Saturday, January 31, 2015

A Little More Detail -- On The Idea Of Repatriation Incentivized Infrastructure Bonds


Just to be sure that the Rand Paul/Barbara Boxer version isn't thought of as the only game in town, here -- I'll repost the details of Sen. Bennet's (D., CO) Partnership to Build America Act proposal, from late 2013.

Those critics who opine that this is simply a sop to corporate megaliths -- or is somehow the rewarding of "bad behavior" -- miss an essential point: The government of the United States simply has no power -- no jurisdiction -- over profits earned entirely outside the US. And if we wish to rebuild infrastructure inside the US, offering companies a tax incentive to bring the money back here makes sense. Especially so, where (as in the US House version of the Partnership to Build America bill) the tax break is conditioned upon those same companies purchasing 50 year bonds, dollar for dollar, that pay only a tiny interest coupon, and will be used to fund roads, bridges, and other public works rebuilds. Here is the bit:

. . . .Summary of key provisions of the Partnership to Build America bill:

Creates the Office of Infrastructure Investment, a new office within the Treasury Department, designed to be a resource for states and local governments looking to structure cutting edge public-private partnerships;

Creates the American Infrastructure Fund managed by the Office of Infrastructure Investment to make loans to states - or to guarantee a state or local bond issuance - provided that the proceeds of the loans or bond issuance are invested in qualifying infrastructure projects;

Provides that the loans or guaranties be supported by credit obligations of the state but be structured to have minimal impact on an individual state’s credit rating by making them subordinate to other general obligations of the state, exceptionally long dated obligations, or be made to a local authority with a state guaranty;

Requires that as a condition to receiving a loan or guaranties from the American Infrastructure Fund that a state require the underlying infrastructure project be built pursuant to requirements for prevailing wages;

Requires projects be partially funded with private capital procured through a competitive procurement process using standardized procedures and documentation developed by the Office of Infrastructure Investment;

Provides that the American Infrastructure Fund be funded by selling both Junior Infrastructure Bonds not guaranteed by the U.S. government and Senior Infrastructure Bonds that will include a guaranty of the U.S. government;

The Junior Infrastructure Bonds will pay a rate less than the Senior Infrastructure Bonds and be freely tradable. The Junior Infrastructure Bonds will be the “first loss” and represent a minimum of 5% of the assets of the American Infrastructure Fund (or more depending upon activities). Assets of the American Infrastructure Fund include the total of loans or outstanding guaranties;

Provides that Congress approves the amount of Junior Infrastructure Bonds that may be offered from time-to-time and thereby control the size of the American Infrastructure Fund; and

For every $1 dollar of Junior Infrastructure Bonds purchased, the purchaser may repatriate $4 dollars of overseas corporate earnings tax-free.

Benefits of the proposed bill:

For every dollar of tax credit produced under the program, the American economy will receive a significant multiple of infrastructure investment;

The American economy is estimated to have at least a $2 trillion infrastructure deficit. If only 10% of the estimated cash sitting overseas was repatriated in this manner, the American Infrastructure

Fund could finance over $500 billion of this need and thereby help millions of working families by creating jobs;

Creates a path for some of the estimated $1.7 trillion of overseas earnings to return to our shores and further stimulate our economy while ensuring high quality American jobs will be created in the process;

Limits the risk of allocating funding for anything other than rational economic development reasons since the federal government does not select the projects and states and private investors share risk in the viability of the project;

It is taxpayer friendly as it requires no appropriations and involves structuring the American Infrastructure Fund in a safe and sound manner with significant risk based capital and limited lending parameters;

Creates a framework for public-private partnerships at the project level that can create investment opportunities for pension funds looking for investment opportunities; and

Helps working families by creating jobs and positions the United States to compete in the 21st century. . . .


The actual text of the House version of the bill provides that any company that takes advantage of these provisions, and then later conducts an inversion (ref. Pfizer's failed 2014 attempt) in the following five years, shall pay the full regular 35 per cent tax rate "recapture" penalties, on all repatriated earnings under the infrastructure bond incentive program. So, we will keep an eye on this.

Summit, NJ: As Merck Vacates Legacy Schering-Plough Facility, Tax Bill Abated


I mention this primarily because a commenter asked about it, after last weekend, when we discussed the Union, NJ vs. Kean interests fight resolution. The financial impact of these "Summit plus Union" tax savings -- to Merck is trivial to consolidated worldwide revenue (around $47 billion in 2013 -- last full year reported). The local impact however, is very meaningful -- to the good people still living, working and raising their children in these New Jersey townships -- the now largely former "medicine chest" of America. [2013 era background on moves at Summit, among legacy Organon/Animal Health staffers here. That was prior to the decision to vacate the facility.]

