Opko’s Purchase of Schering-Plough’s Rolapitant Assets Only Cost $2 Million; Deal Back-End Loaded

As a condition to receiving FTC clearance to complete the reverse merger in the United States, Schering-Plough agreed to divest a part of its cancer research candidates program, so that the same would not be automatically shelved, by potentially-competing research programs, then underway at Merck. The buyer of those Schering-Plough assets was Opko Health. Specifically, Opko purchased Schering-Plough’s Neurokinin Receptor Antagonist Research programs, the lead candidate of which is Rolapitant.

In an SEC Form 10-Q filed today, Opko disclosed (at pages 17 and 18) that it agreed to pay only $2 million at closing for the assets; but may potentially pay another $27 million, if various research milestones are acheived. In other words, Opko got a great deal:

. . . .On October 12, 2009, we entered into an asset purchase agreement (the “Schering Agreement”) with Schering-Plough Corporation (“Schering”) to acquire assets relating to Schering’s neurokinin-1 (“NK-1”) receptor antagonist program. Under the terms of the Schering Agreement, we will pay Schering $2 million in cash upon closing and up to an additional $27 million upon certain development milestones. Rolapitant, the lead product in the NK-1 program, recently completed Phase II clinical testing for prevention of nausea and vomiting related to cancer chemotherapy and surgery, and other indications. Phase I clinical testing has also been initiated for a second compound in the same class. . . . .

For a cancer compound in very late-stage Phase II trials, $2 million is a stone-cold steal. $29 million, all in (if all milestones are met) — is a still an extremely handsome bargain. Word.

New Merck Reps Are Receiving Training — On The US Schering-Plough Product-Lines, This Week

While it is a CafePharma sourcing, here, it seems confirmed by a few Merck reps, as well.

. . . .Look, we know this sucks for you. . . and by the grace of God, we got lucky. This process sucks for everyone. . . we are glad to have our jobs, but we really do feel bad for you guys. Good luck to you all. . . .

Indeed. Good luck.

Strictly In the Interest of Complete Disclosure(!). . . .

Not that he needed a contribution from anyone, actually — but my research at the New York City Campaign Finance Board, indicates that the Pfizer PAC did not donate to Mayor Bloomberg in the 2009 cycle.

It did donate to Mr. William C. Thompson, Jr., Mayor Bloomberg’s opponent — and did so early on — in 2007, for the 2009 cycle

. . . .Pfizer PAC New York, NY 10017 | Thompson, Jr., William C. | Mayor (2009) 01/10/2007 $1,000.00 | Monetary Contributions | St#: 2 | ID: R0003791. . . .

Not that I think that had anything to do with this piece, this morning, mind you. . . . but go ahead — do your own search, here.

Bloomberg’s Long Article on Off-Label — The Hassan/Cox Conection

Bloomberg is running a massive piece on Pfizer, this morning — and its $2.3 billion settlement with the DoJ — mostly related to off-label promotion of Bextra. This is a fabulously comprehensive run-down of the history, here. But I saw scarcely any new details.

So, I’ll admit that it made me wonder whether Jeff Kindler supported Mr. Bloomberg’s opponent, last Tuesday. Heh. Answer, by clicking the NYC Campaign Finance Badge, at right I’ll go look. [Or perhaps, now that he has been re-elected, the gloves come off, even if Kindler and Pfizer supported his mayoral candidacy.] In any event, while this long and devastating article breaks very little “new” ground, it does collect — in one place — most of the manifold evils of blockbuster off-label promotion, as it was practiced in the early part of the decade.

It also makes plain the calculus at least some upper-level managers silently made: “Will the fine be larger than the increase in profitability, from selling off-label?” And usually, the answer to that question was clearly “no” — so off-label they went.

What the article doesn’t do — as good as it is — is explain that the center-piece of the largest criminal fine ever paid for off-label promotion was actually presided over by Fred Hassan and Carrie Smith Cox (see mine on it, there). Both were most-recently in charge at Schering-Plough — but back then, the pair was leading Pharmacia’s efforts to bring Bextra to market, and turn it into a blockbuster (before they sold the company, that is — “lock, stock and barrel” — to Pfizer):

. . . .Pfizer bought Pharmacia & Upjohn (P&U) in April 2003. From 2001 to the end of 2003, P&U, first as an independent company and then as a unit of Pfizer, paid physicians more than $5 million in cash to lure them to resorts, where salespeople illegally pitched off-label uses for Bextra, P&U admitted in its Sept. 2 guilty plea.

Golf, Massages

“Pharmacia paid targeted physicians both airfare and two to three days’ accommodations at lavish resorts in the Bahamas, Virgin Islands and across the United States and further entertained these physicians with golf, massages and other recreation activities,” according to prosecutors’ findings.

In her guilty plea, Holloway said her team had solicited hospitals to create protocols to buy Bextra for the unapproved purpose of acute pain relief. Her representatives didn’t mention the increased risk of heart attacks in their marketing.

They told doctors that side effects were no worse than those of a sugar pill, Holloway admitted in her guilty plea. . . .

Actually, heart attacks were among the side-effects. And Pfizer pulled the drug from the market in 2005, after being asked to do so by FDA. Do go read it all, but don’t forget that Hassan and Cox were clearly in charge here, when the drug launched, and undoubtedly had a hand in overseeing all the messaging for this drug.

Was there “a wink and a nod“, about off label pain relief, from the pair? We don’t know. [And don't misunderstand, Pfizer is culpable here, too -- as it plainly learned of all of this -- in its acquisition due-diligence, and chose to continue the practices.]

What we do know, now seven years later, is that the above seems to fit a pattern, for the pair — Hassan and Cox. A pattern seen previously at Pharmacia — in Celebrex marketing (and unfavorable study-results delay and minimization), and of course, in Vytorin/Zetia, most recently (unfavorable study results delay, and minimization). But this whole blog — some 970 posts of it — tells that story.

Leerink Swann Upgrades New Merck’s Stock to “Outperform”

The smallish Wall Street firm had Merck at “Market Perform” most recently. Here is the gist of the analysis, via StreetInsider.com:

. . . .A MEDACorp cholesterol survey (published today) suggests another leg down for Zetia/Vytorin in the U.S. from ARBITER 6, and headlines associated with a potential editorial from Steve Nissen may spark weakness in MRK shares, but we believe the current valuation already implies the loss of >50% of the cholesterol franchise, 100% of U.S. Temodar sales, and up to 30% of Remicade/ Simponi profits. Our industry contacts believe chances of a favorable settlement with JNJ are good and that Merial/Intervet FTC overlap may be overestimated and cost synergies underestimated. . . .

I guess we’ll see — but I am not certain that a bad ARBITER 6 outcome is fully-priced in, at $33 or so.