Fred Hassan

Vytorin scrips still falling, Hassan hires help

Tracy Staton — Fri, 18 Jul 2008 10:00:17 -0400

Once again, prescriptions for the embattled Merck/Schering-Plough med Vytorin have dropped, this time by 5 percent during the month of June. Cholesterol drug sales fell overall, by 2 percent, but obviously Vytorin's loss outpaced that decline, leaving the med with only 6.8 percent of the market, compared with 9 percent back in January, when preliminary results from the controversial Enhance trial were released. As you know, that trial found that Vytorin--a combo of simvastatin and Zetia--was no better at preventing artery-clogging than simvastatin alone. So it's not a huge surprise that Schering's latest sales figures show Zetia scrips still falling, too, by 3.7 percent in the month of June.

Probably not a huge surprise, either, that CEO Fred Hassan is bringing in some help to manage the company's image through the spate of bad publicity. Christopher Bowe, a former Financial Times pharma reporter, will consult with Hassan's longtime "media masseuse" Ken Banta. We'll watch and see whether the media plays along.

- see Schering's SEC filing on Vytorin and Zetia
- check out the Pharmalot post on scrips
- read the story about Hassan's new spinmeister

Hassan's advice for hard times

Tracy Staton — Fri, 20 Jun 2008 09:48:49 -0400

When the interview subject is adversity, who better to question than Schering-Plough's Fred Hassan, who's seen his share this year? BusinessWeek chatted with the Schering CEO about dealing with hard times, and he delivered some familiar words about tough times making people stronger. One key, Hassan says, is facing up to problems instead of ignoring them or submitting to "a downward spiral of complaining and commiserating." Another: seeking help from colleagues.

For anyone who's followed the whole Vytorin-Zetia-Enhance series of unfortunate events, the advice is familiar. When the American College of Cardiology meeting yielded advice against Vytorin--one of Schering Plough's biggest moneymakers, in partnership with Merck--Hassan didn't waste time. He asked Schering's key execs for their input and came up with a cost-cutting plan to help make up the revenues Schering was sure to lose to falling Vytorin sales. We suppose that qualifies as facing up to a problem. Maybe Hassan wishes he'd faced up to the original problem--releasing the not-too-flattering data on Vytorin from the Enhance study--a little sooner than he did.

- read the Business Week interview

Schering-Plough's Fred Hassan - CEO Pay

Tracy Staton — Mon, 19 May 2008 14:38:14 -0400

Fred Hassan - Schering-Plough

Total Compensation: $30.1M

2007 Revenue: $12.69B
2006 Revenue: $10.59B
Change: 19.8%

Details: Salary came to $1.67 million, up from $1.65 million in 2006. He got no bonus, but did rake in $18.4 million in stock and options, more than double the amount he brought in last year. He also collected $608,000 in perks, which included $75,544 for use of the company aircraft, $1,101 for a car and driver, $146,680 for personal security, among other expenses.

Schering-Plough News:
A turbulent week for Fred Hassan
Hassan bullish on Schering-Plough
Schering-Plough laying off 5,500
Schering CEO defends Vytorin decisions
A new 'religion' at Schering-Plough

Should Hassan forfeit $13 million?

Tracy Staton — Mon, 19 May 2008 10:22:17 -0400

Should Fred Hassan (photo) give back his bonus? That's what Forbes is asking this week, saying that the Schering-Plough CEO's 2007 compensation package was probably artificially inflated by the fact that sales-damaging study results were held back until early January 2008. If the Enhance study--which pitted Merck/Schering-Plough's big moneymaker Vytorin against the now-off-patent Zocor--had been unveiled in November 2006 or March 2007 as cardiologists had long expected, Hassan might not have received $13 million of his cash compensation over those two years. The trial, you'll recall, showed that the Zocor-plus-Zetia combo Vytorin was no better than Zocor alone at preventing artery-clogging.

Here's how Forbes figures it: Hassan got $19 million in bonuses in 2006, including $9 million in cash, based largely on a Vytorin-fueled increase in Schering's market cap. The Enhance results probably would have eaten into that gain. But it's more likely that the study might have been ready for prime time in 2007, when Hassan got $4 million in cash bonus. If the study results simply stalled Vytorin and Zetia sales, Schering's EPS could have dropped to as low as $1.05 from 2007 actuals of $1.37. That would have wiped out $2 million of Hassan's cash bonus. If sales dropped, the hit would have been even bigger.

