Merck & Co., Inc. Conference Call to Discuss Plunkett v. Merck Trial Verdict - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good day, ladies and gentlemen. Welcome to the Merck public affairs conference call. My name is Carlo and I will be your coordinator for today's presentation. At this time all participants are in a listen-only mode. We'll be facilitating a question-and-answer session towards the end of today's prepared remarks. (OPERATOR INSTRUCTIONS). I would now like to turn the presentation over to our host for today's call, Joan Wainwright, Vice President Public Affairs for Merck.

JOAN WAINWRIGHT, VP, PUBLIC AFFAIRS, MERCK & CO.: Thanks to everyone on the phone for joining us today. The purpose of this call is to discuss the outcomes of the first federal trial and to provide an update on the Vioxx litigation. Ken Frazier, Merck's Senior Vice President and General Counsel is here with me today in person and on the phone we have Phil Beck, the lead trial lawyer in the case. Ken will make a brief opening statement and then we'll open up the call for questions.

Just to remind you, we'll first address questions from analysts since we understand that they made need to be on another call and then we'll address questions from members of the press. Please be advised that since we are involved in ongoing litigation there may be certain issues that we cannot address.

And before we begin, please be advised that this teleconference contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and involve risks and uncertainties which may cause results to differ materially from those set forth in the statements. The forward-looking statements include payments regarding product development, product potential or financial performance. No forward-looking statement can be guaranteed and actual results may differ materially from those projected.

Merck undertakes no obligation to publicly update any forward-looking statement whether as a result of new information, future events or otherwise. Forward-looking statements in this teleconference should be evaluated together with the many uncertainties that affect Merck's business, particularly those mentioned in the cautionary statement in item 1 of Merck's Form 10-K for the year ended December 31, 2004 and in its periodic reports on Form 10-Q and Form 8-K which the Company incorporates by reference. And now I will turn the call over to Ken Frazier.

KEN FRAZIER, SVP, GENERAL COUNSEL, MERCK & CO.: Thank you, John, and thank you all for joining us today. I'd like to say, as Joan said, a few words about the trial that was concluded earlier today, a few words also about the New England Journal editorial and the upcoming litigation and then I will take your questions as well as Phil Beck who is our lead trial lawyer.

Let me start by saying, as you know by now, the jury could not return a verdict in the first federal Vioxx product liability trial, the case of Plunkett versus Merck. That is because the plaintiffs were unable to sustain their burden of convincing the jury that there was in fact reliable medical or scientific evidence showing that short term use of Vioxx increases the risk of heart attack or that it contributed in any way to the unfortunate death of the Mr. Irvin.

We also presented evidence to the jury that Merck acted responsibly in the research and marketing of Vioxx. Notwithstanding this outcome, we are prepared to defend this in other cases in the future. Phil Beck and Tarek Ismail of Bartlit Beck in Chicago along with our witnesses all did a fine job of presenting our case and we are thankful and grateful for the work that they've done.

There are many more trials to come. We expect trials in both federal and state courts to take place throughout 2006 and we remain committed to addressing these cases one by one in a responsible manner over the coming years. Our legal strategy is the right one because the Company acted responsibly and in the best interest of patients every step of the way. Recent events as covered by the media do not alter this fact and we look forward to presenting this information at future trials.

Now I'd like to say just a few words about the recent New England Journal of Medicine editorial that was released at the very beginning of the jury's deliberations in this case. First of all, the (indiscernible) data in the publication -- the heart attack data in the New England Journal publication were all based on a prespecified cut-off date. The final data were widely disseminated; they were shared with the FDA a month prior to the publication of the New England Journal article. They were shared with an FDA advisory committee which met in February 2001 in a very public context.

They were disseminated widely throughout the scientific and medical community and extensively discussed as part of the scientific debate and they were communicated in various press releases that Merck put out. The difference between the data reported in the article and the final data did not affect the analysis or the conclusion. The New England Journal has asked the authors to provide a written response and, out of respect for the scientific process, we intend to allow them to do so.

Let me now comment on the upcoming litigation. There are many more Vioxx cases to come. As I mentioned before, we expect trials in both federal and state courts to take place in 2006. There are three federal trials currently scheduled in the MDL proceedings to commence in February, March and April 2006. The cases have not yet been selected. Judge Fallon will again preside over those cases. We support Judge Fallon's timetable on discovery and setting cases for trial.

With respect to the New Jersey litigation and Judge Higbee in New Jersey has stated her preference for trying two cases in a consolidated hearing beginning on February 27, 2006 in New Jersey. This is the next scheduled Vioxx product liability trial date. The plaintiffs in those cases are in Thomas Cona and John McDarby. Both plaintiffs alleged they suffered heart attacks and both patients allegedly took Vioxx for more than 18 months. However, the court has not yet ordered the cases consolidated for trial and has agreed to allow the parties to brief that issue.

On the issue of the Judge's preference of consolidating cases in New Jersey, we believe that every case is different from the next -- different patients, different medical histories, different doses, different doctors, different indications, different risk benefit decisions, different labeling and so on. Each plaintiff has the burden to prove his or her own case on its facts and we have the right to defect each and every case on its on facts. Our arguments will be contained in a brief to be filed with the court on this matter. Nevertheless, we are prepared to vigorously defend these cases in trial whether they are consolidated or not.

On the issue of case selection in New Jersey, Merck hopes to work with the court to establish a fair and orderly process for selecting cases for trial. The Judge has indicated her interest in trying cases in which the plaintiffs allegedly took Vioxx for 18 months or longer. Merck always expected to try these long-term use cases as part of its overall litigation strategy and remains confident in its defense. Plaintiffs in these cases still have a significant burden to prove that it was Vioxx and not any existing risk factor that caused their injury.

Also I will underscore that New Jersey law requires that plaintiffs must prove that Merck failed to warn of risks allegedly associated with Vioxx use. You will recall that in the last New Jersey trial, Humeston vs. Merck, the jury found in favor of Merck stating that Merck adequately warned patients of the potential risks of Vioxx. As I said earlier, we believe this jury's finding is important because of the fact that Merck acted appropriately and responsibly in scientific research and marketing will transcend all cases regardless of how long the patient took Vioxx.

As it relates to other state's court trials, there are two trials currently scheduled in Texas state court -- Vaget (ph) vs. Merck and Guerra (ph) vs. Merck -- each in March and April 2006 respectively. With respect to the Ernst appeal, we are still waiting for the Ernst verdict to be entered as a judgment by the plaintiff in that case. The appeal process will begin promptly after that judgment is entered by the court.

As we repeatedly stated, we were disappointed with the jury's verdict in Ernst and we believe the case presented by the plaintiff to the jury was fundamentally flawed. If the jurors are presented with information that is inflammatory and not based on rigorous science it can result in inappropriate conclusions. This is why it is important to ensure that the same principles we apply in our labs, the use of rigorous evaluation of sound scientific data is equally applied in the court room. We have strong points to raise on appeal and we're hopeful that the appeals process will correct the verdict.

I'd like to close my remarks with a few words about Merck's litigation strategy. As …