GM had a catalyst for funds to gun shorts, what would be a catalyst for MRK? The trend is down, there is a potent downside cloud that will hang over this stock for years, making any dividend or" Buffett valuation" analysis meaningless. You are dealing with something that is potentially unprecedented, most likely the biggest legal case involving pharma in history. Vioxx generated 2.5 billion in revs for Merck, this is gone, up in smoke. Now compound that with massive litigation, from mutual funds, hedge funds, mom and pop shareholders, pensions, etc on the shareholder lawsuit side and mostly likely $100 billion+ on the Vioxx death liability side. States are going after Merck also: http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/1124273109320390.xml&coll=7 Oregon sues Merck over losses The state, continuing efforts to recover public employees pension money, also goes after insurance company Marsh & McLennan Wednesday, August 17, 2005 BRENT HUNSBERGER Oregon Treasurer Randall Edwards sued a drugmaker and an insurance broker Tuesday, alleging the companies' scandals cost a state pension fund at least $25 million. In the larger of the two cases, Edwards sued Merck & Co. Inc., maker of the drug Vioxx, and eight current and former company officials, seeking $15 million in damages. The complaint alleges that Merck knew but failed to disclose that its painkiller caused a significant risk of heart attacks, strokes and other cardiovascular-related deaths. Merck's stock tumbled 26 percent after it withdrew the drug from the market in September 2004. So, in summary: (1) Shareholder Lawsuits (2) Deaths from Vioxx Liability (3) State Attorney General Investigations (4) Much more scrutiny for Merck drugs that are in the pipeline, serious delays (FDA) (5) Risk of a Dividend Cut, the amount of monies Merck set aside for the Vioxx issues was for adminstration purposes only $675 million, now, the only thing the hack analyst on the street can think of to keep bag holders in the stock is the dividend, but this must be cut and cut soon! I find it challenging for Merck to keep the dividend and fight this massive legal fight from various angles all with declining revenues and profits and increased scrutiny for drugs that are in the pipeline. I see the cut of the dividend as one of the more potent catalyst in the near term as well as lawyers playing the role of shark smelling blood in the water "hey if that lawyer won this case" I can too" Several lawyers were piled up in the courtroom taking notes for their own cases. Texas is a GOP state, this judge was republican and the jury was republican, now, once some of these cases are tried in liberal states with no punitive caps, these awards can go much higher and stick! I leave this post from CBS news: http://www.cbsnews.com/stories/2005/08/19/health/main788963.shtml Troubles Just Beginning For Merck (Page 1 of 2) ANGLETON, Texas, Aug. 20, 2005 Woman Wins, Merck Liable Plaintiff Carol Ernst, center, and her attorneys Randy Moore and Ben Morelli react to the jury's verdict in her favor in her case against Vioxx maker Merck Co. (CBS/AP) "Plaintiff lawyers are sharks and they smell blood." David A. Logan dean, Roger Williams University School of Law Next month, Merck faces a trail in Atlantic City, N.J., brought by Michael Humeston, a former postal worker, who had a heart attack in 2001. (GETTY) (CBS/AP) The huge jury award to a plaintiff in the nation's first Vioxx case is likely to inspire thousands more suits on top of the 4,200 already filed against the drug's maker, Merck & Co., and push liability estimates that reach $18 billion even higher, analysts said. Merck & Co.'s stock sank $2.35, or 7.7 percent, to close at $28.06. The jury awarded $253.4 million in damages to Carol Ernst, a widow of a man who died in 2001 of heart arrhythmia, or irregular heart beat, after taking Vioxx for around eight months. The company plans to appeal. Merck yanked the popular pain reliever from the market last September after a study found it doubled patients' risks of heart attacks and strokes after 18 months. The loss is especially damaging because Merck initially had been expected to win what was considered a weak case because no studies have linked Vioxx to arrhythmia. Some of the other cases are presumably stronger than Ernst's case. Now lawyers and analysts expect a flood of new suits. Merck has set aside $675 million to fight them, but analysts think it may have also need to reserve funds to pay verdicts. CBS News Legal Analyst Andrew Cohen says Merck now has to figure out how it will defend itself in all these other lawsuits. "Clearly, the legal strategy