Tuesday, December 30, 2014

In The Land Of Largely Meaningless Lawsuits. . . We See Cubist's Delaware Shareholders' Putative Class Actions


At least as taught in law school theory, under applicable Delaware corporate law (collapsing many, many layers of oft' times important details, and qualifiers, here), Cubist shareholders would have a claim for damages -- if their board of directors had sold the company at an egregiously low price, to Merck. Or, if these directors had a serious, substantial conflict of interest -- in engineering the same sale.

As I say -- that's the theory. But stacked against these below facts, the Delaware plaintiffs have almost no chance of success, in my experienced opinion. The facts here will include that Merck has agreed to pay a 35 per cent premium, and all of it in cash, over the Cubist shareholders' pre-announcement market price per share -- and that's. . . hefty.

But perhaps the most salient fact we will learn, here, is that Merck had agreed to pay that premium price, even if Cubist were to lose in the patent litigation surrounding Cubicin®, at the Delaware federal trial court level. Which is precisely what happened -- not even 28 hours after the deal was struck. And so we may fairly infer, that without the support of Merck's tender offer, priced at $102, Cubist shares would have fallen perhaps 20 per cent on that same day. Cubicin is far and away Cubist's most important product.

So it seems a little ridiculous. . . to suggest that this particular deal sells Cubist shareholders down the river.

I decided to mention this purported shareholder litigation for the first time, because this evening, as the SEC EDGAR window was closing, Merck amended its tender offer disclosures, for a third time. It did so, to advise the world that the plaintiff in one of these Delaware state court would-be class actions had amended his complaint, on the 29th -- adding allegations about various particulars of the sale process -- to Merck.

I will confidently predict that none of this will matter. This deal will close right on time, and right on target. [And as I've said from the jump, it will clear Hart Scott early.] Here's the bit from tonight's SEC filing:

. . . .On December 29, 2014, the plaintiff in the complaint captioned Lawrence Weinstein v. Cubist Pharmaceuticals, Inc., et. al. filed an amended class action complaint, which includes (i) additional allegations about the sales process and (ii) new claims alleging breaches of fiduciary duty by Cubist’s directors for purportedly omitting material information from the Solicitation/Recommendation Statement on Schedule 14D-9. Also on December 29, 2014, the plaintiff in the Weinstein action filed a motion for expedited proceedings and a supporting brief, requesting the Delaware Court of Chancery to schedule a preliminary injunction hearing and to permit the plaintiff to take expedited discovery. . . .


Now, a word -- to the Cubist shareholders filing these Delaware claims: I'd encourage you to speak very candidly (and pointedly) with your lawyers. I support your right to avail yourselves of the courts, but this seems a fools' errand. That is, it is likely that the only people who will net a recovery of any kind here will be these lawyers, and likely for only a small bit of their claimed legal fees, as Merck pays what will amount to a little nuisance money -- to send them packing.

But please, do not let your lawyers convince you that in paying a 35 per cent upside, and then hanging steady at 35 up, after a perhaps 20 per cent down-bubble event occurs (absent the offer's firmness on this point). . . is in any way unfair to you, the Cubist shareholders. These are just my opinions. . . but they should be yours, too. Now Namaste, and good night! Sleep well.

Forbes' Matt Herper Places Anti-PD Oncology Drugs As His "Top(s) -- For 2014"


My buddy Matt has it right -- he calls it a tie between Merck's Keytruda® and BMS's Opdivo® -- for the title of most important new drug(s) of 2014.

But he goes on to point out (again, quite rightly) that BMS may have the longer term advantage here. BMS is deeper into (and perhaps even on its way out of) the woods -- in finishing their clinical trials for other cancers -- not just end stage melanoma.

And as I've long said, right now, very wealthy US private pay cancer patients of all sorts (and perhaps some residual Cadillac plan participants) are getting the $150,000 a year regimen -- from one or the other of the companies, off label, for other cancers -- by speaking directly to their oncologists, and signing an informed consent and release form. As the anti PD-1 class receives FDA approvals for other cancers, the revenues will certainly mushroom -- by orders of magnitude, here. A bit -- but do go read Matt's fine piece:

. . . .But the real potential of these drugs will come as they are moved earlier in melanoma and into other cancers. Keytruda was approved first, in September. Opdivo followed three months later. But Bristol is further ahead in completing studies that test trying Opdivo before other melanoma drugs. That, some analysts at investment banks say, could lead to an advantage for Bristol. Regardless, sales of each drug are forecast to approach $3 billion in the next few years.

Next year, there should be more information about using both drugs in non-small cell lung cancer. Trials of Bristol’s Opdivo in that disease will be closely watched, and studies are ongoing in other cancers, too. Companies like Roche and AstraZeneca are developing their own, similar medicines. There are also other approaches that harness the immune system that are exciting doctors and researchers. . . .


So it goes (more background here). Have a safe, peaceful and prosperous new year, one and all. I may be rather scarce now, until at least the third day of 2015.

Friday, December 26, 2014

Friday Science Stuff: The Waning Importance Of Our Chromosome 19's IL28B Variants -- In Hep C Cure Rates


Gilead's Sovaldi® has made the previous concern -- about variants at the IL28B gene (on our ninteenth chromosome) far less meaningful, for Hep C patients. It turns out that -- if I had ever contracted Hep C, this variant could be a problem for me (pre 2014). My 23 & Me results confirmed this, about a year ago. But I haven't -- and Sovaldi is now available.

