Shares of Shopify Spooked by Short Sellers

Shopify seeks to defend against short-seller after earnings beat

shop shares spooked by short-sellers. See Stockwinners.com for details

Shares of Shopify (SHOP) dropped in Tuesday’s trading despite the company posting quarterly results that beat analysts’ expectations.

The company continued to defend itself against criticism of short-seller Andrew Left, who has accused the company of being the “hottest new get rich quick scheme on the internet” and “a business dirtier than Herbalife (HLF).”

EARNINGS BEAT

Shopify, a Canadian retail software company, Tuesday morning reported third quarter adjusted earnings per share of 5c on revenue of $171.5M, exceeding analysts’ estimates calling for a loss per share of (1c) on revenue of $165.6M.

Subscription Solutions revenue was up 65% to $82.4M, Shopify said.

Shopify raised its fiscal year 2017 revenue view to $656M-$658M from $642M-$648M, above analysts’ estimates of $648.3M, and forecast fourth quarter revenue to be $206M-$208M, also above the $203.7M consensus.

SHOPIFY AND ANDREW LEFT

Andrew Left, a short-seller who founded Citron Research, published a report on Shopify earlier this month claiming shares “should be down 45% immediately….and that is before the company is caught by the FTC.”

According to Left’s report, Shopify “hides under the shroud of a cloud based e-commerce solution for Small and Medium sized Business,” but is actually the “promoter of the hottest new get rich quick scheme on the internet,” and he believes the FTC “will take notice.”

Additionally, Citron called Shopify “a business dirtier than $HLF [Herbalife],” which has been the target of FTC scrutiny and a well-publicized short held by Bill Ackman.

Left told Reuters a week later that he will “most likely” issue a follow-up report and that he is “looking at many parts” of Shopify’s business.

On its quarterly earnings conference call this morning, Shopify defended itself against Left’s claims, with CEO Tobias Lutke, who has previously called Left a “short-selling troll,” denying his “preposterous,” “unsubstantiated” claims.

“We don’t sell business opportunities — we sell a commerce platform,” Lutke told analysts and investors, adding that Shopify fully complies with FTC rules. Lutke also said the company has not been contacted by the FTC regarding Left’s criticisms.

RESPONSE to EARNINGS

Citron Research posted a response to Shopify’s conference call comments, stating in part: “We have no interest in going back and forth with Shopify, we are releasing this commentary as a response to the numerous media requests we have received. Citron understands Shopify’s platform is effective for small and medium sized businesses to launch e-commerce platforms. We never doubted they have good software for accomplishing this task. That being said, we were unimpressed by the company’s response to Citron’s conclusion that Shopify sells business opportunities through affiliate marketers, and they depend on affiliate marketing to drive their growth metrics. It is impossible to understand the real strength of Shopify’s core business without getting specifics of their true customer acquisition cost. To accomplish that, churn needs to be analyzed, so investors can discount or strip out the dirty/illegal part of their business that will inevitably be curbed by regulators. Immaturity and hubris of management prevents them from addressing these issues…Citron has assembled a comprehensive folder, which we have forwarded to the FTC, and we are certain that the company will face an investigation for selling business opportunities.”

PRICE ACTION

Shopify shares trading in New York are down over 11% to $97.22. SHOP has a 52-weeks trading range of $37.74 – $123.94.


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Rhythm Pharmaceuticals reports positive data

Rhythm Pharmaceuticals announces preliminary setmelanotide Phase 2 study data

Rhythm Pharmaceuticals announces preliminary setmelanotide Phase 2 study data. See Stockwinners.com for details

Rhythm Pharmaceuticals (RYTM) announced the presentation of preliminary data from an ongoing Phase 2 proof-of-concept study evaluating the safety and efficacy of setmelanotide, the company’s novel melanocortin-4 receptor, or MC4R, agonist, for the treatment of Bardet-Biedl syndrome, or BBS.

BardetBiedl syndrome (BBS) is a ciliopathic human genetic disorder that produces many effects and affects many body systems. It is characterized principally by obesity, retinitis pigmentosa, polydactyly, hypogonadism, and renal failure in some cases.

Results are being presented at the ObesityWeek 2017 meeting held October 29 – November 2, 2017, at the Gaylord National Resort & Convention Center in Washington, D.C.

Rhythm is advancing clinical research programs evaluating setmelanotide as a first-in-class treatment for a number of rare genetic forms of obesity caused by deficiencies in the MC4 pathway, a key biological pathway in humans that regulates weight by increasing energy expenditure and reducing appetite.

