Interesting Admission by Schering-Plough in SEC-Filed Timeline. . . .

This morning, before market open [on January 25, 2008], Schering Plough (SGP) and Merck (MRK) jointly-released what purports to be a defense of the handling of the data from the ENHANCE study. The press release includes a time-line of what happened, and when.

This one item, from the timeline, is fascinating:

January 2007

“Hiring of two independent contractors (a project manager and a data manager) to work with the laboratory on data management issues. Advice also sought from an independent consultant, who reviews the data and issues a report on January 26. Report considers data quality similar to that in other IMT trials, but acknowledges desire to improve data quality and recommends a number of ways to improve the data and reduce “missingness.” This consultant will serve as one of the expert panelists in November 2007. Schering-Plough begins the process of “querying” outlier data based on objectively defined criteria. . . .”

Here is the link:

Read that last sentence. Schering-Plough “begins process of querying outlier data.” That’s January 2007. So, people at Schering-Plough knew about at least PARTS of the data in January of last year. Sales of stock by officers and directors, including Cox (and the GC); then massive offerings of stock, and preferred, and debt, took place in those next seven months.

Yet no mention of the problems with this study. No mention of “outlier data”. This study involved a product generating between 50 percent and 66 percent of SGP’s overall profits.

SGP also made no mention that it was delaying the release of the results at scientific conferences, for this study, due to problems with the data, in any of its prospectuses.

No mention? No mention? And, one more time. . . no mention???


[Later in the day, on January 25, 2008:]

On the August 9, 2007 — SGP Common Stock Offering

From the Schering-Plough press release on that day:

Schering-Plough Corporation Prices Public Offering of Common Shares and 6.00% Mandatory Convertible Preferred Stock

KENILWORTH, N.J., Aug. 9 /PRNewswire-FirstCall/ — Schering-Plough Corporation (NYSE: SGP) announced today that it priced its registered public offering of 50,000,000 common shares at $27.50 per share. The underwriters have an option to purchase up to an additional 7,500,000 common shares from Schering-Plough.

Schering-Plough also announced that it has concurrently priced its registered public offering of 10,000,000 shares of its 6.00% mandatory convertible preferred stock at $250 per share. The shares of 6.00% mandatory convertible preferred stock have a liquidation preference of $250 per share, for an aggregate liquidation value of $2.5 billion. The preferred stock will pay dividends at a rate of 6.00 percent per annum, payable quarterly. The first dividend payment date will be November 15, 2007. Unless earlier converted, the 6.00% mandatory convertible preferred stock will automatically convert on August 13, 2010, into between approximately 74,206,000 and 90,909,000 common shares, assuming no exercise of the underwriters’ option to purchase additional shares. The conversion rate will be subject to anti- dilution adjustments in certain circumstances. . . .

These offerings will generate aggregate net proceeds of approximately $3.8 billion, assuming no exercise of the underwriters’ option to purchase additional shares. The offerings are expected to close on August 15, 2007. . . .

The offerings are being made under a shelf registration statement filed with the Securities and Exchange Commission on August 2, 2007. This announcement is neither an offer to sell nor a solicitation of an offer to buy any securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful. Any offers of the common shares and shares of the mandatory convertible preferred stock will be made exclusively by means of a prospectus and prospectus supplement. . . .”

These securities were underwritten, on a firm commitment basis, by Goldman, Sachs & Co., Banc of America Securities LLC, Bear, Stearns & Co. Inc., Citi, Morgan Stanley, BNP PARIBAS, Credit Suisse Securities (USA) LLC, J.P. Morgan Securities Inc., Daiwa Securities America Inc., Santander Investment, Utendahl Capital Partners, L.P. and The Williams Capital Group, L.P.

I suspect, at $27.50 per share just five months ago, there are some unhappy clients of these firms — to say nothing of the firms, themselves.


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