it had used in this case was a catastrophe," Cohen says. "Whether that means we'll see more settlements, or a completely different legal defense, or something even more dramatic like bankruptcy is the question going forward." David A. Logan, the dean of Roger Williams University School of Law, was more succinct: "Plaintiff lawyers are sharks and they smell blood." A seven-man, five-woman jury deliberated for 10½ hours over two days before returning the verdict in a 10-2 vote. The damage award will likely be cut drastically to no more than $26.1 million because Texas law caps the punitive damages that made up the bulk of the total. U.S. Food and Drug Administration researcher David Graham published an article last year in the British medical journal, The Lancet, that said between 88,000 and 140,000 people suffered serious cardiovascular events related to Vioxx. Plaintiff lawyer Mark Lanier said the verdict has emboldened more of those people or their families to file suits. CBS News Correspondent Anthony Mason reports that Lanier admitted the fight is far from over. "But we got justice and we got the verdict we wanted whether we see a penny or not. The truth is out there," said Lanier. Lanier added, "My message to Merck is that I'm just warming up." If this verdict marks the beginning of a losing streak, Merck may back away from its pledge to try each case individually and not settle any, experts said. But they said a rash of verdicts would be necessary before the company changes its strategy. "Merck says there will be no surrender, but you have to wonder about that," said Anthony Sebok, a professor at Brooklyn Law School. But Merck lawyer Ted Mayer reiterated the company's position that it intends to try each case. He said that even in cases where the patient suffered a heart attack or stroke, plaintiffs face a "high burden" in proving Vioxx was a cause. Lanier convinced the jury that Vioxx contributed to the death of the plaintiff's husband, Bob Ernst. Lanier flew Dr. Maria Araneta, who performed Ernst's autopsy, in from the United Arab Emirates, where she had moved since performing the autopsy in 2001. She testified that although her report said Ernst died of an arrhythmia, it was likely he had a heart attack. "I'm not changing my opinion, I'm just explaining it further," Araneta testified. "That's the autopsy report, but it's not the end of the story." She said Ernst probably had a heart attack because a clot blocked the blood flow in an artery that was already clogged with plaque. She also said CPR conducted on Ernst probably dislodged the clot. Jurors said they felt Araneta's testimony was compelling and didn't dwell on the technical differences between heart attacks and arrhythmias. "We felt there was a reason he had a heart attack," said juror John Ostrom, a 49-year old contractor. "We felt Vioxx was a reason." Lanier's case provided other plaintiff lawyers with a blueprint for how to prove Merck behaved irresponsibly in promoting Vioxx, said Zipursky. "A Merck loss means the jury believes the plaintiff story about the company's wrongful conduct," said Zipursky. "That carries into the future." Jurors said there was abundant evidence that Merck put profits over patient safety. Among the most damaging was a 1997 e-mail from a Merck researcher who discussed Vioxx's cardiovascular side effects two years before the drug was launched and a document that outlined the company's determination to beat Pfizer Inc.'s competing drug Celebrex to the market. Merck would be foolish to dismiss Lanier's win as a fluke resulting from a talented Texas lawyer using his abundant Southern charm in what is considered a plaintiff-friendly venue, attorneys warned. "Mark Lanier is an extraordinarily gifted attorney. But there are a lot of other gifted plaintiff attorneys and other favorable venues," said Charles Rhodes, a law professor at South Texas College of Law in Houston. "Maybe Merck will get less damages outside of Southeast Texas, but there will still be damages." Next month, Merck faces a trial in Atlantic City, N.J., brought by Michael Humeston, a former postal worker, who had a heart attack in 2001. Humeston's lawyer, Chris Seeger, said Humeston still has lingering effects from the heart attack. Vioxx has been directly linked to heart attacks. In November, the first of 1,800 federal cases will be heard in New Orleans. The case concerns Richard Irvin, a Florida man who was taking Vioxx for a month before his 2001 death from a blood clot in his heart. Scientists have speculated that Vioxx causes cardiovascular problems because it blocks a substance that keeps blood from clotting.
