DCT Industrial Trust sold for $8.4B

Prologis to acquire DCT Industrial Trust for $8.4B

DCT Industrial Trust sold for $8.4B. Stockwinners
DCT Industrial Trust sold for $8.4B. 

Prologis (PLD) and DCT Industrial Trust (DCT) announced that the two companies have entered into a definitive merger agreement by which Prologis will acquire DCT for $8.4B in a stock-for-stock transaction, including the assumption of debt.

The boards of directors of both companies have unanimously approved the transaction.

The transaction is anticipated to create substantial synergies, including near-term synergies of approximately $80M in corporate general and administrative cost savings, operating leverage, interest expense and lease adjustments, which are forecast to increase annual stabilized core funds from operations per share by 6c-8c.

A combination of revenue synergies and incremental development volume has the potential to generate $40M of additional annual revenue and development profit in the future.

Under the terms of the agreement, DCT shareholders will receive 1.02 Prologis shares for each DCT share they own. The transaction, which is currently expected to close in the third quarter of 2018, is subject to the approval of DCT stockholders and other customary closing conditions.

At closing, it is anticipated that Philip L. Hawkins will join the Prologis board of directors.

PLD closed at $66.58.  DCT closed at $58.75.


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Barron’s is bullish on Ensco, bearish on Chipotle

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

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Stockwinners offers Barron’s review of stocks to buy, stocks to watch,

BULLISH   MENTIONS:

Investors should consider Ensco to benefit from oil-price surge.  Crude-oil prices are set to jump because President Donald Trump is likely to reintroduce harsh sanctions on Iran by mid-May and to benefit from the oil-price surge, investors should consider buying shares in Ensco (ESV), Simon Constable writes in this week’s edition of Barron’s. Other key oil stocks include EOG Resource (EOG), Transocean (RIG), Exxon Mobil (XOM), Halliburton (HAL), ConocoPhillips (COP) and Devon Energy (DVN), he adds.

Netflix may soon pass Disney in Market Value – Any week now, Netflix (NFLX) will surpass in market value Walt Disney (DIS) as investors cheer on the streaming service’s continued subscriber growth, Jack Hough writes in this week’s edition of Barron’s. Investors who buy Disney shares now could have a long wait before they learn whether the streaming push will result in a rebounding price/earnings ratio, but that is where a diversified business model helps, Hough says.

BEARISH  MENTIONS

Chipotle results boosted by potentially short-lived dynamics – Brian Niccol, the new CEO at Chipotle Mexican Grill, got an “enormous” endorsement on Thursday, as shares of the restaurant chain soared 24%, Avi Salzman writes in this week’s edition of Barron’s. But Salzman is still skeptical that investors should buy the rebound. The first-quarter report was boosted by several dynamics that could be short-lived, he argues, adding that even with those results, it is hard to “make a queso” for Chipotle tripling earnings.


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Alexion Pharmaceuticals announced positive topline results of ALXN1210

Alexion says Phase 3 ALXN1210 study shows patients can be switched from Solirs 

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Alexion Pharmaceuticals  announced “positive” topline results of a Phase 3 study of ALXN1210

Alexion Pharmaceuticals (ALXN)  announced “positive” topline results of a Phase 3 study of ALXN1210, the company’s investigational long-acting C5 complement inhibitor, which show that patients with paroxysmal nocturnal hemoglobinuria “can be effectively and safely switched from treatment with Soliris every two weeks to treatment with ALXN1210 every eight weeks.”

The study demonstrated non-inferiority of ALXN1210 to #Soliris in patients with PNH who had been stable on Soliris based on the primary endpoint of change in lactate dehydrogenase levels, a direct marker of complement-mediated hemolysis in PNH, the company said.

It adds that the study also demonstrated non-inferiority on all four key secondary endpoints: the proportion of patients with breakthrough hemolysis, the change from baseline in quality of life as assessed via the Functional Assessment of Chronic Illness Therapy-Fatigue Scale, the proportion of patients avoiding transfusion, and the proportion of patients with stabilized hemoglobin levels.

In addition, numeric results for all five endpoints favored ALXN1210. Notably, no patients treated with ALXN1210 experienced breakthrough hemolysis compared to five patients treated with Soliris, Alexion said.

