Other Q2 2015 Release Updates: Hep C Candidate Grazoprevir/Elbasvir Granted Priority FDA Review — Decision By January 2016

July 28, 2015 - Leave a Response

MRK-Q2-FDA-2015 So as not to be lost in the shuffles — of revised guidance, Venezuelan charges and the smallish Israeli oncology candidate acquisition. . .

I will separately post on the next gen, once daily combo tab for Hep C Merck is advancing through Phase III, now. FDA has received the packet, and will likely make a decision on it early in 2016. However, Kenilworth already faces some daunting competitors in this space. Just the same, this is moderately good news:

. . . .Separately, Merck said, the U.S. Food and Drug Administration has accepted for review the company’s new drug application for grazoprevir/elbasvir, a once-daily, single-tablet therapy for hepatitis C. The agency granted priority review for the treatment with a decision expected by Jan. 28 [2016]. . . .

Onward. . . knowing that so much of science is mystical, too. . . the stars shine and glisten, for like one’s skin — in a night rain, under a waning moon — it is science. . . that makes it so. . . . But only if we. . . notice, is it so.

Merck Full Year 2015 GAAP Guidance Hit By Venezuelan Deval; Deal Costs

July 28, 2015 - Leave a Response

c5a12-mrk-q2-2015-ecc3 Kenilworth just reported Q2 2015 results. More soon, but the biggest driver is a $715 million charge in the Venezuelan currency carrying values. More broadly, Merck saw a seven per cent downdraft, due to the strong dollar (effect of weak foreign currencies), at the sales line. Listening to the webcast now.

While it raised the full year non-GAAP guidance range for EPS (a feel-good measure by and large), Merck lowered its full-year GAAP EPS guidance, due to the Venezuelan deval charge, and costs of M&A of late. That’s not welcome news, but had been widely expected.

In a separate release, Merck said it spent modestly to acquire another promising set of cancer pipeline candidates out of Israel, called cCAM Biotherapeutics:

. . . .Under terms of the agreement, Merck, through a subsidiary, will acquire all outstanding stock of cCAM in exchange for an upfront payment of $95 million in cash. In addition, cCAM shareholders of record are eligible to receive a total of up to $510 million associated with the attainment of certain clinical development, regulatory and commercial milestones. The transaction is subject to certain closing conditions. . . .

More later — graphics soon Keytruda is showing a nice sales ramp in melanoma in the U.S., where it is the number one therapy — but that is the smaller burden cancer set — since BMS holds the lead in lung cancers. Do keep in mind, as Dr. Perlmutter talks, that BMS is around a year ahead on most fronts, in the highest burden cancers. Morning — one and all!

UPDATE: Forbes Offers Specific Guesses — For Tomorrow’s Q2 2015 Results

July 27, 2015 - Leave a Response

b3330-mrk-csfb-06-15UPDATED — 07.26.15 @ 1 PM EDT: As to the predicted numbers, here is Forbes on it all — “. . .Analysts are forecasting lower quarterly profits compared with last year’s, at $0.80 a share from sales of $9.78 billion, partially because of its 58% forex exposure. In the year-ago period, MRK made per-share earnings of $0.85 and $10.9 billion in revenue. However, Wall Street hasn’t been great at nailing MRK. If history repeats itself, Merck’s results could beat expectations like it has in 10 of the last 11 quarters. . . .” Now we wait. End, updated portion.

To be sure, we will have to wait and see what the release on Tuesday morning harbors, but I’d not expect a nine per cent downdraft, at the sales line, due to currencies, as was seen last week at Bristol Myers Squibb. I think Merck has more hedging in place than BMS, and a better “natural” mix of geographies; and product-margins (each of which ought to dampen currency headwinds somewhat, at Merck).

What I see as one of the most hopeful moments, likely to be echoed on the Kenilworth call, Tuesday, is the notion that (thus far, at least) Opdivo® (and by implication, Keytruda®) won’t see strong payer-side pressure to agree to long term contracts, with significant price discounts, in any cancer set — anytime in the near (24 month) future. And this is potentially a $35 billion market opportunity, all in.