Mutations affecting the MC4 pathway are a potential cause of early onset obesity and hyperphagia often associated with BBS, a rare genetic disorder that is also characterized by vision loss, polydactyly, kidney abnormalities, and other symptoms.

BBS is estimated to have a prevalence of approximately one in 100,000 in North America.

The Phase 2 study includes five BBS patients who presented with morbid obesity and hyperphagia at initiation.

Setmelanotide is being administered daily by subcutaneous injection for 52 weeks.

Within 6-19 weeks of initiation, four patients experienced cumulative weight loss of 12.1%, 7.9%, 9.7%, and 9.7% respectively. One patient showed no weight loss; however, achieved apparent weight stabilization.

Hunger scores improved in all patients. Treatment has been well tolerated with adverse effects including mild injection site reactions and increased skin pigmentation.

The preliminary data provide support for continued evaluation of setmelanotide in BBS patients.

Rhythm has also demonstrated proof-of-concept in Phase 2 clinical trials that evaluated setmelanotide for the treatment of two additional MC4 pathway deficiencies: pro-opiomelanocortin, or POMC, deficiency obesity and leptin receptor deficiency obesity.

The FDA granted setmelanotide Breakthrough Therapy Designation for the treatment of POMC deficiency obesity and LepR deficiency obesity, and setmelanotide is currently in Phase 3 development for both conditions.

RYTM closed at $24.42.


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Bioverativ reports positive data from its hemophilia drug

Bioverativ says ELOCTATE shows improvements in joint health in hemophilia

bioverativ reports positive data on its hemophilia drug. See Stockwinners.com for details

Bioverativ (BIVV) and Swedish Orphan Biovitrum announced the publication of interim results from a longitudinal study of joint health in patients treated prophylactically with ELOCTATE marketed as Elocta in Europe and the Middle East, for treatment of hemophilia A.

Hemophilia A, also called factor VIII (FVIII) deficiency or classic hemophilia, is a genetic disorder caused by missing or defective factor VIII, a clotting protein. Although it is passed down from parents to children, about 1/3 of cases are caused by a spontaneous mutation, a change in a gene.

According to the US Centers for Disease Control and Prevention, hemophilia occurs in approximately 1 in 5,000 live births. There are about 20,000 people with hemophilia in the US. All races and ethnic groups are affected. Hemophilia A is four times as common as hemophilia B while more than half of patients with hemophilia A have the severe form of hemophilia.

Interim data show participants enrolled in the ASPIRE extension study demonstrated continuous improvement in joint health over a nearly three-year period with prophylactic dosing of ELOCTATE, regardless of prior treatment regimen, severity of joint damage or target joints.

Joint health improvements were most notable in hemophilia A patients with poor joint health.

These results were published online October 30 in Haemophilia.

This interim post hoc analysis evaluated joint health in adult and adolescent participants in the A-LONG and ASPIRE studies using a modified version of the Hemophilia Joint Health Score, a first-line assessment tool that grades joints by specific domains, including swelling, muscle atrophy, alignment, range of motion, joint pain, strength and global gait.

The study examined mHJHS measurements taken at A-LONG baseline and ASPIRE baseline and annually thereafter for nearly three years of treatment.

In the study, adults and adolescents treated prophylactically with ELOCTATE experienced a mean improvement in joint health score of -4.1 at ASPIRE Year 2, compared with A-LONG baseline.

Regardless of pre-study treatment regimen, subjects showed continuous improvement in mHJHS from A-LONG baseline through ASPIRE Year 2 and benefits were seen in subjects with target joints as well as those with severe joint destruction.

The mHJHS components with the greatest improvement at ASPIRE Year 2 were swelling, range of motion and strength.

BIVV closed at $55.84. It has a 52-weeks trading range of $41.88 – $64.41.


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Apple to say goodbye to Qualcomm

Apple develops iPhones, iPads that would drop Qualcomm components 

 

Apple (AAPL) is developing iPhones and iPads for next year that would drop Qualcomm’s (QCOM) components amid a legal fight with the chipmaker, the Wall Street Journal reports, citing people familiar with the matter.

Apple, which is considering using only chips from Intel (INTC) and possibly MediaTek for the device, filed a federal lawsuit against Qualcomm claiming it used its market dominance to block rivals and charge costly patent royalties after the chipmaker withheld software necessary to test chips in iPhone and iPad prototypes.

