Compare & Contrast: CEO Frazier Sees “Flexibilty” To Do “Bolt-On” M&A Of $10B to $20B, In 2016

January 25, 2016 - Leave a Response

The now-declining valuations available to earlier stage biotech concerns — should the same seek to tap the public markets (or even, increasingly, seek private equity backing) — put the “strategic” industry multinationals with immaculate balance sheets (and great cash flow), in an enviable position.

Mr. Frazier is clearly right that his careful capital management over the years has put Kenilworth in the driver’s seat now, should it decide it wants to snap up a few of these “add on” acquisition candidates in 2016.

I might argue that this puts him (and Merck) in a better near term strategic position than Ian Read, over at Pfizer — as Mr. Read is likely to be so tied up trying to clear the manifold regulatory authorities, on his single mega “re-domicile” deal, that Merck might just be able to start stealing franchises, here, one by one. Mr. Frazier’s strategy for 2016 certainly presents a much smaller execution risk than Mr. Read’s, in my view.

We shall see. But here is a bit, from Reuters, at Davos, Switzerland, last week:

. . . .U.S. drugmaker Merck & Co is eager to do deals to bring in promising experimental medicines and believes a recent correction in biotechnology stocks should throw up new opportunities.

“Prices have come back somewhat. That is a positive thing,” Chief Executive Kenneth Frazier told Reuters in Davos on Friday.

“In particular, some of the early-stage companies are struggling to get the next round of financing as people start to be a little less willing to pay for the promise of growth, so that gives us opportunities. . . .”

“At our size, I would say a $10 billion or $20 billion deal would qualify as a bolt-on,” he said in an interview on the sidelines of the World Economic Forum annual meeting. . . .

We will keep you posted. Meanwhile, here in Chicago, we feel the pain of our East Coast shovel crews — but for once, we are kicking our heels up, and sipping our coffee and OJ — free from that chore. We do feel for you Mike — truly. Smile.

More Detail — From The Merck & Co., Inc. V. Merck KGaA Lanham Act Suit, In New Jersey

January 23, 2016 - Leave a Response

My good buddie, Ed Silverman (now writing for STAT, in Boston, at the Globe) has a very comprehensive run-down on the US part of these now-reignited battles. Do go read it, all.

In the mean time, I’ll leave a link here, to the full complaint at law, a very large 5.5 MB PDF file, running some 78 pages. I must admit that I think the US Merck has the better of the argument, here. I also think, in time, things will get sorted out in England, as well, largely in US Merck’s favor. [My backgrounder, here.] But here’s a bit:

. . . .Over the years, disagreements have arisen between the parties relating to their respective uses of MERCK on the internet and otherwise in different jurisdictions and the parties have had a continuing dialogue which raised and, in certain instances, addressed such issues. Certain matters were not resolved between the parties and KGaA initiated litigation against Merck and related entities in 2013 in the United Kingdom, Germany and France. . . .

Merck [US] now brings this action based on KGaA’s activities in the U.S. as set forth herein. . . .

One of the issues that has not been resolved between the parties is the extent to which use of “Merck KGaA” would be made in the United States. Until recently, use of the Merck KGaA name has not been specifically directed to the United States and/or has not been used in connection with business activities that are in direct competition with Merck in the United States. . . .

Recently, KGaA has been making ubiquitous use of “Merck KGaA, Darmstadt, Germany,” “Merck KGaA” and “MERCK” as a prominent feature of its branding in the United States, including use on websites which are specifically targeted to users in the United States (despite KGaA claiming that its operating companies in the United States today purportedly operate under the trade name “EMD”) as well as on social media sites that are more broadly accessible, including in the United States. . . .

KGaA has taken a new direction and refocused its efforts on becoming a major player in the U.S. market, including specifically in the immuno oncology field where it directly competes with Merck, a well-recognized leader in that field. . . . In 2013, Stefan Oschmann, then head of pharmaceuticals for KGaA (and a former long term employee and executive of Merck Sharp & Dohme, its predecessors and/or affiliate(s)), stated that the U.S. was viewed as an emerging pharmaceutical market for KGaA and that the company was focusing on investing in its U.S. pharmaceutical business and developing new products to be offered directly by KGaA in the U.S. This was a departure for KGaA, as previously its pharmaceutical products in the United States were offered through “alliances” with other companies. . . .

