Updated from 8:16 a/m. EST
shares fell again Tuesday after the company late Monday revealed that it is the subject of a criminal investigation by the Justice Department concerning events leading up to the removal of the arthritis drug Vioxx from the market on Sept. 30.
In addition, Merck said that it is the subject of an "informal inquiry" about Vioxx by the
Securities and Exchange Commission.
The stock was off 53 cents, or 2%, to $26.04. The 52-week low is $25.74.
The company revealed the developments in a quarterly filing with the SEC after markets had closed on Monday. Merck previously said it was removing the arthritis drug from the market because tests showed long-term use of Vioxx -- more than 18 months -- showed a greater cardiovascular risk among Vioxx patients than among people who took a placebo.
Merck said Monday that it had received a subpoena from the Justice Department relating to the "research, marketing and selling activities" in an investigation "under criminal statutes."
Merck, which provided few details in its quarterly filing, said it was told by the SEC staff that the commission was beginning an informal inquiry.
Merck said it would cooperate with the Justice Department and the SEC.
"The company cannot predict the outcome of these inquiries," Merck said. "However, it is possible that highly unfavorable outcomes, including a potential civil disposition from the SEC and/or potential civil or criminal dispositions from the Justice Department, could have a material adverse effect on the company's financial position, liquidity and results of operations."
Merck's potential legal bill for Vioxx is getting as much, if not more, attention on Wall Street than its products and its research efforts.
Standard & Poor's said recently that it was putting Merck's corporate credit and unsecured debt ratings on its CreditWatch list "with negative implications," thus placing Merck's AAA credit rating in jeopardy, because of increasing concern about the "magnitude of possible litigation" due to Vioxx.
Merck estimates that 105 million U.S. prescriptions were written for Vioxx between May 1999 and August 2004. The company says approximately 20 million people in the U.S. have used the drug. Merck recently said it could not yet estimate the number of people outside the U.S. who have used the drug.
The latest SEC filing said the number of lawsuits is growing, up to 375 as of the end of October. Those lawsuits include 1,000 plaintiff groups alleging personal injuries from taking Vioxx. "Based on media reports and other sources, the company anticipates that additional Vioxx lawsuits will be filed against it and/or certain of its current and former officers and directors in the future," Merck said Monday.