Qualcomm, which has worked with Apple for a decade, stopped sharing the software after Apple filed a federal lawsuit in January accusing Qualcomm of using its market dominance unfairly to block competitors and to charge exorbitant patent royalties, this person said. Qualcomm has said Apple is mischaracterizing its practices.

Qualcomm said its “modem that could be used in the next generation iPhone has already been fully tested and released to Apple.” The chip company said it is “committed to supporting Apple’s new devices” as it does for others in the industry.

Apple in the past used only Qualcomm modem chips for iPhones, but started also procuring the chips from Intel for its iPhone 7 and 7 Plus models last year. It again used a mix of the two in the iPhone 8 and 8 Plus that started selling in September.

Apple’s plans to exclude Qualcomm chips from next year’s model could still change. People familiar with Apple’s manufacturing process said the company could change modem-chip suppliers as late as June, three months before the next iPhone is expected to ship. Still, some of the people said Apple hasn’t previously designed iPhones and iPads to exclude Qualcomm chips at a similar stage of the process.

The Apple plans indicate the battle with Qualcomm could spill beyond the courtroom feud over patents into another important Qualcomm business where it has the potential to send ripples through the smartphone supply chain. Qualcomm last year sold around $3.2 billion of modem chips a year to Apple, or 20% of its total chip sales, according to an estimate by Macquarie Capital. This year, Qualcomm’s chip sales to Apple are likely to come to $2.1 billion, or 13% of total chip revenue, reflecting more fully the iPhone 7’s mix of Qualcomm and Intel modems.

Selling chips is generally less profitable for Qualcomm than its patent business. Apple paid $2.8 billion last year in Qualcomm royalties, which accounted for nearly 30% of the chip maker’s per-share earnings, according to Macquarie Capital. In the last year, Apple has stopped reimbursing those fees to iPhone and iPad manufacturers, which in turn have stopped paying Qualcomm.


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Bristol-Myers rises on Merck’s misstep

Bristol-Myers rises after Merck pulls cancer drug filing in Europe

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Shares of Bristol-Myers Squibb (BMY) rose on Monday after competitor Merck (MRK) announced it is withdrawing its European application for a combination regimen featuring #Keytruda, the company’s cancer immunotherapy drug.

Following the news, SunTrust analyst John Boris upgraded BMY’s stock to Buy as he believes Merck’s KN-189 data delay and withdrawal of its European application for Keytruda improves Bristol-Myers’ competitive position.

Meanwhile, several Wall Street analysts downgraded Merck to hold-equivalent ratings.

EUROPEAN WITHDRAWAL

Merck has announced that it has withdrawn its European application for Keytruda in combination with pemetrexed and carboplatin as a first-line treatment for metastatic nonsquamous non-small cell lung cancer.

The application was based on findings from KEYNOTE-021, Cohort G.

Merck said it is confident in the clinical data from this “rigorously conducted trial,” which demonstrated significant improvements in overall response rate and progression-free survival for the Keytruda combination regimen compared to chemotherapy alone.

BUY BRISTOL-MYERS

In a research note to investors this morning, SunTrust‘s Boris upgraded Bristol-Myers to Buy from Hold and raised his price target on the shares to $75 from $55, saying Merck’s KN-189 data delay to 2019 and withdrawal of its EU first-line NSCLC filing improves Bristol’s competitive position.

Boris noted he models an additional $2B in 2021 revenue as a result, adding that he has increased confidence in the Opdivo + Yervoy arm of the Checkmate-227 trial expected in 2018 to generate overall survival benefits.

Additionally, the analyst told investors that he views Bristol-Myers as an attractive strategic asset that could make sense to get a potential bid from Pfizer (PFE). However, such a scenario depends on macro factors such as tax reform and/or repatriation and “binary events” in the marketplace, including the read-out from the company’s 227 trial.

MERCK DOWNGRADES

Following the Keytruda news, Barclays analyst Geoff Meacham downgraded Merck to Equal Weight from Overweight based on diminished upside potential from Keytruda, which is the company’s biggest value driver.

With the formal withdrawal of the EU filing in front-line NSCLC and delays to the Phase 3 KN-189 trial from adding overall survival as a co-primary endpoint, the analyst argued that he sees less upside potential for Keytruda sales in lung cancer.

While he does not think this means I/O rivals will “leapfrog” Merck, Meacham pointed out that both Bristol-Myers and Roche (RHHBY) could have front-line NSCLC data in late 2017/early 2018 that could further weigh on sentiment.

