Monday, AstraZeneca is expected to discuss results for a small number of patients enrolled in a trial of MEDI4736 in combination with tremelimumab, another experimental immune system-booster designed to work by blocking a different protein called CTLA-4. AstraZeneca spokeswoman Ayesha Bharmal referred to the meeting as a "status update," with fuller data only expected in September during the European Society for Medical Oncology meeting in Madrid. . . .


Do stay tuned. Beautiful here in the City of Big Shoulders today!

Friday, May 30, 2014

BMS's Nivolumab Kidney Cancer Data Available At ASCO At 3 PM CST Tomorrow


This will be one of the very first early signs of how far ahead (and a harbinger of how efficacious, actually) nivolumab is going to turn out to be. Overall, by Monday night, we will know much much more.

And so, per Adam Feuerstein:

. . . .The other significant Saturday oral presentations features PD-1 immunotherapy data in kidney cancer from Bristol-Myers Squibb (BMY). Those start at 4 pm ET. . . .


Do stay tuned on this high school graduations weekend for many around the nation. Way to go, all you young science grads!

More Early Word, Out Of ASCO -- Anti-PD-1 Immunotherapy Candidates


The news is now pouring (gushing, actually!) out of ASCO in Chicago -- and both Merck and BMS are grabbing the spotlight.

From The Life Sciences Report then -- an interview transcript bit -- do go read it all:

. . . .TLSR: What is going on with Bristol-Myers Squibb? Wall Street thought this company would be first to market in the PD-1 space.

SD: Bristol-Myers Squibb's nivolumab (BMS-936558) is a humanized monoclonal IgG4 antibody directed against PD-1, and was seen as the frontrunner before Merck leapfrogged Bristol to be first in line for approval at the FDA in Yervoy-failure melanoma patients.

Bristol-Myers is going after third-line squamous cell non-small cell lung cancer using nivolumab monotherapy. The company intends to file its BLA with the FDA by year-end. Bristol's abstract #8112 shows data that will be part of the FDA filing, in which 129 patients treated with nivolumab alone had overall survival of 9.9 months across three different dosing regimens. The best results were in the 37 patients receiving the 3mg/kg, mid-range dose, with an overall survival of 14.9 months.

Also of interest is abstract #8023, which shows Phase 1 interim results using nivolumab and Yervoy, the approved melanoma drug, as first-line treatment in squamous and non-squamous cell non-small cell lung cancer patients (using four dosing regimens). The combination showed an objective response rate of 22% (pooled confirmed and unconfirmed), with the best results using N3+I1 milligrams per kilogram (mg/kg) dosing (3mg/kg of nivolumab + 1mg/kg of ipilimumab) in squamous cell, with a pooled objective response rate of 63%. An odd result is that in 29 evaluable tumor samples, the objective response rate did not correlate with the PD-L1 biomarker.

A trial of 44 metastatic renal cell carcinoma patients, 77% previously treated, was described in abstract #4504. The nivolumab + Yervoy combination yielded objective response rates of 29% at N3+I1mg/kg dosing, and 39% in N1+I3mg/kg dosing. In these patients, it appears that the less nivolumab administered, the better the results.

Long-term follow-up data for 107 treatment-failure metastatic melanoma patients that were never treated with Yervoy showed three-year overall survival at 41% in abstract #9002. The one-year and two-year survival rates were 63% and 48%, so the results appear fairly durable.

In total, Bristol-Myers will have six oral presentations on nivolumab data at ASCO, including presentations on melanoma, non-small cell lung cancer and renal cell carcinoma in combination with Yervoy. The company is hedging its bets in a collaboration with Celldex Therapeutics (CLDX:NASDAQ), using nivolumab + varlilumab, an anti-CD27 monoclonal antibody, in a Phase 1/2 trial in multiple tumor types, including non-small cell lung cancer, metastatic melanoma, ovarian, colorectal and squamous cell head-and-neck cancers. The trials are to be conducted by Celldex. . . .

[What about Merck's pembrolizumab?]

Merck's MK-3475 has 15 abstracts and six oral presentations at ASCO, with data for multiple indications. The most significant ASCO data for Merck was not released with the rest of the abstracts, but will be presented on June 2 as part of a late-breaking abstract session (abstract #LBA9000). The company will reveal the data on 411 advanced melanoma patients across the entire therapy spectrum, including Yervoy-failure patients, which is part of Merck's current FDA biologics license application (BLA).

Additional evidence that MK-3475 is effective in melanoma, and that PD-1/PD-L1 receptors may be used as biomarkers, is in abstract #3005. In 135 melanoma patients treated with MK-3475, objective responses were seen as late as 64 weeks, with some conversions to complete response as late as 72 weeks. The overall response rate was 41%. The median overall survival had not yet been reached, but the one-year survival rate for PD-L1-positive patients was 84%, and 69% in PD-L1-negative patients. However, abstract #3015 showed that baseline tumor size was the strongest independent prognostic factor in patients with metastatic melanoma treated with MK-3475.

The early non-small cell lung cancer data, contained in abstract #8007, showed that in a Phase 1 trial using MK-3475 monotherapy as first-line therapy in locally advanced or metastatic non-small cell lung cancer, the 45 patients treated had an objective response rate of 36% (pooled confirmed and unconfirmed). While the compound appears effective, it may best be used in a combination therapy in this setting.