Merck was able to negotiate a $1.2 million reduction on its roughly $8 million 2015 bill -- to $6.8 million. That represents a decrease of about one per cent in the overall tax base in Summit, NJ. The certainty of an agreement here, is better for the locals, than running the risk of a much larger hit, after a year or more of costly litigation. Here's the relevant portion of the local news bit:

. . . .[Merck]. . . will see its 2015 tax assessment lowered by 15%, in an agreement forged between the City and the soon-to-be departing health solutions giant.

The agreement was announced at the January 30 Summit Common Council meeting by council member Mike McTernan, who heads the Council's Finance and Personnel Committee. Merck had previously fully honored their 2014 tax obligation, and the 15% reduction amounts to a loss of approximately one percent of the City's $128 million in property tax revenue, according to the First Ward Councilman. . . .


Going out to enjoy the sunshine, before perhaps eight to ten inches of white stuff falls. I say bring. it. on.

Friday, January 30, 2015

The Colorado Senator's Idea Finds New Legs -- And Backers -- Will We Shortly See $20 Billion Or More, Repatriated By Merck?


Well, Apple just disclosed it is closing in on $200 billion (yes, that's a "B"!) of foreign un-repatriated cash. So, it was a near certainty that this idea would surface yet again (especially in the minds of Apple's home-state Senators). Tax holidays, for cash repatriated (at an around 6.5 per cent tax rate -- vs. 35 per cent), and then redeployed -- to shore up infrastructure in the USA -- that's the goal. It's a great idea, but. . .

Actually, the idea was originally floated in early 2014, by a Senator out of Colorado -- Michael F. Bennet (D., CO) -- not Sen. Boxer, of California. Either way, here is the idea -- as re-treaded in 2015:

. . . ."The bipartisan repatriation proposal is a win-win for our economy and our country," Sen. Boxer told The Hill. "First, it will bring back hundreds of billions of dollars in foreign earnings that are sitting offshore, which can be invested here in America to create jobs. Second, the taxes paid on those earnings will be used to extend the Highway Trust Fund, which supports millions of jobs nationwide. I hope this proposal will jumpstart negotiations on addressing the shortfall in the Highway Trust Fund, which is already creating uncertainty that is bad for businesses, bad for workers and bad for the economy. . . ."


Plainly this measure (if enacted) could be of vast benefit to Merck, and all of big pharma and big tech, generally, too. Earlier backgrounders on the topic more generally, are here, and here. Enjoy your weekends -- I'm now. . . "the ghost with the most," baby! Mañana!

Thursday, January 29, 2015

As Other Majors Post Q4 2014 Results, I'd Expect Merck To Forecast Strong Headwinds, In Currencies -- In 2015


Maybe not the nearly 10 per cent down bubble Pfizer expects, but perhaps a 5 to 7.5 per cent headwind others are seeing for 2015. That's likely to be Kenilworth's experience in 2015, too.

Yes. Even with solid hedging in place -- you read it here first. Currencies will be a challenge for US domiciled multinationals in 2015.

Now, go out and have a great day! Just a quick prediction -- as we head into pharma and biotech earnings release season.

Tuesday, January 27, 2015

HHS Offers More Detail -- On Ebola Vaccine Trial Design Changes -- Now Evolving In Sierra Leone


There was an HHS teleconference this morning -- to update media on the progress of the Ebola vaccine trials -- and the evolution in the design(s)/protocol(s).

Just as our own Birdman predicted back in November, a wedge design is now favored. Here is the whole transcript -- but this it the bit you need to read:

. . . .Dr. Anne Schuchat, the director of the National Center for Immunizations and Respiratory Diseases: Maybe I could share a little bit from the perspective of the [Merck/GSK] trial being planned for Sierra Leone. We have modified some of the aspects of our design to increase its flexibility and to increase the chance that we will be able to measure the efficacy given the likelihood for fewer -- for lower rates of disease. This has involved switching from a fixed size of enrollment to an event-driven design where we will be able to have rolling enrollment and expand or extend the duration.

So, much of the design remains but rather than having the number of [shots] fixed, we will have an event drive design. And rather than a fixed amount of vaccination we have ability to expand to more people. This also addresses the reality that we won't be able to start as early as we would have liked to. So rather than people being vaccinated pretty much systematically throughout the trial period we will be trying to front load a lot of vaccinations and also have more people vaccinated towards the end of the trial. Again, people will be randomized for the time of immunization, not to either a vaccine group or a control group. We will try to get more people vaccinated earlier than with the previous draft design. That said, we are working closely across the partnerships and making sure that we take advantage of these candidates being ready to go and also don't cut corners.

