Saturday, February 28, 2015

Legacy Schering-Plough Zenhale® Inhalers Recalled -- In Canada Only


Not material to Merck overall -- but noteworthy for its legacy attachment to the Schering-Plough OTC version Nasonex® franchise.

OTC Nasonex (a product and brand now owned by Bayer -- as part of that consumer health transaction) contains some of the same active ingredient as the Zenhale product in Canada. See graphic at right. Here is the relevant Health Canada notice, in any event -- and a bit:

. . . .Merck Canada is initiating a recall of certain lots (see attached list) of Zenhale at the pharmacy/physician level due to the possibility of device malfunction after 24 months shelf-life, resulting in the potential for a patient to receive a lower dose than expected. The company’s investigation has determined that the occurrence of this defect is low.

Merck Canada expects new [inhaler] product to be available in pharmacies by March 23, 2015. Merck Canada will reduce the shelf life of all Zenhale products from 36 months to 24 months. The new product will have a shelf-life of 24 months. . . .


So it goes -- all remedied by March 23, 2015. Thus immaterial. Now, here on a snowy Saturday night -- going to catch up and see Kingsman. . . .UPDATE: it was horrific -- as in an atrocious waste of time.

Friday, February 27, 2015

WHO/SAGE Indicate "No Decision" -- On Mass Ebola Vaccinations -- Until At Least August 2015


Clearly, the recent and heartening reduction in the year long outbreak (the world's worst, thus far) is stretching the time line, but that is net, net, a good thing. And clearly we need to see the immune response is durable in the wild -- in the real world. So we will need to be patient here. I am encouraged. And I am sure Merck and New Link are, too. As are GSK and J&J.

Here's the Reuters bit, overnight:

. . . .WHO spokesman Christian Lindmeier, reporting on a three-day meeting of experts, told a news briefing: "Vaccine introduction is by no means a given and will depend on the results of clinical trials and recommendations from WHO's Strategy Advisory Group of Experts (SAGE) on vaccines and immunization.

"The earliest that the SAGE is expected to make recommendation on a wide-scale introduction is August. Decisions on whether or not to introduce the vaccine will be made by the respective ministries of health of countries. . . ."

WHO spokeswoman Margaret Harris said: "We know the vaccines are safe, we know they produce a good immunogenic response in humans, but we don't know if they are effective when you actually have disease in community."

Guinea, Liberia and Sierra Leone reported 99 new confirmed Ebola cases in the week to Feb. 22, down from 128 the previous week, the WHO said on Wednesday. . . .


So, encouraging declines in new cases continue. . . and Merck will of course "do the right, as it sees. . . the right." For my part, I'll keep hoping. . . for "hope is a good thing -- perhaps even the best of all things. . . ." Onward.

Jefferies & Co. Continues To See-Saw, On Merck


The last move from this house was up to $69 -- now back to $63 (where, in November 2014, the analysts had it prior to the "breakout" $69 level) -- so, the see-saw on near term NYSE price targets for Kenilworth continues.

Always a "Hold" -- neither a "Buy" or "Sell". . . In the context of other large cap pharma concerns -- here is the landscape, at the moment:

. . . .Jefferies Group has also taken action a number of other healthcare stocks recently. The firm raised its price target on shares of Pfizer Inc. from $40.00 to $42.00. They have a buy rating on that stock.

Also, Jefferies Group reiterated its hold rating on shares of Merck & Co., Inc.. They have a $63.00 price target on that stock, down previously from $69.00.

Finally, Jefferies Group reiterated its buy rating on shares of Eli Lilly and Co. They have a $87.00 price target on that stock, up previously from $80.00. . . .


Happy Friday, one and all. Be safe; be warm.

Thursday, February 26, 2015

The Company That Acquired Merck's Boulder Bio Operations -- Has Itself Been Acquired -- By A Trio Of Investment Companies


Back in May of 2014, we reported that KBI BioPharma had purchased Merck's microbial lines API capabilities in Boulder, Colorado. Long before that, we had reported in early-2010 that Merck had itself acquired the facilities from a third party, called Insmed (with additional nuances here).

Here's the bit from Genetic Engineering & Biotechnology News:

. . . .KBI says its capabilities include delivering expert and integrated process development and cGMP manufacturing of recombinant protein active pharmaceutical ingredients (API). Among clients offering testimonials on KBI’s website are Auxillium Pharmaceuticals (acquired by Endo International for $2.6 billion in a deal completed January 29), DynPort Vaccine (a CSC company), Elusys Therapeutics, Trans Tech Pharma, and UCB Celltech.