. . .Merck strongly believes MK-3475 is an entirely new oncology platform. The company is proceeding at full speed, with two dozen clinical trials in 30 different tumor types ongoing during 2014. Seven of these are late-stage Phase 3 clinical trials, including trials in advanced melanoma, advanced non-small cell lung cancer, advanced head-and-neck cancer and advanced bladder cancer.

Merck is also doing multiple combination therapy collaborations with MK-3475, including with Pfizer Inc.'s (PFE:NYSE) axitinib and PF-2566, Incyte Corp.'s (INCY:NASDAQ) INCB24360, and Amgen Inc.'s (AMGN:NASDAQ) T-Vec (talimogene laherparepvec). . . .


Do stay tuned today and tonight -- through to Monday night. Much more to come.

Merck's Union NJ Facility (Legacy Schering-Plough) Subject Of Kean Family Trust Dispute -- Under 80 Year Old Documents


Well, finally! There's finally some colorful legacy Schering-Plough crunchie-newsie goodness. It turns out that the legacy Union facility on Morris Avenue has been leased for over 80 years from various scions of the Kean family of New Jersey. [Apparently as recently as 1986, however, Schering-Plough purchased the land from the Keans but in the process had to give a right of first refusal to a Kean trust to buy it all back.] Now Kean University is seeking to re-purchase 44 acres of the facility, under this right of first refusal -- one that arose from a lease dating from prior to the nation's entry into World War II.

The goofy wrinkle here is that something called Russo Investments claims that right died when the Kean family trust holding it lapsed in 1997. Is Russo Investments in any way affiliated with Schering-Plough director Patricia Russo (now a Merck board member)? I'd doubt it -- but we will look into that some other day. Naturally, the Russo-affiliates want to slip into the Kean shoes, and acquire the Morris Avenue Merck facility for a mixed use retail and residential complex. Kean would love it, because it is literally across the street from the University's main campus (pictured at right). Should be a good tug of war, here.

Here's a bit from NJ.com, do go read it all -- fun family first refusal feuding -- in NJ:

. . . .At issue is whether John Kean, a descendant of the family that has helped shape New Jersey’s political landscape, held the right of first refusal – which he transferred to Kean University – to buy the parcel. Russo, which was set to purchase the property for retail and residential development, is suing, saying it should be the rightful buyer.

The right-of-first-refusal provision was included in a deed when the Kean family sold a portion of its vast estate to Schering-Plough in 1986. Schering, which merged with Merck in 2009, had leased the property from the family since the 1930s. Kean University’s main campus, across the street from Merck, was also once part of the Kean estate.

While Merck was working out a deal to sell the property to Russo for more than $6 million, John Kean transferred the right of first refusal to Kean University, edging out Russo. The school decided to try to buy the parcel, which is across the street from its main campus, and has been in talks with Merck about the terms of a sale. . . .

Union Township is also a party in the suit because it doesn’t want to see the property go to Kean University. The township stands to lose nearly $1 million in revenue if the school – which is exempt from paying property taxes – takes ownership. . . .


This might be a fun bit of street theater. We will keep an eye on it. Happy Friday, one and all. Off to ASCO!

Thursday, May 29, 2014

Merck Holds Annual Meeting; Declares $0.44 Dividend On Common


Nothing of any real note occurred at the Annual Meeting.

Next up? After NYSE close on Monday, June 2, 2014, Merck will present live to investors at ASCO at McCormick Place.

I'll make a special effort toward being in the audience, and awake(!), at that moment -- about 6 :15 PM Chicago time.

Wednesday, May 28, 2014

O/T: Remembering A "Lyrical Witness To A Nation Riven By Race"


She has passed. The New York Times said it well.



. . . .In a statement, President Obama said, “Today, Michelle and I join millions around the world in remembering one of the brightest lights of our time — a brilliant writer, a fierce friend and a truly phenomenal woman,” adding, “She inspired my own mother to name my sister Maya.”

As well known as she was for her memoirs, which eventually filled six volumes, Ms. Angelou (pronounced AHN-zhe-lo) very likely received her widest exposure on a chilly January day in 1993, when she delivered the inaugural poem, “On the Pulse of Morning,” at the swearing-in of Bill Clinton, the nation’s 42nd president. He, like Ms. Angelou, had grown up poor in rural Arkansas. . . .


Still. . . like air -- she now will truly. . . rise. Go be excellent to one another tonight.

The Anti-PD-1 Race Quickens. . . At ASCO Now


Just as we have consistently said since last Fall, the data is starting to flow out of ASCO.

But the really meaningful news will be delivered starting this Friday -- in late breaking posters. I'll have a summary here, then. But, it is still BMS's lead to lose, in my estimation. From Investors' Business Daily, then -- a bit:

. . . .T.J. Qatato, co-manager of the Frost Growth Equity Fund, told IBD that he was disappointed for the same reasons. But he advocates patience, pointing to the learning curve of clinical trials.

"You still have Bristol-Myers experimenting with what the right dosage is with Yervoy, given it is their first I-O drug," he said. "We've also known that it does have higher adverse events than some of the other I-O drugs. You're dealing with some small sample sizes as well — try not to draw too many conclusions."

