Pfizer, Merck And Lilly Partner Up To Get "Enlightened"


Big pharma makes strange bedfellows. Pfizer, Merck and Eli Lilly this morning announced they've launched a joint venture of sorts called, "Enlight Biosciences". They're doing it with the help of the Boston-based VC ("Venture Creation", the website says, not "Venture Capital") firm PureTech Ventures.

All together the partners are kicking in as much as $39 million bucks "to advance breakthrough technologies that can fundamentally alter drug discovery and development." To put that amount of money in perspective, Pfizer takes in more than that in one day's sales. Because it's so immaterial most analysts won't bother mentioning it.

But you can always count on Miller Tabak's healthcare guy Les Funtleyder to weigh in on stuff like this in his own entertaining way.

In his "Morning Commentary" note to clients today Funtleyder writes: "The three have announced a for-profit JV to develop drug development technology. Though we are skeptical on the chances of success given the history of drug development technology and the fact that we doubt the companies can play nicely together, this announcement does show a willingness on the part of pharma to look beyond traditional models which is a positive in our view." On a practical level he questions whether these guys would ever share potentially competitive information.

But something that could be financially material to MRK is mentioned in a Leerink Swann research note this morning. Analyst Seamus (Shay-mus) Fernandez says through a Freedom of Information request he found 11 reports of a rare, potentially fatal skin reaction to Merck's diabetes drugs Januvia and Janumet. But as he points out, so-called adverse event reports are anecdotal, voluntary, may be inaccurate and are difficult to interpret. Merck put information about this side-effect risk on the drugs' labels last October.

Nonetheless, Fernandez talks about the possibility of the Food and Drug Administration slapping a "Black Box" or severe safety warning on J/J. The analyst says Leerink's doctor experts think the benefits of the drugs outweigh the risks. But in what he sees as the unlikely event the pills get a black box warning, Fernandez estimates it could subtract approximately 10 cents from MRK's earnings per share in 2012. This information comes on the heels of recent media reports about alleged bad reactions to Merck's Gardasil vaccine and an analyst's belief that second-quarter Gardasil sales could disappoint investors--a call that caused a five percent drop in MRK shares. Leerink Swann may trade in MRK.

Finally, an update to my recent post about the cost-cutting game of musical chairs being played in biopharma equities research. Late yesterday I got 50 (yes, fifty) emails from FBR

individually announcing the firm is dropping coverage--not suspending, but dropping--of that many biopharma and medical device companies including big names like Genentech , Amgen , Celgene , Elan ,Amylin Pharmaceuticals and a whole bunch of others you've probably never heard of. The emails say the action is based on a "reallocation of resources." Thomson Reuters says it's due to the fact that four analysts have left FBR.

Questions? Comments?