The SEAS (Simvastatin and Ezetimibe in Aortic Stenosis) study jointly sponsored by Merck and Schering Plough showed that Vytorin was not effective in treating complications from heart valve disease.
Shares rose after the announcement that Schering-Plough will be reducing its staff by 10%. The layoffs are part of a plan to save $1 billion to offset the losses from Vytorin.
At a meeting of the American College of Cardiology, Yale University cardiologist Harlan Krumholtz cautioned thousands of doctors against the use of Zetia and Vytorin. Together, these drugs brought in over $5B in 2007 for their makers, Merck and Schering-Plough.
On January 14, Merck and Schering-Plough released a study that showed Vytorin may not be more effective than Zocor alone. Vytorin is a cholesterol drug jointly developed with Schering-Plough that is a combination of Merck's best-selling Zocor, which had lost patent protection in 2006, and Zetia, a newer drug. While sales of the drug are strong, totaling $3 billion in the fourth quarter, Vytorin has faced controversy over its comparative efficacy and marketing techniques. As a combination drug, Vytorin enjoys patent protection, which allows Merck and Schering-Plough to charge significantly higher prices than its Zocor counterpart. However, the two companies recently released the results of a study that showed Vytorin may not be any more effective than Zocor alone. Over the last year, Merck and Schering-Plough had aggressively advertised Vytorin as a better alternative to Zocor, and the two companies are currently defendants in about 50 civil suits related to Vytorin's potentially misleading marketing.
Lehman Brothers has upgraded SGP to overweight from equalweight, hence the unusual gain in the stock price after a week long losing streak.
10/23 - 10/24: Schering-Plough announced FDA approval of Noxafil, an antifungal agent to treat oropharyngeal candidiasis, essentially an oral yeast infection.
Schering-Plough’s stock price fell as the results were below analysts’ expectations even though the Q3 profit almost doubled. The Q3 EPS was 45 cents compared to 19 cents last year. The company would have earned 28 cents on excluding acquisition related gains of $294 million and $20 million on R&D. The revenue increased nine percent to $2.81 billion. However, the analysts were expecting earnings of 30 cents per share on revenue of $2.87 billion.
Schering-Plough reported unexpectedly high sales of cholesterol drug Zetia. Zetia is one of Schering-Plough's single largest revenue sources, and the extra revenue caused the price to rise nearly 10% and the volume to triple in a single day.
Schering-Plough announced its plans to purchase Organon from Akzo for $14.4 billion, an amount nearly 15 times Schering-Plough's annual revenue. The dip in prices is likely a response to this risky and expensive move.
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