Qatato, who owns Bristol-Myers shares, says that he'll be looking for the late-breaking abstracts, which will be made public on Friday. Morgan Stanley analyst David Risinger echoed that sentiment when he reiterated his overweight rating on May 15, writing in a note that Bristol should unveil more mature data based on longer-term treatment. Risinger added that "management continues to feel confident about moving nivo + Yervoy combo into Phase 3 for lung cancer later this year."

Merck's abstracts, by contrast, were in line with expectations, though Qatato says he's disappointed that the company isn't speeding up its lung-cancer timeline to compete with Bristol's. . . .


Stay tuned -- I'll pop over to the exhibit space on Friday (or Monday, if my other duties interfere) to look at the boards. Will report my observations on the late breakers, right here.

Follow-Up: Of Course, Helping CEOs Understand "What's Considered SEC Material" Is All The Trick


It should be clear that -- for just over 80 years now -- perhaps the single biggest task an experienced SEC lawyer faces with a newly-public CEO (and truth told -- many veteran ones, too!) is instilling the sense that what's in their own head no longer belongs. . . solely to them, as to their impressions of, and insights into, the businesses they run.

The public shareholders "own" those thoughts and perspectives too -- at least the material ones. So no "App" is going to tell the CEO which tweets to "star". S/he must do that on his/her own. And that will be quite a feat of client management (and education), in many cases.

This is why simultaneous dissemination (via formal SEC filings) is the rule of law here in the US. The public trading markets rely on it. And if the CEO is not also an SEC lawyer. . . well, having a law department help make these calls is probably a very wise course. I'm all for free-wheeling discussion of emerging material business trends -- by the CEO -- at all public companies. I just should not have to subscribe to a social media outlet to get the feed. I already own it, as a public shareholder, ab initio. And still, "letting" CEOs tweet wantonly opens the board and company to liability for the CEO's wrong guesses about whether saying "next quarter's backlog is HUGE!" is material inside information (if no company official has as yet press released that information/gloss, for example).

So, as it was in 1934 -- so it is. . . today: helping CEOs know when to "clam up" is an art -- more than a science -- and it matters only scantly that the problem is between the thumbs of the CEO's texting hands -- and no longer so much over wine, in a five star restaurant. The problem is the same. Only the medium of transmission differs. And in some ways -- it is more shapeable. Because it will be. . . in writing. And thus it may be quickly flipped into an SEC Reg FD disclosure filing. [Clearly all SEC counsel ought to follow their client CEO/CFO and CIO Twitter feeds.] Heh.

SEC Law Backgrounder: Nothing In Reg FD Prohibits Continuous Disclosures By '34 Act Registered Company CEOs -- NOTHING.


Since it remains a sluggish post-holiday news week for Whitehouse Station, I thought I'd spend a bit or two here -- on something I've been following in the background for a minute. The theme most recently re-surfaced in the NYT's "Dealbook -- DealProfessor" blog, this morning -- but originally caught my eye some two and a half years ago, at IR Web Report.

It seems that tweeting public company CEOs find it. . . inconvenient to file SEC Forms FD when they leak material information via social media. Yawn. Please cue some tiny violins.

It would be trivial to write an app for the CEOs' phones -- one which takes any tweet s/he marks with a star, for example, and immediately prior to transmission -- slaps the same tweet into a standing electronic SEC Form FD (256 bit public/private key pair encrypted); signs it, and files it at the SEC EDGAR desk -- then tweets it out. In fact -- (Hold the Phone!) there is a DotCom 2.0 billion dollar idea. "You are welcome, Gen Y slackers. . . ."

More seriously, the SEC could make an easy interface to do much the same -- but why? A private sector solution will likely always be more elegant -- and user friendly. What is silly though, is the notion that Reg FD is not needed. It is needed more than ever -- the case of Reed Hastings, and the graphic at right, attest to this. I should be able to rely on a company's PUBLIC filings to glean all material public information -- not have to subscribe to each CEOs' social media accounts. That seems simple enough. But all these writers get it backward -- as though there is some "right" of high insider executives -- to share material company information with a select audience (and then see the select audience trade on it). That is called insider trading, folks. Plain and simple.

No, by far the better solution is to auto-post via Form FD -- the starred tweets of certain especially chatty CEOs -- via a Twitter ad on. Word. Here are two bits, from the opinion pieces that led to this little rant:

. . . .[Deal Professor:] The regulation [Reg FD] was pushed by two S.E.C. chairmen, Harvey Pitt, and his predecessor, Arthur Levitt. The proposed rule generated 6,000 comment letters. To some, the idea that all shareholders should have equal access to information was as natural as that Whitney Houston lyric that “children are our future.” These advocates argued that everyone should have all information released by the company, leading to better investing outcomes for all. It would also end the sense of unfairness that Mr. Levitt described in 1998 when he stated that “auditors and analysts are participants in a game of nods and winks.” Mr. Levitt argued that material information was being disclosed to these Wall Street analysts to guide stocks and manage earnings predictions. . . . [Editor's Note: This was certainly the case -- experience talking here.]

[IR Web Report:] Rather than discouraging executives from using new media, regulators should be encouraging them to make a more concerted effort to use these new channels. Social media are both technologically superior to current disclosure systems and provide greater transparency into the personalities and perspectives of executives. . . .

Meckler’s tweets [Ed.: at right] may seem highly unconventional [read: unlawful] and certainly challenge prevailing approaches to disclosure laws, but since when was it a bad thing for all investors to have real-time, public access to information from the most-informed sources of information about public companies — their CEOs?