KBI expanded to Boulder last year, when it bought the microbial process development and manufacturing operations of Merck & Co. for an undisclosed price. As part of that acquisition, KBI agreed to provide ongoing development and manufacturing services to Merck, as well as to third-party customers. . . .


So it goes -- this Boulder bunch has a great pedigree and does excellent science. But it sure has been passed around a bit -- and on very short round-trips, too. I'm just sayin'. . .

An Update -- On Gilead's Tax Haven Utilization -- For Its Sovaldi® Juggernaut


Since we have long followed the way Gilead's Sovaldi® has all but crushed the life out of both Vertex's and Merck's last gen Hep C drugs (which were revolutionary in their day), I thought the readership might enjoy an update on how the Sovaldi train is running, ex-US.

Tonight, the Chicago Tribune has a nicely nuanced story -- about how effective Gilead has become, in sheltering its Sovaldi income from US taxation. [It shouldn't entirely escape notice, however, that Gilead's chief competitor here, Abbott Labs, calls the Chicagoland area home -- and so this is a bit of home town boosterism, in a back-handed way. Boosterism, by casting an unflattering light on Gilead's Irish haven operations.] here is a bit of the Trib story -- do read it all:

. . . .The company reported foreign income before taxes of $8.2 billion for 2014, earning more in non-U.S. profits than it recorded in non-U.S. sales. The data released in a securities filing Wednesday suggest that Gilead is taking advantage of U.S. rules that let companies shift valuable intellectual property to low-tax countries, said Robert Willens, an independent tax consultant based in New York.

"Whenever you have huge, very high profit margins and a lot of income as well, it almost always results from the exploitation of intangibles," Willens said in a telephone interview. "It's quite a dramatic increase from one year to the other. That's something you don't see very often. . . ."


When a multi-national company (with dozens of subsidiaries) records more net income -- than sales -- in a given non-US geography, it must mean that the US entities in the chain are paying a hefty patent royalty on each dollar of their own sales, in the US -- to the patent holding company (usually a parent or subsidiary in Ireland, or a Benelux jurisdiction).

This is plainly defensible for truly ground breakingly revolutionary drugs -- the heart of which rely upon extremely valuable inventions, or intellectual property -- usually patented.

So it would seem, as to Gilead. Fascinating, and good tax planning -- sez me.

NICE To Routinely Reimburse For Merck's Remicade®: United Kingdom Good News


While this expansion of coverage probably won't counter the erosion from bio-similars, it is good news for Merck's non-US operations. We will keep an eye out for Pound Sterling revenue trend lines, in the first and second quarters of 2015.

Here's a it, from PharmaTimes:

. . .Merck Sharpe & Dohme’s Remicade (infliximab) and Simponi (golimumab) and AbbVie’s Humira (adalimumab) will be routinely funded on the NHS to treat the chronic bowel condition in patients with moderate to severe disease, significantly expanding access to these biologics.

Around 146,000 people in the UK live with UC, and the new recommendation means that more options are available to patients giving them a greater chance of controlling symptoms “so they can have a much better quality of life,” said Carole Longson, NICE Health Technology Evaluation Centre Director. . . .


Onward -- out, into the snow!

Wednesday, February 25, 2015

Launch Day! -- Euro Biosimilar to Merck's Remicade®


The estimate is that over the next decade, over $100 billion of value will be transferred away from branded makers, to the bio-similar producers, in the class of biologics overall.

It begins in earnest, for Merck, today. Here is Reuters on it:

. . . .Paul Greenland, head of biologics at Hospira, said that biosimilars are likely to be priced about 20-30 percent cheaper than originals.

Because biotech drugs are made from living cells it is impossible to manufacture exact copies, as happens with simple chemical medicines, so regulators have come up with the notion of approving products that are similar enough to do the job.

Remicade, which has annual European sales of about 2 billion euros ($2.3 billion), and the two biosimilar copies all contain an antibody known as infliximab. . . .


Probably at least a 15 per cent down bubble in sales of Remicade®, over the next three years, in the EU then -- for Kenilworth. But it is priced into today's NYSE quote.

Tuesday, February 24, 2015

Once Again, Doing Well -- And Doing The Good. . . Isentress® Access For Limited Means HIV+ Children Globally


The Medicines Patent Pool announced this morning that Merck, via MSD, has granted non-exclusive licenses in up to 92 limited means countries, for pediatric raltegravir dosings.