For every GM example, there are 10 Delta's. (DAL) Stock closed at $1.50 Friday and we are not talking calls and puts. http://www.marketwatch.com/tools/quotes/intchart.asp?symb=dal&sid=1567&freq=1&time=8&siteid=mktw
Agree on the potential downgrades, I got the September 2750's at 35 cents and bought more at 45. Could of loaded up at 35 cents in massive size, now talk about starting off a weekend right. LOL Its always that way when a trade goes in your favor in an agressive fashion. The thing is, a good deal of traders and fund managers were gone for the day when the verdict was announced. It will be interesting to see how the street reacts once all this soaks in over the weekend. Although analysts were defending the stock initiatilly Friday after the verdict with the dividend upside, I believe once they look at the total risk picture, this disposition wil change, why risk a stock falling into bankruptcy or 50% for a 7% dividend that could be chopped down as early as this week. Congrats on your short Chewbacca
Lost 27% in 1 day back in September, hoping to see a similar crushing of the stock on Monday. Merck & Co. (MRK) shares lost 27% of their value on a single day last September when the company acknowledged Vioxx increased the risk of heart attack and sudden cardiac death and pulled the drug from the market. (In stories at 3:01 p.m. and 3:51 p.m. EDT, the month when the decline occurred was misstated.) (END) Dow Jones Newswires August 19, 2005 16:17 ET (20:17 GMT) Copyright (c) 2005 Dow Jones & Company, Inc. A lot of dumping left. Major Holders Get Major Holders for: BREAKDOWN % of Shares Held by All Insider and 5% Owners: 0% % of Shares Held by Institutional & Mutual Fund Owners: 63% % of Float Held by Institutional & Mutual Fund Owners: 63% Number of Institutions Holding Shares: 1045 MAJOR DIRECT HOLDERS (FORMS 3 & 4) Holder Shares Reported GILMARTIN, RAYMOND V. 829,891 1-Feb-05 LEWENT, JUDY C. 411,360 23-Feb-05 WOLD-OLSEN, PER 172,909 3-Aug-04 ANSTICE, DAVID W. 66,000 3-Nov-04 FRAZIER, KENNETH C. 37,849 2-Feb-05 TOP INSTITUTIONAL HOLDERS Holder Shares % Out Value* Reported BARCLAYS BANK PLC 141,748,259 6.43 $4,588,391,143 31-Mar-05 CAPITAL RESEARCH AND MANAGEMENT COMPANY 86,831,300 3.94 $2,810,729,181 31-Mar-05 STATE STREET CORPORATION 76,729,081 3.48 $2,483,720,351 31-Mar-05 FRANKLIN RESOURCES, INC 59,522,075 2.70 $1,926,729,567 31-Mar-05 VANGUARD GROUP, INC. (THE) 49,158,368 2.23 $1,591,256,372 31-Mar-05 DEUTSCHE BANK AKTIENGESELLSCHAFT 43,079,341 1.96 $1,394,478,268 31-Mar-05 FMR CORPORATION (FIDELITY MANAGEMENT & RESEARCH CORP) 40,313,711 1.83 $1,304,954,825 31-Mar-05 BRANDES INVESTMENT PARTNERS L.P. 39,732,183 1.80 $1,286,130,763 31-Mar-05 Mellon Financial Corporation 36,291,376 1.65 $1,174,751,841 31-Mar-05 CITIGROUP INC. 26,398,385 1.20 $854,515,722 31-Mar-05 TOP MUTUAL FUND HOLDERS Holder Shares % Out Value* Reported FRANKLIN CUSTODIAN FUNDS-INCOME FUND 31,000,000 1.41 $996,340,000 31-Dec-04 VANGUARD 500 INDEX FUND 20,875,144 .95 $670,927,128 31-Dec-04 WASHINGTON MUTUAL INVESTORS FUND 20,500,000 .93 $663,585,000 31-Mar-05 COLLEGE RETIREMENT EQUITIES FUND-STOCK ACCOUNT 19,522,741 .89 $627,460,895 31-Dec-04 INCOME FUND OF AMERICA INC 19,068,300 .87 $617,240,871 31-Mar-05 SPDR TRUST SERIES 1 9,759,499 .44 $322,063,467 30-Sep-04 VANGUARD INSTITUTIONAL INDEX FUND-INSTITUTIONAL INDEX FD 9,509,043 .43 $305,620,642 31-Dec-04 PRICE (T.ROWE) EQUITY INCOME FUND 8,750,000 .40 $281,225,000 31-Dec-04 VANGUARD TOTAL STOCK MARKET INDEX FUND 8,473,711 .38 $272,345,071 31-Dec-04 FUNDAMENTAL INVESTORS INC 8,100,000 .37 $262,197,000 31-Mar-05
UK law firms prepare Vioxx cases Vioxx shares fell 7% after Friday's court ruling British law firms are preparing to take drug company Merck to court, after a US jury found it negligent in the death of a man who took its painkiller Vioxx. The drug - often used by arthritis sufferers - was taken by almost 500,000 Britons before it was withdrawn last September, amid safety concerns. Firms in London and Liverpool are understood to be representing at least 150 potential claimants. Merck said there was no scientific base for the US ruling and it would appeal. Vioxx was seen as a breakthrough in pain relief for arthritis sufferers - because it didn't have the same side effects as other drugs. Negligency ruling on drug But it was taken off the market almost a year ago, when a long-term study found that the risk of heart attacks and strokes was doubled if patients took the drug for 18 months. A jury in Texas on Friday awarded