Ahem. IR Web Report's Dominic Jones asks (in my experienced view) exactly the wrong question, there, at the end. [To be fair, his views may have evolved over the last two and a half years. I dunno.] Access is great -- but I should NOT have to subscribe to each CEO's Twitter feed. Full stop. He/she should be REQUIRED (if it is material) to ALSO file it as an SEC Form FD or 8-K disclosure, as he tweets it -- so I get it automatically. In fact, that is the present state of the law. And it is the way Chairmen Levitt and Pitt thought it out.

Said slightly more tartly: some times it may seem a tad inconvenient to public company CEOs -- to have the world's best, deepest and most liquid capital markets, right here -- on tap -- 24 X 7 X 365. But that is a privilege -- not a right. One they may just as easily forego, and run their companies with. . . access to only meager private capital. Sheesh. [I'll likely have followups here, in the coming days. Much more nuance here -- soon.]

Tuesday, May 27, 2014

A Little Birdy Cheep-Cheeps. . . While I'm On Hiatus. . .


Okay -- all riddled with "maybe's. . ."

But it could be. . . it might be. . . under the flagship of a major label. . . Alive for a third time!

. . . .more news soon. . . .


If so, I told ya' -- no one can keep him down (for very long)!

Monday, May 26, 2014

Ian C. Read Puzzler: How Is This Man Qualified To Be The Chairman Of The U.S.'s No. 1 Public Drug Company?


Okay -- from the go -- and for about two and a half months -- I've repeatedly noted that Mr. Read's executive style has changed little over the decades -- and that he wouldn't play well on the world stage. The man, in short, is the opposite of elegant.

Today is the proof. His approach was Atilla the Hun-like, ham-handed, and needlessly combative. His continuation looked financially-engineered, or tax-driven, at best -- and his closing (and course-reversing last second) bid(s) looked to be within an eyelash-width of wholly disingenuous. One would be forgiven for guessing (at first) that he didn't get very good advice. But no -- he had among the best M&A lawyers, and among the best houses of investment bankers advising him, throughout. My very strong, and experienced suspicion is that in the end, he simply ignored the advice, and chugged ahead -- like a mini-Lionel-locomotive. This afternoon, he hit the brick wall. The real brick wall.

Just because you are big in the US, Ian -- it doesn't mean the world has to bend to your whims. Word. From Bloomberg then:

. . . .Under U.K. takeover rules, Pfizer had until 5 p.m. London time today to make a firm offer. [Editor's Note: That time just passed.] The regulations require a cooling-off period of at least three months before talks can restart, giving both drugmakers time to figure out their next move. Pfizer is hoping AstraZeneca investors will pressure the company’s board to come back to the table, while AstraZeneca may seek a revenue-generating acquisition of its own to help it fend off the larger company. . . .

Pfizer, the biggest U.S. drugmaker, has declined to say if it will try again to buy London-based AstraZeneca after the U.K. company’s board rejected its last offer of 55 pounds a share. For talks to begin anew after three months, AstraZeneca must invite the discussion. Otherwise, Pfizer needs to wait six months to make a new bid. . . .


The now patently-obvious object lesson (though polite society people are too. . . polite to say so, aloud!) -- and (not entirely coincidentally), as Jeff Kindler well knows -- is that, in the end, Ian Read is a one-trick pony. Too bad for the Pfizer board -- and ultimately, the Pfizer shareholders. Time for Ian to pack up, and catch the next thing smokin' -- out of Pfizer. That's my opinion. And well-played, AZ! Very stiff upper lip, and all. Extra points to the House of AZ, this round! [Uttered in my best Howarts Headmaster Dumbledore's voice.] And I am returning to my Memorial Day of rest, now.

Tuesday, May 20, 2014

TV Test Pattern -- Service Interruption -- For At Least A Week


Off on a bit of a West Coast vacation -- not likely to post or follow up on any but the absolutely biggest Merck/Pharma related stories here.

Feel free to drop comments -- with tidbits -- in the box on this one, in the mean time.



Be excellent to one another. And go see "Divergent". Don't really know why -- just. . . do.

Missed most of it, first time around.

Namaste, homes.

"From The Sublime, To The Ridiculous" Dept.: Mer-fizer, Mizer Or Pferk? Not Even Worth Discussing!


With the "news vacuum" created by the sudden (but patently obvious -- for weeks now) failure of Ian C. Read's bid for AstraZeneca, I suppose it was inevitable that some journalist would try to fill the void.

BusinessWeek/Bloomberg is running a piece this morning purportedly recounting Pfizer acquires Merck rumors (in part). Sooner pigs should fly. It isn't worth even a moment's serious consideration for millions of reasons, but here are two world-beaters: (i) Mr. Read was after the financial engineering of tax inversion -- a Merck deal wouldn't EVER offer that, and (ii) the antitrust issues of No. 2 buying No. 5 are overwhelming. But it allows me to display some graphical proclivities -- so see the parody at right. That's all this story is about, this morning -- a bit of frolic in Photoshop. Fun parody graphics. More (hopefully clever graphics) later, time permitting. Here's the bit -- great for grins:

. . . .It’s unclear how far the examinations of Merck and Bristol-Myers went, or if they were just war-gaming by the company’s deals team, the two former Pfizer executives said. Steve Cragle, a spokesman for Whitehouse Station, New Jersey-based Merck and Laura Hortas, a spokeswoman for New York-based Bristol-Myers, declined to comment.