This is both moral, and smart, business. Merck follows on the heels of its iDesign HIV Awareness and patient assistance programs with this humanitarian effort. My hat is off to the team that made it happen. From ABC News, then:

. . . .Drugmaker Merck & Co. has granted a free license allowing one of its HIV medicines to be made and sold inexpensively for use in young children in poor countries hard hit by the AIDS virus. . . .

The deal, announced Tuesday, lets any generic or brand name drug manufacturer make low-cost pediatric versions of Merck's raltegravir for sale in 92 low- and middle-income countries, according to the Medicines Patent Pool. The group, backed by the United Nations, works with brand-name drugmakers to find ways to make their HIV medicines still covered by patents available in developing countries for a fraction of the price charged in Europe or the United States. . . .


Of course, MPP officials have renewed their call for Merck to make the life-saving drug available to adults, under a similar license. I don't expect that Kenilworth will agree to that. There is just too great a risk of it being pirated, and resold in the post industrial world -- undercutting Merck's perhaps $1 billion invested in bringing Isentress® to market, globally.

Monday, February 23, 2015

Ed Silverman: New Merck's "Old School" Biotech Collaboration With NGM Bio


More later -- but this is fascinating. Up to $450 million over five years -- and a "go wherever your head & gut lead you" mandate. Amazing.

LATER UPDATE: Here is a rather breathless account of the deal's back and forth -- from Bloomberg. I'll not need to add. . . anything to that link. I guess Roger has known the NGM folks since at least 2004, at Amgen.

In any event -- from that gent, Ed, who had it first -- at Pharmalot, then:

. . . .Merck will provide a $94 million upfront payment and a $106 million equity investment for a 15% stake, and also fund $250 million of NGM R&D projects over the next five years, although NGM has full authority to control R&D. Merck R&D chief Roger Perlmutter and NGM chief scientific officer, Jin-Long Chen, by the way, once worked together at Amgen. . . .


Off to court, and other sundry duties!

Sunday, February 22, 2015

How The Mighty Have Fallen. . . Part Two: Fred Hassan Founder & Chairman Of (Wait For It. . .) A "Peppermint Oil" Company


As ever, picture is worth 1,000 words -- so I offer one, at right. And, still no clinical trial proving his delivery system provides any real world benefit over a drop or two on the tongue. [I just checked again this morning.] So, the $25 for about two weeks of supply. . . is in my opinion -- outrageous. From my earlier piece -- in June of 2014, then:

Of course. . . not all homeopathic remedies are without merit. Far from it. Some are as effective as FDA approved drugs, at a fraction of the cost. And there is some research suggesting that peppermint oils (properly delivered) might calm upset stomachs. [But I'll flat out guarantee you there is no peer reviewed research of any kind -- showing that Fred Hassan's delivery system here -- micro-beaded capsules -- actually achieves any positive clinical outcomes, beyond that of a few pennies a dose, in the form of a drop or two of ordinary peppermint oil, on the tongue. If he had it -- he'd tout it, to the high heavens! Trust that.]

So, what is truly beyond the pale, here -- in my opinion -- is the price ($25 for 48 capsules!?!), and the pseudo-science in which "Fast Fred" drapes his latest "medical food" -- actually something more akin to a nutri-ceutical, if the truth be told. But FDA is taking a hard look at nutri-ceuticals. Fast Fred is likely trying to "fly under the radar," here -- by calling it a medical food.

I might ask Fred "How many foods require that they be consumed ONLY under a doctor's close supervision?" Doesn't that contradict the idea of GRAS? How is that "generally recognized as safe"? An overdose of purified, concentrated menthol in the gut can lead to several serious side effects. No mention of those, on this slap-dash website.

As I say -- this is quite a come-down for Mr. Hassan -- yet, it does give us a very clear window, to where his head has always been: snagging the hucksters' fast buck -- then moving on, when the regulators show up. And show up, they will. [My guess is that his former GC, Sabatino, helped him get it on the shelves at Walgreens. But that's just. . . a guess. And now, Sabatino has moved on to. . . Hertz, anyway. Revolving doors. . . .]

