Archive for July, 2008

Vytorin fails to meet main goal of heart study (Reuters)

Monday, July 21st, 2008 | Finance News

NEW YORK (Reuters) -
The cholesterol fighter Vytorin sold
by Merck & Co Inc (MRK.N) and Schering-Plough Corp (SGP.N)
failed to meet the main goal of improving outcomes in a
closely-watched heart study, according to data presented on
Monday.

Slightly higher incidents of cancer deaths were also seen
in those taking the drug -- 39 versus 23 on placebo -- although
the lead researcher said those could have occurred as a result
of chance.

The shares of both companies fell after the data were
released, with Schering off more than 15 percent and Merck down
by 7 percent.

No significant difference in the study's composite heart
goals was seen between the patients who received Vytorin and
those who received a placebo, according to data presented in
London by its primary researcher, Dr. Terje Pedersen of Ulleval
University Hospital in Oslo, Norway.

Researchers played down the cancer data, saying much larger
studies of Vytorin have not showed increased cancer risk.

"There is no overall credible evidence of an increase in
cancer," said Sir Richard Peto, professor of medical statistics
and epidemiology at the University of Oxford, who reviewed the
data. "We should not be diverted (from using Vytorin) by fears
of cancer."

Merck and Schering-Plough delayed reporting quarterly
financial results, which were expected on Monday morning, so
investors could first learn about the outcome of the study.

The primary composite goals of the study of patients with
irregular thickening of the main valve to the aorta were broken
into two sets of secondary goals and Vytorin was superior on
one of those sets, researchers said.

Vytorin was significantly better than placebo in reducing
atherosclerotic events, defined as nonfatal heart attacks, need
for coronary artery bypass surgery or artery-clearing
procedures, hospitalization due to chest pain and strokes.

"The study has given a clear-cut answer whether lipid
lowering will influence the cause of aortic stenosis and we can
conclude it does not," Pedersen said.

But he noted that Vytorin did offer some benefits in
reducing risk of coronary artery disease in the study.

The drug was no better than placebo on the other secondary
measure of reducing aortic valve disease events -- the need for
surgical valve replacement, hospitalization because of heart
failure and cardiovascular death.

"Overall it looks positive. They did decrease
atherosclerotic events, which is sort of what everyone
expected," said Jon LeCroy, an analyst for Natixis
Bleichroeder.

He said cancer fears should be allayed by results of
larger, previous studies.

"But we've seen with drugs in the past any time cancer gets
tagged on them sometimes the prescriptions can come off a
little bit," he added.

Vytorin did lower bad LDL cholesterol by 61 percent
throughout the study.

"The bottom line is there was a trade-off in this trial --
in a reduction in some cardiovascular events and an excess of
cancer deaths. It's obviously not a favorable result," said Dr
Steven Nissen, chairman of cardiovascular medicine at Cleveland
Clinic
, who has been critical of Vytorin use in the past.

The trial was designed to determine whether aggressive
cholesterol lowering can lessen the need for surgical
replacement of aortic valves, reduce cardiac death and reduce
cardiovascular events, including heart attacks.

The 1,873-patient study, meant to follow subjects for a
minimum of four years, is the largest formal trial ever
conducted in patients with the condition, known as aortic
stenosis
. An estimated 2 percent of people over age 65 have the
condition, which can lead to heart failure.

Sales of the pill have suffered this year and Merck and
Schering-Plough stock has fallen sharply, following Vytorin's
failure to cut plaque in neck arteries in a separate trial
called Enhance.

Widespread unfavorable publicity followed release of the
Enhance results in mid-January and subsequent recommendations
by researchers that patients first try other cholesterol
fighters before opting for Vytorin.

Linda Bannister, an analyst for Edward Jones, said it would
have been a positive surprise had Vytorin met the main goal of
the latest study, called SEAS.

"The concern is how this is going to be portrayed and
perceived and is it just going to be another issue where there
is a lot of negative publicity surrounding the drug," Bannister
said.

Merck shares were down $2.80, or 7.4 percent, at $34.28,
while Schering-Plough shares were down $3.36, or 15.6 percent,
at $18.08 in afternoon trading.

(Additional reporting by Lewis Krauskopf, Deepa
Seetharaman, Michael Kahn and Kim Dixon; Editing by Andre
Grenon)

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Yahoo and Icahn settle, Microsoft deal seen adrift (Reuters)

Monday, July 21st, 2008 | Finance News

NEW YORK (Reuters) -
Yahoo Inc (YHOO.O) will appoint
activist investor Carl Icahn and two of his nominees to its
board, defusing a proxy battle showdown and making an immediate
deal with Microsoft Corp (MSFT.O) less likely.

The settlement with Icahn, announced on Monday, came just
11 days before Yahoo's August 1 annual shareholders meeting.
Icahn had originally sought to replace the entire board with
his own nominees and oust Yahoo Chief Executive Jerry Yang.

But Icahn's campaign appeared to have failed to win backing
from key shareholders such as Legg Mason fund manager Bill
Miller
, who said on Friday that he would support Yahoo's board.
Legg owned 4.4 percent of Yahoo, according to recent filings.

Icahn failed to convince many investors that if he had won
control of Yahoo at the upcoming annual meeting, that he had
any alternative for turning the business around, other than to
sell it in part or in whole to Microsoft.

