EXCLUSIVE Animal Health “Auction” Observer: — Second Round Saw “Two Strong Bids”

Citing an anonymous source obviously familiar with the matter, but a source unable to “go on the record” because the source is not authorized to speak for either of the companies, I can confirm the following:

“. . . .A LOT of work was done by several of the bidders, and there were at least two bidders who made serious Phase 2 bids. . . .

There was — at least from what I saw — a lot of due diligence material prepared and disclosed. . . . I heard the first round of bids were strong. The second round had two strong bids, and there continues to be a lot of follow-up activity in response to specific questions from the bidders. I don’t have experience in this sort of thing, but Reuters’ use of the word “farce” seemed pretty strong. Maybe that quote came from someone whose bid didn’t make the cut. . . .“

Well, perhaps Sanofi-Aventis doesn’t have quite the upper hand Reuters was told it does. Is it thus possible that Reuters’ story was sourced through/by Sanofi agents? That seems a strong possibility. As ever, more to come.

Jim Cramer: Funny, And “Fact Free” — on SGP! (Schering-Plough)

This is a time-waster, really — of scant moment, as no one believes Jim Cramer’s take on his neighbor’s pharma company, any longer (and, lest we forget — in September 2008, even he didn’t believe his own take, any longer). In any event, here’s a little “best of” list, I’ve cobbled together:

. . . .Jim Cramer said:

July 21, 2009: Schering-Plough CEO Fred Hassan came to the company “when the stock was around $15, $16 and swore that he would make money for you,” Cramer said. “He tied up with Merck, and a lot of people felt that maybe that was a mistake.” But Cramer said that the stock is up 10 points — “a pretty good price.” “During a period when the drug stocks have been absolutely terrible,” Cramer said, Hassan “deserves our plaudits. . . .”

[Ed. Note: No, Jim -- he swore he would "turn it around", and "stay independent". He did neither, Jim. But he is your neighbor -- so I understand why you can't see the truth.]

September 3, 2008 — NYSE Close $19.16: Mad Mail – Schering-Plough: Although Cramer felt bad about selling Schering-Plough, he stood by his comments on Tuesday’s show that the negative press surrounding the company will limit any upside. . . .

January 24, 2008 — NYSE Close $19.76: Now that they’re down, buy . . . Schering-Plough (SGP Quote), Jim Cramer said on CNBC’s “Stop Trading!” segment Friday. . . . Just so you know, I just issued an alert. . . . You should buy it here (around $19.75),” he said of the cosponsors of Vytorin, which made headlines today after the Food and Drug Administration said it would issue early communication on the drug. He’s reminded of Bausch and Lomb, Bristol-Myers Squibb and other pharmaceutical companies that experienced exaggerated stock-price dives on bad news. Those situations, Cramer said, represented buying opportunities. “The headline risk in drugs is also far worse,” Cramer said. “This is what happens with drug stocks. Everyone panics at the same time. They get knocked all the way down.” “This is just unbelievable to me,” Cramer added, saying that to cut shares of Schering-Plough so much, investors would have to believe the FDA was going to pull Vytorin. . . . This is a classic headline overreaction. . . .”

[Ed. Note: FDA didn't "pull 'em"; but Schering-Plough fell all the way down to $13.47, and saw its US market share, for those drugs, fall 46 percent, in under a year and a half.]

December 17, 2007 — NYSE Close $26.44: Cramer’s Take: Buy This Stock Now:

Schering-Plough’s selloff today signifies an important one-time buying opportunity, says Jim Cramer. . . .

[Ed. Note: Apparently, not. . . . That is about where it closed tonight, and Cramer sees that as a "plaudit-deserving performance" -- when he felt it was "severely undervalued" at this same level a bit ago.]

Hilarious. Something more weighty, soon. I promise.

What Is “The Truth” About Schering-Plough’s Animal Health Businesses?