Merck Will Report Q2 On Tuesday; Some Color From BMS’s Views On Newest Immuno-Oncology Agents

July 26, 2015 - Leave a Response

To be sure, we will have to wait and see what the release on Tuesday morning harbors, but I’d not expect a nine per cent downdraft, at the sales line, due to currencies, as was seen last week at Bristol Myers Squibb. I think Merck has more hedging in place than BMS, and a better “natural” mix of geographies; and product-margins (each of which ought to dampen currency headwinds somewhat, at Merck).

What I see as one of the most hopeful moments, likely to be echoed on the Kenilworth call, Tuesday, is the notion that (thus far, at least) Opdivo® (and by implication, Keytruda®) won’t see strong payer-side pressure to agree to long term contracts, with significant price discounts, in any cancer set — anytime in the near (24 month) future. And this is potentially a $35 billion market opportunity, all in. On the BMS call, the question about potential for a Sovaldi® type of pressure/backlash from government- and private insurer- payers was answered thus:

. . . .We’ve really been fortunate with the quality of data that have been generated behind Opdivo and the value that we’ve been able to establish for patients with metastatic melanoma and non-small cell lung cancer. And I think that’s been recognized by payers. We’ve had — we have established very broad and very rapid access in the US.

The breadth of indications that we hope will follow will also further strengthen our ability to weather any attempt that any payers may have to try to restrict these agents, which is very difficult to do in the oncology arena with drugs like Opdivo with overall survival benefits. So we feel very good about our current access and our ability to sustain that going forward. . . .

It would be hard for an insurer to defend being restrictive where the data shows that people will literally die much sooner, without access to the therapy. And that is — in the main — what this data establishes — at both Merck, and BMS. This should mean similar, but smaller, good news ahead for Merck. Keep in mind that in BMS was first to market, and that (at least I predict) Merck will eventually offer to cut price on Keytruda, to win some of the BMS share, in the markets where Merck is likely a year or so behind. Just my $0.02. Onward.

Merck’s Retiring EVP & GC Gets Enhanced Departure Vesting — Purportedly To Enter Public Sector (WTH ?!)

July 25, 2015 - Leave a Response

In general, I’ve held the opinion that Merck has greatly reformed the company’s executive perks and pay practices — especially those that used to prevail at legacy Schering-Plough. [Afterall, this Merck IS the Schering-Plough legacy Delaware holding company, just renamed — with Merck’s legacy assets folded in. In fact, Merck installed double triggers, for all its executive payouts, back when legacy S-P barely had a meaningful “single trigger“. Remember, by 2006, Merck was pulling EARNINGS that regularly TRIPLED S-P’s, despite carrying a much bigger base. For all of this, then CEO Clark earned less than a third (per year) of what that shine-ola salesman Hassan took from legacy Schering-Plough. But I digress.]

Having said all of that, this acceleration of Mr. Kuhlik’s equity awards — and that is what this is — an acceleration, and fixing in cash, the certainty of those awards. . . strikes me as over the top.

I am unconvinced that — as he retires, in normal fashion, from Kenilworth — Merck will receive any meaningful benefit from his entering a government job. And any ordinary person in his role, would simply accept that his choices are. . . his choices — ones that may have real pecuniary consequences, under his previously agreed retirement packages. I’ll wait to see where he turns up, but if he’s to become any judicial or regulatory office holder, getting a “bump” as he departs Merck would seem inappropriate. I am sure he was a very capable GC — but tearing up his retirement agreement, especially where (as here) he is not really retiring at all. . . seems a lil’ like a Fast Fred Hassan move, truthfully. Here’s the bulk of the late Friday evening (i.e., buried) SEC Form 8-K:

. . . .Bruce Kuhlik, who completed his tenure as General Counsel for Merck & Co., Inc. (the “Company”) on June 30, 2015, is entitled to payment of certain compensation following his retirement from the Company (which is effective August 1, 2015) under the Company’s compensation programs, the terms and conditions of which have been previously disclosed. Mr. Kuhlik has advised the Company that following his retirement, he intends to accept a position in the public sector which would require him, as a condition of his employment, to divest himself of any interests in the Company that are subject to variability based on Company performance. The Compensation & Benefits Committee (the “Committee”) of the Company’s Board of Directors determined that it was reasonable and appropriate to allow Mr. Kuhlik to realize a certain amount of income that he would otherwise have had the opportunity to be paid under the Company’s compensation plans and programs had he not been required to divest his interests at this time. Therefore, on July 21, 2015 the Committee authorized and Mr. Kuhlik has accepted changes to certain incentive compensation arrangements previously granted to Mr. Kuhlik, as follows:

1. Accelerate the vesting of that portion of the Stock Option granted to Mr. Kuhlik in 2013 (consisting of 1/3 of the original number of shares), that would have otherwise vested in connection with his retirement so that the final portion of the option is fully exercisable beginning on August 3, 2015, the first business day following Mr. Kuhlik’s retirement, rather than in May 2016. This change does not directly provide a payment to Mr. Kuhlik, but allows him to fully exercise the option in the short term.

2. Accept Mr. Kuhlik’s forfeiture of the portion of each of the stock options granted to Mr. Kuhlik in 2014 and 2015 (consisting of 1/3 of the original number of shares) that would have vested in May 2016 in light of his retirement. The forfeiture will be effective as of his August 1, 2015 retirement date. In addition, the remainder of the options granted in 2014 and 2015 (consisting of the remaining 1/3 and 2/3 of the original number of shares, respectively) will be forfeited in the normal course, also effective as of August 1, 2015.

3. Restructure the Performance Share Units awarded to Mr. Kuhlik in 2013 in respect of the performance period January 1, 2013 – December 31, 2015 (the “2013 PSUs”), in 2014 in respect of the performance period January 1, 2014 – December 31, 2016 (the “2014 PSUs”) and in 2015 in respect of the performance period January 1, 2015 – December 31, 2017 (the “2015 PSUs”) such that Mr. Kuhlik would receive a fixed payment in cash (as opposed to settlement in shares based on achievement of company performance goals) in an amount equal to the product of (x) a pro-rated number of units represented by each of the 2013 PSUs, 2014 PSUs and 2015 PSUs based on his retirement date of August 1, 2015 assuming target performance had been achieved and (y) $58.98, which is the average 60-day closing price of a share of Company common stock for the period of April 24, 2015 – July 20, 2015, the 60-trading days immediately preceding July 21, 2015. The cash payment will occur at the same time as the original distribution of shares would have occurred following the end of the applicable performance period. Payments in respect of these amendments will equal $1,828,498 in 2016, $756,654 in 2017 and $275,319 in 2018.

4. Accept Mr. Kuhlik’s forfeiture of the pro-rated bonus that would have otherwise been paid to him in March 2016 under the terms of the Company’s Executive Incentive Plan. . . .

Great work — if one can get it. [I should point out that the above is only a fraction of his overall retirement benefit.] If he ends up as an Ambassador, weighing in on trade matters, then I can understand this move. Otherwise, not so much. Onward, on a sunny Saturday afternoon.

O/T Space Science Friday — Musings On Periodic Tables — And The Manifold Mysteries. . . Of One’s Life

July 24, 2015 - Leave a Response

Sometimes, when I read something truly transcendent, I find myself short of breath. This is one of those moments.

