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To: 2MAR$ who wrote (229)	8/22/2005 4:29:18 PM
From: 2MAR$	Respond to of 232

Merck Shares ($28) Continue to Drop in Heavy Trading, First Full Day After Vioxx Trial Ruling Monday August 22, 12:55 pm ET By Linda A. Johnson, AP Business Writer TRENTON, N.J. (AP) -- Shares of the drugmaker Merck & Co. slumped in very heavy trading Monday, the first full business day since a Texas jury hit the company with a $253.4 million damage award in the first trial over the withdrawn painkiller Vioxx. ADVERTISEMENT Merck shares fell more than 2 percent in midday trading, with investors apparently nervous about how much liability Merck faces for the former blockbuster arthritis drug. Merck pulled Vioxx from the market last September after its own research showed the drug, widely used by arthritis patients, doubled the risk of heart attack and stroke after 18 months' use. Previously, analysts had estimated Merck's liability over Vioxx at up to $18 billion. Monday morning, analyst David Moskowitz at Friedman, Billings, Ramsey & Co. told CNBC he had raised his forecast for Merck's total tab from $11 billion to $50 billion. To date, Merck has reserved just $675 million for future legal defense costs related to Vioxx. The company has not established a liability reserve, which would cover costs of jury awards and out-of-court settlements. There are no plans to set up such a fund now, Merck spokeswoman Janine Clemente said Monday. A company statement she furnished said in part that the Texas verdict "does not provide a basis for the establishment of a liability reserve for this case or for the litigation as a whole." Independent health-care analyst Hemant Shah of HKS & Co. said he doesn't expect Merck to announce a big reserve. "If you increase the reserve, you're sending a signal that you're prepared to pay more," he said. After initially falling 3 percent Monday morning, shares in Whitehouse Station, N.J.-based Merck partially recovered, then slumped again. They were down 68 cents, or 2.4 percent, at $27.38 by midday. Trading volume was extremely heavy, with nearly 29 million shares changing hands in the first two hours after the New York Stock Exchange opened. Normal daily volume for Merck shares is about 10 million. Monday's decline followed a loss of $2.35 per share, or 7.7 percent of the stock's value, after the jury's verdict in Angleton, Texas, was announced Friday afternoon. That equated to a loss of $5.2 billion in market capitalization. A total of nearly 40 million shares changed hands on Friday. Merck shares had been trading in the $45 range prior to the Vioxx withdrawal. The size of the Texas verdict, the first in a Vioxx trial, will be knocked down to a maximum of $26.1 million under Texas caps on punitive damages. Lawyers for Carol Ernst, whose 59-year-old husband Robert died suddenly after using Vioxx for eight months, alleged Merck knew years earlier the medication could be dangerous, but downplayed concerns and aggressively marketed what grew into a $2.5 billion seller. Merck lawyers countered that no risks had appeared in 58 clinical trials involving 10,000 patients conducted before it won approval from the U.S. Food and Drug Administration. Given Friday's verdict, lawyers and analysts expect a flood of new lawsuits against Merck. On the Net: merck.com