Schering protests, and rightly so, that this sort of hindsight isn't exactly 20/20. The company probably would have cut costs to minimize the EPS drop, for instance. And the company justifies the bonuses because it needs to hang onto its executive talent. But one corporate governance expert told Forbes that Hassan of all people might be one to give up a bonus under these circumstances. "[G]iven Hassan's reputation for open-mindedness in terms of compensation...if there were some doubts about whether he should receive a bonus, he would be more likely than others to voluntarily forfeit it. There are not many CEOs I'd say that about, but he would be one of them."

- see the Forbes article

U.S. Attys probe Schering over Vytorin

Wed, 07 May 2008 06:59:55 -0400

The ranks of investigators probing Schering-Plough and its Vytorin drug are broadening. In a recent SEC filing, Schering disclosed that U.S. Attorneys have been asking for info and documents related to the controversial Enhance trial, which pitted the combo cholesterol drug Vytorin against partner Merck's statin drug Zocor.

That trial, as you know, has been under scrutiny for months now as Merck/Schering-Plough dragged its feet in releasing the results, considering changing its primary endpoint, and then finally reported that Vytorin performed no better than Zocor alone at treating arterial clogging (though it did a better job of lowering bad cholesterol).

Details of the U.S. Attorneys' probes are scant; at this point, all we know is that another government official (or two or more, we don't know how many) has joined the investigatory fray. It's already well crowded with Senators, Congressional committees, state attorneys general and the like. We'll keep you posted.

- see the Pharmalot item
- check out the Shearlings Got Plowed dissection of the 10-Q filing
- read the filing itself at the SEC website

Could Clarinex be vulnerable to generics?

Wed, 30 Apr 2008 06:59:55 -0400

Consider this scenario from Fred Hassan's nightmares: The $800 million Clarinex, ostensibly under patent till 2020, falls early victim to generic competition. Early, as in next year. In court documents filed April 16, the Indian generics maker Orchid Chemicals alleges that Clarinex RediTabs was never covered by Schering-Plough's '274 patent. If that's so, then Orchid could launch its version of RediTabs almost immediately, the documents state. And so, apparently, could other copycat drugmakers circling the allergy med.

Schering disagrees with Orchid, of course. And though Orchid has some smart lawyers on the case, so does Schering-Plough. We'll have to wait and see what the court decides.

- check out the Pharmalot story
- see the item at Shearlings Got Plowed

ALSO: Drugmakers are lobbying Congress to change a particular patent rule that allows protection to be canceled if the patent holder misrepresented or concealed info in its application. Generics makers, however, say the penalty is necessary, because without it, branded drugmakers could "cheat and get away with it," making it more difficult for cheaper generic meds to make it to market. Report

Fissures in Merck, Schering relationship?

Thu, 24 Apr 2008 06:59:58 -0400

Are fault lines in the Merck/Schering-Plough joint venture beginning to open up? Market-watchers are reading the earnings-call transcripts--and the tea leaves--and finding evidence of "the diverging interests of Merck... and its partner."

Part of the problem is that Merck depends less on Vytorin revenues than Schering does. Merck was perfectly willing to admit that it expects a $700 million hit on Vytorin this year, but Schering danced around that prospect like a fire-walker. "We really have no model" for figuring out how much Zetia and Vytorin sales might drop, Schering CEO Fred Hassan told analysts during his earnings call yesterday. A big company like Schering, with plenty of financial types at its disposal? Color the pundits skeptical

Plus, as Forbes points out, Merck is hoping to launch a new heart med this year, Cordaptive, a tweaked form of niacin that could be an add-on to statins--just as Schering's Zetia is. Imagine patients taking Merck's Zocor--one half of Vytorin--along with Cordaptive instead of Zocor-plus-Zetia, otherwise known as, yes, Vytorin. Why would Merck mind that? Schering, on the other hand, would mind it quite a bit.

The "trouble in Merck/Schering-Plough land" chatter must have some traction, because Merck CEO Richard Clark (photo) addressed it in a Star-Ledger interview published today. The fallout from the controversial Enhance study "won't result in any changes" to the partnership, the Star-Ledger reports. "The joint venture is well-managed," Clark said. "This was an unfortunate outcome."

- see the Forbes article
- check out the item at BNET's pharma blog
- read the Star-Ledger piece

Hassan gets $30M pay package

Thu, 24 Apr 2008 06:59:54 -0400

Fred Hassan (photo) may have his hands full these days, defending Vytorin and Zetia while cutting jobs and costs. But at least his pockets are full, too. The Schering-Plough CEO chalked up more than $30 million in 2007 compensation, according to the company's proxy. (The Associated Press totes up $24.7 million, because it leaves out pension benefits.)

The details: Salary came to $1.67 million, up from $1.65 million in 2006. He got no bonus, but did rake in $18.4 million in stock and options, more than double the amount he brought in last year. His $608,000 in perks included $146,680 for personal security.

