To Complete The Record, On Kenilworth’s NGM Relationship — SEC Filed Form 10-Q

May 9, 2015 - Leave a Response

We made only passing mention of this back in February, because all the MSM outlets ran stories. Of course, most repeated only what the press release offered. Now, though, as a potentially material relationship, Merck’s SEC lawyers have given us a window with a significantly more Technicolor view — as the Form 10-Q was filed on the 7th. I repeat it here, en todo.

Do see the lower portion of page 9, of the recently filed SEC Form 10-Q:

. . . .In February 2015, Merck and NGM Biopharmaceuticals, Inc. (“NGM”), a privately-held biotechnology company, entered into a multi-year collaboration to research, discover, develop and commercialize novel biologic therapies across a wide range of therapeutic areas. The collaboration includes multiple drug candidates currently in preclinical development at NGM, including NP201, which is being evaluated for the treatment of diabetes, obesity and nonalcoholic steatohepatitis. NGM will lead the research and development of the existing preclinical candidates and have the autonomy to identify and pursue other discovery stage programs at its discretion.

Merck will have the option to license all resulting NGM programs following human proof of concept trials. If Merck exercises this option, Merck will lead global product development and commercialization for the resulting products, if approved. Under the terms of the agreement, Merck made an upfront payment to NGM of $94 million, which is included in Research and development expenses, and purchased a 15% equity stake in NGM for $106 million. Merck committed up to $250 million to fund all of NGM’s efforts under the initial five-year term of the collaboration, with the potential for additional funding if certain conditions are met.

Prior to Merck initiating a Phase 3 study for a licensed program, NGM may elect to either receive milestone and royalty payments or, in certain cases, to co-fund development and participate in a global cost and revenue share arrangement of up to 50%. The agreement also provides NGM with the option to participate in the co-promotion of any co-funded program in the United States. Merck will have the option to extend the research agreement for two additional two-year terms.

Each party has certain termination rights under the agreement in the event of an uncured material breach by the other party. Additionally, Merck has certain termination rights in the event of the occurrence of certain defined conditions. Upon a termination event, depending on the circumstances, the parties have varying rights and obligations with respect to the continued development and commercialization of compounds discovered under the agreement and certain related payment obligations. . . .

This really is an “old school” collaboration — with the NGM scientists allowed to aim in almost any direction they please — with Merck’s half billion in funding. I do like that idea. Numerically, most of the world’s blockbuster drugs were discovered in just that way. Onward — and again — love to all mothers, planet-wide!

The Lingering Effects Of Corporate HQ Pull-Outs: Merck, Legacy S-P And Dozens Of Others

May 9, 2015 - Leave a Response

I think the below letter to the local Hunterdon County editor in New Jersey deserves nation-wide attention. [So I’ll oblige. International, too. Smile.] A little over two weeks ago, we were encouraged by the news that Whitehouse Station had a buyer under contract.

At the time we noted our local tax base concerns (ones we voiced four years ago, about the legacy Schering-Plough HQ — before Merck decided to move back in there) — and cautions. It is important, nationally, to well consider the lingering effects — of a large corporate citizen’s “pull-out”, from any given township, city, village or county. This advice cuts across all industries in the United States (and would broadly apply to many EU-style Western locations, as well).

The fine author is one Bob Fasinski. His below letter — reprinted nearly in full — makes very clear why we all should be concerned — and keep an eye on this dance:

. . . .Hopefully, at some point in the future, there will be reason for the apparent optimism for the Merck property that the Mayor seems to have. Until more information is known, I for one am going to refrain from any level of rejoicing.

There are a couple of reasons for my cautious optimism.

1. Since the mayor is soliciting ideas, I assume that the potential buyer is not a “white knight” corporation looking to use the facility in the same fashion as Merck (i.e. a corporate headquarters campus).

2. The buyer’s purchase is likely at a significant discount to what the property may have been assessed/valued. The following facts help underscore my concern:

A. In 2014, the assessed value of the subject property was $213 million.

B. Merck had the property appraised at a value of $89 million

C. The negotiated assessed value for 2015 was $153 million

D. Merck reserved the right for further tax assessment/relief for 2016. Presumably the prospective buyer will exercise the same right.