Neither company, though, offers what AstraZeneca did -- a chance to legally relocate to the U.K. to take advantage of that country’s lower tax rate, or to deploy a huge chest of cash stuck overseas and out of the reach of U.S. tax law. . . .


Seriously? Get a grip. Go out and have an adventure today -- and be excellent to one another!







UPDATED: One more -- for grins:

"Well Played, AstraZeneca Directors And Officers!" Quite So. Likely My Last Words, On The Topic.


As ever, first the sober caveats: it is true that under certain rather extraordinary conditions (set out in the applicable takeover rules as they now stand in the UK), Pfizer's bid could be reignited (with a strong, steady and insistent push by the shareholders of AZ). But equally soberly, I don't think that is a remotely likely occurence, any longer. Only a sullen few AZ institutional holders have voiced disappointment over the scuppering of this would-be takeover.

It is true that as of late April, 2014, some 27 per cent of Pfizer's shareholders were also holders of AstraZeneca (but did not represent 27 per cent of AZ's outstanding shares, just holders -- of varying sizes) -- but that is a far cry from an impending full on shareholder revolt of the sort Mr. Read must have hoped he'd engender, here. It was clearly a gambit to ignite an AZ institutional shareholder revolt, with his goofy last minute £55 "take it or leave it" offer, of Sunday night. In short, and there is no other reasonable interpretation -- Mr. Read was outclassed here. Well done AstraZeneca. A bit from a great UK perspective on it all, printed in The Guardian -- do go read it all, then:

. . . .Read's naked aggression was counter-productive. "Pfizer's approach throughout its pursuit of AstraZeneca appears to have been fundamentally driven by the corporate financial benefits to its shareholders of cost savings and tax minimisation," said Johansson. Fair comment. . . .

A lot can happen in half a year. The US might ban tax inversions, or make them harder to implement. Pfizer's share price might fall, or AstraZeneca's might rise on the back of good results for drugs in late-stage clinical trials.

Read's position might also come under pressure. He raised a small army of investment bankers and created a political storm on both sides of the Atlantic, but has nothing to show for his efforts despite starting as a heavy favourite. That can be career-threatening. . . .


Yes -- "pride goeth before the fall," Ian. Some six months from now, under the applicable UK rules, Mr. Read may make a new offer -- but that might well need to be around $139 billion to gain traction, at that juncture. You read it here first: if Mr. Read offers $139 billion for this same company, some seven months from today -- his board will oust him. I'd take that to the bank. Sleep well, now all you Londoners. AZ stays independent for the foreseeable future -- or at least outside Mr. Read's grasps. Word.

Monday, May 19, 2014

Pfizer Close Out: "So it ends -- with a whimper, not a bang. . ." Apologies To T.S. Eliot


I'll repeat my overnight comments here -- now.

In its formal rejection, AZ has indicated that a minimum fair bid (if mostly Pfizer stock) would be 58.85 Pounds Sterling, or about $126.8 billion USD.

I guessed $128 billion, because if accepted, the Pfizer stock portion would almost certainly decline in value on the NYSE, due to dilution, and deal uncertainty.

As it is, both firms' shares will very likely now decline at NYSE open, in my estimation.

Namaste

PS: I suppose if the market believes Mr. Read really is walking away, Pfizer might recover -- over the next few sessions -- at least a part of the 14 per cent decline in its stock -- since deal announcement.

What a mess Mr. Read has made of all of this. Gracious!

May 19, 2014 at 3:12 AM. . . .


Here's the relevant SEC filing from Pfizer -- and from the AstraZeneca reply:

. . . .Leif Johansson, Chairman of AstraZeneca said:

"Pascal Soriot, Marc Dunoyer and I had a lengthy discussion with Pfizer over the weekend about the proposal Pfizer made on Friday evening at a value of £53.50 per share. During this discussion, Pfizer said that it could consider only minor improvements in the financial terms of the Friday Proposal. In response, we indicated, even assuming that other key aspects of any proposal had been satisfactory, that the price at which the Board of AstraZeneca would be prepared to provide a recommendation would have to be more than 10% above the level contained in Pfizer's Friday Proposal. The Final Proposal is a minor improvement which continues to fall short of the Board's view of value and has been rejected."

"Pfizer's approach throughout its pursuit of AstraZeneca appears to have been fundamentally driven by the corporate financial benefits to its shareholders of cost savings and tax minimisation. From our first meeting in January to our latest discussion yesterday, and in the numerous phone calls in between, Pfizer has failed to make a compelling strategic, business or value case. The Board is firm in its conviction as to the appropriate terms to recommend to shareholders. . . ."


Well -- as I said on Sunday afternoon, if denominated primarily in Pfizer stock, it would take about $128 billion to get on friendly terms. . . and Mr. Read never crossed the $120 billion threshhold. Makes it all look like Kabuki theater on US corporate tax rates. Sad that Mr. Read drained 14 per cent from Pfizer's market cap -- in staging this little play. Sad, indeed. Close out any short you have on PFE.

Even proposing, let alone doing a tax-driven deal (primarily) makes no sense, at north of $100 billion. It just doesn't. Not in real M&A -- maybe in some academic accounting seminar, someone might suggest it -- but not in the real world, where real antitrust and other obstacles loom -- to any transaction on this scale.