On information and belief, KGaA has engaged in an intentional, increasing and continuous effort to undermine Merck’s rights and renown in the United States and to establish itself as “THE” Merck or the “ORIGINAL” Merck in the United States. . . . For example, KGaA recently launched a self-promotion campaign on websites directed to the United States dubbing KGaA as the “Original Merck” and featuring KGaA’s U.S. employees declaring their pride in working for the “ORIGINAL” Merck. . . .

As I say, this will all get sorted out, in due course, but using a 1970s-era agreement to address the seamless but complicated nature of the global internet-enabled economy for two very large companies competing in several of the same disease franchises, with very similar names, does not cast a very flattering light — on either of these companies. This is — and more importantly, was — avoidable. Stay warm, one and all!

Sierra Leone 2016 Ebola Flare-Up: Tough News — Second Confirmed Case In A Week

January 22, 2016 - Leave a Response

I suppose the only mote of softening news, here is that this latest new case arose in an already-known contact of the woman who died last week — an aunt who provided the first woman — with care. Thus, this flare-up remains definitively within the 100 or so known contacts, already being quarantined (voluntarily) and monitored, by local health- authorities.

Most of the 27 or so high risk contacts have likely already received Merck’s vaccine candidate, as an emergency precaution (assuming they’ve consented to being part of the clinical field trial). Sadly, and in sum, we should prepare ourselves for more of this. It will require long term vigilance — and significant changes in behaviors, among the exposed — to avoid travel or other contacts for at least 42 days, and very proactive hygiene, more generally, in affected locales. Here’s a bit from CNN, overnight — do go read it all:

. . . .The two cases are connected. The latest patient — a woman being treated in the capital, Freetown — is an aunt of a 22-year-old woman who died of Ebola last week in Sierra Leone, World Health Organization spokesman Tarik Jasarevic said Thursday.

The aunt, who had cared for her sick niece, tested positive for the virus after developing symptoms while in quarantine Wednesday. . . .

Truly heart-breaking. But it will indeed take time, resolute safe practices, and patience, to completely tamp this latest flare-up all the way out. Onward — do enjoy the snow — and one anothers’ company!

MRK-01-22-16

“O/T For Friday” Space Science: NEW Planetary Discovery? Caltech Has It All [VIDEO] — On A Snow Day

January 21, 2016 - Leave a Response

For those of us who were saddened by Pluto’s demotion, a while back — the daughter of Dr. Mike Brown, in the video below, is encouraging him to have this massive new candidate — close to ten times the mass of Earth, and rocky at its core — declared Pluto Prime. . . and that, all by itself, is grin-worthy!

As much of the nation hunkers down and stays home, avoiding rain changing to snow, sleet and ice storms, we encourage you to snuggle up — and watch the Caltech story of Planet 9 unfold, before your eyes (about 2 minutes in duration):

Do stay safe, and dry and warm (all you precious cargo, on our little third rock). . . knowing we almost certainly have another son or daughter in the system, albeit traveling through an elliptical orbit spanning hundreds of generations of our own life-times. And that offspring, like another body of unwasted grace, serves as a “shepherd moon” (of sorts, though it is no moon, at all), to other little world-itas. . . fantastic! Be excellent to one another. . . it’s almost the weekend!

In Which Forbes’ Matt Herper Offers A More Serious Look — At Martin Shkreli. Do Go Read It.

January 20, 2016 - Leave a Response

I had (again) planned a largely satirical piece for this evening, on one of Mr. Shkreli’s uncanny abilities — in this case, to alienate even top-notch, hard-boiled, expert criminal defense lawyers. [Yesterday Arnold & Porter filed papers in New York — to withdraw, as his criminal counsel. Speculation in legal circles presently runs along the lines that his weekend TV interview on Fox 5 NY had made it very difficult to represent him — given those very public statements — from his own mouth — that are at variance with what most sensible people would see as the likely truth, related to the matters involved. So (the speculation goes) the able firm indicated that it could no longer effectively handle his case — again, the idle speculation runs, of course.] That was going to be the gist of this. But then Matt messed up all of that largely meaningless fun.