Note that Mr. Hassan is listed (by a laughingly-inane asterisk) as the "non-executive" chairman of this joint. I am sure the others associated with this company, genuinely want to help patients. They have simply put their careers in the hands of the wrong "expert" here. Mark my words, Fred will slip away, saying he had no real responsibility for any regulatory matter, when the FDA shows up for a site visit. His openly making of a medical claim (without accompanying proof, of any kind) in the below YouTube "infomercial" (this is truly priceless -- so amateurish!) just gave FDA clear jurisdiction, trust that. [See it, at about 1:21 onward. . . in the video.] Fred is likely telling IBGard staffers that FDA has no right to come in and tell "us folks" what to do. He is just mistaken about that, in my experienced opinion.



So it goes. Pretty. . . hilarious!

Friday, February 20, 2015

Vorapaxar (Branded As Zontivity®) May Ultimately Turn Out To Be Not So Terribly Waifish, Afterall


Approved in May 2014, after manifold, multi-year delays, Zontivity® (vorapaxar) has had a bit of a bumpy ride. More background here.

But a forthcoming study in the journal Circulation may slightly improve sales for the beleaguered legacy Schering-Plough drug. [This was one of Fast Fred's 2008-2009 "five stars". . . that became a "has been," before it "ever was". Almost a "never was," in fact.] It seems the PAR-1 inhibitor is showing some moderate efficacy in diabetic patients with a prior history of MI (without -- thus far -- undue breakthrough bleeds). And that is not a small population, either. Here's the snippet:

. . . .Patients with diabetes who have had an MI are at particularly increased risk for recurrent ischemic events, but a new study published online February 13, 2015, ahead of print in Circulation suggests that the addition of the novel antiplatelet agent vorapaxar provides effective long-term secondary prevention of cardiovascular events and stroke in this subgroup.

“Our data raise the possibility that vorapaxar [Zontivity; Merck Sharp & Dohme], which inhibits platelets via a pathway separate from that of aspirin and P2Y12 inhibitors. . . offers a particular advantage for patients with [diabetes],” write David A. Morrow, MD, MPH, of Brigham and Women’s Hospital (Boston, MA), and colleagues. Vorapaxar inhibits PAR-1, the predominant receptor for thrombin on the surface of platelets. Take Home: Vorapaxar Effective for Secondary Prevention in Diabetic Patients With Prior MI

The TRA 2°P-TIMI 50 study included 26,449 patients with stable atherosclerosis who were randomized to receive standard care, including aspirin, and either vorapaxar (2.5 mg daily) or placebo at 1,032 sites in 32 different countries. It demonstrated a reduction in the composite of cardiovascular death, MI, or stroke at 3 years with vorapaxar vs placebo. . . .


Well. . . it will still never be a blockbuster, in my opinion -- but it may break the $200 million a year mark -- for peak sales, at some point, now. Just my newly revised guess, here.

A Second BioSimilar Player Launches In The EU Next Week -- Merck's Remicade® To Be Mightily Pressured In EU


We have long reported that both Celltrion and Hospira (soon to be a part of Pfizer) possess the requisite approvals in the EU to launch their respective biosimilars. [Additional backgrounder, here.]

The legacy Schering-Plough (and J&J -- by license/distribution agreement settlement proceedings) patents in the EU formally expire next week, on the 25th -- and so Celltrion will launch that following morning. Of course in the 2010 spat settlement, J&J gave Merck the EU rights -- so this will not affect J&J immediately. This -- over time -- will actually be material to Merck. However, it is well-factored into the NYSE price at present. Here is a bit of the report from BioPharma-Reporter; do go read it all:

. . . .The South Korean drugmaker told delegates at the European Crohn’s and Colitis Organisation’s (ECCO) in Barcelona, Spain that Remsima could save the UK, Italy and France €336m ($413m) over the next five years. . . .

Celltrion told BioPharma-Reporter the predicted savings, which are based on its own analysis, will let national healthcare systems provide the treatment to more patients, sooner. . . .


As I say -- this has long been expected. But it presents very good news for the already strained Euro-zone payer health budgets. In most cases, that ultimately is a government entity, in the EU. So this is decidedly good news for patients -- and taxpayers, there. Onward.

Zwerko Guilty Plea Entered In Manhattan -- Along With Plea Agreement


Just to close this one out -- on May 15 the judge will enter his formal final sentence.

The involved statutes would allow a sentence of five to twenty. He is likely to be sentenced to three to four. So it ends -- with a whimper -- not a bang. From the online papers, then:

. . . .Zachary Zwerko pleaded guilty in Manhattan federal court to conspiring to commit securities fraud and three securities fraud counts. A plea agreement recommended a three to four-year prison sentence.