Pfizer needed AZ to be friendly, but Read wouldn't pay up, for a friendly deal. And his inversion math wouldn't work at $128 billion (as he needed AZ holders to have more than 20 percent of the combined company equity, to qualify for US tax inveersion -- wasn't possible, if AZ needed mostly cash -- and AZ said it did). As I said, repeatedly -- all of this was obvious on Day One -- to an experienced eye. So my guess is that this is dead. There is almost no pre-market volume, in Pfizer, so we wait for the NYSE open -- there will be huge trades today, no doubt. I guess Pfizer ends off modestly today, even though market is set to rise a bit. We shall see.

Sunday, May 18, 2014

Told Ya' So! -- Close -- But Not QUITE Enough. . . Re Pfizer's "US Tax Protest". . .


At 55 Pounds Sterling, the offer equates to about $118.7 billion USD.

HOWEVER, it now all turns on how big a bite this takes from Pfizer stock tomorrow on the NYSE, at open. It is my experience that this sort of a "paying up" move, will drop the per share NYSE quoted price of Pfizer, tomorrow. How much is the key question. I was suggesting above $120 billion, to account for that drop, on the NYSE. I could get surprised, and Pfizer could rise in the morning, to make the offer around $120 billion -- but I'd not bet on it. Note that each dollar of decrease in Pfizer's NYSE quoted price will drop the final offer price by 55 cents. It is just simple math now. Should be a crazy open, in Pfizer stock tomorrow. [Was this all an Ian C. Read ruse -- to force a public debate on corporate tax rates in the US? Perhaps, just as I have repeatedly guessed.]

From Reuters just now, then:

. . . .55 Pounds; 45 per cent in cash, 55 per cent in Pfizer stock. . . The U.S. group said its new offer was final and could not be increased. It said it would not make a hostile offer directly to AstraZeneca shareholders and would only proceed with an offer with the recommendation of the AstraZeneca board.

Pfizer also increased the cash element in its offer to 45 percent, with AstraZeneca shareholders set to receive 1.747 shares in the enlarged company for each of their AstraZeneca shares and 2,476 pence in cash. . . .


For its part -- just as I said -- Pfizer now admits it cannot go hostile. The deal cannot be done as a hostile. Q.E.D.

So this is Ian C. Read's "final" offer. It is my guess that the AZ board will consider it -- but without a majority of the consideration being flipped to cash, and/or without the price of Pfizer's stock rising say 5 to 10 per cent on the NYSE tomorrow (i.e., ain't gonna happen!). . . I'd bet the deal doesn't get done in 2014. Or at all. Bold guess -- but the AZ team will negotiate in good faith for a bit, seeking a fairer share in cash rather than stock, for the AZ shareholders -- then, when Ian C. Read won't oblige -- AZ will politely push away. As they ought to, as fiduciaries.

That's my gut. [And, oddly enough, this is my 3,000th post. Hmmm. Hawks won Game One against the Kings, as well. Nice!]

WSJ Rumor: Sweetened AZ Offer From Pfizer, Tonight. I say: Gotta Be $120 Billion Or Better To Get It Done


I'll say it again -- this will not be a hostile deal -- as Mr. Read just can't get it done, in a fight. And to get a friendly deal, Pfizer needs to bump the offer up significantly -- to a mostly cash offer of $120 billion (or better than $120 billion; like $128 billion -- if it is priced as mostly in Pfizer stock) -- in my experienced opinion.

So -- again -- we wait for May 26 -- but Pfizer might well walk away on that day, now -- after draining about 14 per cent from its own stock price, in the process. Looks rather foolish to my eye. Pfizer would recover at least some of that, should it walk away -- but again, what on Earth was Mr. Read thinking? If Pfizer walks away, he all but confirms it was a demi-god's tax protest, here in the USA. So, here's the WSJ bit:

. . . .Pfizer Inc. was planning to make a sweetened takeover offer for AstraZeneca PLC on Sunday, according to people familiar with the matter, in what could be a last-ditch effort to bring the British drug giant to the negotiating table.

Pfizer, which has been rebuffed by AstraZeneca more than once, may walk away from its proposed deal if its latest advance is turned away, these people said. . . .

There is no guarantee Pfizer would walk away should that occur, however, and people close to the matter have said in the past that the pursuit could ultimately turn hostile, with the U.S. company making an offer directly to AstraZeneca's shareholders.

Details of a new offer and where any talks between the two companies currently stand couldn't be learned. . . .


So, not much in the rumor, at all. Have a good evening, one and all -- and "Go Blackhawks" -- now up 2 to 1, in Period Two, over the Kings!

Important Sunday Morning PSA: Fosamax® ONJ Settlement Forms -- Submissions; Deadlines, Etc.


Ordinarily, I would not link to a plaintiffs' side law firm website, directly (in fact, I don't think I ever have, in going on seven years of blogging) -- but the Levin firm, as counsel for many of the Fosamax® ONJ claimants, has consistently and faithfully provided very useful content, gratis -- lo' these eight long years, and so distiguished itself online -- that we link the firm -- here and now, directly. That said, this post is NOT legal advice on my part, nor do I endorse any advice given, or view offered at the link, there -- save this one bit (below). Finally, I am in no manner affiliated with that Levin firm, nor have I been compensated in any way -- to post this. [Nor am I affiliated with, or compensated by Merck -- as if that wasn't clear enough -- to this particular moment in time(!)]. Whew, boiler-plate disclaimers concluded, now.

