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.]

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.

Asked the question, today in an interview, here’s what CEO Clark had to say (Reuters reporting):

. . . .”If the CEO succession planning does not go the way I think it’s going to go, then my time as CEO will be a failure. That’s how strong I feel about getting this right,” he said.

Clark, who headed manufacturing at Merck before taking the helm, expressed confidence in his leadership team and said he is also seeking outside advice on the succession.

He would not comment on whether the next CEO might come from outside the company, saying that would ultimately be a decision for the board. . . .

See, there’s this one guy — and by mid 2010, he’ll be tanned, rested and ready. Bonus! — he already knows the Old Schering-Plough/Merck cholesterol management partnership, inside and out.

For all who’ve ever read more than one or two posts on this blog, you’ll immediately know the above is firmly tongue in cheek. For neophytes — the above is. . . firmly tongue in cheek.

[I've debated on and off since about 3 pm today about whether I'd post this at all.

But, "When in doubt -- send it out. . . ." I always say. So be it.]

Per this Brussels, Belgium MarketWire.com (Europe) feed, we see the talent drain continue, as the inevitable career uncertainty festers, in the newly-combined company:

. . . .UCB New Medicines today announced the appointment of Ismail Kola, Executive Vice President, UCB & President of UCB New Medicines^TM, UCB’s discovery research through to ‘proof of concept’ organization. Ismail Kola will join UCB’s Executive Committee with effect from November 23, 2009. . . .

Since March 2007, Dr. Kola has occupied the role of Senior Vice-President, Discovery Research and Early Clinical Research & Experimental Medicine, and Chief Scientific Officer at Schering-Plough. He came to Schering Plough from Merck where in January 2003 he was appointed Senior Vice President/Site Head, Basic Research. Prior to that, Ismail was Vice President, Research, and Global Head, Genomics Science and Biotechnology with Pharmacia Corporation, and served as a consultant to SmithKline Beecham Pharmaceuticals where he was also a member of the Genomics Advisory Board. . . .

I keep meaning to drop this in — and I keep running out of time (or more-often actually, in my advancing age, forgetting it, altogether). So, it is a few days stale, now — but last week, Johnson & Johnson filed its third quarter Form 10-Q with the SEC. And in it, at page 37, we learn that (as I had inferred, during the last quarter) the individual arbitrators have been agreed to, and are seated. So, it is now fair to infer that a “L3 Preliminary Hearing” on the matter is about to occur, or has already occured, and a truncated form of discovery, as contemplated by the rules of the American Arbitration Association, is now underway. Here is the actual quote, from J&J’s latest Form 10-Q:

. . . .The arbitrators have been selected and the matter will be proceeding to arbitration. . . .

Now, here is the text of L-3, which governs arbitrations of this size, and scope:

. . . .L-3. Preliminary Hearing

As promptly as practicable after the selection of the arbitrator(s), a preliminary hearing shall be held among the parties and/or their attorneys or other representatives and the arbitrator(s). Unless the parties agree otherwise, the preliminary hearing will be conducted by telephone conference call rather than in person. At the preliminary hearing the matters to be considered shall include, without limitation:

(a) service of a detailed statement of claims, damages and defenses, a statement of the issues asserted by each party and positions with respect thereto, and any legal authorities the parties may wish to bring to the attention of the arbitrator(s);

(b) stipulations to uncontested facts;

(c) the extent to which discovery shall be conducted;

(d) exchange and premarking of those documents which each party believes may be offered at the hearing;

(e) the identification and availability of witnesses, including experts, and such matters with respect to witnesses including their biographies and expected testimony as may be appropriate;

(f) whether, and the extent to which, any sworn statements and/or depositions may be introduced;

(g) the extent to which hearings will proceed on consecutive days;

(h) whether a stenographic or other official record of the proceedings shall be maintained;

(i) the possibility of utilizing mediation or other non-adjudicative methods of dispute resolution; and

(j) the procedure for the issuance of subpoenas.

By agreement of the parties and/or order of the arbitrator(s), the pre-hearing activities and the hearing procedures that will govern the arbitration will be memorialized in a Scheduling and Procedure Order. . . .

So — both sides ought to be moving quickly toward the exchange of the few documents that matter (which should only be a few, that the other side doesn’t already possess), then it really becomes a case for the arbitrators — largely to decide what the ambiguous language in Section 8.2(c) means.

As I’ve suggested in the past, if the arbitrators think the language ambiguous, or ill-defined, there are two prominent approaches: (1) seek evidence from experts in the area, as to what the words “change of Control” ordinarily mean, or (2) construe the ambiguities (whatever those might be) against the drafter. We are told that Centocor drafted this agreement, but it also contains a clause largely negating this second approach (Section 12.8, when read together with Section 12.7).

So, it will likely return to the first question — the question of whether the arbitrators will take expert witness testimony, as to what the phrase means, in the context of Section 8.2(c).

Pop the popcorn, folks, and grab an aisle seat. Show’s about to start.

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.

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.

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 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.

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.