Schering-Plough profit falls, but beats forecast

By Ransdell Pierson and Lewis Krauskopf

NEW YORK (Reuters) - Schering-Plough Corp, whose shares tumbled earlier on Monday after its Vytorin cholesterol fighter failed another study, said second-quarter earnings fell on charges from its recent $16 billion acquisition of Organon BioSciences.

The company, whose shares fell another 4.4 percent in after-hours trading, said it earned $398 million, or 24 cents per share, compared with $517 million, or 34 cents per share, a year earlier.

Excluding special items and purchase accounting adjustments, the drug maker earned 45 cents per share. Analysts polled by Reuters Estimates, on average, had forecast 42 cents per share.

Quarterly company sales jumped 55 percent to $4.92 billion, helped by new products acquired in the November Organon deal, somewhat higher than the $4.77 billion Reuters Estimates forecast.

"They beat on the bottom line and had a significant benefit on their top line from currency," said Deutsche Bank analyst Barbara Ryan, referring to the benefit of higher overseas sales attributable to the weak dollar.

But she said U.S. sales of several important company drugs, including Vytorin and intra-nasal allergy drug Nasonex, were somewhat disappointing.

The company delayed its earnings report until after the closing of the stock market, so researchers in London could first unveil results from the latest study of Vytorin, a $4.5 billion-a-year pill sold in partnership with Merck & Co.

In the 1,873-patient trial, called SEAS, Vytorin failed to arrest aortic stenosis -- a narrowing of the main valve of the aorta that can cause heart failure and is most commonly seen in the elderly. Moreover, more patients with the condition who took Vytorin developed cancer than those taking placebos in the trial, although researchers said the trend was likely due to chance.

Schering-Plough said its quarterly share of global sales from Vytorin and a related drug called Zetia, also sold in partnership with Merck, fell 9 percent to $566 million.

Sales of Vytorin, and share prices of Merck and Schering-Plough, have been hurt since the medicine failed in January to meet the primary goal of another study.

Vytorin, which combines Merck's older cholesterol fighter Zocor with Zetia, was shown in that so-called Enhance trial to be no more effective than Zocor alone in reducing plaque in neck arteries.

Several of Schering-Plough's other important medicines rose in the second quarter, including arthritis drug Remicade, whose sales jumped 41 percent to $557 million despite strong competition with similar products sold by Abbott Laboratories Inc and Wyeth.

Sales of brain cancer drug Temodar rose 16 percent to $251 million, while revenue from Nasonex rose 6 percent to $311 million.

Schering-Plough shares fell 11.6 percent on the mostly negative SEAS study results, before slipping further to $18.10 per share in after-hours trading, following its quarterly earnings report.

Merck shares fell 6.2 percent before the close of regular trading, but fell another 8 percent to $32.45 after it released its own earnings report.

(Reporting by Ransdell Pierson; Additional reporting by Deepa Seetharaman; editing by Carol Bishopric and Andre Grenon)