Tag Archives: 2013

US Financial Press: “Better Late Than Never,” I Guess

MSM outlets are just now pickng up on the post May 15 spike in Merck’s short interest. As I said on Monday, there was a move afoot — in block trading mostly — to clip Merck’s cash dividend, while insulating the trader from price moves in Merck’s stock, which could eat into the dividend expected. An uptick would be nice, but downward pressure would be. . . bad.

So, the 300 per cent increase in short positions likely reflects these traders stop loss positions. In any event, I don’t expect it will increase after tonight — Merck is now ex-dividend. Here’s what I wrote at the beginning of the week:

In order to clip the fat cash dividend off of Merck’s common shares, many institutional holders are arranging largely riskless trades in Merck. Riskless, from a stock price perspective, that is. The goal here is not to lose money on the price of the stock — while clipping off that fat Merck dividend payment right.

So, traders are buying and selling (or actually writing) both puts and calls, pivoted around Merck’s current price, agreeing that if the stock price doesn’t move at all, all they will be out is the premium. This is driving up volumes, and distorting normal market trading.

What To Expect, Come Early Friday — From Whitehouse Station

Again — I’ll be more keenly interested in the finer details of the financial analysis — as opposed to the simple top-line and bottom-line figures (too noisy).

To be clear, I do now expect a wallop of sorts, from foreign exchange (just as Pfizer reported, this morning), in the fourth quarter of 2012 — at Merck.

Here is how Forbes sees it, as of Tuesday evening:

. . . .Analysts are expecting Merck to come in with earnings of 81 cents per share, 16.5% less than a year ago when it reported earnings of 97 cents per share. . . .

Analysts are expecting earnings of $3.81 per share for the fiscal year. Analysts look for revenue to decrease 6.7% year-over-year to $11.47 billion for the quarter, after being $12.29 billion a year ago. For the year, revenue is projected to roll in at $47 billion. . . .

As I say, we shall see, come Friday morning — but it seems that stodgy old branded pharma is supporting a minor market rally today on the NYSE. Who’d a’ thunk it?

IMPROVE-IT: Now due in 2013 — or Even Later?

I’ve reordered the side-bar, at left, and re-set the end-date on the count-down clock for the IMPROVE-IT study results. Why? Because I traded some private e-mail over the weekend with an expert in these matters, and because I just noticed what Matt Herper has independently written, in a similar vein, this morning:

. . . . Zetia and Vytorin, sold by Merck and Schering-Plough, contain an active ingredient that lowers cholesterol but hasn’t been shown to save lives in large studies. An 18,000-patient trial testing the chemical is expected to wrap up in 2013, just a few years before the drugs lose patent protection and go generic. At that point, the companies will probably have booked at least $30 billion in annual sales. . . .

So — instead of mid-2012 — the countdown clock will use an end of 2013 date — for now.

In the next few months, at approximately the mid-point of IMPROVE-IT (as Merck CEO Dick Clark mentioned on the Merck Q1 2009 earnings conference call), Schering-Plough and Merck will take an “blinded” look at the data, to decide whether a second increase in sample size is warranted. The partners upped the original study size (from 12,000) to 18,000, last Spring. The companies’ official line is that this increase will improve the probability of a clear outcome — up or down.

If the companies elect to increase the size again this summer, it will signal another delay — beyond 2013 — for IMPROVE-IT results, and perhaps, just perhaps — that IMPROVE-IT is suddering the same potential for a “non-result” that afflicted ENHANCE. There would be scant other reason to increase sample size twice in such an already massive study — except that the raw data, even while still-blinded, was showing no clear trend — in any direction.

So — instead of waitng “only” another 1,146 days to see the IMPROVE-ed results — we’ll now wait at least 1,695 days — from today — to find out whether Vytorin is actually saving lives. Cumulative sales of over $30 billion — and we won’t know whether it reduces cadiovascular risks/outcomes. Astonishing.