Propecia®/Proscar® MDL Update: Today, The Initial Six Bellwether Cases Have Been Suggested — With Three Per Side

October 6, 2016 - Leave a Response

In the federal District courthouse in Brooklyn this afternoon (as we indicated they would, last week), both Merck, and the plaintiffs’ lead counsels revealed their three (cherry-) picked cases. Well, they each revealed them to the able trial court judge, Brian M. Cogan I should more properly say. Of course, where erectile dysfunction is among the alleged off-target / side-effects, it makes quite a bit of sense that some plaintiffs might prefer not to be identified by name, in the public record — any more than absolutely required, to allow the cases to proceed. Indeed, there are very important health care/personal privacy interests at stake here.

In view of that, both sides then immediately filed mirroring motions to seal the names and all other details of the three cases each had selected. Judge Cogan provisionally granted those “stereo” motions, this evening — subject to his determining that the sealing is appropriate, upon review of the involved papers — and still addresses any concerns about a free press, and the general preference for open access to our federal courts. That said, I suspect the names will remain sealed. These cases are more sensitive, in my view, than the Vioxx, the Fosamax or NuvaRing ones — given that a central claim of most of these male plaintiffs is a permanent (or at least long-lasting) reduction in their manhoods’ firmness.

For our part, we hereby resolve not to name any plaintiff, unless a given named plaintiff consents in writing to the contrary — after either (i) an appropriate court order, or (ii) proof of identity, attached to the consent. Here is the full text of tonight’s order:

. . . .ORDER granting Motion to Seal, subject to the Court’s review of the sealed materials after it has been filed so the Court can determine whether sealing is necessary. Ordered by Judge Brian M. Cogan on 10/6/2016. . . .

And so, the federal MDL stays on track to hold a first bellwether trial — as early as September 2017, or about a year from now. The state consolidated action (in New Jersey) will start similar “test case” trials no earlier than April 2018, in all likelihood. Now you know — so sleep well, one and all. . . . like little round river rocks. A busy day lies ahead, on the ‘morrow. Smile. . . .


An Update: Has Pfizer’s Off-Shore (Non-US Tax-Haven) Retained Cash Hoard Recently EXPLODED — To Almost $200 Billion[?]

October 6, 2016 - Leave a Response

[Occasionally we talk tax policy here. Please forgive us.]

UPDATED @ 1 PM EDT: I am now fairly curious as to how this non-partisan think tank arrived at the $193 billion figure attributed to Pfizer below. The report quite accurately quotes Merck’s most recent (2015) year end SEC Form 10-K for the figure it uses; and it quotes the analogous figure for Apple, also accurately — from that company’s SEC Form 10-K. Oddly, though, at year end 2015, Pfizer showed “only” an $80 billion figure (at page 91 footnotes), not the $193 billion claimed by the report I’ve quoted below. I’ll keep digging, but it could be that the report isn’t comparing “apples to apples“, as to the Pfizer figures. Or (less probably) it could be that the two failed inversions Mr. Read attempted in 2014 to 2016 somehow led it to create additional shelters, off-shore (ones we will only see in March of 2017, when its 2016 SEC Form 10-K is filed). [Moreover, I am not aware of any easy way to move earnings off-shore, by selling one’s HQ — and moving just a few blocks away, inside Manhattan — as Mr. Read announced he will, here in late 2016.] In any event, I’m on the hunt, and will report back — right here. FINAL UPDATE: The Senior Policy Analyst has answered my questions, to my satisfaction — and so the original post below stands, in full. There is no footnote source for that Pfizer figure, so I have a call into the editors of the report — to get an explanation. [End, updated portion.]

