Let The “Great Speculations” Begin — Arbiter 6 – HALTS, Come Monday

This is from The New York Times’ version of an Arbiter 6 – HALTS spec piece — actually not a bad one — by Natasha Singer:

. . . .Seamus Fernandez, an analyst with the investment bank Leerink Swann, said he expected the study to favor niacin.

A research study by the bank, based on interviews with about 100 doctors, predicted that prescriptions for Merck’s cholesterol franchise could decline by 25 to 35 percent in the next 12 months, if the study reports niacin to be statistically superior to Zetia. But Mr. Fernandez said that was a worst-case outcome. . . .

One thing is certain — most of Wall Street’s bigger pharma analysts will be in Florida, on Monday morning — first thing. Here’s more on the Arbiter 6 study early termination. Maybe I’ll dart down there, too. We’ll see.

Hassan Makes Arguably Material Public Remarks — About JNJ Arbitration

This is a Reuters Health newsfeed, but versions of it are running elsewhere, tonight as well. Note that the story misses — by four hundred percent — the actual amount of time since CEO Hassan departed from “New Merck”, and closed the merger.

. . . .Fred Hassan, former head of Schering-Plough, said Merck is likely to prevail over Johnson & Johnson in its battle to retain overseas rights to the blockbuster arthritis drug Remicade.

“Personally, I feel good that Merck will be able to keep Remicade,” Hassan said on Thursday at the Reuters Health Summit in New York, just four weeks seven days [Blog Editor's correction] after completing the $41 billion sale of his company to Merck. . . .

Note also that — in high irony – if Reuters’ version of the last line “sale of his company to Merck” is taken to be the actual substance of the transaction (as most pundits regularly pen, as opposed to a reverse-merger, in which Hassan’s Old Schering-Plough is the surviving entity), then J&J will likely win the arbitration — as a sale of “his” (Hassan’s) company is plainly a “Change of Control” under Section 8.2(c) of the relevant agreement.

Ah, details, details. . . the devil’s surely in ‘em.

Now, will New Merck need to put out a Reg FD SEC filing tomorrow, given that Ex-CEO Hassan’s upbeat statements go well-beyond (there is much more detail to his quote — in the article) where either CEO was willing to go, pre-merger? Especially so, since Fred Hassan is only one-week out of his seat — as CEO?

Doesn’t that look like a selective disclosure of some arguably material “inside” information?

We’ll see. Whatever happened to the idea that Ex-CEOs dont comment on pending material arbitrations?

Morgan Stanley Starts Out Essentially “Swiss” (Neutral) on New Merck

I am late on this one, as it came out early this morning, but Morgan Stanley (a long-standing lead banker for the Old Schering-Plough) has initiated coverage on the New Merck, with what amounts to a yawn, given the $34 price target, near term:

. . . .Merck was initiated with an equal weight rating and $34 target at Morgan Stanley. . . .

On Monday the 16^th, disclosures explaining the Arbiter 6 – HALTS early termination may drop this price target — if, as Leerink Swann expects, it will result in an additional 20 percent downbubble, in worldwide Vytorn/Zetia sales. Of ocurse I’ll have reports on that, up or down, on Monday morning. Look for much editorializing on that morning.

Ex-CEO Hassan To Join Bausch and Lomb Board

Bausch & Lomb was taken private in the Fall of 2007. This morning, the vision care company announced that Ex-Schering-Plough CEO Fred Hassan will join its board of directors, taking a seat beside a bevy of representatives of the investing entities that took it private. In view of this development, this is probably an opportune moment to highlight the one year (sheesh!) non-compete (at pages 14 to 15) Mr. Hassan signed, in order to secure, in part, his “Change of Control” payments:

. . . .During the Noncompetition Period (as defined below), the Executive shall not, without the prior written consent of the Board (which consent shall not be unreasonably withheld), engage in or become associated with a Competitive Activity. For purposes of this Section 9(b): (i) the “Noncompetition Period” means (A) the period during which the Executive is employed by the Company, plus (B) one year following the termination of such employment by the Executive without Good Reason (if before a Change of Control) or by the Company for Cause; (ii) a “Competitive Activity” means any venture, enterprise, company, business or endeavor which is in competition with the Company or any of its Affiliated Companies in fields in which the Company and its Affiliated Companies have annual sales of more than $10,000,000; and (iii) the Executive shall be considered to have become “associated with a Competitive Activity” if the Executive becomes directly or indirectly involved as an owner, principal, employee, officer, director, independent contractor, representative, stockholder, financial backer, agent, partner, advisor, lender, or in any other individual or representative capacity with any individual, partnership, corporation or other organization that is engaged in a Competitive Activity. Notwithstanding the foregoing: (x) the Executive may make and retain investments during the Noncompetition Period which do not constitute a controlling interest of any entity engaged in a Competitive Activity, if such investment is made on a passive basis and the Executive does not act as an employee, officer, director, independent contractor, representative, agent or advisor with respect to such entity, and so long as the making or retaining of such investment is not contrary to the best interests of the Company, as determined in good faith by a majority of the Board (excluding the Executive); (y) if as a result of a reorganization, merger or consolidation the Executive is assigned a position (including status, offices, title, reporting requirements and prospects), authority, duties or responsibilities which diminish the Executive’s position, authority, duties or responsibilities relative to the 120-day period immediately preceding such reorganization, merger or consolidation, then this Section 9(b) shall not apply; and (z) the Executive shall not be considered to violate this Section 9(b) as a result of his complying with law or legal process or as a result of his cooperating with any of his prior employers in connection with litigation relating to matters in which he was substantially involved, provided that (A) the Executive does not receive any compensation for such cooperation, other than reimbursement of his expenses, (B) neither the Company nor any of its Affiliated Companies is a party adverse to such prior employer in such litigation, and (C) the Executive notifies the Board before beginning such cooperation and provides the Board with any information it may reasonably request, from time to time, regarding such cooperation. . . .

Gosh — you mean he needs to wait a whole year, in return for the likely $178 million in change of control payments? [Tongue firmly in cheek, here.]

Ad Age Reviews The “Efficacy” — Of Old Schering’s 2009 Out-Of-Home TV Ad Spend

Toward the end of 2008, Old Schering-Plough made waves by spending $10 million of its advertising budget — in a single chunk — on the then nascent “digital out-of-home” TV screens: the ones you now see in the grocery checkout lines, on golf carts, and at the gas pumps, for example. Tonight, Advertising Age is running a longish piece assessing what worked, and what didn’t — one year in. A lot of the money went to Dr. Scholls’ line item brands.

What intitially caught my eye was that Old Schering spent $150 million a year in TV advertising on the Claritin brand, alone. Wow. As I kept reading, I began to wonder whether any of the ad spots had “meaningful efficacy” — to borrow from pharma parlance, thus:

. . . .”What it didn’t change was top-of-mind brand awareness. But we looked at this from a pretty broad perspective, so we didn’t expect it to change dramatically,” he said. “The other thing that really struck us from a business standpoint was that 68% of consumers surveyed saw the screen, [but] only 38% of them interacted with the screen. So only a third of the people actually watched the ad. . . .

Huh. That’s much worse that the statistics usually cited for “in-home” TV ad watching — but then the price per ad is much lower, out of home. Again, though — like Pharmalot before us — we wonder whether this sort of DTC advertising works at all, for pharmaceuticals. [See my earlier piece, on the percentage of negative social media mentions, as well.]

One has to wonder whether — after CEO Clark’s remarks that Consumer Health “will need a partner” (i.e., likely be busted-up, or spun-out, in some partial or full transactional move, in the near term) — this sort of spend can continue on Dr. Scholl’s and Claritin, at the “New” Merck.