Here's a philosophical question for Merck ($MRK): If you had to do the Enhance trial all over again, what would you do differently? The answer probably would amount to more than a half-dozen things, beginning with the choice of arterial thickness as an endpoint. And now, it just may include the when and how of disclosures to investors.
That's because Merck agreed to pay $688 million to resolve two securities-fraud lawsuits filed by irate shareholders. Pension funds and other institutional investors alleged that Merck--and Schering-Plough, which Merck bought in 2009--held back key information about the Enhance trial, which tested the combination drug Vytorin against one of its constituent parts, the statin drug Zocor.
The Enhance results were expected at the end of 2006, but the data wasn't released till January 2008. Merck said researchers were double-checking the outcome, which was based on imaging scans of three different spots in each patient's carotid arteries. The scans were difficult to read, the company said, and some images appeared to be missing. And the study results hinged on whether Vytorin patients' arteries were less plaque-ridden than Zocor patients'.
The results delay--and a quickly abandoned attempt to change the primary endpoint--raised plenty of eyebrows. It triggered a congressional investigation. And Vytorin sales suffered. Shareholders sued almost 5 years ago. A trial was scheduled to start March 4.
The settlements--$215 million in one case, $473 million in the other--together amount to one of the biggest ever in a shareholder class action, according to Bernstein Litowitz Berger & Grossmann, the plaintiffs' law firm.
Merck says it's taking a $493 million charge on the settlement, which will cut into its already-reported 2012 earnings. The company admitted no wrongdoing, it said in a statement. "This agreement avoids the uncertainties of a jury trial and will resolve all of the remaining litigation in connection with the ENHANCE study," EVP and general counsel Bruce N. Kuhlik said. "We believe it is in the best interests of the company and its shareholders to put this matter behind us."
- get the statement from Merck
- see the Bernstein Litowitz release