Of greater importance, scientifically speaking, Sovaldi's existence and FDA approved status means that African Americans and Latinos are equally likely to benefit from the Hep C therapy. Cost remains a very significant problem, but the cure is here -- almost regardless of IL28B variant, for all. I write tonight to note that 23 & Me (for logged in users, grandfathered prior to the FDA moratorium) still talks about telaprevir and boceprevir (along with pegylated interferon alpha) -- Merck and Vertex offerings, and the IL28B variant problem. So 23 & Me is in significant need of revision -- in case you too are reading behind that firewall.

. . . .Since everyone gets a gene from each parent, a person can have an IL28B "CC", "CT" or "TT" genotype. People with the IL28B CC genotype are more likely to be cured by HCV treatment than people with the TT genotype; cure rates among people with the CT genotype fall somewhere in between. Apparently, the IL28B TT genotype is common among African Americans; it clearly contributes to lower cure rates

Knowing this information can be helpful to you and your doctor when discussing treatment options, especially with new medications that aren't affected by the IL-28B gene becoming are now available. . . .


Here's an earlier 23 & Me largely humorous backgrounder post I put up, last year. Sleep well, and enjoy your weekends -- one and all.

Thursday, December 25, 2014

A Norwegian Court Has Ruled That Gilead May Never Owe Merck Royalties On Sovaldi® (Sofosbuvir) -- Due To Merck's Patent Invalidity


Patent lawsuits are pending in the United Kingdom, Germany, Norway, France, Canada, Australia and of course, on both coasts here in the United States, related to Merck's claims for as much as a 10 per cent royalty on sales of Gilead's Sovaldi® -- the most successful drug launch in history. [That's potentially a $5 billion claim, by the way.]

However, it is beginning to look like Merck's very expensive global patent lawsuit juggernaunt may amount to. . . very little. Consider that in Oslo, Norway, a patent court has held some of the Merck patents invalid because they don't teach how to make the chemical substances -- without undue random experimentation, by someone skilled in the art. That alone could be fatal (even taking into account the slightly differing patenet standards in Europe, compared to the US); but then add to that, that some US governmental patent authorities have opined that Merck's claims should not be considered as prior in time, or prior in right, to Gilead's. OF course we will keep watching, but we learned all of this from an amended answer, and set of counterclaims (full 25 page PDF here) filed this past Monday in the federal District courthouse in Wilmingon, Delaware -- here's a bit:

. . . .The Norwegian District Court summarized the origins of this litigation as “a disagreement between the parties to the case as to who are the rightful owners of chemical substances of the pattern 2’-methyl-up, 2’-fluorine-down nucleosides with a natural N-bonded base.” (Norwegian Opinion, attached hereto as Exhibit 6, at 3). . . .

. . . .On March 21, 2014, the Oslo District Court (a three-member panel consisting of one legal judge and technical expert judges in nucleoside chemistry and medicine) issued a judgment holding NO330,755 [the Merck/Idenix patent] invalid because “the description in patent NO ‘755 is not sufficiently clear and complete as to enable a skilled person, as at the application date of 27 June 2003, to carry out the invention without undue burden or experimentation.” (Norwegian Opinion, attached hereto as Exhibit 6, at 34.) The court simultaneously upheld the validity of NO330,700. (Id., at 38).. . .

The claims of the ’600 [the Merck/Idenix] patent are invalid for lack of enablement under 35 U.S.C. § 112 because the ’600 patent fails to enable one of ordinary skill in the art to make and use the full scope of the claims without undue experimentation for at least the reasons set out in the ’871 interference, the ’981 interference, and Norwegian Opinion, including that the patent does not disclose how to synthesize a compound with a fluorine down and a methyl group up in the 2’ position, and [Merck and Idenix] Counterclaim Defendants themselves were not able to successfully synthesize such a compound until long after the filing date of the ’600 patent. (See, e.g., March 22, 2013, Decision on Motions, Paper 426 at 25, attached hereto as Exhibit 1; Clark Substantive Motion 7 and 8, Papers 154 and 155, attached hereto as Exhibits 3 and 4; Norwegian Opinion, attached hereto as Exhibit 6, at 33-34). . . .


Finally, it elsewhere appears in the moving papers that the US patent authorities have ruled that at least some of the Merck/Idenix patent claims are not prior in right to those through which Gilead claims (the legacy-Pharmasset patents). So the burden of proof here in the US is pretty firmly fixed on the shoulders of Merck and Idenix. While there will be quite a bit of wrangling to go, around the globe, I'd say that, on balance, it is starting to look like Merck will get nothing like a 10 per cent running royalty on any of Gilead's sofosbuvir sales.

Tuesday, December 23, 2014

Merck Reduces Projection On Cubist Acquisition: Now Only "Mid Single Digits" Accretive In 2016 (Patent Uncertainty); But Zerbaxa® Opportunity Highlighted


Merck filed amended thirdy party tender offer materials with the SEC this morning -- related to the Cubist acquisition. As expected, Kenilworth trimmed projections in 2016 for Cubist overall (lowering its guess at accretive status for that year), due to uncertainities around the Cubicin® patent litigation. But it also highlighted the Zerbaxa® opportunity. So -- overall, this isn't really going to matter much, to big Merck -- but do compare these two slides:


The reason the first bit won't matter too much is this second slide, as imaged above -- look at the size of the market opportunity for Cubist's Zerbaxa -- just recently FDA approved, on this past Friday evening. That's a much larger opportunity than even Cubicin's. But to be sure, the reduction in 2016 projections is due to those well-publicized uncertainties surrounding the Cubicin patent litigation.

Now you know. Onward!


The Birdman. . . Rises!


Birdman said. . .

Wow, my own avatar; never had one of those before. I am honored albeit undeserving.

