The Wall Street Journal reports that Attorney General Andrew Cuomo has launched an investigation into both Merck (NYSE: MRK) and Schering-Plough (NYSE: SGP).
The New York AG is concerned that both companies may have "deliberately concealed" negative results from a clinical trial for Vytorin, known as Enhance. Vytorin is a drug marketed to treat cholesterol.
According to the article, "the Enhance clinical trial cast doubt about whether Vytorin is better than a cheaper generic drug in slowing the progression of cardiovascular disease, even though Vytorin was more effective in reducing LDL, the so-called bad cholesterol, which is a major risk factor for heart attacks."
Behind the issue is timing. According to the article, the Enhance trial was completed in April 2006, but the companies didn't disclose the results until January 2008. During that time, combined annual sales of Vytorin and a sister drug, Zetia, grew to more than $5 billion.
That's not chump change.
Both Merck and Schering-Plough are down pretty strongly off the news flow last week.
Cramer says to buy this extremism. What do you think?
Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.
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