Assistant U.S. Attorney Jessica Masella said the 32-year-old Cambridge, Massachusetts, resident passed along secrets that earned $722,000 in illegal profits. . . .


A more material new post -- in mere moments. . . onward we go.

Thursday, February 19, 2015

Smallish Update: NewLink Genetics Gets $20 Million Milestone Deposit From Merck -- Large Ebola Vaccine Candidate Trial Underway In Sierra Leone


Completely immaterial to massive Merck, but good news for the Ames, Iowa NewLink folks.

Here's to hoping that they can get to a large enough wedge, to prove effectiveness. From the Genetic Engineering and BioTech News report then -- a bit:

. . . .NewLink Genetics said today it will receive $20 million from Merck & Co. for achieving a key clinical development milestone in their collaboration to co-develop the experimental Ebola vaccine candidate rVSV-EBOV—namely the launch of a large-scale clinical trial.

Earlier this month, NIH announced the launch of the Partnership for Research on Ebola Vaccines in Liberia (PREVAIL), a Phase II/III study in which approximately 27,000 healthy men and women aged 18 years and older are being assessed for their response following assignment at random to placebo or any of two Ebola vaccine candidates—rVSV-EBOV, and cAd3-EBOZ. . . .


Onward! And we send our very best wishes -- that it all works out. Whether it is one and done, or prime plus boost -- the planet will need to have it at the ready.

Tuesday, February 17, 2015

EU Approved Since 2013, Hospira Launched Inflectra® Biosimilar To Merck's Remicade® -- In EU Today


Well, we all knew this day was coming -- we said so, with specificity as to the date, back in September of 2014. And yet it has taken a bit of a spell to get all the ducks in a row, at Hospira.

The $2.4 billion a year Merck ex-US franchise will almost certainly see some near term and substantial erosion -- in the European Union in 2015. And Hospira -- the Abbott spinoff, just now being acquired by Pfizer -- will see a very strong revenue ramp on this product. So it goes. Here is the Zack's research note, on today's events -- across the pond:

. . . .Hospira announced that it has launched Inflectra® (infliximab), the first biosimilar monoclonal antibody, in major European markets. Inflectra is approved for inflammatory indications including rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis, adult and pediatric Crohn's disease, adult and pediatric ulcerative colitis and plaque psoriasis.

Inflectra is a biosimilar to the reference product, Johnson & Johnson/Merck’s (JNJ/MRK) Remicade (infliximab). Merck recorded Remicade revenues of $2.4 billion in 2014 in Europe, Russia and Turkey. . . .


More background here (for more, dozens more, search "Remicade" in the upper left box). And. . . I am sure ole' Bob Parkinson is glaring at not so old Ian Read now. But Mr. Frazier is likely unruffled -- by either of them.

Monday, February 16, 2015

Another Large Holder Added Incrementally To Its Merck Stockholdings, In 2014


Various Capital New World entities have been steady large holders for over a decade, in Merck (and in legacy Schering-Plough as well). During the year 2014, they inched upward, almost touching the six per cent of outstanding mark once again (click image at right to embiggify!).

I suppose it is also significant (and encouraging) that they've actually added nearly 1.8 million Merck shares -- to their holdings. Still not back to the 2010 high water mark levels, but moving in the right direction, certainly. From the just filed SEC Schedule 13G amendment, then:

. . . .PERCENT OF CLASS. . . 5.9%

SOLE DISPOSITIVE POWER | 170,766,040 Shares. . . .


Onward, then. . . enjoying a quiet Presidents' Day -- here in the US. . .

Saturday, February 14, 2015

Closing Out A Sad 2008-2010 Chapter: Last Inside Trader From Former SGP/MRK To Plead Out, Per His Lawyer


I post this not because it should in any way reflect upon the current "new" Merck, and its generally hard-working, ethical, honest and very capable team of employees and officers, worldwide. [No. . . this is just a sad reminder of the CEO Fred Hassan-led past, only.]

I post it to complete the record -- and close this unfortunate chapter out. It seems that the last of the 2008-2010 era inside trading ex-SGP (and, to a lesser extent, ex-MRK) employees will be sentenced on an agreed plea later this month. Here is some of the background (do search "insider trading", in my search box, upper left, for the full 20-plus posts download), and here is a Reuters story on the rumored plea, from earlier this week:

. . . .A former Merck & Co Inc finance analyst plans to plead guilty to engaging in an insider trading scheme by tipping a former Bank of New York Mellon Corp employee about potential pharmaceutical mergers, his lawyer said on Monday.

