Watch Vanda ahead of pruritus data

Watch Vanda ahead of pruritus data

Watch Vanda ahead of pruritus data. See Stockwinners.com for details

This month, Vanda Pharmaceuticals (VNDA) will report Phase II data in atopic dermatitis with chronic pruritus. Jefferies analyst Matthew #Andrews believes chronic pruritus conservatively represents a $530M market for the company’s Tradipitant, which could add $10-$15 per share.

DATA IN ATOPIC DERMATITIS

In September, Vanda Pharmaceuticals is expected to report Phase II data in atopic dermatitis with chronic pruritus.

#Pruritus is defined as an unpleasant sensation that provokes the desire to scratch. Certain systemic diseases have long been known to cause pruritus that ranges in intensity from a mild annoyance to an intractable, disabling condition.

According to Jefferies’ Andrews, this is the first of five key data read-outs through 2018, with positive data being key to advancing a third product to market in 2020 and beyond, Vanda receiving credit for its pipeline, and potentially being viewed as a biotech.

TRADIPITANT

Vanda’s Tradipitant is an oral drug which binds NK1 receptors in the periphery and CNS, thus blocking Substance P, a key mediator of the itch signal, the analyst explained, adding that some see NK1R antagonists as promising due to their mechanism, benign safety, limited drug-drug interactions, and positive proof of concept data for NK1R’s aprepritant and serlopitant.

Vanda is developing Tradipitant for moderate-to-severe chronic pruritus, a U.S. market of over 350K, with few safe/effective drugs.

POTENTIAL SUCCESS

Jefferies’ Andrews pointed out that prior Phase II data indicate robust lowering in the Visual Analog Scale of 41mm over four weeks. However, there was a strong placebo effect and Trapiditant’s once daily pharmacokinetics were not optimal with a waning of efficacy over 12 hours post-dose, he noted.

Andrews pointed out that there are some important changes in this Phase II, including increased size for better study powering, extended dosing to eight weeks that could diminish placebo effect, and a change in dosing.

In September data, the analyst expects low discontinuation rates and a similar adverse effect profile to prior NK1R data, and believes positive Tradipitant results may enable investors to begin evaluating the company as more of a true biotech with an under-appreciated pipeline.

Additionally, Andrews pointed out that he sees share upside of about 15%-25% on positive data, and grinding higher thereafter as investors start to focus more on the pipeline. He reiterated a Buy rating and $21 price target on the shares.

PRICE ACTION

In Tuesday afternoon’s trading, shares of Vanda Pharmaceutical are flat at $17.25.


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Insmed Could be Sold

Insmed seen as potential target after inhaled antibiotic study succeeds

Insmed seen as potential target after inhaled antibiotic study succeeds. See Stockwinners.com Market Radar for details

Insmed (INSM) has announced results from a phase 3 clinical trial, saying its inhaled antibiotic successfully treated patients with a rare lung disease caused by a bacterial infection.

Following the news, Citi analyst Liav #Abraham argued that the positive headline data could increase the likelihood of Insmed being a viable takeover target.

STUDY RESULTS

This morning, Insmed announced top-line data from its Phase 3 CONVERT study, saying it met its primary endpoint of culture conversion by month 6 with statistical and clinical significance.

The study demonstrated that the addition of ALIS to guideline-based therapy eliminated evidence of nontuberculous mycobacterial, or NTM, lung disease caused by MAC in sputum by month 6 in 29% of patients, compared to 9% of patients on GBT alone.

Insmed plans to pursue accelerated approval of ALIS under subpart H based on the data from the CONVERT study, which will be reviewed by the Division of Anti-Infective Products, the company noted.

TAKEOUT TARGET

In a research note this morning, Citi’s Abraham told investors that the positive headline data for Insmed’s ALIS for the treatment of NTM lung disease bode well for the potential approval of the therapy.

The analyst highlighted the clinical meaningfulness of the data, with a 20% difference in culture conversion reported between the active and control arms of the trial.

Additionally, Abraham pointed out that the debate on the stock is likely to shift to the commercial outlook for ALIS, with pricing also being key to the uptake of the drug. The positive headline data “could well increase the likelihood of the company as a viable takeout target,” she argued. Abraham reiterated a Neutral rating on the shares.

ACCELERATED APPROVAL

Also commenting on the announcement, Leerink analyst Joseph Schwartz told investors in a research note of his own that after achieving statistical significance in the primary endpoint for ALIS, Insmed’s management intends on pursuing accelerated approval, in line with the expectations laid out during the company’s recent analyst day.

The higher reported adverse events in the ALIS cohort were expected, and while the secondary endpoint of six-minute walk test did not achieve statistical significance overall, patients who culture converted showed a statistical significant improvement, which was a pre-specified analysis, #Schwartz contended.

The analyst reiterated an Outperform rating on the shares.

Meanwhile, his peer at #Evercore ISI increased his price target for Insmed to $40 from $28 following the clinical data. Analyst Josh #Schimmer noted, however, that the commercial outlook is still not well defined and will likely evolve over time as more is learned about the CONVERT study results, the companion 312 study and the company’s efforts to expand labelled use. Schimmer reiterated an Outperform rating on the shares.