If the report is accurate, that Pfizer figure is certain to be over $200 billion at year end 2016 — almost a fifth of a trillion dollars. To be fair, Merck is now holding a little over $70 billion (not small potatoes!) in a similar fashion. But proportionately, Pfizer is NOT three times Merck’s size (no, it is only about a third larger than Merck). And proportionately, Apple dwarfs Pfizer on market cap — yet Pfizer is only about 20 per cent behind Apple, in the hoarding of foreign cash reserves. Consider that at year end 2014, this amount for Pfizer was only $74 billion (page 81, footnotes) — and now, about 20 months later — it is going to be over $200 billion. That’s a major inflation, without some underlying new mega-blockbuster coming on line (as an economic explanation) for Pfizer, to boot (in comparison to Merck’s Keytruda® launch during the same period — none for Pfizer).

My thesis then, is that Pfizer (under UK chartered accountant/chairman Ian C. Read’s leadership) may be playing the “patent holdco paid a foreign license fee strategem” just a little too close to the edge of the envelope. In order to pass US tax muster, a multinational like Pfizer, Apple or Merck must be able to show the IRS that the patent license royalties paid to the foreign patent holdco (in truth, just another of Pfizer’s controlled companies, in this example) — for its patents on drugs like Xeljanz® — is a fair market value rate.

Wishing to be careful, and prudent here — most public companies are fairly conservative about declaring the vast tax advantage of not having to pay US corporate income taxes on the funds expensed in this manner, as patent “royalties“, to their foreign holdcos — and tend to choose the low end of the range of FMV rates, for such patent license royalties. Not so Pfizer, it would seem.

This is my conjecture (to be clear), and operating thesis — because no law requires disclosure of these intra-company royalty rates. So we cannot know, for certain. But it seems unlikely that a company only modestly larger than Merck, operating in almost all the same US and foreign markets, in the same industry, could generate such a run-up in foreign cash, without having bumped up these patent royalty rates. Doubly so, when Pfizer’s cash off-shore so quickly is “catching up to” the Apple level. Apple’s tech supports very high royalty rates. But I am less than certain that Pfizer’s drugs on patent are as valuable, on a per dollar of sales basis, as Apple’s tech patents.

It is the top-end — and bottom-end “gap” — between the three companies that feeds my conjecture. I’d love it if someone could offer a contra case, in favor of Pfizer. I very much doubt such a case can credibly be made. But do consider the above analysis an earnest, and friendly, offer of scientific challenge: please prove me wrong. Please.

Finally, to be clear, I do not agree with all — or perhaps even most — of the conclusions reached in this non-partisan report, but it does accurately set out the scope of the tax problem our next Administration simply must address in a thoughtful, non-punishing way. That is, we need for Merck, Apple and Pfizer to use these cash hoards to invest in the US — by encouraging (with tax reform) the return of this capital — not free of tax, but in a graduated manner to feed our own US economy. Here’s the report quote (on page 3) that set me to writing all of the above(!):

. . . .Pfizer, the world’s largest drug maker, operates 181 subsidiaries in tax havens and holds $193.6 billion in profits offshore for tax purposes, the second highest among the Fortune 500. Pfizer recently attempted the acquisition of a smaller foreign competitor so it could reincorporate on paper as a “foreign company.” Pulling this off would have allowed the company a tax-free way to avoid $40 billion in taxes on its offshore earnings, but fortunately the Treasury Department issued new anti-inversion regulations that stopped the deal from taking place. . . .

So, it is high time for the adults in the room — that does NOT include you, Mr. Trump(!) — to discuss US and international corporate tax schemes with fresh eyes, under HRC in 2017 (here I did like the 2014-era “Colorado Compromise” suggestion). We need solutions, not more gaming — like the Trumpkin’s $916 million paper loss, that let him (in all likelihood) avoid paying any federal income taxes on his billions, for over 20 years. Now you know. And I am smiling widely, on a softly raining, warm Fall morning walk in. . .


In A Move First Announced In July 2010, Merck Now Closes Its Miami Lakes Manufacturing Facility

October 5, 2016 - Leave a Response

Several media outlets are reporting the loss of 112 jobs at Miami Lakes — here at the lunch-hour. I never relish mentioning these matters, out of genuine empathy for the families involved.