This virus/disease (ebola/EVD) is just the tip of the iceberg. With human encroachment into the formally uninhabited jungles of the world more of these formally unknown diseases will appear in increasing numbers over the next decades and centuries. A mechanism must be developed to deal with these emerging infectious diseases, as well as the intentional use of biological warfare agents by unethical individual/entities or governments.

A wonderful book by Kendall Hoyt "Long Shot" Harvard University Press 2012 captures the history and the critical need for governmental/private collaborations for vaccine development. Today, more often than not, private/public companies will not embark on vaccine/drug development unless a profit can be made.

If you have ever had to deal with a Board of Directors/investors you would quickly understand the complexities of this matter. This profit may be financial, but not always. Good luck convincing the Board that non-financial profits (good publicity) are good for the company! We often must remind the skeptical public that not all decisions in Pharma are profit driven; WE ARE WORKING TO SAVE LIVES.

The US Government has seen the writing on the wall and has formulated a number of groups to plan for the un-plan-able. This involves rapid development and deployment technologies/platforms for dealing with situations like this ebola outbreak. Many of the systems are still in their infancy, but, they are beginning to work as planned.

It is only because the US and Canadian Governments had supported the development of ebola vaccines over the past decade and because the US Government has divisions like NIAID, PHEMCE and BARDA that supplied funding to allow manufacturing and clinical trials underway in West Africa so quickly, that we are in the place we are today; on the brink of employing vaccines to curtail the outbreak. The monies supplied to NewLink/Merck are only a small portion of the investment made by the US Government to prepare for and deal with possible/actual disasters. They should be applauded for their efforts.

Thanks to the Biotech/Pharma companies and the Governmental/Non-Governmental agencies/groups for their contributions and collaboration that will help to end this ebola outbreak and ameliorate/prevent future outbreaks! These relationships must be maintained and collaborations increased. The privatization of science over the past decade has led to diminishing basic research and increasing interest in profitability through Intellectual Property. Science must be "opened up" again so we can proceed with issues that benefit society, not only investors.

OK. I'm off my soapbox. Thanks for the venue and Merry Christmas/Happy Holidays!

December 23, 2014 at 4:07 AM


Monday, December 22, 2014

BMS Gets FDA Nod For Opdivo® (Nivolumab) -- Advanced Melanoma


Opdivo® was approved in Japan in July 2014 -- ahead of all the other Anti PD-1 inhibitors, worldwide. Now it is available in the US too. Off label is of course the biggest market at the moment. But the clinical studies are concluding that it works well in other cancers, beyond advanced melanoma.

So the horse race gets underway in earnest now -- it will compete head to head with Merck's Keytruda®. Per the FDA press release then, just now:

. . . .The U.S. Food and Drug Administration today granted accelerated approval to Opdivo (nivolumab), a new treatment for patients with unresectable (cannot be removed by surgery) or metastatic (advanced) melanoma who no longer respond to other drugs. . . .

Opdivo works by inhibiting the PD-1 protein on cells, which blocks the body’s immune system from attacking melanoma tumors. Opdivo is intended for patients who have been previously treated with ipilimumab and, for melanoma patients whose tumors express a gene mutation called BRAF V600, for use after treatment with ipilimumab and a BRAF inhibitor. . . .


Stay tuned.

Right On Cue -- BARDA Funds Ebola Vaccine Candidate Phase Ib Study -- Additional $30 Million


As if to echo my theme of yesterday -- (almost prescient), seems Birdman's (and mine) -- BARDA, a US HHS (government) arm, has awarded a $30 million contract to NewLink & Merck, in scale up funding for the larger trials.

This is good news, and yet I am certain Merck was going to put on a full speed scale up -- out of internal corporate capital accounts, in any event. So this (again) just means Merck will be able to reduce its downstroke, here. Good for everyone. From GEN | News, then -- a bit (do go read it all):

. . . .The U.S. Biomedical Advanced Research and Development Authority (BARDA) has awarded a $30 million contract to a NewLink Genetics subsidiary toward supporting manufacturing and development activities of the Ebola vaccine candidate rVSV-EBOV the company is co-developing with Merck & Co., the companies said today. The grant—awarded to NewLink subsidiary BioProtection Systems — is intended to cover the cost of clinical development through a new 330-person Phase Ib study, the companies added.

“The current funding provided by BARDA is key to the rapid development of this Ebola vaccine candidate,” Charles J. Link, Jr., M.D., NewLink’s founder, chairman, CEO, and CSO, said in a statement. “These funds will support multiple facets of the accelerated Ebola vaccine program including the expansion of critical vaccine supplies and larger clinical studies. . . .”


As a side note, the press release indicates that Merck is now headquaretered in Kenilworth -- the old S-P HQ move must be going on this week and next. How times change. . . . my, my, my. . . . Onward!

Sunday, December 21, 2014

Merck May Pay $50 Million For NewLink's rVSV ZEBOV Ebola Vaccine Candidate, But May Sell The FDA Voucher For $125 Million


Early on, with a torrent of good data (some of it in blue below), our "Birdman" cogently pointed out that there were many a soft dollar incentive already embedded in the global race to develop an Ebola vaccine. The list of those incentives has lengthened appreciably here in December. There will be $300 million in GAVI vaccine purchasing money, and there is now nearly bullet proof tort immunity, under the PREP Act from injury suits, for the vaccine makers -- should they win FDA approval.