3. It would be reasonable to assume that such a tax adjustment/assessed value could be close to or lower than the $89 million. Such a valuation would reduce taxes from the Merck property by approximately $1.8 million – on top of the $1.8 million reduction in 2015.

4. The purchase price could be well below the $89 million appraised value.

5. Whomever the purchaser may be, it will likely take several years to realize the improvements, rehabilitation and occupancy necessary to begin increasing the assessed value.

6. The above scenario and the long term valuation of the Merck property and impact on Readington’s tax base is reasonably likely regardless of whom the buyer might be.

7. Moreover, until the buyer’s identity and intentions are known, the public – and the mayor – should contain their enthusiasm.

Bob Fasinski | Readington, NJ

Even so, the property ought to be put back to some fruitful use — taxes or no (if held in charity). Here’s to hoping. Onward!

Excellent News Out Of Liberia: 42 Days — No New Ebola Cases. End, Outbreak.

May 8, 2015 - Leave a Response

It seems only a few weeks ago, we were mightily discouraged by new Ebola cases in Liberia. Now — 42 days later — the nation will be declared disease free by the WHO, tomorrow.

Once again, science finds a way. It just does. It is truly a heady time to be alive. Here is Bloomberg, on it all:

. . . .Liberia, the country with the most deaths in the current Ebola outbreak, may be declared free of the virus tomorrow, according to the World Health Organization.

May 9 marks 42 days since the burial of the last confirmed Ebola victim in the West African nation, according to the Geneva-based WHO. That’s twice the longest-known incubation period for the virus, the marker for declaring the outbreak over in a country. Sierra Leone and Guinea are still reporting additional Ebola cases. . . .

The White House welcomed the news as a milestone for Liberians but cautioned there was more work to be done in Sierra Leone and Guinea.

“We must not let down our guard until the entire region reaches and stays at zero Ebola cases,” it said in a statement that stressed the importance of trying to prevent, detect and respond to outbreaks before they become epidemics.

In Liberia, the government ran a national awareness campaign to educate Liberians on how to protect themselves from Ebola.

“It is a tribute to the government and people of Liberia that determination to defeat Ebola never wavered, courage never faltered,” the WHO said in a statement on Saturday. . . .

If you are so inclined, do ask for the Universe to aid the fine people of Guinea and Sierra Leone, in your Mothers’ Day meditations. And for those who hold close those less clearly defined covenants of the life-sciences, keep hoping for robust large scale, durable ring/clinical trial results there, too. Fond wishes to all mothers the globe over. Thank you for being. . . you.

O/T — “We Shall Overcome” Co-Promoter Heads Out, Into The Universe: Fly Well, Guy Carawan

May 7, 2015 - Leave a Response

Though the antecedents for the melody date to Beethoven, and the lyrics were written and rewritten in the centuries since, perhaps no one more co-promoted what became the de facto anthem of the US Civil Rights Movement more than young Guy Carawan [excepting of course, Pete Seeger — and Joan Baez].

Guy passed last Saturday evening — in rural eastern Tennessee, at home. The Universe is certainly taking this son home, now.

Do go read it all in the Gray Lady:

. . . .Mr. Carawan, a white folk singer and folklorist who died on Saturday at 87, did not write “We Shall Overcome,” nor did he claim to. The song, variously a religious piece, a labor anthem and a hymn of protest, had woven in and out of American oral tradition for centuries, embodying the country’s twinned history of faith and struggle. Over time, it was further polished by professional songwriters.

But in teaching it to hundreds of delegates at the inaugural meeting of the Student Nonviolent Coordinating Committee — held in Raleigh on April 15, 1960 — Mr. Carawan fathered the musical manifesto that, more than any other, became “the ‘Marseillaise’ of the integration movement,” as The New York Times described it in 1963. . . .

Fly well, Mr. Carawan. Here is a Morehouse Mens’ Choir version:

And an older Diana Ross version in Budapest:

And — best for last! — Mahalia Jackson (late 1960s version):

If You Have Filed A Propecia® Sexual Side Effects Claim In New York (Federal) District Court — Check In With Your Lawyer BEFORE May 11, 2015

May 7, 2015 - Leave a Response

This is — to be fair — a very smallish subset of the finasteride cases, but if you see your case number listed below, do get in touch with your lawyer.