We, like the NIH, have set up a data monitoring board that is reviewing closely both design and progress. . . .


More as it develops. We will keep you apprised.

Monday, January 26, 2015

Duke's Dr. Califf To Lead FDA -- By Mid 2016? Hamburg Names A Potential Successor?


I believe Duke runs top flight programs. And I believe Dr. Califf is no small reason why. So it is gratifying to see him arrive at FDA. He has done a nice job of balancing the competing interests at the University -- so I expect he will do the same at FDA. And it won't hurt Kenilworth a bit that it has a nice relationship with him, of course.

Here is one of my backgrounders on Dr. Califf -- and his IMPROVE-IT work. I respect him immensely. And here is the FierceBiotech article of this morning:

. . . .FDA Commissioner Margaret Hamburg appointed a Duke cardiologist with ties to biopharma as the agency's deputy commissioner for medical products and tobacco, stoking speculation that she's lining up a successor.

Robert Califf will join the FDA next month, presiding over its separate drug, biologic, medical device and tobacco wings. Califf, now vice chancellor of clinical research at Duke, will oversee the agency's changing policies in personalized medicine, orphan drugs and pediatric science, the FDA said, and he'll play a role in the all-important advisory committee system. . . .

Califf also led the 6-year IMPROVE-IT study, in which Merck's Zetia had a [very slight] positive effect on cardiovascular outcomes, affirming the hopes of companies developing new cholesterol-lowering medicines. . . .


This is indeed good news, all the way 'round.

Already On Market In The US, Cubist's Sivextro® Gets Good News In The EU, At EMA


This will help increase the return Merck books on the Cubist deal, over the next few years.

It is welcome, and widely expected news. Here's the bit -- from a presser:

. . . .Merck announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) has adopted a positive opinion recommending approval of the investigational antibiotic SIVEXTRO® (tedizolid phosphate) for the treatment of acute bacterial skin and skin structure infections (ABSSSI) in adults. Merck acquired SIVEXTRO as a part of its purchase, through a subsidiary, of Cubist Pharmaceuticals, Inc.
The CHMP positive opinion will be reviewed by the European Commission. If the European Commission affirms the CHMP opinion, it will grant a centralized marketing authorization with unified labeling that is valid in the 28 countries that are members of the European Union, as well as European Economic Area members, Iceland, Liechtenstein and Norway.
SIVEXTRO is a once-daily oxazolidinone antibiotic developed for both intravenous and oral administration for the treatment of serious infections caused by certain Gram-positive bacteria. . . .


Onward!

Sunday, January 25, 2015

Some Shifts In Geography "Probable" -- In Large Scale Phase II/III Ebola Vaccines Trials


The good news here is that Liberia is ever so gingerly turning the corner -- on her Ebola outbreak.

Sierra Leone is not yet that fortunate -- so the large, three arm (Merck-GSK-placebo) trials may be conducted (at least in part) outside of Liberia. Sierra Leone is the likely second site. Finding enough volunteers to take nearly 30,000 doses already arriving in West Africa will take a bit, now -- or so says the head of US NIH, Dr. Francis Collins. Here's the minor updating tidbit, sourced from off-hand remarks made at a Davos, Switzerland conference yesterday, EU time:

. . . .A steep fall in Ebola cases in Liberia will make it hard to prove whether experimental vaccines work in a major clinical trial about to start in the country, the head of the US National Institutes of Health (NIH) said on Saturday.

The NIH might have to move some testing to neighbouring Sierra Leone, while regulators could end up approving Ebola shots based on efficacy data from animal tests backed by only limited human evidence, Francis Collins told Reuters. Liberia, once the epicentre of West Africa’s deadly Ebola epidemic, has just five remaining confirmed cases of the disease, a senior health official has said. The sharp decrease in cases is clearly good news, but it poses a problem for scientists from the NIH, GlaxoSmithKline and Merck, who want to enrol 27,000 people at risk of infection in the pivotal Phase III Liberian study. “It’s going to be a hard trial,” Collins said on the sidelines of the World Economic Forum in Davos. “It’s possible we may have to move some of the effort to Sierra Leone. . . ."


Huge soft wheeling snowflakes drifting by my window right now. . . a very peaceful late rising Sunday morning. . . do go enjoy yours. Smile.