Now add to this that a freely transferable FDA "Priority Review" Voucher goes to the winner of the Ebola sweepstakes. Very recently, just such a voucher sold for $125 million. While Merck will doubtless have something like $200 million in development and scale up costs here, near term -- recall that Whitehouse Station will only pay a maximum of $50 million to NewLink for all the rights to the rVSV ZEBOV candidate. So, Merck's net investment -- the amount it would need to cover -- via future sales, might be only be $125 million (or $250 M minus $125 M). And it would doubtless win the lion's share of that GAVI $300 million, so it would be. . . in the black, even as the first commercial sales occur. And of course, Merck will likely need to give it away (or nearly give it away), in several geographies in West Africa.

All of that said, I suspect Merck will keep the FDA bonus voucher, near term, and use it for a program of its own. The value in that case mght be well north of $200 million -- if it gave a six month lead in the market to Merck, on some other hotly contested field. Here's some backrgound, on the relative benefits of durability in the vaccine, from Bridman, followed by an earlier bit from Modern Medicine's Formulary Watch:

Birdman 11.30.14 --

. . . .I do not believe that durability of the immune response is a critical issue during the outbreak and for curtailing the outbreak. The durability must be moderate...perhaps 6-10 months. Ten months was achieved with the ChAd3-EBOL vaccine which was boosted with MVA-EBOL. Durability IS an issue in populations which are exposed to endemic ebola virus after the outbreak has been stopped. To stop the outbreak one needs a single dose vaccine that generates fast, high level immune responses against ebola. The vaccine would also optimally NOT generate signs or symptoms commonly associated with EVD. This could lead to vaccinees and contacts thinking they have ebola.

Stanley clearly showed poor durability of ChAd3-EBOL as a stand alone vaccine in NHP and that heterologous boosting with MVA vectored GP was needed to achieve 10 months of protective immunity. Also shown was that MVA vectored GP was a very poor standalone vaccine.

Stanley, D.A., et al., 2014. Chimpanzee adenovirus vaccine generates acute and durable protective immunity against ebolavirus challenge. Nat. Med. 20, 1126–1129. doi:10.1038/nm.3702

Unfortunately we only have indirect evidence that the VSV vectored elola Zaire vaccine will elicit durable responses. There are no NHP durability data published for the VSV-Zaire vaccine...only the VSV-Marburg vaccine:

Mire, C.E., et al., 2014. Durability of a vesicular stomatitis virus-based marburg virus vaccine in nonhuman primates. PLoS ONE 9, e94355. doi:10.1371/journal.pone.0094355

However, As I mentioned in a previous post, I believe the human anti GP ELISA titers elicited with the VSV vector will be higher than those generated with the ChAd3 vector and this alone is likely to lead to a durability better than that generated with ChAd3. . . .

[Formulary Watch:]

. . . .The FDA initiated its PRV program, which allows companies to transfer PRV approvals, in 2008 to encourage development of drugs to prevent and treat tropical diseases that affect millions of people globally. “There has been remarkably little progress over the last 50 years in development of drugs for these diseases. Because these diseases are found primarily in poor and developing countries, existing incentives have been insufficient to encourage new and innovative drug therapies,” FDA wrote in its Guidance for Industry. . . .

Drug manufacturers can apply for applications for PRVS for tuberculosis, malaria, blinding trachoma, Buruli ulcer, cholera, dengue, leprosy, and other diseases, particularly infectious diseases for which there is no signficant market in developed countries and that disproportionately affects poor and marginalized populations, according to FDA. . . . [Ed. Note: Ebola vaccines just added to this list.]


So now we await the first efficacy trial results. I still think we will see the beginnings of those results by early February. And I for one expect Merck's candidate to be the clear leader here. Which means. . . "Birdman" is right -- Merck will almost certainly NOT lose money on this deal. And it will have done well, by doing good. And that's the way it ought to be.

[As a side note, maybe our Birdman is a jazz head -- maybe he references Charlie Parker. We will wait for word, in comments. I can source a good graphic with that Birdman as the avatar, too. Smile. . . .]

Saturday, December 20, 2014

On Same Day As Merck's Tender Offer Formally Launched, Cubist Gets Zerbaxa® FDA Nod


The FDA squeaked in under the wire (once again!), on its own PDUFA rule deadlines, and approved this new Cubist antibacterial afterhours, late last evening (expiry date was to be tomorrow). It will undoubtedly be a big seller in the complicated urinary tract infection space, and will help Merck defend the overall price it has agreed to pay -- for Cubist.

Here's a bit of the Forbes item on the news:

. . . .Zerbaxa was specifically approved for complicated intra-abdominal infections (cIAI) and complicated urinary tract infections (cUTI) that also includes infections of the kidney (pyelonephritis). For cIAI, Zerbaxa is intended to be combined with metronidazole, an antibiotic and antiprotozoal drug with particular activity against anaerobes. . . .


We will watch this -- and I may offer a few comments on the price events, and other escape clauses baked into the tender offer and merger documents, come Monday. At the airport. . .

New Occasional Guest Feature, Here: The Birdman Chronicles -- Ebola Vaccine Edition


Over the past fortnight, we have been very fortunate to have been visited by a. . . comic book superhero. No, not that one. It seems the "Birdman" who flies in on us is a virologist, and well versed in the life sciences. [The handle is amazingly clever -- as is the movie, BTW.] It also seems that our Birdman's coverage of the Ebola vaccine efforts is much more comprehensive, deeply sourced, and nuanced than mine -- so, I'll run his comments, as a feature, verbatim, from time to time. Starting today.

Do go back and search "Ebola" in the box at upper left (and read all the comments), to get caught up here, if you haven't been reading his fine commentary, right along. We introduce a public domain graphic for this series, as well -- and claim fair use of the derivative and insignificant portion of the imagery included, as part of our graphic. The movie (its people and studios and producers) don't (as far as we know) endorse "our" Birdman's views (or mine, for that matter!). . . But there you have it. Installment No. One of the Birdman Chronicles, herewith:

. . . .12.20.14 @ 1:28 PM EST | Birdman said. . .