However in this case, as we first reported in July 2010, this closure has been on Merck’s docket for more than six full years. At least two employees will remain into 2017, to facilitate clean up — and final closure. Here is the bit:

. . . .Merck will begin laying off employees at its Miami Lakes plant on Nov. 15, with the rest expected to separate from the company Dec. 16. Two employees will remain at the plant for “closure activities” until mid-2017. The employees have no bumping rights and are not represented by a union. . . .

In a very-minor “silver linings” story — this is nearly the last of the legacy Schering-Plough layoff/clean-up actions. Thanks again, old “Fast” Fred Hassan. Our thoughts and prayers are with the families involved. [Editor’s Nota Bene: Blogging, and news coverage, may be slightly sporatic until at least mid-next week, with an important transaction pending closure in my shop — and a looming trip to Kentucky for an Iron Man, over the long weekend. Just fair warning. Smile.]


FDA Warning — Current Hep C Regimens: Hep B May Re-Emerge, While On Meds, Industry Wide…

October 5, 2016 - Leave a Response

I’ll post this mostly just to keep a complete record. It is immaterial to Merck.

And it will matter very little to the overall horse-races (in claiming that coveted lead, now held by Gilead) underway between Merck, Gilead and Abbvie, primarily — since the FDA’s latest black box warning applies to all of them (and six others, besides). Here’s a bit — it has been widely reported, overnight:

. . . .The Food and Drug Administration is warning about the risk of reactivation of hepatitis B among patients who have had that disease and who are taking some prominent and expensive newer medicines for hepatitis C.

The federal agency said it is requiring a so-called black-box warning in the labels for at least nine brand-name direct-acting antiviral drugs, including Sovaldi and Harvoni from Gilead Sciences Inc., Viekira Pak from AbbVie Inc. and Zepatier from Merck & Co. . . .

I suppose the fascinating object lesson, of this development (for me) — is one of evolutionary biology. It seems that suppressing the Hep C virus to an undetectable level in humans, leads in some cases to a rise in a perhaps mutated version of the other, Hep B virus. Or maybe it simply allows Hep B to compete effectively for biological resources inside the host once more. But it is plainly proof of the complexity of human viral biology. Onward, with an expectant twinkle in my eyes — as so, so much (grin-worthy) looms ahead — in the coming weeks!


HHS/BARDA Awards Additional Contract To NewLink Genetics: Ebola Vaccine Marches Forward Toward Manufacturing Scale-Up…

October 4, 2016 - Leave a Response

mrk-barda-ebola-10-2016 While this firm additional $24 million — plus kickers for another $51 million on milestone achievement — is small potatoes to Kenilworth, it makes a very big difference to tiny NewLink. And it comes on top of an earlier $75 million from HHS — this past Spring.

And so it is very good news in Ames. Even so, my unduly-busy graphic at right is intended to suggest that — in fact — “it takes a village” to conquer the Ebola vaccine puzzle — from concept, to fully-scaled manufacturing. As we’ve long written, it is unlikely that a market price reflecting the full costs will be recoverable, so governmental and humanitarian funds will have to bridge that gap. Here is a bit — from tonight’s press release:

. . . .NewLink Genetics Corporation announced that the Biomedical Advanced Research and Development Authority (BARDA) of the United States Department of Health and Human Services (HHS) has issued a $24.8 million contract to a subsidiary of NewLink Genetics to support the advanced development of the investigational rVSV∆G-ZEBOV GP (Ebola Zaire) vaccine candidate, designated V920.

The new award includes an additional $51 million of contract options which may be exercised by BARDA. BARDA has previously awarded $76.8 million in contracts for development of V920. The new funding is in support of manufacturing facility readiness, manufacturing process qualification activities, and additional clinical trials to support regulatory approval of the V920 vaccine. . . .

In late 2014, Merck licensed the vaccine from NewLink Genetics to apply Merck’s vaccine expertise to help accelerate the development of this vaccine candidate. Merck is responsible for and involved in the research, development, manufacturing, distribution and regulatory efforts in support of V920. Clinical studies of the vaccine candidate are ongoing. . . .