Saturday, January 24, 2015

Motion For Reconsideration Filed: In Former Union Facility "Real Estate Tax Rolls" Dispute


Apparently, the Kean interests do not intend to back away, until the last dog is hung.

Two weeks ago, we reported that the Russo entity had secured a trial court level order awarding it the property -- for a local commercial real estate development project. That would mean that the parcel would stay in Union's tax base.

But the interests seeking to return it to an untaxable status -- legacy members of the Kean family, and the University that bears its name -- have asked for a reconsideration of the judge's ruling. They call it "palpably incorrect". I palpably disagree.

The path of the law (as it has evolved, since the middle of the last century) has generally disfavored these sorts restrictions on the alienability of title to real estate. And at issue here is a 1925-era restriction upon which the Kean interests base their claim. Moreover, apparently it is an entirely oral claim, at that -- no writing gives the right of reverter/option back to Kean, post the Schering-Plough 1986 transaction, as I understand it. So, all I can say is. . . good luck with that. There must be some statute of repose on these matters in New Jersey, as there is in Illinois and New York. In any event, here is NJ.com, on it all:

. . . .Union Township officials challenged the university’s claim to the property. Township officials say they receive an estimated $4 million in property taxes from the tract annually, and allowing the university – which is exempt from paying property taxes – to take ownership would take away that revenue.

Township officials today issued a statement condemning the university's motion to have Dupuis reconsider her ruling, saying the university is extending the legal battle and costs of litigation.

“The land does not belong to Kean University,” Union Township Mayor Manuel Figueiredo said in a statement. He said the court decision “was decisive and left no room for misinterpretation.

“The complete and total disregard for the people of our community who have worked in partnership with the university over these past years is almost incomprehensible,” Figueiredo said. . . .


As I say -- I think the property will ultimately be ruled to belong to the Russo interests -- and remain taxable. These are just the death rattles of those opposing that process.

Now, on a much lighter note, we wish all young hoopsters nationwide the best of luck this afternoon. Do let the divisional playoffs begin!

Friday, January 23, 2015

Merck Cuts Its Lobby Spend In Half -- Full Year 2014 (Preliminary Data), Vs. 2013: $5.7 Million


This is a very, very significant reduction, year over year -- even though it was not a presidential race year. Merck spent (in 2014) at about the low-water levels it last touched back in 2006 -- almost a decade ago, now.

But before we all celebrate too, too loudly, I'll note that Merck still outspent Apple by about 30 per cent ($4.1 million in 2014 -- a record high water mark for AAPL) -- and Apple boasts over 5 times Merck's market cap (and needs lots of wonky-tech lobbying work done, to boot). Merck did come in at nearly the lower quartile of its mega-pharma peers, though. [That's about $56 million over the last six years, on lobbyists.] These are all preliminary numbers, and still I think the US Senate database now reflects all of Whitehouse Station's spend (we will update, right here, if things change). So. . . here's what the company reported as "self-lobbying" subjects, in the fourth quarter:

. . . .340B (no specific bill), National Diabetes Clinical Care Commission Act (H.R. 1074, S.539), Eliminating Disparities in Diabetes Prevention Act (H.R. 3322), Oncology education (no specific bill), adult vaccine policies (no specific bill), medication adherence, DISARM (H.R. 4187), ACA Implementation (no specific bill), Hepatitis C education (no specific bill), HIV education (no specific bill), MODDERN Cures Act of 2013 (H.R. 3116), biosimilars (no specific bill), Alzheimer's education (no specific bill), 21st Century Cures (no specific bill), general pharmaceutical industry issues and education. . . .


The vaccines lobbying was likely for Ebola vaccine candidates' tort immunity -- under the PREP Act. T.G.I.F. one and all -- I'm out! Have a great weekend!

Friday's Merck-Related Roundup: Ebola Vaccines; Hep C And Cubist Clean Up


So, as Cubist's CVRs are canceled, and wiped from the SEC's registration rolls (as they are no longer capable of being exercised), its convertible debt is now the subject of a tender offer, funded by its 100 per cent parent -- Merck. This will wipe the convert feature, at least as to converting into old legacy Cubist shares. I think I'd rather hold the (original issue) higher coupon on the straight debt feature, if I could, to maturity, since the credit rating behind those payments is now. . . big Merck. Just a notch below government backed paper, and yet originally issued at legacy Cubist higher borrowing rates -- if one either acquired (i) in the offering, or (ii) more than a week prior to the Merck announcement, last fall.

In other overnight news, Merck has announced it will stop selling Victrelis® in the US by year end 2015. Gilead's Solvaldi® is just so very much the better therapy option (Vertex previously did the same, for its Incivek® biologic Hep C offering -- which used to kick Merck's tail here, too).

