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Merck's net income, revenue fall in second quarter; tax charge, Vioxx withdrawal to blame

Merck & Co. Inc. posted lower net income and revenue for the second quarter of 2005, reflecting a tax charge and continued damage from last year's withdrawal of arthritis drug Vioxx (rofecoxib).

Net income was $720.6 million, or $0.33 per diluted share, in the most recent quarter compared with net income of $1.77 billion, or $0.79 per diluted share, during the same quarter last year.

Excluding special charges, Merck earned $1.36 billion, or $0.62 per diluted share, which Reuters said matched the average expectations of analysts polled by Reuters Estimates.

Sales for the second quarter fell 9 percent, from $6.02 billion in 2004 to $5.47 billion in 2005.

Worldwide sales of Singulair (montelukast sodium), indicated to treat chronic asthma and relieve symptoms associated with seasonal allergic rhinitis, totaled $730 million for the second quarter, a 14 percent increase from the comparable period last year.

Global sales of cholesterol-lowering drug Zocor (simvastatin), however, fell 16 percent to $1.2 billion for the latest quarter.

Merck expects earnings of $0.61 to $0.65 per share for the third quarter, with anticipated full-year earnings in the range of $2.44 to $2.52 per share, excluding charges.

Merck shares closed at $31.38, down $0.47, or 1.5 percent, in moderate trading on the New York Stock Exchange.

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MGI Pharma to buy Guilford Pharmaceuticals for $177.5 million

MGI Pharma Inc., a biopharmaceutical company with a focus on oncology and acute care, signed a definitive agreement to acquire Guilford Pharmaceuticals Inc. for approximately $177.5 million.

MGI will acquire all outstanding shares of Guilford for $3.75 per share, representing a premium of 55.6 percent over the stock's closing price on July 20. Payment will consist of fractional shares of MGI stock plus cash; MGI expects to issue approximately 4.5 million shares in connection with the transaction.

The acquisition is part of a business development strategy to broaden MGI's product portfolio and its pipeline of candidates, the company said.

Aquavan, Guilford's late-stage injectable acute care candidate for procedural sedation, and Gliadel (carmustine), a wafer product for treating high-grade malignant gliomas, are to be included in the acquisition.

"This strategic transaction significantly advances our efforts in building an acute care business and enhances our existing oncology franchise as we create a leading biopharmaceutical company," said Lonnie Moulder, chief executive officer of MGI.

The acquisition is expected to close during the fourth quarter of this year. MGI anticipates reporting a loss for 2005, due to transaction costs and purchase accounting entries, but expects the transaction to be accretive by 2008. Additional terms of the agreement were not disclosed.

MGI shares closed at $26.10, down $1.47, or 5.3 percent, while Guilford shares closed at $3.40, up $0.99, or 41.1 percent, both in heavy trading on the Nasdaq.

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Study of patients with diabetes on hemodialysis shows no improvement in composite cardiovascular outcome with Lipitor

Data from a double-blind study suggest treatment with Pfizer Inc.'s Lipitor (atorvastatin calcium) may not improve cardiovascular outcomes in patients with diabetes who are receiving hemodialysis.

To examine the possible benefit of statins in this population, investigators in Germany conducted a multicenter trial of 1,255 patients with type 2 diabetes who were receiving maintenance hemodialysis and who had fasting LDL cholesterol levels between 80 mg/dL and 190 mg/dL. Participants were randomized to receive Lipitor 20 mg/day or placebo; mean length of follow-up for the treatment groups was 3.96 years and 3.91 years, respectively. The primary endpoint was a composite of death from cardiac causes, nonfatal myocardial infarction and stroke.

After four weeks of treatment, median LDL cholesterol levels were reduced by 42 percent among those in the Lipitor group and by 1.3 percent among those in the placebo group. During follow-up, 469 patients (37 percent) reached the primary endpoint, including 226 in the Lipitor group and 243 in the placebo group.

Regarding the individual components of the primary endpoint, no effect of Lipitor was observed except for an increased incidence of fatal stroke among those assigned to the drug.

Risk of all cardiac events combined was reduced by 18 percent with Lipitor, driven mainly by differences in rates of coronary-artery bypass graft surgery and percutaneous transluminal coronary angioplasty. In terms of incidence of all cerebrovascular events, however, no significant differences were observed between the Lipitor and placebo groups.

"We conclude that in persons with type 2 diabetes mellitus who are receiving maintenance hemodialysis and have LDL cholesterol values between 80 and 190 mg/dL, routine treatment with a statin to reduce the primary composite endpoint of death from cardiac causes, myocardial infarction and stroke is not warranted," the researchers wrote. "The initiation of lipid-lowering therapy in patients with type 2 diabetes mellitus who already have end-stage renal disease may come too late to translate into consistent improvement of the cardiovascular outcome."

The study appeared in the July 21 issue of The New England Journal of Medicine.

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Dendreon's Provenge extends survival in patients with advanced prostate cancer, study shows

Dendreon Corp. said an analysis of the final three-year survival data from a second Phase III study of Provenge, an investigational active immunotherapy for the treatment of prostate cancer, showed a survival benefit in men with advanced prostate cancer who were treated with the drug.

In the double-blind study of 98 men with asymptomatic, metastatic, androgen-independent prostate cancer, patients treated with Provenge exhibited a 20 percent improvement in median survival compared with those who received placebo. Furthermore, after three years of follow-up, a "substantially greater" percentage of patients in the Provenge arm were still alive as compared with the control arm.