He was not the only analyst cutting Merck’s rating this morning. Morgan Stanley analyst David #Risinger also downgraded the stock to Equal Weight from Overweight on similar reasons.

The analyst noted that the negative Keytruda updates caused him to lower projections, while adding that Keytruda’s lung cancer readout delay limits sales and exposes Merck to competitive threats.

Meanwhile, SunTrust analyst John Boris downgraded Merck to Hold from Buy and lowered his price target on the shares to $54 from $73 to reflect lower Keytruda sales.

The analyst also argued that Merck’s HCV/HIV and Zostavax vaccine franchises face significant competitive headwinds, anticipating an added headwind to the bottom line as the company is unable to reduce its R&D or SG&A expenses to preserve its immuno-oncology position.

PRICE ACTION

In Monday’s trading, shares of Bristol-Myers gained over 1.5% to $60.85, while Merck’s stock has dropped more than 6% to $54.70.


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CalAtlantic sold for $51.34 per share

Lennar, CalAtlantic to merge in deal valued at about $9.3B

CalAtlantic sold for $9.1 billion. See Stockwinners.com for details

Lennar (LEN) and CalAtlantic (CAA) announced that their respective boards of directors have unanimously approved a definitive merger agreement pursuant to which each share of CalAtlantic stock will be exchanged for 0.885 shares of Lennar Class A common stock in a transaction valued at approximately $9.3B, including $3.6B of net debt assumed.

The business combination will create the nation’s largest homebuilder with the last twelve months of revenues in excess of $17B and equity market capitalization, based on current market prices, of approximately $18B.

The combined company will control approximately 240,000 homesites and will have approximately 1,300 active communities in 49 markets across 21 states, where approximately 50% of the U.S. population currently lives.

It is currently anticipated that the transaction will generate annual cost savings and synergies of approximately $250M, with approximately $75M achieved in fiscal year 2018.

These synergies are expected to be achieved through direct cost savings, reduced overhead costs and the elimination of duplicate public company expenses.

Additional savings are also expected through production efficiencies, technology initiatives, and the roll out of Lennar’s digital marketing and dynamic pricing programs. Under the terms of the merger agreement, each share of CalAtlantic stock will be converted into the right to receive 0.885 shares of Lennar Class A common stock. Based on the closing price of Lennar’s Class A common stock on the NYSE on October 27, the implied value of the stock consideration is $51.34 per share, representing a 27% premium to CalAtlantic’s closing price that same day.

CalAtlantic’s stockholders will also have the option to elect to exchange all or a portion of their shares for cash in the amount of $48.26 per share, subject to a maximum cash amount of approximately $1.2B.

CalAtlantic stockholders will receive Lennar stock unless they exercise an option to receive cash. On a pro forma basis, CalAtlantic stockholders are expected to own approximately 26% of the combined company.

The transaction is expected to close in the first calendar quarter of 2018. The transaction is subject to approval by Lennar and CalAtlantic stockholders. Stuart Miller and the Miller Family Trusts have agreed to vote their 41.4% voting interest in Lennar in favor of the merger. MP CA Homes LLC, an affiliate of MatlinPatterson Global Opportunities Partners III L.P., has agreed to vote its 25.4% voting interest in CalAtlantic in favor of the merger.

Additionally, MP CA Homes has agreed to exercise the cash election for at least the number of shares to cause the maximum cash consideration amount to be fully subscribed by electing stockholders.

Upon completion of the transaction, Stowell, CalAtlantic’s Executive Chairman, will join the Lennar board.


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Neos Therapeutics says No Thank You

Neos Therapeutics board unanimously ejects PDL BioPharma proposal

Neos Therapeutics says No Thank You. See Stockwinners.com for details

Neos Therapeutics (NEOS) announced that its Board of Directors has unanimously rejected the October 26 unsolicited proposal from PDL BioPharma (PDLI) to acquire all of the outstanding shares of Neos for $10.25 per share in cash.

Neos noted that PDL’s October proposal is identical in all material respects to proposals received in June, July and September from PDL, which were also reviewed and unanimously rejected by the Neos Board.

After a comprehensive review, conducted in consultation with its financial and legal advisors, the Neos Board affirmed its previous determinations that PDL’s proposal undervalues Neos, does not reflect Neos’ strategic value and future prospects for continued growth and value creation, and is not in the best interests of the Company or Neos shareholders.