So — as a grown-up, I’ll devote more column space to Mr. Herper — and ask you to read a far more sobering, and more broadly policy-shaping piece — which he dropped into Forbes online, this morning. It will be in the paper version in early February 2016.

The notion is not entirely original, but Matt makes the case quite forcefully: Shkreli is not an abberation — or an exception to the rule — no, he is the rule. When pharma CEOs say they are not like him, they are of course right insofar as none of them stands accused of seven felonies — and facing up to 20 years of federal incarceration. But, as Matt makes plain — and I hinted at in September 2015 — his price gouging is not uncommon in pharma. It is just dressed up — in better linens, when the majors play the game. That’s his thesis (and he deftly reiterates Shkreli’s early and abiding devotion to one “Fast” Fred Hassan, and less so lately — to Brent Saunders — Hassan’s protégé). So we had to mention it. Again. Do go read it top to bottom — especially the part toward the end, about allowing direct governmental negotiations — on pharma pricing. And on remimportation initiatives. Follow this link:

. . . .Martin Shkreli has a knack of saying exactly the thing that will make people angry. But the industry’s dirty little secret is that it is full of Martin Shkrelis, albeit less greedy ones with nicer shoes and more polished manners. They usually don’t raise prices on old drugs by 5,000%–just 50% or 500%. Over the past three years Merck’s price increases have amounted to 29% of its sales growth, Pfizer’s 34% and AbbVie’s 112%, according to consultancy SSR, which does health care research. . . .

This is pharma’s Shkreli problem. Yes, many new drugs must be expensive, or nobody would spend years and billions of dollars to invent them. But should Shkreli — or anyone else — be able to raise the price of a 62-year-old drug 5,000% in one fell swoop? What if he raised the price by just 200%? What if he made sure patients who can’t afford the drug get it for free — as he claims he does? Or if he promised to put some of the money into research and development — as he also says he does? Would any of this have made it okay?

We have a new measure for claims about drug prices: the Shkreli test. How would any justification for raising the cost of a drug sound coming out of Martin Shkreli’s mouth rather than smoothly parsed in legally vetted sound bites? Some price hikes, like those for innovative drugs, clearly pass. But many others don’t. . . .

[In 2012, Shkreli told Herper — over lunch — that he] wanted to invent drugs, and he’d started a company called Retrophin to do it. Shkreli initially got money to license a muscular dystrophy drug from investors including Fred Hassan, the legendary former chief executive of drug giant Schering-Plough, and Hassan’s protégé Brent Saunders. (Both now claim that their relationships ended quickly and Shkreli exaggerated their importance.) “The only person I needed affirmation from was Fred Hassan,” Shkreli told me then. . . .

For my part, I had said that Shkreli’s odious behavior was just Fred Hassan’s world-view, taken to its logical conclusion. That was in September of 2015 — long before his rain-soaked December perp walk. And so — I think the current leadership at PhRMA ought to be thinking now about making concessions to at least some of Candidate Hilary Clinton’s points — on pricing. The tide may have turned here, just as it did in mid-2008, on health care reform, more generally. We shall see.

Sleep tight one and all!

Merck’s Ebola Vaccine Efforts Rewarded With GAVI Contract Support — To Secure Global Approvals

January 20, 2016 - Leave a Response

My regular readers will recall that just over a year ago, HHS granted Merck’s Ebola vaccine candidate so-called “PREP Act” suit-immunity, which essentially provides that Kenilworth won’t ever face US claims — for having been a Good Samaritan, here — in producing the vaccine candidate, to respond to last year’s devastating West African epidemic. Now, Merck will likely be at least cash neutral, as it seeks various global regulatory approvals — from the commitments in this initial GAVI contract.

Until those approvals are secured, though, the vaccine may only be used to quell contact flare-ups, on an emergency basis. That is happening this week, in Sierra Leone, for just over 100 contacts of the latest reported victim of the virus. But in time, Merck might secure governmental/W.H.O. funding — for wide scale vaccinations, in threatened populations. We shall see — this could actually be a slightly profitable franchise — even though that was not the original primary objective.