It is almost certain that Merck will contribute real monetary value to this effort — without a pecuniary profit in sight. And that is praise-worthy, indeed. Now you know.


The Lead HR Functional Section 16 Officer Cashed Options Yesterday — Using A 10b5-1 Trading Plan — Nothing Material

October 4, 2016 - Leave a Response

The officer sold the equivalent of about 40,000 shares (by exercising and then reselling long vested stock options) netting about $17.84 per share, pre tax, in cash — but she still holds very substantial amounts of Merck stock (almost $5.5 million worth of it, in fact) — post the transactions, as of October 3, 2016.

This open market NYSE sale was included along with a batch of board of director vestings/tax-surrenders (mostly off-exchange, non open market transactions), so the casual observer might not have noticed it. [And, I am anything but a casual observer. Smile. She also sold in a similar fashion, in early July of 2016.] But these latest two in 2016 are nothing like the size of her July 2014 sales.

Here’s the one most recent SEC Form 4. This is nothing to worry about.

Now you know.


U.K. Drug Price Authority Issues Keytruda® A Draft “No Go” For Lung Cancer — On Price/Cost-Effectiveness

October 4, 2016 - Leave a Response

mrk2-nice-oops-nsclc-prelim-2016 The erstwhile PharmaLetter was first out of the gate with this scoop, from across the pond.

I will say that the idea that a therapy might be “dinged” — on price, because one might need to keep taking it. . . may not ultimately rule the day, when a final decision is made, on advised treatments for NSCLC, by the single payer, in Britain. Me? I’d read this as a velvet glove, covering an iron fist — and inviting Merck to offer increasing UK discounts based on time on therapy, in NSCLC. So this has to be mildly disappointing news, for Kenilworth. More to come, but do go read PharmaLetter (and — a bit of it):

. . . .Medicines cost-effectiveness watchdog the National Institute for Health and Care Excellence (NICE) today issued draft guidance not recommending US pharma giant Merck & Co’s (NYSE: MRK) Keytruda (pembrolizumab) to treat advanced non-small-cell lung cancer (NSCLC).

There is currently no robust data on the long-term benefits of pembrolizumab. In its submission to the NICE, the company assumed that patients stopped using pembrolizumab at two years if their disease had not gotten any worse.

The NICE’s appraisal committee felt that in real-life clinical practice it was very unlikely that patients who were benefiting from treatment with the drug would stop taking it. . . .

Now you know — but this is only act one of a three act play — if the truth be told. Onward.


Tough Dilemmas Dept.: Responsible Hawaiian Mountain Stewardship, Or… A Deeper Understanding — Of The Stars?

October 4, 2016 - Leave a Response

The “Gray Lady” has done a nice job on this story — outlining the competing interests at play (do go read it). I struggle with whether to reach out, and weigh in. . . or remain silent, today. [In truth, I also simply wanted to run the below poem, welded to that stunning photo at right. Smile.]

It always moves me, when I see the Milky Way up close — the very same Milky Way, of my youth. This is exactly what I remember, powered with stars, against the black — but usually with lustrous night-snows, underfoot. Do come to your own conclusions, about whether we need a thirty-meter scope on Mauna Kea. I myself am undecided, with Hubble still operating quite well, and the James Webb on schedule, for an October 2018 launch-date, at NASA. Let us now turn to why we are here, this morning, then:

. . . .CLXXIII: She Walks In Beauty, Like The Night

She walks in beauty, like the night

Of cloudless climes and starry skies,

And all that’s best of dark and bright

Meets in her aspect and her eyes;

Thus mellow’d to that tender light

Which Heaven to gaudy day denies.

One shade the more, one ray the less,

Had half impair’d the nameless grace

Which waves in every raven tress

Or softly lightens o’er her face,

Where thoughts serenely sweet express

How pure, how dear their dwelling-place.

