The Indiana-based animal health company Elanco (NYSE: ELAN) held its first-quarter earnings call for 2021 Friday morning.
One product, not surprisingly, dominated the hour: Seresto flea and tick collars. We clocked CEO Simmons at 4 minutes 30 seconds into the earnings presentation when he first said “Seresto”:
“I’d like to take a moment to address Seresto,” Simmons began, directing call participants to two slides, “before progressing to a more detailed review of our performance [Seresto Slides: Slide 5, Slide 6 ].”
Simmons focused on describing ELAN’s efforts to “correct the misinformation spread through media reports.” He was, of course, referring to the USA Today story in early March which, despite being discredited by the veterinary community almost as soon as it was published, was amplified by additional outlets, such as CBS News.
The allegation — that Seresto collars, a product that’s been on the market since 2012, had fatally poisoned hundreds of cats and dogs — had initially and not surprisingly, sent Elanco’s stock tumbling. Congressman Raja Krishnamoorthi (D-Ill.) then appeared in a CBS News report on March 18 that parroted USA Today’s story, publicly rebuking Elanco and calling on the company and Bayer, the original manufacturer, to produce documents and recall the product. That, in turn, triggered an even larger, more amplified wave of media reports, still parroting the original and problematic USA Today story.
Today, CEO Simmons highlighted steps the company has taken to double down on Seresto’s safety profile, including data and reports they’ve provided to regulators.
“In the first quarter today, in a separate 8-K filing, he said, “we released additional scientific data to correct the misinformation spread through media reports regarding Seresto flea and tick collars. The filing includes conclusions from a comprehensive review of adverse event data, which we have also provided directly to regulators and legislators.”
CEO Simmons continued:
“Our team has worked tirelessly to clarify the science and safety around this trusted brand. So let me summarize and be clear on Seresto. First, the product’s strong safety profile is supported by registrations from more than 80 regulatory bodies around the world and our robust pharmacovigilance process. Also, there is no scientific evidence in clinical studies or pharmacovigilance reporting to substantiate that Seresto’s active ingredients caused pet deaths. We are providing additional product surveillance information on Seresto to the EPA, and we’ve shared information with the House of Representatives Sub-Committee on Economic and Consumer Policy to set the record straight. We continue to actively cooperate with both on any supplemental requests for facts. Our proprietary market research indicates high levels of confidence among consumers and veterinarians bolstered by our proactive efforts to share the facts with pet owners, retailers, and veterinarian clinics. Importantly, in terms of revenue in the first quarter, we saw no deviation and two-year growth for global Seresto compared to historical trends. April revenue in the US is ahead of our original expectations from the start of 2021. And we are on track towards full-year expectations for the Seresto brand.”
News about Seresto was not without some disappointment. “Global Seresto revenue declined 9 percent against a difficult comparison of 49 percent growth in the first quarter of 2020,” the Q1 earnings release said. The release continues: “April revenue for Seresto in the U.S. is ahead of our original expectations from the start of 2021, and
a global brand is on track toward full-year expectations.
Seresto, Seresto, Seresto Q&A
Most of the Q&A portion of the Q1 Earnings presentation was also dominated by Seresto. We’ll have more when we can cross-check with an official transcript, which has not yet been published.
One question that did not come up in the Q&A portion was any question about litigation and what, if any, settlement fees there were to date and what the fees were costing the company. The same line of questioning on which Simmons and company spokeswomen Parr and McGrath declined to engage TCR in March in the first days and weeks following Collargate.
Since Collargate landed on March 2, eager plaintiffs’ attorneys have been circling Elanco like vultures, apparently as unaware as Gannett’s editors that the story had problems.
In late March in an interview with TCR for an earlier, related story, plaintiff’s attorney Spencer Sheehan of Great Neck, Long Island acknowledged that the complaint he and his colleagues had recently filed against Seresto relied solely on the USA Today story.
Responding by telephone to a question about whether he and his colleagues planned to introduce any evidence in addition to the USA Today story, Mr. Sheehan offered:
“You know, the way our system, I guess, legal system is that, you know, and it might seem silly and, you know, glib to say, well, the evidence comes later, you know, I guess lay person says, well, how do you file a lawsuit without evidence? Well, you really, in many instances, evidence, such as what would be relevant here is in the possession of, you know, the opposition. So a lawsuit in this case has to, you know, do enough, show enough allegations that seem, you know, like, I guess the word is used plausible and, you know, that’s something that can be done without, let’s say, you know, what most people would describe as evidence, meaning, you know, the documents…”
Asked, again, he or any of his colleagues had spoken with any veterinarians or planned on introducing veterinary records or necropsies as evidence, Mr. Sheehan responded, “That’s not necessarily required at this early stage or, you know, the early stage and the beginning of any litigation.”