One interesting note in the proxy: If the stock performance as of March 31, 2008 had been used to calculate compensation (rather than December 31, 2007) then Hassan's "five-year transformational incentive" would have paid out exactly nothing. The Vytorin controversy thus puts a big chunk of Hassan and his fellow Schering-Plough bigwigs' pay at risk, the proxy states. Duly noted.

- find Schering's proxy at the SEC
- check out Pharmalot's calculations
- see the Associated Press numbers
- get the specifics on Hassan's at-risk pay at the Shearlings Plowed blog

ALSO NOTED: J&J reports big revenue growth; Drugmakers fight U.K.'s Aricept ruling;

Tue, 15 Apr 2008 06:59:50 -0400

> Johnson & Johnson reported a 7.7 percent increase in first-quarter sales, to a record-setting $16.2 billion; EPS grew by 8.6 percent to $1.26 excluding special charges. Report

> Eisai, Pfizer, and Shire are fighting a U.K. ruling that restricts access to Alzheimer's drugs such as Aricept to patients in later stages of the disease. Report

> Schering-Plough will report its first-quarter results tomorrow with a conference call; CEO Fred Hassan will offer an update on the company's business and its "major initiatives," most likely including Schering's new $1.5 billion cost-cutting plan. Report

> Abbott Laboratories is prepping for an antitrust trial over the AIDS drug Norvir, scheduled to start Friday. Report

> A combo of Lipitor and Celebrex--both made by Pfizer--inhibited the growth of prostate cancer cells in mice; human trials are being planned. Report | Report

> Genentech and its partner Biogen Idec said their blockbuster lymphoma and rheumatoid arthritis med Rituxan didn't show efficacy against multiple sclerosis in a 96-week trial. Report

> Forest Labs reported fourth-quarter earnings of $172.8 million on a 12 percent increase in revenues to $990.9 million. Release

> Laureate Pharma said it's made a deal with Alopexx Pharmaceuticals to manufacture the latter's product candidate mAb F598 antibody for use in clinical trials. Release

> Teva Pharmaceuticals got 180-day exclusivity for a generic version of the Ortho-McNeil antipsychotic med Risperdal. Report

> Roche said it would pay $160 million for the British pharma Piramed, which is developing meds for cancer and inflammatory diseases such as rheumatoid arthritis. Release

> The European commission gave Bristol-Myers Squibb and Otsuka permission to market their Abilify drug for treatment and prevention of mania in bipolar patients. Report

> Belgian healthcare group Omega Pharma will distribute Chrisal International's anti-dust mite spray in Europe, a Belgian newspaper reports. Report

> Hit by a clinical trial delay triggered by a surprise change-up at the FDA, Canada's Vasogen has hit the brakes on spending and announced plans to lay off 85 percent of its work force. Report

> Shares of AtheroGenics shot up this morning on the news that an interim analysis of late-stage data for AGI-1067 showed a statistically significant reduction in Hemoglobin A1c--a standard measure for blood sugar control. Report

And Finally... New York still feels the effects of a cholera epidemic almost 200 years ago. Report

A turbulent week for Fred Hassan

Mon, 07 Apr 2008 06:59:55 -0400

Wonder what it was like to be Fred Hassan (photo) last week, when his top products were getting hammered first at the American College of Cardiology meeting and then in the press? The Star-Ledger has a behind-the-scenes play-by-play that shows the Schering-Plough CEO shuttling back and forth from conference calls about Vytorin and meetings at the company's executive confab in Miami, then boarding a jet back to New Jersey, where the talk turned to layoffs.

"We were building on each other's ideas," Hassan told the newspaper, "and I started to say we have to be more forceful in our response and more speedy." Then, Hassan hashed it over with CFO Robert Berolini, coming up with an outline based on emergency plans Schering already had ready. Wednesday morning, Hassan went into his office, shut the door, and "scratched out" a $1.5 billion restructuring plan.

Schering's stock, of course, dropped precipitously on recommendations from the ACC panel and others that Vytorin and Zetia be used only after most other cholesterol-lowering remedies fail. Hassan's cost-cutting plan cheered some investors, though, and some stock analysts remain optimistic about the drugs' long-term prospects, expecting Vytorin to still bring in $4.7 billion in sales in 2008. Naysayers, however, expect a drop-off of up to 50 percent. It all depends on how doctors interpret the news.

- see the Star-Ledger article
- get analyst feedback at Pharmalot
- check out other sales predictions at Question Authority

Related Articles:
Hassan bullish on Schering-Plough. Report
Schering-Plough laying off 5,500. Report
NJ will feel brunt of Schering ax. Report
Schering CEO defends Vytorin decisions. Report