Vipin K. Garg, Ph.D., President and CEO of Neos Therapeutics, said, “We are successfully executing the Company’s strategy and believe we are well positioned to deliver enhanced value to Neos shareholders in both the near- and long-term. PDL’s proposal is opportunistic and its interest underscores Neos’ growth and value creation prospects as an independent company. We believe many of Neos’ largest shareholders support this view.

While the Board is confident in Neos’ strategic direction, we are committed to serving the best interest of all Neos shareholders and remain open to considering all options to deliver on the Board and management’s value creation objectives.”

NEOS closed at $10.05. It last traded at $9.50.


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Advanced Accelerator sold for $3.9 billion

Novartis to acquire Advanced Accelerator for $82 per American Depositary Share

advanced accelerator applications sold for $3.9 billion. See Stockwinners.com for details

Novartis (NVS) announced that it has entered a memorandum of understanding with Advanced Accelerator Applications (AAAP), or AAA, under which Novartis intends to commence a tender offer for 100% of the share capital of AAA subject to certain conditions.

Under the terms of the memorandum of understanding, which has been approved by AAA’s board, Novartis will make a cash offer of $41 per ordinary share of AAA and $82 per American Depositary Share, each representing 2 ordinary shares, subject to certain conditions. This offer values AAA’s equity at $3.9B.

The transaction to acquire AAA is planned to be fully funded through external short- and long-term debt.

Novartis will commence a tender offer upon completion of works council consultation and AAA’s board recommending the tender offer to AAA shareholders.

The senior management and Directors of AAA have, in their capacity as shareholders of AAA, undertaken to tender their shares into the proposed tender offer.

The transaction is additionally subject to the valid tender pursuant to the tender offer of ordinary shares of AAA representing at least 80% of the outstanding ordinary shares on a fully diluted basis and receipt of customary transactional regulatory approvals and other customary closing conditions.

“The transaction would strengthen Novartis’ oncology presence with both near-term product launches as well as a new technology platform with potential applications across a number of oncology early development programs,” the company stated.


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Vistra Energy and Dynegy merge

Vistra Energy, Dynegy to combine in tax-free, all-stock transaction 

Vistra Energy (VST), the parent company for TXU Energy and Luminant, and Dynegy (DYN) announced that their Boards of Directors have approved, and the companies have executed, a definitive merger agreement pursuant to which Dynegy will merge with and into Vistra Energy in a tax-free, all-stock transaction, creating the leading integrated power company across the key competitive power markets in the United States.

The resulting company is projected to have a combined market capitalization in excess of $10 billion and a combined enterprise value greater than $20 billion.

Under the terms of the agreement, Dynegy shareholders will receive 0.652 shares of Vistra Energy common stock for each share of Dynegy common stock they own, resulting in Vistra Energy and Dynegy shareholders owning approximately 79 percent and 21 percent, respectively, of the combined company.

Based on Vistra Energy’s closing share price of $20.30 on October 27, 2017 and the aforementioned exchange ratio, Dynegy shareholders would receive $13.24 per Dynegy share.

Through the all-stock transaction, both Vistra Energy and Dynegy shareholders are expected to benefit from an estimated $350 million in projected annual run-rate EBITDA value levers, additional annual free cash flow value levers of approximately $65 million, and approximately $500-600 million in projected net present value benefit from tax synergies.

The combined company is projected to achieve approximately $350 million in annual run-rate EBITDA value levers by streamlining general and administrative costs, implementing fleet-wide best-in-class operating practices, driving procurement efficiencies, and eliminating other duplicative costs.

Vistra Energy estimates the full run-rate of EBITDA value levers will be achieved in approximately 12 months of closing.

The companies anticipate closing the transaction in the second quarter of 2018.

The transaction is subject to certain regulatory approvals, including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and approval by the Federal Energy Regulatory Commission, the Federal Communications Commission, the Public Utility Commission of Texas, the New York Public Service Commission, and other customary closing conditions.

The transaction is subject to approval by the shareholders of Vistra Energy and Dynegy.

In addition, the transaction will not require any refinancing of Vistra Energy’s or Dynegy’s debt, but preserves flexibility for opportunistic refinancing at, or after, closing.

Following the close of the transaction, the combined company will be led by Curt Morgan as President and CEO. Bill Holden will serve as the CFO with Jim Burke as the COO.

The Board of Directors is expected to have a total of 11 directors consisting of the current eight members of the Vistra Energy Board and three members from Dynegy’s Board.