The newly-proactive global health approach — from a wide array of interested parties — is quite gratifying. Here’s a bit from Reuters overnight, out of Davos, Switzerland — but do go read it all:

. . . .If approved, Merck’s so-called VSV-ZEBOV live attenuated Ebola Zaire vaccine would become one of the world’s first licensed Ebola shots and Gavi would be able to start buying it to create a stockpile for future outbreaks, it said in a statement issued at the World Economic Forum in Davos.

“The suffering caused by the Ebola crisis was a wake-up call to many in the global health community,” said Gavi’s chief executive Seth Berkley.

“New threats require smart solutions and our innovative financing agreement with Merck will ensure that we are ahead of the curve for future Ebola outbreaks.”

The deal was agreed on the understanding that the vaccine will be submitted for a license by the end of 2017.

Speaking to Reuters in Davos, Berkley said the advance commitment should give a positive signal to drugmakers developing products that may not have an immediate market

“It’s critical that we give confidence to companies that when they make this type of effort, there is somebody to buy it,” he said.

As part of the agreement, Merck will ensure that 300,000 doses of the vaccine are available from May 2016 to be used in expanded use clinical trials as well as for emergency use as needed while development work on the shot continues. . . .

Good news for all concerned. Enjoy the softly wheeling snowflakes around much of the mid-nation, this morning. . . smile. . . .

Moderately Good News: New Kentucky Governor Now Admits He Cannot Unilaterally Dismantle Medicaid Expansion There

January 19, 2016 - Leave a Response

[First, a digression — I was actually going to write tonight, about Martin Shkreli parting ways with his criminal lawyers — but decided to save that for tomorrow. Much hilarity likely there, in my estimation, in the coming news cycles. Do be assured, though, this is a smart move by the very able lawyers at Arnold & Porter — that guy is the quintessential toxic client.]

Where was I? Oh. Right. In our (very) occasional series of updates on how Obamacare is faring in the remaining open (red, mostly southern) states, I’ll quickly mention Kentucky. It is ironic that the new Governor, Bevin — a conservative who professes that he prefers local government over federal incursions, is forgoing a working local health care exchange, Kynect — to foist his neediest citizens off onto the default federal exchange — something he has repeatedly said is an inferior alternative. [But the 2016 bathtub of politics is literally overflowing with unintended irony, it seems.]

Ah hey — why quibble about such. . . details? He is just in an entirely scorched Earth reactive mode — bent on undoing anything our 44th President did, before Bevin arrived. Having said that, I think in the end, he will end up with a modified state exchange (his people will insist on it — the ones who elected him).

I also think, in the end, the main victory here is that he realizes he needs federal approval to alter eligibility for the already in-place Medicaid expansion in Kentucky — as those are now property rights vested in the recipients, by controlling federal law. So I am smiling, here. Just a bit, then from the Gray Lady:

. . . .Another point that defenders of Kynect make is that its annual budget comes entirely from a 1 percent assessment on all insurance premiums in the state, which existed even before Kynect opened to pay for another insurance program. The federal exchange places a 3.5 percent assessment on all plans bought through it.

They say the higher assessment from the federal exchange could make premiums more expensive. But Ms. Ditto said the federal exchange’s assessment would be fairer.

“The vast majority of Kentuckians are paying an assessment to support a website that they do not use,” she said. “This will ensure that the assessments are only applied to those using the exchange.”

Ms. Ditto said the Bevin administration did not anticipate having to pay back any of the $290 million in federal funds it received to build Kynect. But federal officials have suggested the state may need to repay $57 million the exchange has not yet spent. . . .

Be careful what you wish for Gov. Bevin — the irony quotient here is rising, day by day. I’ll have more, if and when he actually sends these people off to the federal exchange. But as I say, I’d still bet on a compromise on the generally well-regarded Kynect — and a continuation of the Medicaid expansion in Kentucky. G’night, one and all.