Tragic indeed. I agree the studies need to get started in West Africa. A 7.5 hour FDA workshop on Ebola Immunology and a press release from the WHO this morning reveal the complexities with these trials in choosing assays and endpoints and dealing with many different funding organizations and governmental regulatory agencies. Everyone wants to do it their way. . . .

12.10.14 @ 7:40 AM EST | Birdman said. . .

Considering that many non-profits/US Government agencies are and will pay for the expensive clinical trials, process development and manufacturing of clinical trial doses this leaves relatively "minor" funding requirements from pharma. This endeavor will not result in a financial loss for the major players and will, as you have stated, get them major "brownie points". . . .

More on that last point -- including FDA priority review vouchers, tomorrow. Until then, enjoy your Saturdays, one and all -- and our sincere thanks go out to the Birdman. Please keep enlightening us!

Thursday, December 18, 2014

To Underscore The Urgency Of An Ebola Vaccine -- Just A Short Note


In an ironic twist of fate, a doctor in Sierra Leone who treated a banker he later learned was infected with Ebola, has died from the virus -- just hours after a Defryus drug called ZMab, arrived in country to be given to him.

It didn't thaw in time. Tragic -- per Reuters:

. . . .Victor Willoughby was diagnosed with Ebola last week after he treated a man with organ-related problems. The patient, a senior banker, was later diagnosed with Ebola and has since died. . . .

The drug, ZMab, was transported in frozen form on a Brussels Airlines flight that arrived overnight. Before it could thaw, Willoughby's condition deteriorated, said chief medical officer Brima Kargbo. . . .


As concerned scientists, we should all take heed -- and be warned. Now, let's get those clinical trials cranking.

Privately-Held Swiss Clinical Development Stage Oncology Company, OncoEthix, Purchased By Merck (For Up To $375 Million)


OncoEthix SA was funded (in part) by Index Ventures and endeavourvision, initially, and then SV Life Sciences and Edmond de Rothschild Investment Partners, in a July 2013 Series B round. It is a clinical stage biotechnology company. OncoEthix was formed in 2007 to develop a portfolio of several promising new drug candidates for cancer, primarily aimed at treating solid tumors. Now it belongs to Whitehouse Station. There will be no antitrust hiccups. That's a certainty.

From the Wall Street Journal, then -- a bit:

. . . .The deal includes an upfront payment of $110 million, and OncoEthix is eligible for additional milestone payments of up to $265 million, contingent upon clinical and regulatory approval.

Through the acquisition, Merck gains OTX015, a BET (bromodomain) inhibitor that is currently in Phase 1b studies for the treatment of advanced solid tumors. . . .


Clearly immaterial to Merck, but a good deal, nonetheless. It's a VERY nice payday for the venture investors named above, as well. Onward!

Wednesday, December 17, 2014

Just As Predicted, Judge Salas Has Promptly Entered The Distribution Order In ENHANCE Settlement, Today


As I said last Saturday, the very able Judge Ester Salas, in the federal District Courthouse in Newark, has entered the distribution order -- clearing the way for the $688 million federal securities law settlement (thanks going out here, to Ex S-P CEO Fred Hassan!) to be disbursed.

So ends that tale of greed, (alleged) obfuscation and ineptitude. From the order (and a link to the full-text PDF), then:

. . . .In order to encourage Authorized Claimants to promptly deposit their payments, all Initial Distribution checks shall bear the following notation: “DEPOSIT PROMPTLY, VOID AND SUBJECT TO RE-DISTRIBUTION IF NOT NEGOTIATED WITHIN 90 DAYS OF DISTRIBUTION.” Co-Lead Counsel and Epiq are authorized to take appropriate action to locate and/or contact any Authorized Claimant who has not cashed his, her, or its check within said time as detailed in footnote 5 of the Thurin Declaration. . . .

Authorized Claimants who do not negotiate their Initial Distribution checks within the time allotted or on the conditions set forth in footnote 5 of the Thurin Declaration shall irrevocably forfeit all recovery from the Settlement, and the funds allocated to all such stale-dated checks shall be available to be re-distributed to other Authorized Claimants in the Second Distribution described below. Similarly, Authorized Claimants, who do not negotiate subsequent distributions within the time allotted or on the conditions set forth in footnote 5 of the Thurin Declaration shall irrevocably forfeit any further recovery from the Net Settlement Fund. . . .


Do promptly cash your check -- to avoid forefeiture.

Tuesday, December 16, 2014

When You See History Marching Right Past You. . . Just Jump In Front, And PRETEND To Lead It: "Tennessee, Leading From Behind"


As I've repeatedly written for going on two years now, Tennessee's stubborn, wrong-headed failure to accept federal health care funding (in the form of a Medicaid expansion) for its poorest citizens -- all in some misguided "stand" against Obamacare -- was a deep disservice indeed, to the people who put Gov. Haslam in office.

He's finally seen the light. Or. . . the green, actually. In either case, I am thankful that people like Mr. Casteel (depicted, lower right) will have some minimal coverage, now. History had judged Tennessee's Republican majority to be in error. At least the Governor can now admit that. I don't care about the obvious sophistry of calling the expansion a different name -- the important thing is that his people will FINALLY get some coverage and benefits, all as envisioned by the ACA of 2010. Per Bloomberg, overnight, then:

. . . .The Obama administration supports in principle. . . . Indiana, Utah, Wyoming and Alaska [and now Tennessee] are [all] considering an expansion, at least 90 percent of which would be funded by the federal government.