So, to Levin Papatonio: well done, ladies and gentlemen.

This is the latest "PSA" announcement, from those lawyers. For my part, I seriously doubt Merck will walk away, even though it negotiated for the right to do so. The goal of Whitehouse Station, I think, was to drive as many ONJ claimants as possible into the settlement. At 95 per cent, it has done so. I do think Merck will reduce the per claimant payouts by the corresponding approximately five per cent, though -- making a very favorable settlement, all the more so, from Merck's perspective. No, it will go through. But that's just business, right? Right. Here's the Levin link -- and the update below. Do bookmark and follow the link though -- as I am not likely to be timely with updates here -- and Levin will be. Here it is, then:

. . . .05/16/14 - IMPORTANT UPDATE: PSC Lead Counsel Tim O’Brien reports that, as of today, the Master Settlement has a participation rate of approximately 95% of all claimants.

Under the terms of the Master Settlement Agreement, Merck has 45 days to review the non-participating claimants’ files and determine whether Merck will walk away from the settlement or claw back the claim values of the non-participating claimants from the total settlement fund. The Claims submission process will coincide with the 45 days period and will begin shortly. There will be an on-line training session for the Claim Portal announced in the next week.

Stay tuned to this website for updates relating to the submission of Claim packages through the on-line Claims portal. . . .


Enjoy some fresh hot coffee, cold fragrant OJ and slice of something delicious this morning -- then go ride a bike! I know I will. . . in short, be excellent to one another.

Saturday, May 17, 2014

O/T Fun: Looking 22 Minutes Into The Future. . . .


Will I be right? Or wrong? We shall see:


Clearly Mr. Read Was NOT Expecting This: British Ministers In Talks At EU -- To Revise "Public Interest" Test -- On M&A


This development was just as predictable. . . as a soft Spring rain. Predictable, as here we see that Mr. Read is returning to the form (and proclivities) he used -- to gain the Chairman's seat at Pfizer -- the first go 'round. All swagger; all hubris -- no humility. But this time, his NiccolĂ² Machiavelli in a demitassĂ© glass won't play well on this grand stage, I'll wager. It will be fascinating theater, though.

The Saturday evening Guardian online has it all -- do go read it -- and, a bit:

. . . .The saga of the [$106 billion] takeover bid for AstraZeneca by Pfizer took a fresh twist on Saturday as it emerged that ministers have opened talks in Brussels about strengthening the UK's ability to force the American firm to honour its commitments on jobs and research.

The Observer has learned that exploratory talks have begun with EU officials over amending the terms of the British government's public interest test, which currently only allows ministers to block takeovers where there are concerns over national security, media plurality or competition.

It has been [intimated] by UK ministers that the public interest test could be revised to include continued investment in research and design as grounds on which the government could threaten to block the takeover or, at least, seek stronger commitments from Pfizer than have so far been given.

A source said: "The public interest test does not have to be about blocking: it can be about securing legally binding commitments on research. Early exploratory talks in Brussels have begun about whether it is possible to write a commitment on research and design into the approval process, into the public interest test. . . ."


If that comes to pass -- Mr. Read will face nearly a year of delays, while the UK agonizes over just how "binding" is binding "enough." That is -- if he can get the deal done, at all. This deal is likely no longer capable of closing as a hostile deal, in my estimation.

I simply must remark -- yet again -- Mr. Read seems well out of his depth here. International M&A -- north of $100 billion -- is essentially nation-building, or nation breaking. It should be approached as a treaty negotiation -- with a NATO power level of care. Thus far, Mr. Read hasn't even shown a UN level of decorum. All swagger; all hubris -- no sensitivity to the fact that the combination he seeks will dwarf many nations' GNP. So, underneath it all -- when under pressure -- most men return to their roots. That is, he's reverted to being a small-time operations accountant -- but is doing so, on the most conspicous of world stages. And I'm afraid he won't be up to the task of softening his leadship style -- to match the heady venue he is now playing. We shall see. May 26, 2014 looms. The "put up, or shut up" date -- in the UK, under the takeover rules there.

Almost Four Years On -- And Still No Argument Date, For The Appeal Of Boles' (Fosamax® ONJ) Counsel Sanctions Ruling, In The Second Circuit


Before we head out to a busy, actively athletic and fun-filled weekend, we will take a quick look back -- at some dangling threads (to tie them up). . . on what appears at this point to be a very slow news weekend for Whitehouse Station. So here goes:

Back in July of 2010, during the plaintiff's counsel summations in the Boles II Fosamax® ONJ trial, the very able New York federal District Court Judge John F. Keenan held one of the lawyers before him in contempt -- for an alleged act of professional misconduct -- and subsequently ordered that particular lawyer to pay a $2,500 fine for -- it was claimed -- improperly arguing (in summation) that the jury should calculate the damages award to "punish" New Merck.

In that case (and almost all other) Fosamax ONJ cases, the required pleadings and showings for so-called "punitive" damages did not exist. [To be fair, the image at right, used by the Merck lawyers in summation in Boles II -- also seemed questionable -- as it suggested the judge would be willing to pay the jury for for the truth. In sum, there was quite a bit of hard-nosed, "border-lining" advocacy, at the end of the trial, on both sides, in Boles II.]