a $253.4m (£141m) settlement to the widow of the US man who died suddenly after using Vioxx. It found Merck negligent in the death of 59-year-old Robert Ernst, in the first of what could be as many as 4,000 similar lawsuits worldwide. The court heard claims that Merck had played down safety fears about the drug for a decade. Lawyers in the UK have been watching the case closely. One potential British claimant is Christine Peckham from Skelmersdale, Lancs. She described the effects the drug had had on her to BBC Radio Four. Merck should be made to pay for what they've done for the people who've been taking the product Christine Peckham Potential claimant 'Taking Vioxx ruined my life' "I've been left partially paralysed, I've lost my sight and I've got epilepsy," she said. "In total I'd been taking it for four years before they withdrew it from the market but when I had my first stroke I'd been taking it for 22 months. "Merck should be made to pay for what they've done for the people who've been taking the product, because they put their profits first, before lives." The drug is known to have been taken by more than 20 million people worldwide before it was banned. Worldwide It has been estimated that Vioxx could have caused 27,785 heart attacks or deaths since it was approved for use in 1999. More than 3,800 lawsuits have been filed against the firm over the drug. But Merck has always maintained that it investigated the safety issues as soon as they arose. After the ruling in Texas, Merck attorney Jonathan Skidmore said: "There is no reliable scientific evidence that shows Vioxx causes cardiac arrhythmia, which an autopsy showed was the cause of Mr Ernst's death." Shares in Merck fell $2.35 - or 7% - on Friday. http://news.bbc.co.uk/1/hi/business/4168172.stm 20 Aug 2005 01:37 ET DJ Australian Plantiffs' Lawyer Welcomes US Vioxx Verdict SYDNEY (AP)--A lawyer representing Australians who believe they suffered heart attacks after taking Vioxx welcomed a U.S. jury's quarter-billion-dollar judgement against Merck & Co. Inc. (MRK) to the widow of a man who died after taking the painkiller. "The decision in the U.S. confirms our independent assessment...," Richard Meeran said Saturday. "We hope it encourages Merck to establish a settlement scheme so that people don't have to go through a protracted court case." Meeran is a lawyer with Slater & Gordon, a legal firm representing about 100 Australians who say they suffered heart attacks because of taking Vioxx. Between 250,000 and 300,000 Australians were taking Vioxx when it was pulled off shelves last September after tests revealed it could increase the risk of heart attack or stroke. A Texas jury Friday found pharmaceutical giant Merck liable for the death of a man who took the company's once-popular painkiller Vioxx, awarding his widow US$253.4 million. Merck plans to appeal the ruling. The total damages may not stand anyway because they appear to exceed limits on punitive damages set by Texas law. Slater & Gordon has been approached by about 300 people who took Vioxx, including 100 who blame the painkiller for their heart attacks, the firm said. (END) Dow Jones Newswires August 20, 2005 01:37 ET (05:37 GMT) Copyright (c) 2005 Dow Jones & Company, Inc.
I wouldn't mind if some funds try one last shot to support it and defend their long exposure Monday before it caves in so I can build up a bigger short position. Also wouldn't mind if it gaps down 20%+. Either way, I believe shorts on a swing trade win here. Shorting some PFE Monday also as they have some exposure here as well.
Pretty soon even the pharmaceutical industry will go to China since Americans just want free money NOW. I'd like to see a greedy American lawyer sue a Chinese company just to observe how/when/what they would collect. There's no way I would be in the pharmaceutical business, that's for sure.
I don't see why so many here are complaining about the lawsuit. If the drug companies stopped lying and hiding the dangers of their drugs there would be no lawsuits. They are getting their rewards for an illegal action action against the consumers. The drug companies are the modern day snake oil salesmen. Just watch their ads, rolling in the grass and flowers and life is perfect, just take our pill.
I totally agree with this part and I'm not advocating protecting their ass. But at the same time, you can' be awarding $250 mil per plaintiff. There would soon be no drug industry left. There is a *need* for good, honest pharmaceutical business/research.