PRICE ACTION

In Tuesday’s trading, shares of Insmed (INSM) are up $14 to $26.


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Delphi Automotive Could be Sold

Delphi is an attractive target for a company that wants to get into autonomous driving

Delphi could be sold. See Stockwinners.com Market Radar for details

Delphi Automotive PLC (DLPH) manufacturers vehicle components; and provides electrical and electronic, powertrain, and safety technology solutions to the automotive and commercial vehicle markets worldwide. It operates through three segments: Electrical/Electronic Architecture, Powertrain Systems, and Electronics and Safety.

Shares have recently moved higher on speculation that the company is a take over target. The Wall Street Journal gave credence to the rumors by publishing an article speculating that Delphi is an attractive take-over target for a high tech firm such as Tesla (TSLA).

Delphi which is now a UK-based company has recently joined forces with high tech firms regarding autonomous driving. It recently teamed up with Israel-based Innoviz Technologies for enhancement of vehicle safety for the self-driving cars. Notably, before tying up with Innoviz Technologies, which develops advanced remote-sensing solutions for mass commercialization of autonomous vehicles, Delphi made a minor investment in that company.

It’s the second company that specializes in light detection and ranging sensors (LiDAR) in which Delphi has made a strategic investment. In 2015, Delphi bought a stake in Quanergy Systems as part of a $90 million funding round.

Earnings

Delphi has reported solid earnings recently. Delphi’s second-quarter revenue rose 3% to $4.3 billion; the growth was 5% when adjusted for currency exchange, commodity movements, acquisitions, and divestitures. That was higher the $4.2 billion that was expected. The company’s earnings from continuing operations checked in with a 13% increase to $1.71 per share year over year. Estimates had called for $1.65 per share.

Delphi now predicts its full-year revenue to check in between $16.85 billion and $17.05 billion, up from its previous guidance calling for $16.50 billion to $16.90 billion. It raised bottom-line guidance also, and expects its full-year adjusted earnings to check in between $6.55 and $6.75 per share, up from its previous guidance of $6.40 to $6.70 per share.


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Multi-Shot Sold for $215 Million

Patterson-UTI to acquire Multi-Shot in cash and stock deal

Patterson-UTI to acquire Multi-Shot in cash and stock deal. See Stockwinners.com for details

Patterson-UTI  (PTEN) announced that it has entered into an agreement to acquire Multi-Shot, LLC d/b/a MS Energy Services, on a debt-free basis for total consideration of approximately 8.8M shares of Patterson-UTI common stock and $75M of cash.

Based in Conroe, Texas, MS Energy is a leading directional drilling services company in the United States. The pending transaction, which is expected to close early in the fourth quarter, is subject to customary closing conditions and receipt of required third party consents, and is subject to expiration or termination of the waiting period under the Hart-Scott-Rodino Act.

Under the terms of the transaction, Patterson-UTI will acquire all of the issued and outstanding limited liability company interests of MS Energy for consideration of approximately 8.8M shares of Patterson-UTI common stock and $75M of cash. In connection with this transaction, Patterson-UTI expects to acquire approximately $30M of non-cash working capital.

The transaction values MS Energy at approximately $215M, based on the most recent closing price of Patterson-UTI common stock of $15.94. Patterson-UTI will fund the $75M cash consideration using cash on hand and the Company’s revolving line of credit.

The cash consideration paid to the sellers will be used to cover transaction expenses and repay the outstanding debt at MS Energy, and as such, Patterson-UTI will not assume any debt of MS Energy.


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NeoTract Sold for $1.1 Billion

Teleflex to acquire NeoTract in deal valued up to $1.1B

Teleflex to acquire NeoTract in deal valued up to $1.1B. See Stockwinners.com Market Radar for details.

Teleflex (TFX) and NeoTract announced that the companies have entered into a definitive agreement under which Teleflex will acquire NeoTract in a transaction valued up to $1.1B.

Under the terms of the agreement, Teleflex will acquire NeoTract for an upfront cash payment of $725M at closing, and up to an additional $375M upon the achievement of certain commercial milestones related to sales through the end of 2020.

The boards of both Teleflex and NeoTract have unanimously approved the transaction. This transaction is subject to the satisfaction of customary closing conditions and is expected to close within the next 30 days.

The addition of NeoTract will greatly enhance Teleflex’s presence in the urological market as NeoTract’s UroLift System is a novel solution used to address a significant medical issue and targets a total addressable market estimated at over $30B.

The transaction is structured as a merger in which Teleflex will acquire NeoTract for an upfront cash payment of $725M at closing, and up to an additional $375M upon the achievement of certain commercial milestones related to sales through the end of 2020.

The transaction is expected to close within the next 30 days and is subject to the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other customary closing conditions.

The acquisition is expected to be slightly dilutive to adjusted EPS in 2017, however, the company does not expect to adjust its previously provided adjusted EPS range as a result of the acquisition.

During 2018, the acquisition is expected to be breakeven to adjusted EPS, with significant accretion thereafter, including 35c-40c of adjusted EPS accretion in 2019.

The acquisition is expected to generate a return on invested capital that meets Teleflex’s cost of capital in the third year after closing and exceeds Teleflex’s cost of capital in the fourth year after closing.


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