Finally, Ebola vaccine candidate trial vials (from Merck and competing ones from GSK) -- in huge scale -- are on their way to West Africa, overnight. Good news. Be safe and have fun this fine Friday! [I'll add links for all these tidbits later today. Onward.]

Thursday, January 22, 2015

As Of Yesterday Evening, Cubist Became. . . A Merck Subsidiary: Closed

As expected -- it is complete. And yes -- it is true -- some Cubist stockholders may seek Delaware appraisal rights, but they will likely get $102 per share (in my humble estimation). So what's the point? That is a very fair market value -- independently negotiated -- by two public companies' boards. So. . . it is all over, save a little hoarse shouting (and throat clearing). Merck owns Cubist, now.

Per the latest SEC filed amendment to the tender offer documents, overnight:

. . . .On January 21, 2015, Purchaser merged with and into Cubist, without a meeting of the stockholders of Cubist in accordance with Section 251(h) of the General Corporation Law of the State of Delaware, with Cubist continuing as the surviving corporation and thereby becoming a wholly-owned subsidiary of Parent. Each outstanding Share (other than Shares held in the treasury of Cubist or by Parent, Purchaser or any of Parent’s other subsidiaries, which Shares were canceled and ceased to exist) were automatically canceled and converted into the right to receive $102.00 per Share, without interest, but subject to any required withholding of taxes. Cubist was delisted from NASDAQ at the close of market on January 21, 2015. . . .


Carry on. It is gray here, but we are. . . smiling. . . .

Tuesday, January 20, 2015

Ed -- At Pharmalot Has It: Zilmax®, In Lower Dose Testings, Via Texas Tech University, Since Last Summer. . .


Just an update -- but for some time now, it's been known, at least in livestock trade press circles that Merck was running large trials through Texas Tech University, to see whether robust cattle weight gains could be achieved with lower doses of zilpaterol, branded as Zilmax®. [That's a legacy Schering-Plough Animal Health product by the way.] Obviously we are now years away from a renewed widespread acceptance in the US, and "livestock/ag news" outlets are openly saying that the competitor's product has effectively won over the US market, in Zilmax's self-imposed 18 month absence. Background here. And here.

In any event, here is Pharmalot's item:

. . . .Merck is funding the testing of lower dosages of its controversial Zilmax drug for cattle growth in a move that livestock experts say is crucial if the company is to resume sales of the product to the U.S. beef industry, Reuters writes. Nearly 18 months after Merck pulled the drug from the U.S. and Canadian markets after videos and photographs showed Zilmax-fed cattle turning up in a distressed state, either lame or with hooves missing at slaughterhouses, scientists at Texas Tech University are testing beef carcasses taken from cattle fed different concentrations of Zilmax. . . .


At its peak (2012) this was only about $156 million a year in sales (far less, in profits) for Merck. So -- immaterial, overall (even at double that amount). Onward!

Monday, January 19, 2015

As The Phase II Trials Progress, Post Industrial Nations Must Grant Wide Indemnity To Ebola Vaccine Candidates


Just as the US Department of Health and Human Services has already declared, all other post-industrial nations ought to formally decree, as we wait for the vaccine trial outcomes, that administering any approved Ebola vaccine in accordance with its label (assuming a satisfactory Phase II trial result) will presumptively insulate all parties from liability for administering the vaccine to humans. It is time to act.

Wellcome Trust and CIDRAP just last week put out a 16 page PDF roadmap urging this action (at page 6) -- and setting various guidelines for what will be acceptable as candidate vaccines, and clinical trial outcomes. Do read all about it at Chemistry World this morning, but the World Health Organization ought to endorse it -- in its entirety -- immediately:

. . . .Finally, in December 2014, the US Department of Health and Human Services issued a declaration to provide liability protection (indemnity) for activities related to EVD vaccines; similar actions should be considered by other leading governments around the globe, such as the European Union, Japan, Brazil, India and China. . .


The US CDC ought to echo support for the roadmap as well. Here endeth my MLK Day 2015 sermon. But he would have agreed, for certain. Be of service today, to all your fellow humans.

Sunday, January 18, 2015

Come Mid-2015, Two High Ranking HP Alums Will Handle All Legal & Compliance Matters -- At Whitehouse Station/Kenilworth

In my estimation, given their completely transparent, courageous and ethical decisions during the aftermath of a board room wire-tapping and surveillance scandal at HP circa 2006, both Ms. Watson (a University of Georgia high honors law grad), and Mr. Holston (background on his arrival, there) are excellent new Merck legal point people.