This Tide Continues To Roll — More Southern States Expanding Medicaid: Louisiana Just The Latest

January 18, 2016 - Leave a Response

We had long predicted this moment — when sane people, regardless of party affiliation, would do what is right by their most needy fellow citizens — and start to accept immense federally-subsidized Medicaid expansion plans — covering millions of additional Americans, across 19 or so remaining hold-out states — so that the neediest might be able to receive basic life saving medical services, from their local health care providers. Louisiana is the latest to join — in providing a basic human right — to her citizens. This was a campaign promise made by her new Governor, and he made good on it within 48 elapsed hours.

The funding clock is ticking, though — as federal dollars not applied for, by these remaining states, by calendar year end 2016 — will be lost, permanently. From Forbes reporting, on this past Sunday, then — but do go read it all.

. . . .President Obama is traveling the country trying to coax the remaining 19 states, largely led by Republican governors, into taking advantage of the Affordable Care Act’s generous federal funding formula that costs state coffers much less than in the past to provide Medicaid coverage.

Obama last week visited Louisiana’s new governor, Democrat John Bel Edwards, who had just issued an executive order to expand Medicaid insurance for poor Americans under the health law, making the state the 31st plus the District of Columbia to take advantage of federal dollars available. Former Republican Governor Bobby Jindal, who dropped out of the GOP race for the presidency, was opposed to Medicaid expansion.

Before Obama signed the health reform legislation into law six years ago, the federal government traditionally picked up a little more than half the cost of Medicaid. But funding under the ACA is unlike past efforts to expand Medicaid in that the federal government will pick up the full tab through this year. States gradually have to pick up some costs in 2017, but by 2020, the federal government is still picking up 90% or more of Medicaid. . . .

“By July 1, we expect more than 300,000 hard-working citizens will have the comfort and security of health coverage,” Edwards said in a New Orleans Times-Picayune report. “This will not only afford them peace of mind, but also help prevent them from slipping further into poverty and give them a fighting chance for a better life. . . .”

The healthcare industry is lobbying the remaining states to expand as well. Hospital companies like HCA Holdings and Tenet Healthcare, as well as insurers like Anthem, Aetna, Centene and UnitedHealth Group stand to benefit from expanded Medicaid coverage. . . .

We trust and hope that all people of good will, regardless of party affiliation, will see this proposal through Dr. King’s “better” eyes — as part of our fifty plus year war on needless poverty in America. This is, afterall, one more step — toward a more perfect Union. Sleep well, one and all.

Be Of Use — To Someone Who Needs Your Help, Today: Honor MLK

January 18, 2016 - Leave a Response

You know why I write this, if you’ve read this space for the last few years.

There may be no better way — to honor his day.

And so do go be of use — to anyone you may encounter, who may need. . . . you — your talents, your kindness, your creative input, your support, in short, your time and mindful attention. Go offer it, today — and always.

[U] Ebola: Within 18 Hours Of W.H.O.’s “All Clear”, A Single Fatality On the Borders Between Sierra Leone & Guinea: A Flare Up

January 16, 2016 - Leave a Response

While this is certainly disheartening news, it is to be expected. This is how viral biology works. Darwin was right — even viral life. . . finds a way. . . a way to persist. And persist, Ebola has.

UPDATED: 01.17.2016 @ 11:00 EST — According to The Guardian (U.K.), health authorities in Sierra Leone have quarantined over 100 people, and are monitoring 27 closely, with 24 of those considered “high risk” contacts. [End, updated portion.]

The stricken woman fell ill near the border between Sierra Leone and Guinea, though the “countdown to all clear” clock will restart only in Sierra Leone — Guinea is still considered all clear, as is Liberia. Here’s a bit — but do go read it all, at the WHO Ebola Situation Center website:

. . . .The patient got sick at a town bordering Guinea, said Sidi Tunis, a spokesman at an Ebola response center in Sierra Leone.

Health officials are tracing anyone who may have had contact with the deceased.

The new case was confirmed Friday, hours after the World Health Organization gave the region an all-clear. . . .

It is how we, as a planet, respond to set-backs like this — that will define our character, as one human race. So, let us move forward. And. . . Onward.

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