Nick & thread, this Bloomberg update indicates more good news to come:
Merck to Split Stock 2-for-1, First Split Since
'92 (Update3)
Bloomberg News
November 24, 1998, 3:05 p.m. PT
Merck to Split Stock 2-for-1, First Split Since '92 (Update3)
(Adds closing stock price.)
Whitehouse Station, New Jersey, Nov. 24 (Bloomberg) -- Merck
& Co., the world's biggest drugmaker, said it will split its
stock two-for-one in February, its first split since 1992, as
prospects for its new painkiller push shares to record prices.
Merck yesterday said it filed with the U.S. Food and Drug
Administration for approval of its drug, Vioxx, which appears to
treat pain and swelling without irritating the stomach. Analysts
estimate that annual sales of this drug easily could top $1
billion.
Although rival Monsanto Co. likely will beat Merck to market
with its similar drug, Celebrex, Merck may catch up quickly. Its
drug offers once-a-day dosing where Monsanto's Celebrex is taken
twice a day. Monsanto's Celebrex could be introduced in early
1999.
''The stock split is a reflection of the hot move that Merck
has made to the magic level of 150,'' said David Saks, an analyst
with Gruntal & Co., who has ''buy'' rating on Merck. ''The split
is not a surprise. The timing is.''
Merck, based in Whitehouse Station, New Jersey, rose 2 5/8
to 158 5/8. It earlier touched a record 160.
Saks said he was expecting Merck to disclose the stock split
when it announced first quarter earnings results around the end
of January. Merck had another surprise yesterday when it
announced it had filed for approval of Vioxx. Saks and other
analysts once had expected Merck to release this news at its
analysts meeting on Dec. 9.
More Good News
''They're going to have, I think, more good news'' at the
meeting, Saks said.
Merck likely will have some news about its research program,
considered the best in the drug industry, Saks said. At last
year's meeting, Merck revealed its progress in developing a new
antidepressant that may someday compete with top-selling drugs,
such as SmithKline Beecham Plc's Paxil.
''It would be a disappointment if they didn't have
something,'' said Barney Rosen, an analyst with Argus Research.
''They recognize the need to do something.''
Merck needs potential blockbuster drugs such as Vioxx and
the antidepressant to make up for expected patent expirations by
2001. Merck could face generic competition for four drugs that
had more than $5 billion in combined 1997 sales.
To make up for the loss of the high-blood pressure medicine
Vasotec and other drugs, Merck is introducing new products. It
started sales of five new drugs in the past year including a pill
to treat male baldness, Propecia. Of these drugs, the most
promising may be the once-a-day asthma medicine Singulair, which
had $55 million in third-quarter sales.
Next Blockbuster
Merck's painkiller Vioxx is expected to be its next
blockbuster. Vioxx and Monsanto's Celebrex could eventually have
combined sales of $5 billion because they can treat pain and
inflammation without irritating the stomach, analysts have said.
Existing painkillers such as aspirin and ibuprofen can cause
ulcers and bleeding.
In August, Monsanto said it won a so-called priority review
for Celebrex, which generally means the FDA will review it in six
months instead of the usual year. Now, analysts will be watching
to see if Merck can do the same and try to narrow the gap between
the expected early 1999 introduction of Celebrex and the start of
Vioxx sales.
Vioxx and Celebrex are part of a new class of drugs, the Cox-
2 inhibitors. These work by interfering with the production of an
enzyme, cyclooxygenase-2, linked to pain and swelling. Unlike
existing painkillers, a Cox-2 inhibitor don't seem to hamper a
related enzyme, Cox-1, that helps protect the stomach from its
own acid. This could mean less risk of bleeding and ulcers for
people who take pain medication for chronic conditions, such as
arthritis.
Monsanto won't say exactly when it filed for FDA approval of
Celebrex, but has said it expects approval in early 1999 if all
goes well. Next week, Monsanto's Searle drugmaking unit faces an
expert FDA advisory panel which will decide whether to recommend
the drug -- generally one of the last steps in the approval
process.
Last Split in '92
Merck said the split will apply to shares held as of Jan.
25. Merck's last split was in 1992, when the stock was split
three for one.
Four other U.S. drugmakers have announced stock splits in
the past year. Warner-Lambert Co., Schering-Plough Corp.,
American Home Products and Abbott Laboratories also intend to
split their shares as rising demand for medicine has boosted
their profits.
--Kerry Dooley in the Princeton newsroom (609) 279-4016 with |