The orderly GC succession has been in the works since Mr. Holston arrived in 2012 -- but was made formal in June of last year. None of this takes effect until later in the year 2015. Ms. Watson won't officially arrive until April 1, and the transitions are effective mid-year 2015 -- but Merck will clearly benefit from the world class bench here. A blogger for/at the WSJ broke the story, and it seems it was a bit of a scoop. All good:

. . . .Ashley Watson is joining Merck Inc. as chief ethics and compliance officer on April 1, the pharmaceutical company said, and has left her similar role at Hewlett-Packard Co.

Ms. Watson is replacing Michael Holston, who on July 1 is moving into the role of general counsel being vacated by Bruce Kuhlik, who is retiring. . . .

In her role, Ms. Watson will report directly to Chairman and Chief Executive Kenneth Frazier, the spokeswoman said. . . .


This is excellent and orderly "next gen" leadership transition planning by Merck -- which by mid year ought to have moved most of its executive functions to the legacy Schering-Plough HQ in Kenilworth (thus the slash in the headline). As we reported previously, Holston was one of Merck's outside lawyers, during Ken Frazier's 2004 tour of duty as GC during the Vioxx® matters. Off now -- to enjoy a quiet science-filled reading day. . . smile!

Saturday, January 17, 2015

Saturday's Sublime Trivialities: From The Movie "Trading Places" Edition


We all likely recall the Eddie Murphy/Dan Aykroyd Paramount Studios vehicle -- of the same name, from the 1980s. . .

Well, at the JP Morgan Conference in San Francisco this past week, pharma and life science CEOs were asked who they'd most like to "trade places" with -- as a fantasy job. Several of course named Elon Musk, Telsa's jaw-slacking maven -- and SpaceX genius. . . and more than a few named Steve Jobs -- at the "Second Coming" of Apple. [One named Tim Cook, as well.] But I'll highlight our CEO's response -- as it truly made me. . . smile. From HITC Business, then:

. . . ."I would be the CEO of the Philadelphia Eagles because maybe I could help them win," said Merck CEO Kenneth Frazier. . . .


I'd dare say not even he could really help the hapless "Iggles" -- long term. Now you know. Time for some real world Saturday fun -- do go enjoy. . . yours!

Friday, January 16, 2015

Ebola Crisis Update: J&J Lands €100 Million In Public/Private Funding -- For Its Janssen Unit's Vaccine Efforts


Just a quick Friday update -- on Ebola vaccine candidates' news, here: J&J has scored a way to likely become the solid third-place player, in this race.

Even so, this is far less about commercial opportunities, and far more about doing the right thing. Profits may well come, for these top three finishers -- but they will be incidental. From the press release, then:

. . . .Johnson & Johnson is pleased to announce the formation of consortia with leading global research institutions and non-government organizations to work in conjunction with Janssen Pharmaceutical Companies to accelerate the development of its Ebola vaccine regimen. The Innovative Medicines Initiative (IMI) plans to award these consortia grants totaling more than €100 million from the Ebola+ programme to support the development, manufacturing and patient education for the vaccine regimen.

The IMI is Europe's largest public-private initiative aiming to speed up the development of better and safer medicines for patients. Funding for the IMI Ebola+ programme comes in part from Horizon 2020, the European Union's research and innovation programme, and in part in the form of in-kind contributions from the European Federation of Pharmaceutical Industries and Associations (EFPIA) partners in the projects.

"In the face of the global challenge of Ebola, bringing together the expertise and capabilities of the pharmaceutical industry, academic centers and NGOs will be critical to help solve this crisis," said Paul Stoffels, M.D., Chief Scientific Officer and Worldwide Chairman, Pharmaceuticals, Johnson & Johnson. "The European Commission's support through IMI bolsters collaboration that should significantly accelerate efforts to help address this humanitarian crisis. . . ."


This is the very sort of thing George Merck would have been proud to be associated with -- and driving, were he still on the planet. Kudos to GSK, Merck and J&J, here. Onward.

Thursday, January 15, 2015

Jefferies Still At "Hold" -- But New Target Is. . . $69!


Back in November 2014, we mentioned that for 18 months the firm had "see-sawed" its target between $58 and $63 -- always keeping a "hold" rating.

Well, the hold still applies, but they've now called for an 11 per cent upside, on the 12 month price target for Merck. Nice. The item, then:

. . . .Analysts at Jefferies. . . boosted their price objective from $65.00 to $69.00 in a report issued on Thursday. The firm currently has a “hold” rating on the stock. Jefferies Group’s target price would suggest a potential upside of 11.51% from the stock’s previous close. . . .


