Merck Resolves Securities Class-Action Lawsuits Related to the ENHANCE Trial
February 14, 2013 8:00 am ET
The Company Records $493 Million Charge Reducing 2012 GAAP Results
Merck, known as MSD outside the United States and Canada, announced
today that it has reached an agreement in principle with plaintiffs to
resolve two federal securities class-action lawsuits. The suits are
pending in the U.S. District Court for the District of New Jersey
against Merck, Schering-Plough Corporation and certain of their current
and former officers and directors.
Under the proposed agreement, which will have no impact on Merck’s 2013
results of operations, the company will pay $215 million to resolve the
securities class action against all of the Merck defendants and $473
million to resolve the securities class action against all of the
Schering-Plough defendants. In connection with the settlement, Merck
recorded a pre-tax and after-tax charge of $493 million, which reflects
anticipated insurance recoveries. This charge reduced the company’s
previously reported fourth-quarter 2012 GAAP (generally accepted
accounting principles) EPS (earnings per share) results from $0.46 to
$0.30 per share and full-year 2012 GAAP results from $2.16 to $2.00 per
share, but did not change its previously reported non-GAAP results.
The plaintiffs are investors who purchased certain securities issued by
Merck and Schering-Plough between December 2006 and March 2008 and claim
that they lost money when the results of the ENHANCE trial were
published in early 2008. Merck continues to believe that both companies
acted responsibly in connection with the ENHANCE study, and this
agreement contains no admission of liability or wrongdoing. The
agreement is subject to court approval.
“This agreement avoids the uncertainties of a jury trial and will
resolve all of the remaining litigation in connection with the ENHANCE
study,” said Bruce N. Kuhlik, executive vice president and general
counsel of Merck. “We believe it is in the best interests of the company
and its shareholders to put this matter behind us, and to continue our
focus on scientific innovations that improve health worldwide.”
Judge Dennis M. Cavanaugh is presiding over the cases. Merck is
represented by Theodore V. Wells, Jr. and Daniel J. Kramer of Paul,
Weiss, Rifkind, Wharton & Garrison LLP.
About Merck
Today’s Merck is a global healthcare leader working to help the world be
well. Merck is known as MSD outside the United States and Canada.
Through our prescription medicines, vaccines, biologic therapies, and
consumer care and animal health products, we work with customers and
operate in more than 140 countries to deliver innovative health
solutions. We also demonstrate our commitment to increasing access to
healthcare through far-reaching policies, programs and partnerships. For
more information, visit www.merck.com
and connect with us on Twitter, Facebook and YouTube.
Forward-Looking Statement
This news release includes “forward-looking statements” within the
meaning of the safe harbor provisions of the United States Private
Securities Litigation Reform Act of 1995. These statements are based
upon the current beliefs and expectations of Merck’s management and are
subject to significant risks and uncertainties. If underlying
assumptions prove inaccurate or risks or uncertainties materialize,
actual results may differ materially from those set forth in the
forward-looking statements.
Risks and uncertainties include but are not limited to, general industry
conditions and competition; general economic factors, including interest
rate and currency exchange rate fluctuations; the impact of
pharmaceutical industry regulation and health care legislation in the
United States and internationally; global trends toward health care cost
containment; technological advances, new products and patents attained
by competitors; challenges inherent in new product development,
including obtaining regulatory approval; Merck’s ability to accurately
predict future market conditions; manufacturing difficulties or delays;
financial instability of international economies and sovereign risk;
dependence on the effectiveness of Merck’s patents and other protections
for innovative products; and the exposure to litigation, including
patent litigation, and/or regulatory actions.
Merck undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or
otherwise. Additional factors that could cause results to differ
materially from those described in the forward-looking statements can be
found in Merck’s 2011 Annual Report on Form 10-K and the company’s other
filings with the Securities and Exchange Commission (SEC) available at
the SEC’s Internet site (www.sec.gov).
Merck
Media Contacts:
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OR
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