The Dynegy Board of Directors and Mr. Flexon have mutually agreed to extend his employment as permitted under the terms of his existing employment agreement for one year.

Mr. Flexon will continue to serve as President and CEO of Dynegy through April 30, 2019 or the date the transaction closes, whichever comes first. The combined company’s headquarters will be in Irving, Texas.

In addition, the combined entity has retail offices in Houston, Texas, Cincinnati, Ohio, and Collinsville, Illinois.


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Seagate enhances its video surveillance business

Seagate launches first drive for AI-enabled surveillance

 Seagate launches first drive for AI-enabled surveillance. See Stockwinners.com for details

Seagate (STX) has announced its SkyHawk AI hard disk drive, the first drive created specifically for artificial intelligence enabled video surveillance solutions.

#SkyHawk AI provides unprecedented bandwidth and processing power to manage always-on, data-intensive workloads, while simultaneously analyzing and recording footage from multiple HD cameras.

Analytics on video surveillance hardware is growing exponentially, forecasted to increase from 27.6 million shipments in 2016 to 126M shipments in 2021, as hardware manufacturers continue to include analytics sensors on network video recorders.

This will only increase as AI – particularly deep learning and machine learning applications, such as facial recognition and analyzing irregularities in behavior – become increasingly prevalent.

In parallel, the need for fast video analytics will continue to rise, increasing the workload burden on NVR storage. SkyHawk AI is ideal for intensive computational workloads that typically accompany AI work streams, as its high throughput and enhanced caching deliver low latency and excellent random read performance to quickly locate and deliver video images and footage analysis.

This enables on-the-edge decision making, eliminating the latency of exchanging cloud-based data and processing. Equipped with Seagate #ImagePerfect AI firmware, the drive reliably records high quality, sharp video footage with no dropped frames, while simultaneously facilitating AI-enabled NVR analytics – ensuring that intelligence gathered through video surveillance footage is not lost.

SkyHawk AI is now shipping to customers worldwide through appointed authorized distributors.

The SkyHawk AI hard drive is available in both 10TB and 8TB capacities and has a Manufacturer’s Suggested Retail Price in the U.S. of $449.99 and $349.99, respectively.

STX closed at $36.90.


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Pfizer’s Inflectra proves effective in Crohn’s disease

Switching data in patients with Crohn’s supports use of Pfizer INFLECTRA

Pfizer to spin off its Consumer Healthcare Business. See Stockwinners.com for details.

New data show that switching patients with Crohn’s disease, or CD, to INFLECTRA from REMICADE led to comparable efficacy, safety and tolerability to treatment with REMICADE over a 24-week period.

The full 54-week results of the randomized controlled trial comparing INFLECTRA and REMICADE in biologic-naive patients with active CD support the long-term effectiveness of treatment with INFLECTRA.

The results also show that INFLECTRA was well-tolerated, with a similar safety profile to REMICADE.

Pfizer (PFE) and South Korea’s Celltrion Healthcare jointly announced the secondary outcomes from the phase III trial of INFLECTRA in CD at the 25th United European Gastroenterology Week.

The study previously reported its primary endpoint at six weeks, demonstrating non-inferiority of INFLECTRA compared to REMICADE in the treatment of CD.

More than 50 real-world studies in IBD have been conducted with INFLECTRA, evaluating over 7,500 IBD patients in real-world settings.

There is an important and growing body of evidence for the switching of stable REMICADE patients to INFLECTRA.

Clinical studies supporting this switch include NOR-SWITCH,15 BIO-SWITCH,16 PROSIT-BIO3 and now CT-P13 3.4.

REMICADE  (infliximab) is manufactured by Janssen Biotech., a division of JNJ.

PFE closed at $35.60.


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Enzymotec sold for $290 million

Enzymotec enters definitive agreement to be acquired by Frutarom

Enzymotec sold for $290 million. See Stockwinners.com for details

 

Enzymotec (ENZY) has announced that it has signed a definitive agreement under which Frutarom will acquire Enzymotec for $11.90 per share in cash.

The transaction will be completed by way of a merger under the Israeli Companies Law.

The transaction has received unanimous approval by Enzymotec’s Board of Directors and implies an equity value of approximately $290M.

The offer of $11.90 per share in cash represents a premium of 39.8% over the price of Enzymotec’s ordinary shares on the Nasdaq Stock Market on July 31, 2017, the date on which Frutarom first disclosed an ownership position in Enzymotec.

A shareholder meeting to approve the transaction is expected to be held in December 2017.