Zachary Zwerko is in the process of negotiating a plea agreement to resolve the conspiracy and securities charges he faces, his lawyer, Jeffrey Denner, confirmed after a court hearing in Manhattan federal court. . . .


More local 2010 color here. May the passion of St. Valentine burn brightly -- for all of us, today!

Wednesday, February 11, 2015

2015 Venezuelan Bolivar Currency Deval To Affect Many US Multinationals, Merck Included


I'll likely come back to offer some more detailed analysis and background here, late tomorrow -- but I'm too tired tonight to go through all of it. Very early start tomorrow. . .

For now, just accept that this is a significant part of the forecasted currency headwind most US multinationals expect, if they do business in Venezuela, amid an economy experiencing plummeting oil field revenues, this year. Venezuela proposes a new three tier system for trading currencies in country. It is an improvement over the prior systems, but like all the others before it, this one is byzantine -- and only quasi-market driven. [So, Merck will suffer the same vagaries here that BMS, Pfizer and Abbott and Lilly will.] Here is a bit from the Business Recorder:

. . . ."This third mechanism is open, free, in which bidders and buyers exchange offers," Marco said during a press conference with [Venezuelan] Central Bank President Nelson Merentes. The currency controls have been providing US dollars at three different rates: 6.3 bolivars for food and medicine, and two complementary rates of around 12 bolivars and 52 bolivars for other goods through systems known as Sicad I and Sicad II. But dollars fetch nearly 190 bolivars on the black market, according to widely referenced website dolartoday.com.

Marco and Merentes did not offer details on what the open rate would be when the market kicks off in coming days. Brokerage sources consulted by Reuters say the rate could begin at around 120 bolivars, substantially lower than the black market but still more than double the lowest existing rate.

The Sicad I auction system will continue to hold periodic auctions for specific sectors of the economy and will for the moment continue providing dollars at the rate of 12, Marco said. The new Simadi market will replace the Sicad II rate. Investors generally interpret devaluations positively because they leave the government with more hard currency available to service debt. Venezuelan bonds, which have been trading at distressed levels on fears of a possible default, were up across the board on Tuesday, with yields on several dropping to one-month lows. . . .


More tomorrow evening, dear readers. And. . . onward.

Tuesday, February 10, 2015

Pharmalot's Ed Silverman Has a Nice Update On The British Columbia Januvia® Reimbursement Flap


As always, Ed's fact checking is impeccable. You may rely upon his reporting without question.

So do read yesterday's excellent "later developments" piece on this story -- which originally broke in August of 2014. Merck has paid doctors to complete a survey, in order to counter the ministry positions. Yawn. Do go read it all -- but here's a bit:

. . . .Approximately 4,500 specialists and general practitioners who were surveyed noted that between 25% and 30% of their patients expressed confusion, anxiety or unease about the move. About half of the doctors indicated they expected patients to stop taking their medication and 69% felt that patients who were doing well on Januvia should have been excluded from the change in coverage.

The survey, however, is causing its own ruckus.

“Obviously, we have concerns about this survey conducted and supported by Merck in terms of its lack of objectivity and the fact that physicians had a very small response rate, and physicians were paid to respond, and [there was] a failure to really disclose a connection between the surveyors and the drug company,” Terry Lake, the health minister in British Columbia, tells The Vancouver Sun. “We feel the survey is really a lobbying effort on the part of a large pharmaceutical company. . . .”


We will keep an eye on this -- here's our prior item on it all.

Monday, February 9, 2015

Off From Last Year's High -- But Still Very Respectable: BlackRock Holds 6.6% Of Merck At Year End 2014


This still puts Merck near the top of the venerable firm's holdings in the pharma space, by dollar weighting. Here is the morning's full text SEC filing -- on Schedule 13G.

This is reduced from the zenith -- at 7 per cent -- breached last year, this time. But as I say, still respectable. Very. . . respectable:



Here is last year's item on this -- for perspective. Off to enjoy a foggy, London style Monday morning.

Sunday, February 8, 2015

Kean Scion Seeks To Intervene In Union Property Ownership Suit -- While Reconsideration Motions Are Pending

John Kean Jr. (depicted at top, right), a scion of the Kean family, has filed a motion to intervene in the recently decided legacy Schering-Plough Union facility property ownership suit.