An analysis of pooled survival data from two companion Phase III studies of Provenge yielded a statistically significant survival benefit in the overall intent-to-treat population of 225 patients. In the analysis, patients treated with Provenge exhibited a 23 percent increase in median survival compared with placebo.

"The results of this trial support our understanding of the potential utility of Provenge in the treatment of patients with advanced prostate cancer," said Dr. Celestia Higano, a principle investigator of the study.

Provenge uses a recombinant form of the prostatic acid phosphatase antigen to stimulate a patient's immune system against prostate cancer.

Dendreon shares closed at $7.02, up $0.82, or 13.2 percent, in heavy trading on the Nasdaq.

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Lilly posts net loss for Q2, lowers guidance

Eli Lilly and Co. recorded a net loss of $252 million, or $0.23 per diluted share, for the second quarter of 2005, which was primarily the result of a $1.07 billion liability charge related to Zyprexa (olanzapine), an antidepressant used in treating patients with schizophrenia. Last year, the company earned $656.9 million, or $0.60 per diluted share, in the second quarter.

Excluding charges, the company earned $728 million, or $0.67 per diluted share, compared with a net income of $738.7 million, or $0.68 per diluted share, in the second quarter of 2004. According to Reuters, the adjusted earnings were in line with analysts' expectations.

Sales for the second quarter increased 3 percent from $3.56 billion in 2004 to $3.67 billion in 2005.

Zyprexa and attention-deficit/hyperactivity treatment Strattera (atomoxetine hydrochloride) both experienced declining sales this quarter, while sales of osteoporosis drug Forteo (teriparatide [rDNA origin]) increased 56 percent compared with the same quarter in 2004.

For the third quarter, Lilly expects to earn between $0.70 and $0.72 per share. For the full year, projected earnings are now $1.90 to $1.96 per share, down from a previous guidance of $2.80 to $2.90 per share.

The company anticipates full-year sales growth of 6 percent to 8 percent; previous estimates were 8 percent to 10 percent.

Shares of Lilly closed at $56.25, down $1.01, or 1.8 percent, in heavy trading on the New York Stock Exchange.

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Schering-Plough reports Q2 net loss related to special charges

Schering-Plough Corp. reported a net loss in the second quarter of 2005, due in large part to an increase in litigation reserves in connection with investigations of the company's marketing, sales, pricing and clinical testing practices.

Including $259 million in special charges, the firm recorded a net loss of $70 million, or $0.05 per diluted share, in the latest second quarter compared with a net loss of $65 million, or $0.04 per diluted share, in the same period of 2004.

Excluding charges, analysts said the firm earned $0.13 per share, according to Reuters. Analysts polled by Reuters Estimates predicted earnings of $0.05 per share.

Net sales for the quarter totaled $2.53 billion, an 18 percent increase over the $2.15 billion recorded in the second quarter of last year. Schering-Plough attributed the increase to strong sales of drugs such as Remicade (infliximab), which is indicated to treat rheumatoid arthritis, Crohn's disease, ankylosing spondylitis and psoriatic arthritis. Remicade is marketed in the United States by Centocor Inc. Schering-Plough markets the drug to the rest of the world except in Japan and parts of Asia.

Schering-Plough said it expects the its underlying growth to continue, despite higher expenses in the third and fourth quarters associated with research and development costs and the launch of Asmanex (mometasone furoate). Asmanex was approved in March as a first-line maintenance treatment for asthma, as well as for patients with asthma who have already been treated with other drugs.

The company's stock closed at $20.11, down $0.09, or 0.5 percent, in heavy trading on the New York Stock Exchange.

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Pfizer Inc.

Pfizer Inc. plans to file next month for U.S. regulatory approval of its cancer drug Sutent (sunitinib malate). The company is seeking approval for Sutent as a treatment for metastatic renal cell and gastrointestinal stromal cancer. Pfizer continues its attempts to introduce new drugs to the market as patents for several of the company's older drugs expire, Reuters reported.

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Biovail Corp.

Biovail Corp. is discussing a potential multibillion-dollar buyout with investors, reported Canadian news source The Globe and Mail. If the transaction takes place, the drug maker could become a private concern. While Biovail would not comment on the speculation, the Globe and Mail, citing "people familiar with the talks," said company founder Eugene Melnyk started exploring the option of going private months ago. If there is a buyout, it could be valued at approximately $2.47 billion, making it one of Canada's most expensive buyouts. Biovail shares closed at $16.25, up $0.84, or 5.5 percent, in heavy trading on the New York Stock Exchange.

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Guidant Corp.

Guidant Corp. posted lower-than-expected quarterly earnings following a series of product recalls for potential malfunctions. The recalls prompted concerns that Johnson & Johnson may change its plans to acquire Guidant; however, according to Reuters, Guidant said the plans are "still on track." Guidant's second-quarter net income fell to $107.3 million, or $0.32 per diluted share, down from $126.5 million, or $0.39 per diluted share, during the second quarter of last year. Net sales rose to $974.1 million, up from $938.8 million for the equivalent period a year ago; analysts had expected quarterly sales of $990.43 million, Reuters reported. Guidant shares closed at $69.63, up $1.93, or 2.9 percent, in moderate trading on the New York Stock Exchange.

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CytRx Corp.

CytRx Corp. received verbal notification from the Food and Drug Administration that a planned Phase II trial to investigate the company's small molecule drug candidate, arimoclomol, has been placed on hold pending receipt and review of additional information. The Phase II trial is intended to investigate the safety and tolerability of arimoclomol as a treatment for amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig's disease. CytRx filed an Investigational New Drug application for arimoclomol in May, and the FDA granted the product an orphan drug designation.

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