All of the states cast their expansions as departures from the traditional Medicaid program, in which participants pay little or nothing toward their care and the government compensates most doctors and hospitals directly. Their modified programs would generally require individuals to bear more of the costs of their health care. It’s a compromise that lets state Republicans work with the Obama administration even though their party rejects the health-care law.

“We made the decision in Tennessee nearly two years ago not to expand traditional Medicaid,” Haslam said in a statement. “This plan leverages federal dollars to provide health care coverage to more Tennesseans, to give people a choice in their coverage and to address the cost of health care, better health outcomes. . . .”


It is not a Medicaid expansion -- if I say it is not. . . really, Mr. Haslam? Sheesh. It's an ugly win, to be sure -- but I'll take it! Carry onward! [More background here, here and here.]

Sunday, December 14, 2014

Settlement Conferences Continue -- In Delaware District Court -- Between Gilead and Merck/Idenix, On Sovaldi® Patent Spats


It would seem that the very capable Judge Christopher J. Burke, sitting in Delaware's federal District courthouse, would like to encourage the parties to settle the patent license royalty demands made by Merck, and echoed by Idenix, now that Merck owns Idenix.

You will recall that Merck has demanded a 10 per cent running royalty on all sales of Sovaldi® (sofosbuvir), under a patent that Merck claims teaches how compounds like Sovaldi are metabolized from a pro-drug, in the human body -- into a therapeutic drug (in this case) to cure Hep C. [The question would seem to be whether what the human body does naturally, to the pro-drug, to metabolize it, can be considered (all by itself to be) an invention worthy of patent protection.] In any event, here's the minute order of mid last week:
b
. . . .Judge Christopher J. Burke held a Settlement Teleconference on December 8, 2014. . . .


We will keep you informed, here on a nice quiet Sunday morning here -- fresh OJ, croissants and hot coffee. . . onward!

Saturday, December 13, 2014

Hospira Has Already Filed A Notice Of Appeal, From The Cubist Trial Court Patent Decision Of Monday


So, as I said early on Tuesday morning, this one is at least 18 months away from being resolved -- with any form of certainty. Here is a bit of the Hospira filing:

. . . .Notice is hereby given that Hospira, Inc., defendant in the above-captioned matter, hereby appeals to the United States Court of Appeals for the Federal Circuit from the Order of final judgment entered in this action on December 8, 2014 (D.I. 136), together with all underlying orders, rulings, and findings, including without limitation the “Order Construing the Terms of U.S. Patent Nos. 6,468,967; 6,852,689; 8,129,342; and RE 39,071” (D.I. 59), “Order Denying Defendant’s Letter Request to file a Motion for Summary Judgment” (D.I. 107), and “Memorandum Opinion” (D.I. 135). . . .


And that (perhaps 18 to 24 month time frame) assumes that there will be no additional appeals from any decision ultimately entered by the Federal Circuit.

As ever, we will keep an eye on it -- so stay tuned.

Ex-Schering-Plough CEO Fred Hassan's ENHANCE-Era Federal Securities Fraud Class Settlement (Of $688 Million!) Crawls To A Close


Earlier this past fall, the eminently capable Judge Cavanaugh retired from his seat on the bench of the federal District Court in Newark, New Jersey, which caused this matter, Genesee, et al. v. Schering-Plough (Cause No. 08-2177) to be reassigned by lot to Judge Salas.

All that remains to be done, now that the lone remaining objector to the settlement has withdrawn his appeal, and his appeal bond has been refunded to him, is for Judge Salas to sign the October 14, 2014 order starting the claims submission process. So the lead lawyers wrote and asked her to do just that, yesterday:

. . . .Specifically, on October 1, 2013, this Court entered an order approving the settlement of the above-captioned class action for $215,000,000. This order is final, as all appeals of the settlement have been withdrawn. On September 12, 2014, Lead Plaintiffs filed a Motion For Approval Of Distribution Plan, seeking the Court’s approval of a plan of distribution pursuant to which the settlement fund could be distributed to the Class. There is, of course, no objection to the plan and the Class is anxious (particularly at this time of year) for the settlement fund to be disbursed.

The fund, however, cannot be disbursed without execution of the order approving the distribution plan. I have enclosed an additional copy of the order for Your Honor’s convenience with this letter. As no one has objected to the Distribution Plan, we respectfully request that Your Honor enter the Order at the Court’s earliest convenience so that Lead Plaintiffs can cause the settlement fund to be disbursed to the Class. . . .


I would expect that the order (beginning the disbursement process) would be entered next week. Merry Christmas, a little early (or, four years late, if you prefer!) -- to one and all. I had earlier hoped that checks would arrive by Christmas of this year, but the return of the last remaining appeal bond took a bit, as did the re-assignment process, for the above mentioned retirement. Oh, and. . . Thanks again, Fred.

Thursday, December 11, 2014

Will A Double Dose Ebola Vaccine Be Practical -- In West Africa?


That's an eminently fair question to ask. Of course, J&J, and GSK, both well into development and testing with separate "prime, plus booster" regimens, at present, are arguing that the immunity from a double dosing will be more durable, longer term. I concur that is likely to be true, given past vaccine trial experiences, in other viral outbreaks.

The difficult reality, however, is that the health care system in some of these geographies is so strained, and the people so widely dispersed (without many reliable methods of recall and followup contact), a second dose might never be given in more than three quarters of the population. And that would mean the outbreak would not be contained, at all. Add to this, that J&J's booster component is required to be grown up in chicken eggs -- a notoriously difficult way to acheive the pandemic volumes needed for the booster. [Just ask Baxter about its 2010-2011 era avian flu vaccine experiences, here.]