The trial court judge issued an opinion last month granting the Russo entities the right to develop the property, and close their pending purchase transaction from Merck (as successor to legacy Schering Plough, here). Last week, the Kean University interests filed a motion for reconsideration, under explicit instructions from the University's President, Dawood Farahi (depicted to the left of Mr. Kean, above).

Now President Farahi has enlisted the aid of the Kean family member who -- it is claimed, at least -- properly exercised the nearly century old right of first refusal, to re-acquire the parcel, under the provisions of (again, putatively) a 1925 trust agreement and last will of the current Mr. Kean's grandfather. So, perhaps as early as tomorrow, Mr. Kean the younger could be heard, on his motion to intervene. Here is the Union News Daily's report, of this morning -- on these latest maneuvers:

. . . .Less than two weeks after Kean University filed a motion for reconsideration with the court to overturn a ruling saying they had no legal claim to the 50-acre Merck property, John Kean filed a motion with the court to be a part of the university’s fight to reclaim the land.

Kean, a surviving heir of the original owners of the property that includes Merck and other land fronting Morris Avenue, filed the lawsuit late last week with the expectation his plea would be heard as early as tomorrow before the same judge that ruled the university had no claim on the property. . . .

The motion to intervene is a legal move or application to the court that permits a person with an interest, or claim of interest, to become a part of a lawsuit that could “impede or affect that interest.”

While complex, the move by John Kean is significant because he is seeking to actually become a defendant in the motion for reconsideration the Kean Board of Trustees filed two weeks ago. This motion requested that Superior Court Judge Katherine Dupuis reconsider her ruling of January 5, 2015. . . .


Of course, Union's mayor has blasted this latest gambit, as a potential taking of much needed tax funds from the public coffers here. We will keep you informed.

Saturday, February 7, 2015

Merck Issues $8 Billion of Longer Term, Low Coupon Debt -- To Pay Off Cubist Related Commercial Paper


Here is the SEC filing.

This is the foundational financial structure that will support the Cubist franchises -- now at Kenilworth -- on a go forward basis.

And these are great rates, and spreads.

Well done Mr. Davis. A better graphic now later today shall appears. I'm out.

Friday, February 6, 2015

Are We About To Witness A "Revival" Of the CETP Inhibitor Class -- As Genomics Tailored Heart Medications?


So, back in mid-January 2015, the ever-perceptive and savvy pharma-writer John Carroll, over at FierceBiotech, noted that this once hailed, then derided class of purported cholesterol medicine candidates might make a comeback, of sorts. Or, at least, Roche's version might -- as a targeted therapy for patients with the right genetics. So, Roche is potentially rethinking dalcetrapib, as a "personal genomics" driven cardio-protector? That's pretty. . . unusual, to say the least -- given the very rocky road the CETP class has traveled (and slid head-long off the side of the mountain, actually), in larger studies (and recall Pfizer's much-earlier flame-out).

And now, just a few hours ago, John LaMattina, a Merck alum writing at Forbes, has highlighted Roger Perlmutter's emerging view -- that Merck's ongoing large (30,000 patient) CETP candidate study will read out in late 2017/early 2018 with an actual edge -- driven by lowered LDL (i.e., not the mechanism expected). Either way, Merck will have easily spent $500 million on the study. And in a class where Pfizer saw increased mortality in the early part of the last decade. Upshot? This game is decidedly not for "the faint of. . ." um. . . heart. Rim-shot. I think, just like with IMPROVE-IT, the effect will be only slight improvement -- and may not translate to in-office visit benefits sufficient to justify the perhaps 100 fold price multiple, over generic statins. But we shall see.

So, back to John Carroll's Roche musings, then -- about personal genomics, and Roche's dalcetrapib (nice twist!):

. . . .Back in the spring of 2012, Roche was forced to scrap its closely watched cholesterol drug dalcetrapib, a bitter setback that forced the company to start re-evaluating the entire R&D process while raising questions about the entire class. But now scientists in Canada say they have drilled down into the massive data files from the development effort and found that a subset of patients with the right genetic profile benefited greatly from the drug. They've published their results in Circulation: Cardiovascular Genetics. And now they plan to follow up with a new study in an effort to revive the long-dead drug. "These results will lead to a genetics-guided clinical study in patients with the appropriate genetic background to allow review by health regulatory agencies and to provide personalized therapy with dalcetrapib. . . .


