Category Archives: Schering Q2 SEAS Vytorin fallout lost profits of $1 bil

Revised — Schering-Plough: A Greek Tragedy, in Three Acts.

An update, to this one, proclaiming it all a “comical farce“, also in three acts — I sincerely apologize. That was entirely premature:

Act I

March 31 — April 1, 2008: ACC ENHANCE Panel Discussion in Chicago — Schering stock goes from $19.87, to $14.41 per share [Meanwhile earlier, off-stage, left, SEAS study launches — to compare Vytorin to a placebo (i.e., stack the deck-chairs)].

Act II

Slowly recover — to around $22 — by late last week. . . . Then, delay Schering and Merck Q2 earnings conference calls — to after market-close, on July 21, 2008 — for “an important update” on SEAS: Vytorin to a placebo results*.

Act III

Fail the primary endpoint on a Vytorin study — [Again!]

But flog an (underpowered) secondary SEAS endpoint, while ignoring some data on cancer incidence-spikes. Point to your successes in rearranging those pesky deckchairs — dutifully ignore that icberg. Vytorin/Zetia is still more than 50 percent of all of Schering’s 2008 full-year profitability — at least before this evening, it was. . . .

Tune in tomorrow, for all [the rest] of the carnage. James Cameron is now under contract — to direct. Shorter Condor [channeling PharmaGossip‘s excellent turn of phrase!]: Heavy SEAS, ahead!

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* A more detailed plot synopsis, then: I just walked off my plane from the West Coast, and I am still digesting how this topsy-turvy Schering-Plough trading day ended. . . .

Over 108 million shares changing hands — off another 3 percent in the NASDAQ after-hours session — on about a million shares changing hands, after hours.

Yep. I think it safe to say — “Look out below.”

Add to this that Merck refused to update its full-year 2008 guidance, tonight — CEO Clark is still studying the SEAS fallout. So, will Schering close below $18 tomorrow?

$17?

$16?

$15?

I honestly need to do some math — but all of these are at least possibilities “in play“, at the moment. [Had the analysts really taken all of the 2008 Vytorin profits out of their models, before last Friday? I doubt it.]

I am genuinely saddened — for the Schering rank and file — to have been so terribly right, over the last few weeks. That $22 was truly a suckers’ rally.

So, it would seem SEAS missed the primary end-point (bad enough), but wait! There’s more! The big “C” — However, since no similar cancer incidence results have been seen in IMPROVE-IT (thus far, apparently) — this shouldonly” mean that Vytorin is largely ineffective at improving cardiac outcomes — not “inherently a dangerous drug“, per se.

And, while it is also true that the secondary result (flogged by CEO Hassan, tonight) was a “positive“, that positive is underpowered possibly the result of a confusing variable — the statin’s presence in the compound. [Edit: Thanks to the loyal fanbase, MM, for the edit — I did misuse the term of art: “underpowered”!] That is, it should have been significantly better than it was, if it was NOT (quite likely) an artifact.

So, tomorrow we will know — by the close of the market — whether Wall Street’s analysts had really factored Vytorin sales to be near zero by mid-2009. If so, Schering should be flat, to slightly rising, tomorrow. I. don’t. think. so.

I expect it will be off sharply, and on very heavy volume, again. I cannot see how there is a significant market for a combo pill that costs at least triple what a plain statin does — but can’t beat a placebo. Sell me that one, please.

Where is the [revised] business model for this drug? I say this fully-aware that I am simply ignoring the cancer-incidence data. (Will your family doctor do the same?) And — still, I genuinely ask — what is the “value proposition” this drug now offers? At any price. What?

I don’t see it. I don’t think Wall Street will, either.

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