In less than 24 hours, the big drugmaker has four pieces of news - one bad, the rest good. And that’s enough to boost Merck stock consideably this morning.

First, an FDA panel boots Arcoxia, the ‘Son of Vioxx’ follow-up over cardiovascular risks, essentialy ending any chance the painkiller will get approved. But then, a federal judge dissmises a securities class-action lawsuit in which investors claimed fraud related to Vioxx.

Still more good news: a Texas judge, who oversees 1,000 Vioxx lawsuits, dismisses a case citing the FDA pre-emption rule. This says that drugmakers are immune to product-liability challenges in a state court because FDA approval is in place. He expects to apply the rule to all 1,000 lawsuits, although it’s not clear if such a decision would ultimately be upheld.

In the midst of all this, Merck revised first-quarter earnings upward. The drugmaker, by the way, is trying to make a habit of keeping Wall Street expectations low in order to create opportunities to later surprise investors with revised forecasts.

In an investor note this morning, Barbara Ryan of Deutsche Bank reacts to earnings forecast::

“We believe the exceptionally strong first-quarter performance was driven by…gains from 5 percent to 6 percent price increases taken for most major products at the end of January…In 2006, Merck raised guidance three times and continues to execute handsomely in 2007 on a strategy to, in our opinion, understate and overperform.

The strong performance is being driven by cost cutting via restructuring, and strong sales of new products, namely Garasil and Januvia, both of which have $2 billion peak annual sales potential in our estimation…While the uncertainty of the Vioxx litigation remains, we continue to believe that the costs will be paid out beginning several years from now, and that they will likely be at a level which is entirely manageable.”

Further reading…
Bloomberg News on investor reaction;
Bloomberg News on securities lawsuits;
The Wall Street Journal on the Texas Vioxx lawsuits (subscription required);
Merck’s statement late yesterday.
[tags]Gardasil, Januvia, Merck, Pre-emption, Vioxx[/tags]