As I wrote in 2010, Merck's Anacetrapib had shown (at least at that stage of the game) considerably better lab results than Roche had, with its CETP candidate. There is no suggestion, however, yet -- that the enhanced genomics-differentiated effectiveness will appear in Merck's study results. Wow. So, even if this all pans out, both Roche and Merck will face a population -- by 2018 -- that has been on statins (at perhaps one-one hundredth the price) for seven to ten years, and is seeing real benefit from that course of therapy. It is not at all clear (except perhaps in the sub-class of patients with perfectly matched genomics), why a doctor would be willing to switch his or her patient to this undoubtedly much, much more expensive alternative.

But here's to hoping -- hoping that Dr. Perlmutter is right, and I am wrong. Or, as Mr. LaMattina has put it: ". . .Merck is not putting any credence in the potential for the HDL elevating properties of anacetrapib for reducing cardiovascular risk. They are resting all their hopes on the enhanced LDL cholesterol lowering capacity of anacetrapib which, when combined with a statin, is superior to a statin alone. Who would have ever thought that a CETP program would be viewed as an LDL lowering approach?. . . ."

Indeed, who? I must confess, all of this does feel just a bit like an episode from the later seasons of The Walking Dead. Just rehashing the mayhem, perhaps. . . but I do like the idea of a genomics-tailored approach to heart medications. I wonder how many patients will potentially fit dalcetrapib's genetic marker profile(?). Will it be in the low thousands, or the low millions? Or somewhere in between? We shall see, in time. In time. . .

Wednesday, February 4, 2015

Q4 2014: Slight EPS Beat; Slight Sales Beat -- 2015 Sales Outlook Dampened By Continuing Strong Dollar (Down 8 Percent)


Nearly exactly as I guessed last week, the estimate out of Kenilworth for full year 2015 currencies-related down draft -- at the revenue line -- will be between 7 and 8 per cent. That is an effect not seen in this magnitude since the early part of the last decade. [Graphics momentarily.] And while Merck's very substantial foreign asset base footprint (a pin-cushion full of plants and facilities, dotted around the globe) provides a "natural hedge" of sorts, it is not remotely a tightly-matched hedge. It is fuzzy, and lumpy -- all over.

So, while Ketyruda®'s expanding fortunes are likely to be a particularly bright story in 2015 for Kenilworth (moderated by BMS's Opdivo® actually pulling into the market lead position here, in the latter part of 2015), the trick will be to protect as much of that currency affected sales line volume -- and drag the bulk of it to the GAAP EPS bottom line, unimpaired. Mr. Davis has his work cut out for him. Here then, is the salient part of the forward-looking statements in this morning's Q4 2014 earnings release:

. . . .Merck expects its full-year 2015 non-GAAP EPS range to be between $3.32 and $3.47, including a $0.27 negative impact from foreign exchange. The range excludes acquisition- and divestiture-related costs and costs related to restructuring programs. Merck expects its full-year 2015 GAAP EPS range to be between $1.62 and $1.91.

At mid-January 2015 exchange rates, Merck anticipates full-year 2015 revenues to be between $38.3 billion and $39.8 billion, including a $2.6 billion negative impact from foreign exchange and approximately $1 billion of net lost sales from acquisitions and divestitures.

In addition, the company expects full-year 2015 non-GAAP marketing and administrative expenses to be below 2014 levels and R&D expenses to be modestly above 2014 levels.

The company anticipates its full-year 2015 non-GAAP tax rate will be in the range of 22 to 23 percent, not including a 2015 R&D tax credit. . . .


The extremely strong US dollar should make things interesting in 2015. That -- along with diving crude oil prices, globally -- will make it difficult to effectively and economically hedge these exposures. Even so, I expect consumers to spend -- in a discretionary fashion -- much of the additional perhaps $40 a week they will now not be dumping into their gas tanks. That is cyclical spend, mostly -- but may benefit Merck -- as people choose to schedule doctor visits and well-care, and buy meds, more frequently.

Separately, Merck may face a renewed wave of criticism about all the cash it has parked abroad (over $50 billion) -- while roads and bridges crumble here, in the US. We shall see. There is a nice answer for that, as we discussed this past weekend. In short, Merck could advocate for that part of the Obama budget.

UPDATE: Apparently (FierceBiotech has it!) Merck's latest Hep C candidate is no longer a breathrough according to FDA -- due to other on market meds. Not material -- but I've never seen a "de-designation" personally, before.