Interview: An attorney with Merck
>> we return to our top story, a verdict in the merck case with vioxx. an attorney with merck is joining us right now. thank you for joining us.
>> thank you for having me on your show.
>> strong words from colleagues of yours after that verdict was announced today. let us get your reaction and catch our viewers up, how merck is responding.
>> well, we are disappointed in the jury’s decision. we believe it was not a sufficient basis in the evidence to support the verdict and we plan to appeal.
>> what will the basis of the appeal be?
>> we are exploring the basis of the appeal. this just happened. among them are the fact that there was no reliable scientific basis for a lot of the expert testimony that was given including the testimony of that mr. ernst suffered a heart attack at all, the fact that there were unqualified expert testimony was admitted into evidence, the fact that a lot of irrelevant testimony as to time period, as to marketing matters that had nothing to do with mr. ernst prescription. other grounds as well.
>> how quickly can we expect you to appeal?
>> well, we’ll take the appeal at a time that the rules allow. first the judge has to accept the verdict and there are caps in texas on the punitive portion of the award that should reduce that before appeal to a level of $10 million if the judge applies the law correctly.
>> currently the award was $24.4 million in actual damages. $229 million in punitive damages to mr. ernst’s family. what you say is application of the law should bring the punitive down to $2 million, is that correct?
>> that’s correct. we don’t think it is a punitive damage case at all. we believe the company acted responsibly every step of the way in researching this drug and continuing relentlessly to study the drug after it was on the market and disclosing the raoults of the work they did to the f.d.a. and to medical and scientific communities. this was a medicine that the company believed strongly in its benefits and safety and the researchers who worked on the drug, the head of the research laboratories took the drug themselves and they believed very strongly in it.
>> let’s talk a little about that scientific evidence, that which will likely be the basis of your appeal. what changes, if any, cow anticipate bringing into evidence in an appeal to make a stronger case about the scientific veracity of the drug?
>> well, the evidence is what it is which is evidence of a strong science-based company researching relentlessly this drug before it was on the market . careful research before it was ever submitted to f.d.a. a very big body of research that supported the safety of the drug. continuing to research it after the drug was on the market and making appropriate disclosure of that information to the public, to the medical and scientific community and f.d.a., working with the f.d.a. on labeling. that story will not change. those are the facts. we believe they strongly support the fact that the company reacted responsibly every step of the way. those facts will be in every case we defend.
>> give us an update in terms of the number of cases. there have been efforts to do class action suits and individual suits as well. what pace of cases are you geared up to handle?
>> well, we’ll be ready for whatever comes. and we’ll address these individually on their individual facts.
>> and how many cases are you anticipating?
>> well, we can’t predict that. the behavior of the trial lawyers. but we are ready to defend the cases one by one as they come.
>> and in terms of how well the company is positioned to deal with the financial fallout from this, can you give us an update on how much the company has set aside? >> i think that’s in public disclosure of the company. i really can’t elaborate further on what the company has disclosed in the public disclosures.
>> and, ted, one other question here which has to do also with that drug. give us an update. there have been discussions on whether merck would bring back the drug. what’s the latest on that?
>> that continues to be looked at carefully. the company with the f.d.a. will continue to look at that issue carefully going forward.
>> ted, we thank you for joining us this afternoon.
>> thank you very much.
>> ted mayer, merck attorney, joining us by telephone. we take a break and come back. a lot more to talk b.world and national news, updates on the market as well as the latest financial news. please stay with us.
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Listen Market briefing --- Ellen (slow)
NYSE --- Deb (fast)
>> welcome back to “after the bell.” i’m ellen braitman. a ruling against merck over the vioxx painkiller sparking an afternoon selloff. in terms of the week, benchmark indexes falling for the week. this week marks the unofficial end of second quarter earnings season. let’s check in now with deborah kostroun. she continues to be at the big board. she will wrap it up for us.