We will keep you posted. Drive safely out there.

A Quick Update -- On Cancer "Collabos": Merck(s)(!) & Pfizer


My regular readership will recall that back in August of 2014, we wrote about the two known collaborations between Merck and Pfizer -- to deploy potential combo therapies, with Merck's Anti PD-1 immuno offering. Will our Merck still be enthused about the collaboration(s)? I am uncertain.

I mention those agreements again today, as I am reading reports (like the below, from Bloomberg) that Mr. Read now plans to try to skip melanoma, and leapfrog right into lung, kidney and other cancers, with some recently purchased immuno assets (candidates, really). . . now that he knows he'll never get AZ's pipeline. This does set me to wondering whether his seemingly rather desperate move. . . has any lasting merit at all. I also mention it because the German Merck (no relation!) is his partner in those efforts. This is going to get (even more) confusing. Here's the Bloomberg bit:

. . . .The market for immuno-oncology drugs, as they’re called, may be worth $40 billion a year or more a decade from now, according to Leerink Partners LLC. Last year’s abandoned attempt by Pfizer to buy AstraZeneca Plc for more than $100 billion was predicated in part on a desire for the London-based company’s cancer pipeline.

Pfizer has lagged behind competitors in turning research spending into marketable drugs, according to data from Boston Consulting Group. From 2008 to 2010, the drugmaker -- then the world’s largest -- was also the biggest spender of research and development dollars. Over that period it spent more that $10 billion a year, more than any other large pharmaceutical company, while falling only in the middle of the pack in turning that into new product sales, according to the study. . . .

Instead of skin cancers like melanoma, New York-based Pfizer will focus on malignancies of the kidney, lung, head and neck, and bladder, using its German partner’s drug, MSB0010718C, along with others from the alliance and its own labs. It will also test cancer drugs that use other immune-system mechanisms. . . .


We will keep you apprised, but personally -- I'd not bet on Ian Read, on this one.

Wednesday, January 14, 2015

Merck's Cubist Tender Offer Clears Hart Scott Overnight


Just made public, and as filed this early morning -- at the SEC's EDGAR desk -- Merck's tender offer for Cubist has cleared Hart-Scott, as of midnight last night. No antitrust wrinkles -- just as we said.

Pretty shortly, the tender offer period closes as well. In fact, that is set to occur 11:59 p.m., Eastern Time, on next Tuesday, January 20, 2015. So, that condition is satisfied (see (i) below) -- now we await word from Austria and France (see (ii), and (iii)below):

. . . .(i) the waiting period (and any extension thereof) applicable to the consummation of the Offer and the Merger under the HSR Act, shall not have expired or been terminated, (ii) the transactions contemplated by the Merger Agreement shall not have been cleared under the Austrian Cartel Act (Kartellgesetz 2005), and (iii) the French Ministry of Economy does not provide confirmation that Articles L.151-3 and R.153-1 and seq (as modified by Decree n°2014-479 of May 14, 2014) of the French Monetary and Financial Code do not apply to the transactions contemplated by the Merger Agreement or, in the alternative, there has not been requisite authorization without condition of the French Ministry of Economy of the transactions contemplated by the Merger Agreement. . . .


We will keep you posted. But this is good -- and largely expected -- news.

Tuesday, January 13, 2015

Maybe A (NJ State Court) Femur Settlement Afoot? Compelled Status Hearing -- In a Week -- In Federal Fosamax® Femur Case MDL?


UPDATED: As of the close of business today (6 p.m. Eastern), one of the plaintiffs' steering committee counsels has already written the court to say that at least one of those lawyers is unavailable on the date ordered. Both sides are conferring and looking for alternate dates. But that bit confirms that this is irregular. We will keep an eye on the docket. [End, Updated Portion.]

It is rather unusual -- for all the lawyers to be summoned in, on only one week's notice -- in a nationwide MDL, like this -- for a live status conference, and by name, to boot.

Not sure what may have happened. . . but I will try to find out. Perhaps something has happened in the parallel state court proceedings -- those aren't easy to obtain, online. In any event, this order was entered by the very able Judge Pisano, just yesterday:

. . . .In-Person Status Conference has been set for 1/21/2015 at 11:00 AM in Trenton - Courtroom 1 before Judge Joel A. Pisano. The following representatives are to be present: Plaintiffs Steering Committee (Cecchi, Weitz, & Seeger), and Merck's counsel (Marshall). Please confirm receipt of court notice by (e-file) not later than 1/14/2015. . . .