Assuming typical timeframes, Enzymotec currently anticipates the transaction will close in the first quarter of 2018.

ENZY closed at $11.25. The issue has a 52-weeks trading range of $5.20 – $12.35.


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Barron’s is bullish on biotechs, Target

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names: 

Stockwinners offers Barron's review of Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin

BULLISH  MENTIONS

Local Chinese consumer plays to have significant advantages – China’s 19th Communist Party Congress gave expanded powers to President Xi Jinping to wield in a second five-year term as the country’s leader, endorsing the continued shift of China’s economy toward domestically focused consumer goods and services, which should be bullish for stocks such as Alibaba (BABA) and China Life Insurance (LFC), John Kimelman and Assif Shameen write in this week’s edition of Barron’s. Meanwhile, U.S. companies with footholds in the country’s consumer markets can expect to face regulatory and other roadblocks in the years ahead, they add.

Biotech selloff creates buying opportunity for investors – Biotech companies are not looking that healthy, with Amgen (AMGN), Biogen (BIIB), Celgene (CELG), and Gilead Sciences (GILD) all offering disappointments of one kind or another, but the selloff has created a buying opportunity for investors, Ben Levisohn writes in this week’s edition of Barron’s. Biotech looks like a victim of high expectations and could be ready to run again, he adds.

Tech giants continue to exploit their dominance – The latest earnings, particularly from Amazon.com (AMZN), Alphabet (GOOGL; GOOG), and Microsoft (MSFT), show that tech giants continue to exploit their dominance to Wall Street’s amazement, Tiernan Ray writes in this week’s edition of Barron’s. All three are examples of network effects, the ability of a business to exploit its position in a kind of virtuous cycle, and the payoff continues to astound Wall Street, he adds, noting that Apple (AAPL) is expected to report earnings this Thursday.

Playing double-up strategy with GE worth considering – General Electric (GE) stock is down 34% this year and seems poised to trade even lower amid fears that it may cut its dividend, Steven Sears writes in this week’s edition of Barron’s. While Sears has profitably recommended wagering against the stock since May, and still thinks bearish trades make sense, he recognizes that many investors feel stuck with their GE holdings and are not sure what to do. The “humble double-up strategy” is worth considering for anyone who wants to maintain ownership of the stock, and also realize a tax loss, he argues.

Target shares could return up to 30% amid renovation – Target’s (TGT) missteps have cost the company $15B in stock-market value over the past three years, Vito Racanelli writes in this week’s edition of Barron’s. The retailer is now remodeling stores, cutting costs and ramping up its online business to combat Amazon (AMZN), and store traffic and earnings look poised to rise in coming years, which could lead to an upward revaluation of the shares, he adds.

May be ‘lots to be gained’ from CVS/Aetna possible tie-up – In a follow-up story, Barron’s says that while CVS Health (CVS) shares were under pressure following a report by The Wall Street Journal saying the company and Aetna (AET) were in talks, there is “lots to be gained from a tie-up.” By securing better drug pricing from CVS than it gets now, Aetna stands to win more health-plan customers, and it can send many of them to CVS for drugs but also for care, the report explains, adding that the deal would help transform CVS into a company that also profits from health outcomes. Further, Barron’s argues that it could help protect it from future changes in health-care law, and from losing sales to Amazon (AMZN).

Enterprise Products Partners promises growth, income – Enterprise Product Partners (EPD) is a leader among U.S. energy master limited partnerships but its units are depressed like those of many peers, with investors worrying about slowing growth, competitive pressures, weak energy prices and cuts or moderating gains in distributions, Andre Bary writes in this week’s edition of Barron’s. However, he argues that compared with other MLPs, Enterprise has better corporate governance and a stronger sheet, offering an “enticing yield” of nearly 7% and a good growth outlook that investors should see as a “winning combination.”

Apple iPhone X may be catalyst for Sony – Long ago considered a rival of sorts for Apple (AAPL), Sony (SNE) has instead emerged as one of its key suppliers, but its stock is up just 10% over the past six months, while other suppliers have seen their shares almost double in the same period, Assif Shameen writes in this week’s edition of Barron’s. Sony supplies iPhone X’s12-megapixel camera, as well as state-of-the-art 3-D sensors designed to boost iPhone’s Face ID and augmented-reality capabilities, he adds, noting that Jefferies analyst Atul Goyal believes these attributes merit a re-rating for the shares, which he thinks can rise at least 40%.