And on that cheek and o’er that brow

So soft, so calm, yet eloquent,

The smiles that win, the tints that glow,

But tell of days in goodness spent,—

A mind at peace with all below,

A heart whose love is innocent.

— Lord Byron

I think it best — to pause right here, for the moment. But — for my part — in the darkness, it seems, a truer beauty there resides. What one’s eyes cannot see in the dark, one’s heart then might. Smile. . . .


Eternally Silent Rosetta — She Resides On The Plains of Sais, Once More…

October 3, 2016 - Leave a Response

Just a quick follow-up here — on ESA’s final press release about the Rosetta mission’s success. And the long-echoing poetry of the history, behind that name. It cascades small chills down my back, even thinking of it. . . smile.

It seems that Patrick Martin (the ESA Rosetta comet mission manager) has named the final resting place, where the Rosetta orbiter set down on Comet 67P. . . “Sais“. Of course, it was at the temple from antiquity — just an hour or so (on foot) outside of Memphis, Egypt — near modern day Rashid — at Sais, in fact, that the original earth-bound Rosetta Stone was first re-discovered by the French in modernity, in 1799.

It matters not that these were Napoleon’s men — Lieutenant Pierre-François Bouchard, to be precise — it matters that the stone was preserved for the sake of science. [And so, even a barbarian may be taught manners, it seems.] From ESA, this afternoon, EU time, then — a bit:

. . . .After contact was confirmed and the mission declared complete, Mission Manager Patrick Martin announced the name of the impact site.

He said, “The Rosetta Stone was originally located in Sais, and we shall name the impact point as such so we can finally say that Rosetta has come home to Sais.”

The mission was named after the Rosetta Stone, itself so named because it was found in a town called Rashid (Rosetta), having thought to have been moved from a temple in Sais.

Just as the Rosetta Stone was pivotal in understanding ancient language and history, so the vast treasure trove of Rosetta spacecraft data is changing our view on how comets and the Solar System formed. . . .

Now you know. . . and puzzling about other forms of radio silence — hoping that they are not eternal — as Rosetta’s silence on the Sais plain shall be, here. Smile. . . .


In Which We Shift Gears A Bit Here — As We Last Did — In 2008; And 2010. . .

October 3, 2016 - Leave a Response

It is becoming increasingly likely that some adjustments will be required, to the general scheme of US health care delivery laid out by the ACA of 2010 (or Obamacare, if you prefer). I won’t offer my long-form political analysis as to why that is so, other than to say that Republicans have regularly used various means to try to cut off the funding (or more precisely, the federal subsidies to states and insurers) for the measures enacted.

So — in the coming weeks here, as we last did in 2008, and 2010 — we will start to make predictions (and maybe even some suggestions, as we did in 2007, live in Philadelphia) about what the 45th President’s “tweaks” should/will look like. [Back in 2007, in Philly, we all favored the public option, but I think correctly realized it wold not pass muster in a red Congress. I think that risk has mitigated somewhat — but we will have to see, after the November US House races are settled.]

In any event, I decided to get started on this predictive project a little early, given that overnight, The New York Times is also suggesting that change will be needed, here. Here’s a bit of that:

. . . .The departing president, the woman who seeks to replace him and nearly one-third of the Senate have endorsed a new government-sponsored health plan, the so-called public option, to give consumers an additional choice. A significant number of Democrats, for whom Senator Bernie Sanders spoke in the primaries, favor a single-payer arrangement, which could take the form of Medicare for all. . . .

I’ll take a week or three to collect my thoughts, and then begin to post on them, occasionally, here.

Onward — on a gray but decidedly optimistic fall morning [and not just because Alec Baldwin delivered an Emmy-worthy Trump on SNL!]. . . .

In truth, I am grinning widely, as I look ahead, at large and exciting changes looming at my own firm, and thus am put in mind of how my practice may change in the life sciences, more generally, in 2017 and beyond. So it all flows in synchronicity — as the Universe ever does (if we are perceptive enough, to stop and listen. . . carefully — as she sings sweet, she sings low, but she does sing, indeed). Smile.