"It may be possible it does generate some positive change.
Perhaps Icahn can drive some more staff reductions, persuade it
to divest its Asia investments," Jeffrey Lindsay, an analyst at
Sanford C. Bernstein, said of the settlement.

"Overall it seems much less likely that there will be a
transaction with Microsoft. The market is already reading it
that way," he added. "This looks like a compromise and in
general most of these compromises, certainly with ones with
Icahn in the past, have reinforced the status quo."

Yahoo has said Microsoft's various deal proposals have
undervalued its business and instead reached a search
advertising partnership with arch rival Google (GOOG.O) to
boost its performance.

Yahoo shares fell 69 cents, or 3 percent, to $21.76 in
afternoon trading. The stock is far below Microsoft's last
offer price of $33 per share, a bid that was withdrawn in May.
Microsoft shares fell lost 20 cents to $25.66.

A REPRIEVE FOR MANAGEMENT

After six months of on-again, off-again talks with
Microsoft that have undermined Yang and his management team's
credibility with Wall Street, the settlement with Icahn could
shore up Yahoo's position in the near term.

"Yahoo's current management is much better suited for Yahoo
shareholders throughout this transition period. It's not like a
vote of confidence, it's just they're the right people to get
us through the disaster that we're in," said RBC Capital
Markets analyst
Ross Sandler.

"They've done a poor job, but unfortunately there isn't a
whole lineup of really good Internet executives who are
pounding down the door to take on this challenge."

Yahoo reports quarterly results on Tuesday and some
analysts said the Icahn settlement could help allay pressure
over what is expected to be a weak second-quarter performance.

"They may be able to find a few extra pennies this quarter
via cost controls just to show the market that they are making
improvements," Canaccord Adams analyst Colin Gillis said.

But Gillis added it would be difficult for Yahoo to show
momentum when it gives forecasts for the current quarter, given
economic weakness and competitive pressures hurting online
advertising, which could still come back to haunt its leaders.

"The key thing is, is Jerry inspiring people, and if he's
not, then there's a good chance Carl Icahn will agitate him out
of that position," Gillis said.

YAHOO TO EXPAND BOARD

Icahn, who owned 4.98 percent of Yahoo, called the
settlement a "good outcome" and said he continues to believe a
transaction to sell Yahoo or its search business should be
given full consideration, according to a company statement.

Yahoo said it will expand its board to 11 members from
nine, with eight of its existing directors standing for
re-election. Icahn will be appointed and the remaining two
board seats will be chosen from a list that includes Icahn's
original slate of candidates and Jonathan Miller, former
chairman and CEO of Time Warner Inc's (TWX.N) AOL, Yahoo said.

Yahoo said Roy Bostock, Ronald Burkle, Eric Hippeau,
Vyomesh Joshi, Arthur Kern, Mary Agnes Wilderotter, Gary Wilson
and Jerry Yang would stand for re-election. Activision Blizzard
(ATVID.O) CEO Robert Kotick will not.

(Editing by Dave Zimmerman and Maureen Bavdek)

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Oil gives back gains despite Iran, tropical storm (Reuters)

Monday, July 21st, 2008 | Finance News

LONDON (Reuters) -
Oil gave back most of its gains of more
than $3 during trading on Monday, as worry over Iran and a
storm in the Gulf of Mexico were not enough to sustain a price
recovery after the biggest one-week slide on record.

U.S. light crude for August delivery fell back below $130
having been as high as 132.05.

At 2:05 p.m. GMT (10:05 a.m. EDT) it was up 71 cents at
129.60, having briefly dipped below the opening price of
128.88. London Brent crude was $95 cents higher at $131.14, off
highs of $133.15.

A stalemate over talks to resolve Iran's nuclear standoff
with the West and the tropical storm in the Gulf of Mexico both
provided reasons to call a halt to last week's sell off, but
were not enough to sustain a recovery in prices.

"If you're in a downward trend and you get a couple of
factors providing upward pressure, the upward pressure might
not be enough to get prices to go up, but could cause prices to
stabilize," said Mike Wittner of Societe General in London.

Oil's losses last week were the biggest in dollar terms
since futures began trading in New York in 1983 and in
percentage terms the steepest sell-off since late 2004.

Major powers on Saturday gave oil producer Iran two weeks
to rein in its nuclear programme, which it says is only for
peaceful purposes, or face tougher sanctions.

But the talks ended in stalemate despite unprecedented U.S.
participation.

The war of words between Iran and the West has contributed
to tensions in the Middle East that helped to push oil prices
to a record high of $147.27 on July 11.

But prices corrected sharply last week, pressured in part
by concern over the fragile economy in the United States, the
world's biggest energy consumer, as well as by expectations the
weekend talks on Iran could defuse tension.

Tropical Storm Dolly, which is headed for Mexico's Yucatan
Peninsula
, also helped to boost the market as the storm was set
to pass just north of Mexico's huge Cantarell oil field.

The fourth storm of the 2008 Atlantic hurricane season is
expected to emerge into the Gulf of Mexico on Monday local
time, north of the Cantarell field and other ports and
platforms used by the world's sixth-largest oil producer and
top supplier to the United States.

"She may dissipate, but if direction were to change then a
protective shut in of production facilities across the Gulf of
Mexico
is likely," said Rob Laughlin, at broker MF Global.

(Reporting by Jane Merriman and Peter Graff in London, and
Fayen Wong in Perth, editing by Anthony Barker)

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