ACC Not With Merck and SGP on Vytorin/Zetia

Yoda made an appearance at the American College of Cardiology [ACC] conference in Chicago on Sunday.

At the end of his speech in the opening session, the outgoing president of the organization played a "Star Wars" clip with the sage saying, "Try not. Do or do not. There is no try." He was trying to make a point about the ACC's role in forging healthcare reform.

But many--especially, I suspect, folks at Merck (MRK) and Schering-Plough (SGP)--would argue the ACC tried, but did not do, when it comes to the promised "reasoned" panel discussion of the controversial Vytorin/Zetia test results.

It was standing room only in the great hall for the "showcase session," although the fire marshal shooed away people who were standing four and five deep in the wide doorways. They came to hear the data presentation and then an airing-out of the results by an ACC handpicked panel of experts.

But the second part never happened. One of the experts, Dr. Harlan Krumholz, launched into prepared remarks during which he suggested that Zetia could be nothing more than an "expensive placebo." Those are his words. Another panel member put a brief button on Dr. Krumholz's speech and that was it. No discussion. No Q & A. The room, packed with about 6,000 people, emptied out in a hurry.

Damage was done.

Credit Suisse analyst Catherine Arnold writes in a research note to clients Tuesday morning, "...the expected 'panel discussion' had almost no 'discussion', rather it seemed like a (Zetia)-bashing session...." Because of that Arnold now believes a Vytorin/Zetia "recovery" will require patience and as a result she's taking a scalpel to her earnings estimates for both companies.

Credit Suisse has done and wants to do more investment banking for MRK and SGP. And Arnold or someone on her team lives with a Schering employee.

May the sales force be with Merck and Schering-Plough.