A number of readers have asked for valuation help – comp cos, transactions, etc.


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by Stephen Cervieri, Managing Director
 

 

A number of readers have asked for valuation help – comp cos, transactions, etc.  If you want an objective perspective on your (private) company’s current valuation, reply to this email indicating such.

 
At the risk of becoming a full-on Cardiology Newspaper, I need to run a bunch of articles here or my growing news file will never be emptied.
 
Roche – Catch 22?
 
On the one hand: the latest from the long Mircera saga.  A federal appeals court ruled that Roche could import the anemia drug so long as it wasn't for sale--but sent the case back to the International Trade Commission for its opinion. Previously, the ITC had said that it couldn't rule on whether importing the med in itself would infringe on Amgen's patents. The appeals court says it can.
 
Meanwhile, a federal judge is still weighing his opinion in the case. Last month, he told Roche he might let Mircera onto the market in spite of the patent infringement if Roche would meet five conditions.
 
Roche said: “ok”.
Amgen said:  “no way”.
How the judge will respond now is anyone's guess.
 
On the other hand, the Delhi (India) High Court ruled that domestic drug maker Cipla could market its copycat version of Roche's lung cancer med Tarceva, pending another hearing in August. The court also accepted a patent challenge to Tarceva from Cipla; Roche has four weeks to respond.
 
Celebs – They’re Just like Us!
 
Celebs may help sell magazines but do they really help market drugs? In the wake Robert Jarvik’s axing as Pfizer's pitchman, advertising experts are wondering.
 
Famous folk do generate interest, but maybe meds shouldn't be sold using the same techniques used to hawk detergent.
 
Consider the fact that the Jarvik controversy revolved around his qualifications to recommend Lipitor, a cholesterol med. Inventor of the artificial heart, Jarvik had never practiced medicine. Critics say that more effective pitches come from famous people who are actual patients, such as Sally Field -  who was diagnosed with osteoporosis in 2005 – and promoted Roche and GlaxoSmithKline's Boniva.
 
Either way, though, celebrities tend to distract from the ad message.  In drug ads, the rapidly spoken voice-over of side effects is important for safety’s safe, and needs to be understood.  That's one reason why Big Pharma has backed off from celebrities and turned to animated bees and Abraham Lincoln instead.
 
Expect more backing off, experts said. "I think the latest round of concern is going to cause a lot of agencies to think twice," one ad exec predicted.
 
New and Improved Zetia – With 30% More Schmoozing
 
A week ago, sales-rep forums were abuzz with a new promo push by Schering-Plough: the 49 Plan, a seven-week wine-and-dine rush to turn the tide on Zetia. Scrips for the cholesterol med have dropped 17 percent since late last year and 3.8 percent year-over-year. That's after the (controversial) study showed that adding Zetia to now-generic Zocor--in the Merck/Schering-Plough med Vytorin - didn't forestall artery-clogging any better than Zocor alone.
 
The reps were skeptical.  For example, some at CafePharma even predicted that, without new positive data, a schmooze-fest would backfire.
 
Well, it has certainly done that, though perhaps not in the way the sales folks expected.
 
The Senate Special Committee on Aging is demanding documents about the plan from Schering-Plough. "I am troubled by any attempts to persuade physicians to prescribe a drug for any reason other than the patient's condition and the drug's effectiveness in treating it," wrote Senator Herb Kohl, who chairs the committee. "Unfortunately, it appears that your '49 Plan' may do exactly that."
 
Here Come the Communists, or Can't We ALL Just Get Along
 
The 4 year Presidential election campaign, the gift that keeps on giving.  Our quadrennial date with socialism is upon us, and the Democrats pinup girl lays out her bona fides to carry the torch – “The Agenda to Fight Special Interests and Restore Fairness to our Economy”:
 
…Point 5 – Hillary will force the drug companies to provide lower costs to consumers and reign (sic) in excessive payments to HMOs.  She will end health insurance discrimination so that no American is denied coverage or charged excessive premiums. 
 
You can see that this is point 5.  She reserves additional vitriol for bankers, oilmen, and multi-nationals. 
 
But that’s not what caught my attention.  These people plan to do all of this and yet they don’t know the difference between “rein” and “reign”?
 
Come to think of it, that might be the problem.
 
BUT Doing their Best to Help the Commuunists Politicians
 
On a mission for more info on how companies set top execs' pay, the SEC has been pushing for details.  Door knocking at Bristol-Myers Squibb, Boston Scientific, and Baxter leaked the following:
 
Why is compensation for BMS' executive vice presidents set to increase by 50 percent, and other officials are getting 25 percent bigger deals?
 
The company says it needed to bring pay in line with salaries at peer firms.
 
Boston Scientific needs to analyze how executive compensation was determined, exactly, the SEC says. How tough has it been for execs to meet their performance targets? Plus, just what is this "executive allowance?"
 
The company says the allowance is exactly what it sounds like: A lump sum cash payment. It's made, the company says, in lieu of perks that execs get at other companies. Must be nice.
 
Baxter also needs to be more forthcoming about every element of executive compensation, the SEC says, asking for details on metrics, incentives, and the rationale behind various dollar amounts.
 
That's lots of info. Baxter wasn't very cooperative; it said it would include more details in its future SEC filings.
 
The Wrong Side of Compounding Interest
 
A federal judge added $69 million in prejudgment interest to the $431 million a jury ordered Boston Scientific to pay for infringing on a drug-eluting coronary stent patent.  The interest will date back to when the company first infringed on the patent in question.
 

BSX said it will appeal.