It is true (as Reuters is reporting) that Merck's trial in Geneva, Switzerland is presently on hold -- while four cases (of 59) of joint pain are evaluated -- to be sure that the malady is temporary, and reversing. Even so -- Merck's vaccine candidate (so far) shows the strongest single dose immune response.

And a single dose regimen may be the only practical way to contain this -- and other -- outbreaks. It is just too hard to do follow-up for second dosings, on vast swaths of rural, low infrastructure, migrant populations. Populations like those now afflicted in West Africa. The UN public health organizations -- and Doctors Without Borders -- have seen this, over and over, again.

So (and all of this is just my opinion), assuming that the joint pain and stiffness is temporary, in the Merck/NewLink Genetics candidate, I think Merck's vaccine will be the one deployed in Sierra Leone, at least this time around. Such temporary stiffness is not all that uncommon a side effect -- of several vaccines, already on market. . . . so we should not be too terribly surprised to see it appear here.

Now, let us hope that it is temporary -- because the alternative candidates present some real logistical nightmares -- in most of Africa -- where they will be most sorely needed.

Wednesday, December 10, 2014

HHS Secretary Burwell Invokes PREP Act Immunity For Ebola Vaccine Makers -- Merck Included


While the HHS press release of yesterday only mentions NewLink Genetics, the PREP Act itself makes clear that those companies in Merck's shoes in this sort of a situation become "Covered Persons" -- under the Act's immunity provisions.

The Act's products liability immunity applies to “Covered Persons” -- with respect to administration or use of a "Covered Countermeasure". Covered Persons include manufacturers, distributors, program planners, and qualified persons, and their officials, agents, and employees, and the United States. The PREP Act goes on to define the terms “Manufacturer” and “Distributor”, thus: a "Manufacturer" includes a contractor or subcontractor of a manufacturer; a supplier or licenser of any product, intellectual property, service, research tool or component or other article used in the design, development, clinical testing, investigation or manufacturing of a Covered Countermeasure; and any or all of the parents, subsidiaries, affiliates, successors, and assigns of a Manufacturer. A "Distributor" means a person or entity engaged in the distribution of drug, biologics, or devices, including but not limited to: Manufacturers; repackers; common carriers; contract carriers; air carriers; own-label distributors; private-label distributors; jobbers; brokers; warehouses and wholesale drug warehouses; independent wholesale drug traders; and retail pharmacies. Both of these definitions would clearly apply to Merck's role in rVSV-ZEBOV candidate efficacy trials, ultimate vaccine conjugate manufacture and finished vaccine distribution.

And that makes sense. Here's the Secretary's press release of yesterday -- and a bit:

. . . .The PREP Act was designed to facilitate the development of medical countermeasures to respond to urgent public health needs, including the development of critical vaccines like those to prevent the spread of Ebola. This U.S. declaration under the PREP act is part of a global dialogue to address these issues in the U.S., and other countries where the vaccine is being developed, manufactured and potentially used.

“My strong hope in issuing this PREP Act declaration in the United States is that other nations will also enact appropriate liability protection and compensation legislation,” said Secretary Burwell. “As a global community, we must ensure that legitimate concerns about liability do not hold back the possibility of developing an Ebola vaccine, an essential strategy in our global response to the Ebola epidemic in West Africa.”

The PREP Act declaration is expected to strengthen the incentive to conduct research and spur development, manufacturing, and the potential use of the vaccines in large scale vaccination campaigns in West Africa. The PREP Act declaration provides legal protection under U.S. law for three vaccine candidates:

• GlaxoSmithKline’s Recombinant Replication Deficient Chimpanzee Adenovirus Type 3-Vectored Ebola Zaire Vaccine known as ChAd3-EBO-Z;

• the BPSC1001 vaccine, known as rVSV-ZEBOV-GP, made by BioProtection Services Corporation, a subsidiary of Newlink Genetics; and

• the Ad26.ZEBOV/MVA-BN-Filo vaccine manufactured by Janssen Corporation, subsidiary of Johnson & Johnson/Bavarian Nordic. . . .


This is a truly sound public policy decision, in my experienced view. Next up -- the first clinical efficacy head to head results will start trickling in, perhaps by mid-February 2015.

Gardasil 9® Gets FDA Approval Nod, Just As Dr. Gerberding Is Promoted "Up and Out" Of Merck's Vaccines Businesses


Dr. Gerberding certainly has earned the right to take a victory lap, as she is promoted -- and point toward this new approval as being her handiwork -- at the vaccines businesses helm.

While the vaccine now protects against a greater portion of cancer causing viral strains, it remains to be seen whether US vaccination rates will ever achieve the levels Merck had originally hoped for, in younger girls (and boys) when it started marketing the original version of quadrivalent Gardasil®. Here's a link to the FDA's announcement -- and a bit from it:

. . . .The U.S. Food and Drug Administration today approved Gardasil 9 (Human Papillomavirus 9-valent Vaccine, Recombinant) for the prevention of certain diseases caused by nine types of Human Papillomavirus (HPV). Covering nine HPV types, five more HPV types than Gardasil (previously approved by the FDA), Gardasil 9 has the potential to prevent approximately 90 percent of cervical, vulvar, vaginal and anal cancers.

Gardasil 9 is a vaccine approved for use in females ages 9 through 26 and males ages 9 through 15. It is approved for the prevention of cervical, vulvar, vaginal and anal cancers caused by HPV types 16, 18, 31, 33, 45, 52 and 58, and for the prevention of genital warts caused by HPV types 6 or 11. Gardasil 9 adds protection against five additional HPV types—31, 33, 45, 52 and 58— which cause approximately 20 percent of cervical cancers and are not covered by previously FDA-approved HPV vaccines.