I’ll not spoil the surprise of it all — it is an easy one page read — in this Friday morning’s New York Times. Do go read it all:

. . . .A few weeks ago, in the country, far from the lights of the city, I saw the entire sky “powdered with stars” (in Milton’s words); such a sky, I imagined, could be seen only on high, dry plateaus like that of Atacama in Chile (where some of the world’s most powerful telescopes are). It was this celestial splendor that suddenly made me realize how little time, how little life, I had left. My sense of the heavens’ beauty, of eternity, was inseparably mixed for me with a sense of transience — and death.

I told my friends Kate and Allen, “I would like to see such a sky again when I am dying.”

“We’ll wheel you outside,” they said. . . .

. . .a broad and ample road, whose dust is gold, and pavement stars, as stars to thee appear seen in the Galaxy, that Milky Way. . . .

Milton

And so it goes. . . do go read this. You will not regret it. This afternoon we will have new images of that enigmatic little dwarf planet Pluto. . . from its improbably but metaphorically perfect “heart” region. Onward — ever, onward. . . . to a wondrous summer weekend, whose nights are powdered with stars. . . .

Glenmark Granted A July 28, 2015 Supreme Court Hearing In India — Ongoing Sitagliptin Wars

July 23, 2015 - Leave a Response

We have been following this battle for quite a while. It involves Merck’s right to protect its patents on Januvia®/ Janumet® — a leading diabetes therapy. The latest news here, is that India will entertain arguments from Glenmark, the object of which will be not only to sell off its existing finished drugs inventory, but to actually manufacture into new drug stock all the API (or raw materials) it now holds. Local reports indicate that Glenmark has on hand over 1,700 tons of API raw materials — which would result in vastly more than just the ability to stay on-market through November 2015 (in my estimation, at least).

This will be completely fascinating to watch — will the India courts still allow the production of what has been held to be infringing copycat drugs, against Merck’s patents, in order to keep reasonably priced generics on market, in India, where some 63 million people are afflicted with diabetes — and the vast majority of those cannot afford Merck’s branded therapies? We shall see. Here is a bit from the ever-informative LiveMint.com India outlet, on it all:

. . . .A bench comprising justices Ranjan Gogoi and N.V. Ramana agreed to hear Glenmark’s plea on 28 July. . . .

On Wednesday, Glenmark said that it had over 1,700 tonnes of existing stock of raw material left, which would be wasted if it is not allowed to manufacture their anti-diabetes drug. . . .

Of course, we will report back any outcome from the July 28, 2015 proceedings in India. And now, rise & shine, all of good will!

Propecia® MDL Update: On A Sampling Basis, About One-Third Of Merck’s Claims Of Privilege Were Inappropriate

July 22, 2015 - Leave a Response

The very able US Magistrate Judge Victor Phodereski, sitting in the Eastern District of New York, has today ruled that — in a statistical test sample of about 75 documents which the Propecia® plaintiffs claimed were inappropriately withheld from the earlier MDL discovery deliveries — just over one-third were actually properly discoverable, and not protected by any attorney client (or other) privilege, as Merck had originally claimed.

The full six page PDF order is here, but the Magistrate has left for another day whether he will order a new review of the privilege logs provided by Merck. He did order Merck to look anew at the withheld documents in light of his order.

In the main, then, this should result in the MDL plaintiffs’ lead lawyers getting access to many more documents about the history of the problems with Propecia, as to they relate to Merck’s awareness and path of responses.

All in all, a good day for the plaintiffs today, out of the US Courts in Brooklyn. Onward — and, sleep tight. . . .

Merck Gets EU Nod In Melanoma; BMS’s Opdivo® Already On Market There

July 22, 2015 - Leave a Response

This is great news for Kenilworth, now adding the 28 member states of the EU to Canada — and the US — as approved Keytruda® geographical sales channels.

Yes, Opdivo® is already there — and yes, BMS is a year ahead, in the larger burden NSCLC (lung cancer), and renal cell cancer races. But having options is an extremely important development, for the patients, and the payers. Now there is the real possibility that Merck will ultimately engage in price competition, against BMS — to “win market share” in melanoma in the EU. And that will benefit both payers and patients.