>> thanks, ellen. if you take a look at where we are, second quarter earnings pretty much wrapped up. 476 of the s&p 500 members have posted results. 71% of s&p 500 companies reporting have exceeded analyst estimates that. according to thomson financial. that is the highest quarter since the first quarter of 2004 that companies have exceeded estimates. as we take a look at where we are with second quarter earnings we look at growth up 11.8%. you can see the third quarter what we expect. growth up 14.4%. that has been ratcheted down ever so slightly mainly because of energy prices. of course, fourth quarter earnings will come in at least expected 12.9%. big story on the day is merck. it led other drug shares lower like pfizer and johnson&johnson. you combine those together and that took off a point and a half of the s&p 500. you are talking about merck today and it lobbed off $4.8 billion in market cap on the day. so certainly a big story. it did come in the last hour of trading. we also saw the best volume in merck since about february 18. we saw about 37 million shares traded on the day. take a look at a little bit of flip-flop changes he in the s&p 500. public storage was one of the most actively traded stocks on the day. a little lower. it entered the s&p 500 on the day after the stock market closed yesterday replacing delta airlines. a lot of news about delta. delta the worst performer in the s&p 500 so far this year. gainers in the dow on the day, caterpillar, i.b.m., and coke. coke got an upgrade. i.b.m. with positive comments from a prudential equity analyst as well. that helping out i.b.m. and also coke. mellon financial higher on the day. looks like they may spin off asset businesses and merge with merrill lynch. you saw mellon financial higher.
>> thanks so much. the yield on the 10-year treasury note falling to the lowest level this month even though the economy does seem to be on solid footing. so why is the value of the benchmark falling even as the economy improves and which treasury should investors look to to generate better income? let’s ask the portfolio manager with port washington investment advisors. he helps oversee $1.7 billion in bonds. he joins us from cincinnati. tim, thank you for joining us. do we have you, tim? can you hear me? does seem like we have a technical problem with tim for which we apologize. in the meantime, we catch you up on the market today. let’s take a closer look because we have not looked at the bond market . here you go. here’s the 10-year. price differences today in bonds. let me tell you what happened in the bond market today because there’s focus on the movement in yields. what you had today was treasuries falling on speculation yields at the lowest since july offering little value after reports this week showed bigger than expected gains in manufacturing as well as wholesale prices. you currently have the yield on the 10-year at 4 pwoeupb 2%. as for the two-year, yield at 4%. a lot of focus here. we are sorry we don’t have the conversation with tim. what we’ll also do is tell you about―where are we going now? ok. we are going to look at the stock market again. let me bring you back to more stocks. here’s the stock market on my bloomberg terminal today. you had option expiring today. as for what happened in stocks, you see the indexes really ending little changed for the day. you had a rally during the day. you had the indexes higher for much of the day. then that verdict came out against merck in the afternoon trading. what that did is essentially wipe out gains in the dow. it also weighed on the s&p. the indexes closing little changed. an investor we spoke to earlier today said the head winds have been building for at least the past six months with higher energy prices. it was a week ago today you had crude reaching record highs. huh a few days of declines earlier this week. crude rising again today. very much a factor for investors. again, the indexes ending the day little changed. as for the week, they did end the week lower. now let’s move on and talk about housing. very much a focus for investors as well these days. what we’re hear something the housing market may, in fact, be near ago peak. that according to economist and realtors that say too many buyers are having to stretch too far to pay inflated home prices. lehman economist ethan harris says buyers are “taking interest-only loans and other exotic loans in a desperate attempt to afford the house.” that is a sign the market is near ago top. housing affordability is at 14-year low according to the national association of realtors. the trade group expects price also rise next year at about half the rate of 2005. real estate brokers in some markets say houses are staying on the market longer and the number of unsold homes, they say sin creasing. this week the federal reserve released figures showing buyers increasingly resorting to riskier financing in order to afford houses. adjustable rate mortgages, interest-only loans and non-traditional options make up a larger share of portfolios at more than half the u.s. banks who did respond to the fed survey. with all that, we head to a quick break. coming up, we have a guest saying the second half of the year looking bright for corporate profits. but the short term may not be as bright. we’ll have the details, a conversation coming up.