On page 31 of the just-filed SEC Form 10-Q, Schering-Plough attributes the weakening sales in Intervet to “intense competition” and “frequent introduction of generic products“, thus:

. . . .Animal Health global net sales totaled $677 million in the 2009 second quarter, a 17 percent decrease as compared to $818 million in the second quarter of 2008. Excluding the unfavorable impact of foreign exchange of 10 percent, Animal Health sales would have been down by 7 percent as compared to the second quarter of 2008. The sales decline was a result of the overall economic environment, difficult comparisons against the 2008 launch of bluetongue vaccine and the impact of 2008 product divestitures. For the six months ended June 30, 2009, Animal Health sales decreased by 15 percent from $1.5 billion to $1.3 billion. The Animal Health segment’s sales growth rate is impacted by intense competition and the frequent introduction of generic products. . . .

On the other hand, Schering-Plough executives regularly feed, and encourage, the analysts’ mantra that animal health businesses see few generic product introductions, and that “people will pay (almost) anything” when it comes to their pets. See this, as but one recent example:

. . . .As large pharmaceutical companies look for ways to diversify and defend against generic drug rivals, they are finding animal health offers consistent growth and limited competition. . . .

So, which version is the truth? The former — not the latter — of course. And Schering-Plough very-well-knows this.

But at the moment, Schering and Merck very much need to sell one or more Animal Health businesses — to clear the FTC, and Hart Scott Antitrust review. So the spin wears thin — and thinner — out there in the financial (flogging) press outlets. Sometimes, the MSM seems to be a simple stenography pool, no?

FDA Should Have Background Materials Up on Asenapine — Um, Now.

UPDATE — 07.28.09 @ 8 AM EDT: FDA’s PDAC Materials are now posted — it is a daunting 19.1 Mb download; 1,067 pages. Paging Salmon. . . .

We have a new working thread on it, for your collective observations.

~~~~~~~~~~~~

It is the policy of FDA that the Advisory Committees release background materials for committee meetings two business days prior to meeting date. The Saphris (asenapine) meeting is July 30 2009. So, I expect that sometime during the day — perhaps whilst I am off the grid, attending to other matters — FDA will post the asenapine materials right here.

Until that happens, do go take a look at the latest installment of Salmon’s “Continuing Asenapine Chronicles” — right here, in the comments. Do go read all of his, but here is a teaser, to encourage you to follow that link:

. . . .Found a little bit of info on this study at [Medical News Today]:

“. . . .In the study, SAPHRIS was significantly more effective than olanzapine in the reduction of negative symptoms as measured by change from baseline to Day 365 in the NSA-16 total score, the primary endpoint of the study. By using a mixed model for repeated measures (MMRM), least square mean changes in the NSA-16 total score were -15.8 for SAPHRIS vs. -11.0 for olanzapine (P=0.015). Full results of the trial, including efficacy, safety and tolerability data, will be submitted for presentation at a medical meeting at a later date. . . .”

Another report for up to 6 months shows no difference in effect but a higher incidence of EPS with asenapine but less weight gain (possibly a “side effects” wash):

“. . . .There was no difference in effect between olanzapine and asenapine on negative symptoms at 6 months. This study continued things for another 6 months and found a statistically significant difference at 12 months. There was also a lot more weight gain reported with olanzapine. . . .”

[The] study uses MMRM (mixed modeling of repeated measures) as a statistical technique. My experience with this is that you need to know what is making people drop out of the study and account for each different reason. In practice even when attempted you can’t get reliable data for this and so you have to impute the reasons and that’s not a very good assumption because what is true for one drug is not necessarily true for another.

When I see MMRM I immediately know the statistical analysis is likely based on a bunch of fudge factors that are likely wrong.

Plus without a placebo and knowing the scale it’s hard to interpret whether this is of any real benefit.

Lastly, even if it is real it may imply that there’s poorer efficacy on the positive symptoms and may be why 3 of 4 pivotal trials in support of the acute treatment of an acute psychotic episode in schizophrenia were negative.

FDA needs to be more transparent in the future and release all reports and data. . . .

[And, From A Later Update from Salmon:]

. . . .So if we see a summary written by FDA management without individual reviews or without individuals reviews in clinical pharmacology, and pharmacology/toxicology or these reviews are redacted (they shouldn’t be at all) then I would say something fishy is going on.

And I know fishy.

– Salmon

Indeed. If the background materials happen to show up while I am away, feel free to comment on them in this thread. [I suppose it is a possibility that -- though rather unlikely -- the FDA Advisory Committee meeting on Schering-Plough's Saphris (asenapine) has been postponed, and thus the materials are not posted.]