So, a "punishing" damages verdict from the jury would be inappropriate. And so, to intentionally mislead the jury -- by appealing to passion or prejudice by arguing for such a punishing award, in summation, would arguably be misconduct.

Back in 2011, the Second Circuit ruled that it didn't have jurisdiction to decide whether the sanction was appropriate, because the questions raised by the sanctions appeal were too closely intertwined with the questions then still in play, in the retrial on the merits (Boles III). That trial never occured as both sides agreed to settle, in confidnece. And in fact, the ONJ cases in total are all winding their way toward a global settlement, as I write this -- four years on. About a month ago, the Second Circuit -- which handles appeals taken from Judge Keenan's Manhattan federal District Court, entered by endoresement a letter order delaying until at least late 2014 any hearing on the appeal. So, the involved lawyer will have to wait into 2015, in all likelihood, to know whether his summation went beyond the pale, then some five years ago.

You may also recall that this litigation also featured (not even a month ago!) the New Jersey state appelate courts' very public scolding (by order and opinion) of all lawyers involved, for failing to notify the court that a settlement had been entered -- thus wasting the taxpayers' time and money -- on writing an opinion, on a separate appeal. This would suggest that all of the points in litigation were hard fought. And as we covered it, you know they were. Lots of high-jinx, throughout.

Friday, May 16, 2014

My Opinion? Pfizer Just Engineered An NYSE Halt In Its OWN Stock -- Primarily To Disrupt AZ's Trading


Pfizer just announced a lung cancer candidate is moving to Phase III. There is scarcely a snowball's chance in the River Styx that TODAY, such a move is worth $5 billion to consolidated Pfizer Q2 2014 results or prospects. Filing. . . is not approval. Period. [Proof? No immediate SEC Form 8-K -- just the pricing of a yawner of a debt deal.]

Pfizer is just. too. big. That much is certain. It's not material.

No, the Phase III announcement was not at that rather gargantuan level of materiality such that the NYSE would have required a halt. I promise you that -- well over two decades of experience, on that cha-cha. . . .

So, it almost certainly was elective, by Mr. Read. And the halt caused a dip in AstraZeneca's stock. This is on the hairy edge of the envelope, in terms of lawful takeover tactics -- even in a hostile deal in the US (no opinion expressed about UK law, here -- but I'd wager it is frowned upon). Now recall that Mr. Read hasn't officially gone hostile -- and this looks a bit like an artifice or scheme to manipulate AZ stock, by proxy. Just my opinion -- and almost certainly not capable of being set out with competent proof, in an SEC enforcement proceeding. . . but clearly a little dodgy, to my eye.

On the other hand, maybe late tonight, Pfizer will sweeten its bid materially. That would be halt-worthy, but the NYSE will be closed by then.

And that's the. . . erh, cricket way of handling such matters. Again, deep experience on hundreds of previously-closed or abandoned public deals, backs that up.

You've been warned -- Mr. Read is likely to play dirty pool -- sharp elbows, too -- from here on.

Wednesday, May 14, 2014

The WSJ -- And Kenneth C. Frazier -- Have Solid Points, On US Taxes


All of the ribbing about Mr. Read aside, I do agree with the sentiments here expressed.

From the opinion page of the Wall Street Journal, this morning:

. . . .Meanwhile, American politicians are objecting to Pfizer's bid because it would let the company change its tax domicile out of the U.S. This could allow it to save $1 billion a year in tax payments because AstraZeneca pays a lower corporate rate in the U.K. than Pfizer does in the U.S. Michigan Senator Carl Levin is bellowing that this has to stop, though. . . [it is] the punitive tax rate that gives Pfizer every incentive to relocate overseas. It's so much easier to demagogue companies for acting in their self-interest than it is to fix [our] anticompetitive mess of a U.S. tax code.

Merger decisions ought to be made on the business merits, which means they are best left to shareholders and directors, who know their own business and products far better than politicians and pundits. AstraZeneca has so far resisted Pfizer's overtures on legitimate business grounds. But politicians on both sides of the Atlantic aren't helping the companies or their economies by trying to inhibit the free flow of capital across national borders. . . .


So it goes. The solution, I think, is to be a better US citizen, and change the tax code -- not abandon the land of the free.

Tuesday, May 13, 2014

Brit Tabloid: "A Wee Man. . . In Dentist's Glasses"!? Oh. My!


'Cross the Pond Media Review Edition: Yep -- I love this!

This is the arch comedy we so expect of that arid British wit. . . Do go read it all -- from the The Daily Mail:

. . . .Here came the top man at American drugs giant Pfizer. Mister Viagra! Real name: Ian C Read, chairman and chief executive, British-born but, by the sound of his elastic twang, long lost to these islands.

He turned out to be a humdinger, American business baloney made flesh, all plastic jargon and resolute jaw with a hilarious lack of that most important of senses: the self-absurd.

There was a scrum outside the committee room and you could easily have missed the wee fella – bald, dentist’s glasses – who swaggered in to meet the business select committee.

Was that really one of the most important industrialists in the world? Or was it Ronnie Corbett’s accountant? He was followed by a great wodge of suits from both Pfizer and its bid target, AstraZeneca. Not Astra Zeneca, thank you. . . .


Do go read every hilarious bit of it!