The motions to dismiss in these cases are up on May 11, 2015 — and absent a response from your lawyer(s), each is very likely to be granted.

. . . .Any response to the defendants’ motions to dismiss ((18 in 1:14-cv-03974-JG-VVP, 26 in 1:14-cv-02277-JG-VVP, 27 in 1:14-cv-02248-JG-VVP, 18 in 1:14-cv-03956-JG-VVP, 26 in 1:14-cv-03622-JG-VVP, 18 in 1:14-cv-03975-JG-VVP, 37 in 1:13-cv-05172-JG-VVP, 233 in 1:12-md-02331-JG-VVP, 87 in 1:12-cv-02047-JG-VVP, 26 in 1:14-cv-02272-JG-VVP, 24 in 1:14-cv-03791-JG-VVP, 26 in 1:14-cv-03086-JG-VVP, 22 in 1:14-cv-03588-JG-VVP, 27 in 1:14-cv-02246-JG-VVP, 26 in 1:14-cv-02232-JG-VVP, 18 in 1:14-cv-03957-JG-VVP, 26 in 1:14-cv-02677-JG-VVP) is due by May 11, 2015. . . .

In the wider sexual side-effects MDL, discovery battles still predominate (as they did on New Years’ Day 2015). The central issue is whether scads of source files — or just summaries of them — will be turned over. And it is still being hashed out, with the Magistrate Judge primarily. We will keep you informed. Have a great night, one and all.

Cancer Spend To Eclipse $110 Billion Worldwide, In 2015; Was $100 Billion In 2014: IMS

May 7, 2015 - Leave a Response

This narrative has been repeated everywhere, of late — so I’ll belatedly note it, for the record. And it is correct. There will be much more spent this year, and next — on oncology. [For the sake of completeness, here — I should note that I personally am very safely predicting the $110 billion in 2015 figure — IMS is only reporting historical 2014 data at this point.]

This is decidedly good news for all the emerging immuno-oncology candidates — Merck’s plainly here included. Here’s a bit from US News & World Report:

. . . .According to the Global Oncology Trend Report, released Tuesday by the IMS Institute for Healthcare Informatics, global spending on cancer medications rose 10.3 percent in 2014 to $100 billion, up from $75 billion in 2010.

“We’ve made huge progress from a scientific perspective in understanding cancer,” says Murray Aitken, executive director of the IMS Institute, a global information and technology services company. “It’s not a single disease but so many sub-diseases. … We’re at the edge of a major breakthrough in terms of cancer treatment. It’s a very exciting time.”

MRK-Onco-2015The report follows one from IMS Health released in April, which found that overall U.S. spending on drugs reached $373.9 billion in 2014 – a record high. This is largely attributable to the kinds of drugs on the market. Pharmaceutical companies are investing more and more in specialty medicines, such as complex, injected drugs rather than conventional treatments like pills. Spending on such specialty medicines grew 26.5 percent and accounted for one-third of medicine spending, up from 23 percent of the total spent five years ago. . . .

Spending for really excellent outcomes (significantly longer survivals — or outright remissions) always makes sense, in my estimation. Onward — it is an exciting time to be alive, indeed.

Misguided Republican Governor Sues Over Obamacare. Again. Yawn.

May 7, 2015 - Leave a Response

Yes — this would be easily re-labeled as comical, except that the poorest Floridians are dying, while Florida’s Gov. Rick Scott… continues to file new suits against the ACA of 2010 implementation (or Obamacare, if you prefer). So today, in DC — he was fed a graceful faceful… of humble pie. One he baked himself, per Bloomberg:

. . .”Governor Scott has failed to address the matter in a fiscally responsible way and is caught in his own ideological trap that now is causing harm to Florida,” U.S. Representative Kathy Castor said in a statement. “He should stop going everywhere and looking to everyone else to fix Florida’s problems. He should stay in Tallahassee and work with the Senate to put Florida’s tax dollars to work. . . .”



It would be a good (even better!) idea to accept the Medicaid expansion, Mr. Scott. Your poorest citizens are literally dying — because of your ideological intransigence. Disgusting. The rest of the world has moved on. You should, too — for the good of your own people, Mr. Scott.