“Vaccination is a critical public health measure for lowering the risk of most cervical, genital and anal cancers caused by HPV,” said Karen Midthun, M.D., director of the FDA’s Center for Biologics Evaluation and Research. “The approval of Gardasil 9 provides broader protection against HPV-related cancers. . . .


While this is clearly good news for Whitehouse Station, it is also clearly a product that will cannibalize almost all the old Gardasil revenue -- so it may not result in much incremental new revenue for the company. Now you know.

CDC's Former Chief Now Global Health Czar -- At Whitehouse Station: Promotion Makes Eminent Good Sense


I now suspect more than one of the "elite tier" of pharma and life science companies will soon follow suit, and unify the "compassionate science" sections of their businesses, under one global leader.

And Merck could not have found a finer leader, in this regard. She has served admirably, as the global head of the company's vaccines businesses, since 2010. From today's press release, reprinted by the Fort Mills Times then, a bit:

. . . .[She will now] be responsible for Merck’s global public policy, corporate responsibility and communications functions, as well as the Merck Foundation and the Merck for Mothers program. Gerberding will also lead new partnership initiatives that accelerate Merck’s ability to contribute to improved population health, a measure of impact that is increasingly valued by governments and other global health organizations.

"Julie has been instrumental in making Merck’s vaccines more accessible and affordable, particularly in emerging markets and many of the world’s most resource-limited countries,” said Kenneth C. Frazier, chairman and chief executive officer, Merck. “Julie’s leadership of our vaccines business and her exceptional track record in both the public and private sectors make her ideally suited to lead these areas and to advance our engagement with organizations around the world that, like Merck, are working to advance population health. . . .”


Onward, and upward!


Tuesday, December 9, 2014

Despite Hospira's Spin Doctoring, Cubist's Patents Held. . . Valid -- Through Late 2016 At Least


UPDATED @ 7:45 AM EST -- Merck has taken the rather unusual step of proactively commenting on the Hospira Cubist ruling in Delaware. And, as you'll see -- what I said prior to 6 AM EST still holds. Merck confirms the accuracy of mine, below. Merck will make very good money on this deal, and I'll separately predict that there will be no topping bid offered. It is a fully-priced tender offer. [End, updated portion.]

Yesterday afternoon, at the federal trial court level in Delaware, there were some developments in the Hospira v. Cubist Hatch-Waxman proceedings (Cause No. 12-367). The very able Judge Gregory M. Sleet entered a memorandum opinion late in the day yesterday. . . and overnight, much was made of Hospira's claim that at least four three of Cubist's daptomycin patents were invalidated. This cheer-leading was led by Hospira. The statement is true -- but is not remotely complete -- nor is it even close to the end of the story.

Indeed, far less has been written (thus far) about the one central Cubist patent -- RE '071 -- (belonging to Cubist, via a year 2000 Lilly exclusive license) which was held valid, and held to be infringed, by Hospira's actions, and ongoing attempts at commercialization -- of a generic daptomycin injection. Of course, this is exactly the sort of ordered litigation Hatch-Waxman envisioned. Indeed, settling -- in an orderly, courtly fashion -- whether a generic may enter the market, and when, reduces chaos for all concerned. I suppose Hospira could still attempt an "at-risk" launch, but that would be decidedly unwise, given Judge Skleet's opinion of yesterday. The full 47 page PDF is right here, so you may read it for yourself -- but willful patent infringement leads to treble damages, in these cases. And so -- we will wait for appeals, and additional motions, but here is the business end of the opinion:

. . . .For the reasons stated above, the court concludes that: (1) the Certificate of Correction issued for the RE'071 Patent is not invalid, and therefore Hospira's products infringe the RE'071 Patent; (2) the RE'071 Patent is not invalid for lack of written description; (3) the RE'071 Patent is not invalid for improper recapture; (4) a revision to the court's claim construction of the term "daptomycin" in the '967, '689, '238, and '342 Patents is not warranted, and therefore Hospira's products infringe the '967, '689, '238, and '342 Patents; (5) the '967, '689, '238, and '342 Patents are not invalid for lack of written description. . . .


Now you know. Of course there will be appeals (on both sides), and Strides and Fresenius are still circling Cubist, as well. As I've said, Teva already extracted a daptomycin patent settlement -- and we shall have to wait and see if Teva is ever able to enforce it. So in the mean time. . . keep calm and carry on. Busy day ahead. . .

Monday, December 8, 2014

No Antitrust Concerns Re Cubist: Remember That Vancomycin Is Now Available As A Generic, Too. . .


I've said a few times here that Merck will likely be granted early termination of the Hart-Scott waiting period, related to the all cash $102 per share Cubist tender offer deal launched this morning. I believe that because over 70 percent of Cubist's revenue comes from Cubicin®, and that market place is quite fragmented, as the Merck slide grab at right shows. And Merck has no direct offering here. Note that there are several different manufacturers of generic "Vank" -- all subsumed in that one large (72 per cent) chunk of the US 2014 pie. So, Merck's acquisition won't materially affect the marketplace.

I'll also note that Merck is likely to keep its current debt ratings, stable to improving, even after issuing about $9 billion -- in order to take the legacy Cubist financing structure out. Merck will directly assume about $1 billion of Cubist's debt, and likely drop the interest rate on the whole $9 billion financing, near term. Sharp CFO-level management, that.

So -- this is a smart speedy deal, all the way round in my view. Kudos to all involved! [And I must grin, given that DeutscheBank got a chunk of the Merck M&A advisory and debt work. Shocking. Not.]