[I suppose I should note that Keytruda was compared in these studies to BMS’s last generation therapy — not head to head, against Opdivo.] in any event, from the early morning presser, then:

. . . .”Today’s European approval supports our goal of accelerating immuno-oncology research for the benefit of patients around the world,” said Dr. Roger M. Perlmutter, president, Merck Research Laboratories. “We believe that the broad data set supporting this approval helps illustrate the significant potential of KEYTRUDA to treat advanced melanoma, a devastating disease.”

“Merck has long-believed that innovation and access must go hand-in-hand, which is why we work to bring forward new innovations, and ensure access to those innovations,” said Deepak Khanna, senior vice president and regional president, Europe, MSD Oncology. “Merck is committed to working collaboratively with governments and other stakeholders to ensure that KEYTRUDA will be made available to advanced melanoma patients in Europe as rapidly as possible. . . .”

And so, onward we forge, in the race to improve lives of cancer patients the world over. [Planetary science side note: A new range of Appalachian-sized mountains was just revealed in the Southwestern “Heart of Pluto”. New images at NASA — thrilling!]

US Judge Shadur: “Counsel For Merck And Bayer — Meet Me At The Woodshed” And. . . “Don’t Charge Merck For The Avelox® Rework!”

July 21, 2015 - Leave a Response

Well, first things first — Senior federal District Court Judge Milton I. Shadur is a very able jurist — and widely respected, here in Chicago — for being very precise in his handling of courtroom decorum and practice, under the federal rules. And so — this opinion will forever endear him to believers in plain English pleading (like myself).

Whether the plaintiffs here, Mr. and Mrs. Hobbs, have a good Avelox® products liability case is unclear, at this stage. What is clear is that the Hobbbs’ claim permanent nerve damage from being prescribed Avelox, or a companion antibiotic. Under the federal rules, then, they should be given notice of whether Merck feels it has responsibility here, in Merck’s Answer. After some 150 pages, Judge Shadur could not tell. And he’s a very sharp man — so he told Merck’s lawyer to pay a $200 fine, and redo the entire Answer, free of charge — and, this time, more faithfully comply with the federal rules for notice pleadings. Ouch. Here’s a bit, of this priceless opinion (and the full 6 page PDF):

. . . .After all, because the real function of federal notice pleading is to identify the respects in which litigants are or are not at odds with each other, it is really thoughtless on the part of defense counsel to thrust on their adversaries and the judicial officer to whom the case is assigned the task of wading through two separate Answers, occupying just under 150 pages instead of half that number, to become informed as to any respects in which jointly represented parties are or are not on the same page and the way (if any) in which they differ. . . .

It is of course oxymoronic for a party to assert (presumably in good faith) that it lacks even enough information to form a belief as to the truth of an allegation, then proceed to deny it. Because such a denial is at odds with the pleader’s obligations under Rule 11(b), that quoted language must be and is stricken from each of those paragraphs of the Answer. . . .

That then leaves for discussion the true absurdity of the vast proliferation of supposed Affirmative Defenses (“ADs”). In that respect defense counsel are first referred to App’x ¶ 5 to State Farm. But that is only the beginning, for what each pleading sets out under the caption “Separate Defenses” reveals a total misconception of what the pleading of ADs is about. . . .
Both of the current Answers (including their ADs) are stricken in their entirety, with defense counsel being granted leave to file a single combined Amended Answer on behalf of both Bayer and Merck on or before August 7, 2015. Any ADs that are included in that joint Amended Answer must conform to the limitations ordered in this opinion. And lastly, no charge may be made to Bayer or Merck by their counsel for the added work and expense incurred in correcting counsel’s errors. Defense counsel are ordered to apprise their clients to that effect by letters, with copies to be transmitted to this Court’s chambers as an informational matter (not for filing). . . .

Gosh — that is about as tough as I’ve ever seen him be. [And here’s the Hobbs’ 29 page complaint at law, for reference.] Onward.

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