Shire bear case may be too extreme – While Shire (SHPG) has struggled against generic pressures and rising competition, the bear case may be too extreme, Victor Reklaitis writes in this week’s edition of Barron’s.


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ExxonMobil pays $800 million to Russia’s Statoil

Exxon Mobil to acquire interest in Carcara oil field block from Statoil

ExxonMobil in deal with Statoil. See Stockwinners.com for details

ExxonMobil (XOM) announced that it has completed an agreement to purchase half of Statoil’s (STO) interest in the BM-S-8 block offshore Brazil, which contains part of the pre-salt Carcara oil field.

The Carcara field contains an estimated recoverable resource of 2 billion barrels of high-quality oil. The block is located approximately 200 miles offshore Rio de Janeiro.

Statoil currently holds a 66% interest in the block, which contains about half the Carcara field.

The other part of the field is in the adjacent North Carcara block, where ExxonMobil, Statoil and Petrogal Brasil were high bidders in a bid round held. Statoil will continue to operate the Carcara development and hold 33% interest.

Over the last month, through bid rounds and announced farm-in agreements, ExxonMobil has added 14 blocks comprising more than 1.25M net acres offshore Brazil to its portfolio, bringing its total acreage in the country to more than 1.4M net acres.

Separately, ExxonMobil recently added highly prospective acreage to the company’s portfolio after completing a farm-in agreement with Queiroz Galvao Exploracao e Producao.

ExxonMobil will make an upfront cash payment of approximately $800M for the interest in BM-S-8 block, and an additional contingent cash payment for a potential total of approximately $1.3B.

The transaction is subject to government approvals and is expected to close in 2018. Following the close of the transaction, partner interests in the BM-S-8 block will be 33% for Statoil, 33% for ExxonMobil, 14% for Petrogal Brasil, a subsidiary of Galp, and 10%each for QGEP and Barra.


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JC Penney’s woes continue

J.C. Penney plunges after slashing 2017 earnings view

JC Penney's woes continue. See Stockwinners.com for details

Shares of J.C. Penney (JCP) are down 21%, a new multi-year low, after the retailer slashed its forecast for fiscal 2017 as it accelerated actions to liquidate inventory and overhauled its women’s apparel department. Following the implementation of the “reset,” the retailer said it has already seen an improvement in performance.

THIRD QUARTER UPDATE

J.C. Penney said it expected to report an adjusted loss per share of (45c)-(40c) for the current quarter, well below the current analysts’ consensus of a loss of (18c), and comparable store sales up 0.6%-0.8%.

Cost of goods sold for the quarter are expected to increase 300 to 320 basis points compared to the same period last year, impacted primarily by a greater sales penetration in major appliances and e-commerce and the decision to accelerate the liquidation of inventory.

Chairman and Chief Executive Officer Marvin Ellison stated that “based on the encouraging results from a third quarter reset in women’s apparel, which expanded our casual and contemporary offering, we made the strategic decision to accelerate a wider transformation of the entire women’s department by clearing slow-moving inventory primarily in women’s and other apparel categories.”

He noted that “following this comprehensive reset, we saw an improvement in performance, particularly in our women’s division.”

The retailer also said that Jeffrey Davis, its new Chief Financial Officer, will oversee the company’s pricing and planning policies to improve its predictive analytics capabilities and get a better view of current sales trends.

The retailer said the inventory liquidation favorably impacted sales during September and October, and that “although these actions will create a short-term negative impact to cost of goods sold and earnings, long term, we firmly believe it was the right decision for the company as we transition into the fourth quarter and fiscal 2018.”

J.C. Penney will report third quarter results on November 10.

SLASHED FISCAL 2017 OUTLOOK

However, the “improvement” Ellison noted following the reset was not enough for the retailer to maintain its forecast, and J.C. Penney significantly cut its fiscal 2017 adjusted EPS view to 2c-8c from 40c-65c and comp sales down 1% to flat vs. its prior view of down 1% to up 1%.

Prior to the report, analysts expected J.C. Penney would report FY17 EPS of 43c. Cost of goods sold for the year are now seen up 100-200 basis points vs. 2016 and free cash flow is now seen at $200M-$300M.

WHAT’S NOTABLE

Retailers tend to clear out leftover inventory ahead of the critical holiday season to stock up on fresh merchandise. J.C. Penney and other mall-based retailers and department stores have been hurt by the increasing popularity of fast-fashion retailers like Zara, Forever 21, and H&M, as well as an increase in online shopping on sites such as Amazon (AMZN).


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