Do stay tuned. Onward, on a chilly morning.

Will Moderna Therapeutics' mRNA Approaches Create Whole New Classes Of Infection Fighting Pathways?


That is what EVP of R&D at Merck, Dr. Roger Perlmutter is betting. And he's plunking down $50 million in upfront R&D contracts, and a $50 million equity stake in Moderna, on that bet. This whole approach is one of those potentially game changing, big "out of the box" ideas, to be certain.

Dr. Perlmutter has followed closely-held Moderna since his days at Amgen, so I suspect he's making a pretty carefully thought through bet. Here's a bit, from Forbes -- do go read it all:

. . . .Moderna Therapeutics, the Cambridge-based company that has taken the biotech industry by storm with a radical idea for messenger RNA therapies, is announcing today it has secured a big vote of confidence from a company with a reputation for doing rigorous science. Merck has agreed to make a $50 million upfront cash payment to Moderna for the rights to use its mRNA technology to develop as many as five vaccines and treatments against infectious diseases over the next three years. Merck is also making a $50 million equity investment in closely held Moderna. That new shot of $100 million means Moderna has raised a stunning $500 million in private investment this month alone, and it has scooped up a grand total of more than $1 billion from investors and partners in less than five years.

All that money has arrived before Moderna has put its first drug candidate to the ultimate test in clinical trials. It’s an unprecedented amount of money for a new drug technology at such an early stage of development. . . .


We will keep a weather eye on the horizon -- for this bet. . . and now, carry on. Je Suis. . . Charlie.

Merck Looking To Get Keytruda® To "First Line" Therapy -- In Lung Cancers; Partnering With Lilly


I think a more nuanced perspective here would be to very look closely at Lilly's pipeline, and finally admit that Lilly is simply trying to get something into the game, as it is, at present, so far behind on next gen immuno-based oncology track. In fact, Lilly may be essentially discounting its longer term future oncology pipeline here, just to get the candidates linked to Merck's Keytruda®, on the mental maps of FDA regulators -- and eventually, prescribing oncologists. Lilly is that far behind, truly.

Even so, this is good news for Merck -- as Merck gets a likely 2017 study result that may well be the basis for first line therapy in NSCLC. And we all know that's a goldmine. We've been saying right along that Merck will move to widen the oncology market-spaces for Keytruda, and this is clearly designed to do just that. A bit of the release, then:

. . . .Merck will conduct a Phase 2 study examining the combination of pembrolizumab with pemetrexed in first-line non-squamous, non-small cell lung cancer (NSCLC). This study is currently enrolling.

Lilly will conduct a multiple-arm Phase 1/2 study examining the combination of ramucirumab with pembrolizumab in multiple tumors. This study is anticipated to begin in 2015.

Lilly will conduct a Phase 1/2 study examining the combination of necitumumab with pembrolizumab in NSCLC. This study is anticipated to begin in 2015. . . .


Financial details were not released, but this easily runs to the high hundreds of millions of dollars -- perhaps nearly a billion, life of deal. And still, in NSCLC, at least -- Opdivo® remains the clear leader -- the one to beat, in my experienced opinion.

Monday, January 12, 2015

As We Predicted, BMS's Opdivo® Has Lept To Clear Lead On Lung Cancer; Phase III Trial Stopped Early -- To Be Submitted To FDA (For Approval) Very Shortly


We said so, right here, most recently, in reply to Tim Anderson's prognostications. But we also said so here, earlier last year.

Yesterday morning, BMS announced that its Phase III NSCLC (lung cancer) clinical trial has shown such clear superiority over existing treatments that the monitoring board on the study has halted it early (to continue would be questionable ethically -- to those not receiving the Opdivo® arm). So, now BMS is pivoting sharply, and submitting this NSCLC lung study to FDA for prompt approval, and resulting label expansion -- into advanced squamous cell lung cancers. That's a vast market opportunity, in which it is likely to be the first mover. Per BusinessWeek just now:

. . . .An independent committee halted the Phase 3 trial of 272 patients with advanced, squamous cell lung cancer after concluding that Opdivo was showing a superior survival rate, Bristol-Myers said yesterday in a statement. The company will provide the data to regulators.

The medicine is part of a class in one of the hottest areas of cancer research, known as immunotherapy because it stimulates patients’ immune systems to work more effectively against the disease. .


BMS is up six per cent on the NYSE on the news. Don't forget, Merck will present on the west coast later today -- but I doubt Mr. Frazier has any similar hat trick to announce. Onward -- out into the snow flurries!