Strong Q1 2015 Leads To Increasing 12 Month NYSE Price Targets, For Merck

May 5, 2015 - Leave a Response

The strong quarter Kenilworth posted last week is causing the bankers to raise their price targets, bit by bit, here. This is CSFB, via Benzinga:

. . . .Neutral, but up to $62 from $60 [12 month price target]. Credit Suisse rated both of those stocks [Lilly and Merck] at Neutral. . . .

I do think Merck is starting to hit its stride, finally — even if CSFB prefers Pfizer at the moment, in the space (and it does). Soft, quiet and cool rain falling. . . onward.

Ed’s 2011 Story Still Has Legs — More, On “Murcky” Merck Naming Origins

May 4, 2015 - Leave a Response

Today, that fine gent Ed Silverman once again took his readers on a tour through “the Facebook car-jacking” of 2011.

And many a MSM outlet took notice — once again. Here is BrandChannel on it (as just one example):

. . . .Germany-based Merck KGaA, a pharmaceuticals and chemicals group, needs to be more assertive in its ownership of the brand everywhere outside North America in the view of CEO Karl-Ludwig Kley, as reported by the Financial Times. But US-based Merck & Co. told the FT that it is committed to “resolving issues through communication and cooperation without the need to resort to litigation. . . .”

This is a fun and fascinating narrative. And if memory serves, the top-level domain administrators have not issued a definitive ruling. As of this moment, the Merck web site you see depends entirely on the geo-location of your computer’s point of access. Or so I am told. As ever, we will keep an eye out for developments, here. Onward.

“Look In The Mirror, Much?” London’s Financial Times Has Story Of German Merck CEO’s “Frustration” With Ongoing Merck “Internet-Driven” Name Confusion

May 3, 2015 - Leave a Response

This fine Spring Sunday morning, the London edition of The Financial Times has an interview with Karl-Ludwig Kley, German Merck’s CEO (registration required), in which he again laments how hard it is to handle the name flap, in this, the digital age. Geographic borders no longer even remotely define consumer and customer borders. So it goes. At the end of the interview, perhaps worryingly, he suggests that while he and Kenilworth are on friendly terms, German Merck intends to step up its efforts to control its brand globally — including inside the US and Canada. I have repeatedly written that a separation — complete separation — of names, is probably the only sensible way to go. And that is still so. Here is more of my background on it all, over the years 2010 to 2014 — firmly establishing that the confusion is real:

In February 2014, I poked a little fun at the capitalists’ paper of record — for the German-US naming confusion to which they also more than occasionally have fallen prey. [At least a little more than. . . a little. Heh.]

So many, many people — and organizations — make this same mistake: including the Wall Street Journal (proof under that link). The list would include Facebook, in granting short-hand named commercial page rights (three separate times). And CNBC — in its graphics department — continuously since 2009. So, it now seems fair to lay part of the blame at the feet of the companies themselves.

But that doesn’t mean that we should believe, as some at Kenilworth (then Whitehouse Station) claimed — in the Facebook name flap — that people at US Merck forget that they aren’t. . . living in Germany. [Yes folks, that was US Merck’s first defense (circa 2011) — to having poached German Merck’s page — on Facebook. Preposterous.]

In any event, here is a February 2014 vintage Exhibit A — from the WSJ Blogs lead page (do read it all, there). All I ask? Please just understand, many, many smart people have done it too. See here:

. . . .There was some head-scratching [in February 2014] at Merck KGaA, the German pharmaceutical company, as protesters from STOPAIDS gathered outside its north London office.

The protest was over leaked plans for pharmaceutical industry lobbying against proposed reforms to South Africa’s intellectual property laws. Trouble was, those plans came from Merck & Co. of the U.S.; it and the German company aren’t connected. . . .

The leaked document, which referred to South Africa as “ground zero” in the debate over intellectual-property protection, was only a proposal and was rejected, said U.S. Merck. . . .

And so, given the benefit of my documented perspective, above — one might understand why some AIDS activists might get confused about which set of signs, and regional HQs. . . belong to. . . which. This is not at all to be charged as any one journalist’s error — but it nicely points up why each of these companies ought to rethink their brand identity. These two need to become more distinguishable, one from the other.

Now I’m off to enjoy a mountain bike ride — in the clear Spring air.

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