Funny Thing: Motley Fool Just Saw “Unicorns” — Over At Pfizer!

Yesterday, I held forth, in a rather sarcastic tone, about why valuing a company, or its stock price, using non-GAAP EPS, feels a little like chasing after, and then herding unicorns. This, I said, was doubly true at companies about to merge (like Schering-Plough & Merck).

This afternoon, Jim Mueller, of The Motley Fool finds several unicorns — in Pfizer’s recently-reported “as adjusted EPS” (i.e., non-GAAP EPS). Funny thing. Pfizer is in the midst of acquiring Wyeth — and I bet the same analysis I offered yesterday — applies. In any event, do take a look at The Fool:

. . . .The real question, though, is whether Pfizer, Wall Street analysts, and investors should rely so heavily on those “adjusted” numbers. Clearly, investors like what they’re seeing; the stock rose more than 1% yesterday following the earnings report, and was up even more sharply in today’s session.

But I don’t like that “certain significant items” includes such things as “major non-acquisition-related restructuring charge[s]” which Pfizer announced just a couple of quarters ago, “sales of products or facilities that do not qualify as discontinued operations,” and “certain intangible asset impairments” or amortization. To me, it’s beginning to look as if company executives are cherry-picking what to include in the numbers they want everyone to pay attention to. . . .

Listen up, Fools. Looking past currency fluctuations can be an important way to see how a business is faring. And Pfizer is doing all right on that front.

But generally accepted accounting principles, for all their faults, are meant to provide transparency in the reporting of results by the companies in which we invest. And that means the cost of doing business includes the cost of things like “non-acquisition-related restructuring.” When management starts throwing around things like “adjusted this” and “don’t include that,” turn up your skepticism meter and take a deeper look. Then decide if you really want to invest in that company. . . .

Indeed — couldn’t have said it better, myself. Ooh, wait! Check that. I did.

Merck Rising on NYSE — As Januvia Likely Won’t Face US Taketa Competition, Near Term

For solid scientific reasons, FDA is giving the Taketa diabetes drug candidates program the slow-roll, per Reuters’ Matthew Goldstein, a few minutes ago:

. . . .[Taketa's] Alogliptin, which belongs to a new class of diabetes drugs called DDP-4 inhibitors, has been positioned by Takeda as a successor to Actos, which will lose U.S. patent protection in 2011.

“The approval process for alogliptin by itself is separate from that of the fixed-dose combination,” said Takeda spokeswoman Hisako Nagata.

“But it is difficult to think that the combination drug would receive approval prior to alogliptin by itself,” she said.

There is currently only one DPP-4 diabetes drug on the U.S. market, Merck & Co’s Januvia. . . .

This development is likely behind the over 3 percent increase in Merck’s shares on the NYSE, this morning — while Schering-Plough, via the coming exchange ratio, is rising about half that much, on the NYSE, this morning.

House Chairman Waxman Holds To His “Tough, But Fair” Pharma Stance, Overnight

Duff Wilson, in The New York Times (do go read it all) has a very interesting set of counter-developments laid-out — countering, by pushing back, still seeking even more ambitious reforms. This should be seen, in some measure, as the progressives’ answer to the President’s speech of this evening. Here’s a snippet, covering House Chairman Waxman’s views on the matter:

. . . .For starters, Mr. Waxman wants the drug industry to give up an additional $63 billion over the next decade. That would come by reversing a 2006 policy change that removed millions of low-income elderly from Medicaid drug coverage and had them pay higher prices for the same drugs under Medicare — a move he has called a “windfall for drug companies.”

Billy Tauzin, head of the drug industry’s main trade group, said that his members could not support that change. “What Waxman is trying to do, you not only break the deal, you break the bank for us,” said Mr. Tauzin, president of the Pharmaceutical Research and Manufacturers of America.

But Mr. Waxman said in an interview Wednesday night: “I know they have a deal with the Senate, and I think they do have a deal with the White House, but I don’t know how pinned down it all is. But they don’t have a deal with us — the House.”

Mr. Waxman is also looking for a much tougher bargain with drug makers on another pivotal piece of the cost puzzle — the effort to allow generic competition in so-called biologic drugs, which represent the most expensive and fastest growing part of the market. The drugs, many of them used against cancer, can cost tens of thousands of dollars a year. . . .

There is much more in the full NYT article — do go read it all.