SchMerk - Vytorin: call the confidential informant

Plaintiffs believe that after a reasonable opportunity for further investigation and discovery, the evidence will show that Defendants were aware in. . . late 2005/early 2006 that the ENHANCE trial would not yield positive results. In this regard. . . a confidential informant who was one of Schering-Plough’s senior medical personnel², provided information to counsel in the companion securities action against the Company, according to which, a quality control assessment of the ENHANCE data was conducted at Schering-Plough in late 2005 to early 2006 that showed that the ENHANCE trial would not succeed in demonstrating VYTORIN’s superiority over generic statins.

According to that confidential source, even though the ENHANCE trial was purportedly blinded, updates regarding the trial were shared in quarterly meetings of Schering-Plough’s Brand Team (the “Brand Team”), that included Sean McNicholas, Ray Russo (“Russo”), Michael McCann, Michael Matin, Eric Cox, Steven Morales and Denise Foy. At the meetings, discussions and detailed PowerPoint presentations updated the participants on developments concerning VYTORIN and ZETIA, including not only the marketing and commercial aspects of the drugs, but also the status of the ongoing research. Further, according to that confidential source, by the Spring or Summer of 2006, it was clear that the results of the ENHANCE trial would be problematic for the Company. Still further, according to that confidential source, the individuals at Schering-Plough who were familiar with the Company’s cholesterol franchise (including Defendants Hassan and Bertolini who were regularly briefed on the details of the ENHANCE trial) were aware of this information.

However, at the time, Defendants did not inform the medical community or the investing public, including the Plans’ participants, of VYTORIN’s inefficacy, instead, spending millions of dollars in marketing campaigns. As Harlan Kumholz, a cardiologist at Yale University, had observed in his remarks to Forbes, “By the summer of 2005, [Schering-Plough/Merck’s] marketing division [was] so successful that [VYTORIN was] already a blockbuster drug. There was only downside [to analyzing the results of ENHANCE trial].”

Indeed, according to the information provided to counsel in the companion securities case by a confidential informant, the Company’s marketing department for VYTORIN and ZETIA, headed by Russo, "wanted to control the science; it was very much marketing driven and not science driven," and Schering-Plough was "not concerned with the data as much as they [were] selling the drug". . . .

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