It noted that ALXN1210 was generally well tolerated with a safety profile that is consistent with that seen for Soliris. “Once again ALXN1210 met the high bar set by Soliris in a second, large Phase 3 study.

Importantly, we now have robust data that patients with PNH can effectively and safely transition from Soliris to ALXN1210,” said John Orloff, M.D., Executive Vice President and Head of Research & Development at Alexion.

“We are very pleased that the totality of the Phase 3 PNH data in more than 440 patients, which included patients who had never received a complement inhibitor and patients who were stable on Soliris and switched to ALXN1210, shows numeric results favoring ALXN1210 across all primary and key secondary endpoints, including breakthrough hemolysis.

We believe that the differentiated profile of ALXN1210 could be a meaningful improvement for patients and clinicians and look forward to moving rapidly to global regulatory filings in the U.S. and EU in mid-2018, followed by Japan later in the year.”


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Vertex initiates Phase 3 studies of its cystic fibrosis drugs

Vertex initiates Phase 3 studies of VX-445, Tezacaftor, and Ivacaftor

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Vertex initiates Phase 3 studies of VX-445, Tezacaftor, and Ivacaftor

Vertex Pharmaceuticals (VRTX) announced that it is initiating two Phase 3 studies of VX-445, tezacaftor and ivacaftor as an investigational triple combination regimen for people with cystic fibrosis.

The first Phase 3 study will evaluate approximately 360 people with CF who have one copy of the F508del mutation and one minimal function mutation and is designed to support the submission of a New Drug Application in the U.S. using data from the study’s 4-week primary efficacy endpoint together with safety data through 12 weeks of treatment.

The second Phase 3 study will evaluate approximately 100 people with CF who have two copies of the F508del mutation, the most common genetic form of the disease, and is designed to support the submission of an application for approval in patients with two copies of the F508del mutation in the U.S. using data from the study’s 4-week primary efficacy endpoint together with 24-week safety data generated from the Phase 3 study in patients with one F508del mutation and one minimal function mutation.

The initiation of the study in people with two copies of the F508del mutation is supported by data announced today from a Phase 2 study that showed an incremental mean absolute improvement in percent predicted forced expiratory volume in one second of 11.0 percentage points from baseline through week four of treatment when VX-445 was added in people with CF who have two F508del mutations and were already receiving tezacaftor in combination with ivacaftor.

In the Phase 2 study, the VX-445 triple combination regimen was generally well tolerated, and the majority of adverse events were mild to moderate in severity.

VRTX closed at $158.81.


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Comcast offers to buy Sky News

Comcast announces GBP12.50 per share cash offer for Sky

Comcast tops Fox offer for Sky. Stockwinners.com
Comcast tops Fox offer for Sky

Comcast (CMCSA) published a Rule 2.7 announcement under the City Code on Takeovers and Mergers announcing its pre-conditional “superior” cash offer for the entire issued and to be issued share capital of Sky (SKYAY).

In the UK Announcement, Comcast announced that it intends to make the following commitments regarding Sky and investment in the UK: Maintain annual expenditure in Sky News for ten years, at a level not less than incurred in Sky’s 2017 financial year; Establish an editorial Sky News board with the responsibility to ensure the editorial independence of Sky News for ten years; Maintain Sky’s UK headquarters in Osterley for five years; and Not acquire any majority interest in UK newspapers for five years.

Additionally, Comcast reaffirmed the following statements of intention given in its Rule 2.4 announcement on February 27, 2018: Continue to support the creative industries in the UK and increase investment in UK film and TV production; Support innovation in the UK by continuing to support Sky’s technology hub in Leeds; Continue to support young people in the UK by maintaining Sky’s Software Engineering Academy scheme; and Continue to support Sky’s local community sports programs in the UK.

Comcast believes that, combined, Comcast and Sky will create a business equipped to compete more effectively in a rapidly changing and highly competitive industry.

Together, the companies would be well positioned to drive growth to provide attractive returns to Comcast shareholders and to benefit the employees and customers of both organizations.

Under the terms of the Acquisition, Sky shareholders will be entitled to receive GBP 12.50 in cash for each Sky share.

In addition, Sky shareholders shall be entitled to receive any final dividend in respect of Sky’s financial year ended June 30, 2018, up to an amount of 21.8 pence per Sky share, which is declared and paid prior to the Effective Date.

Comcast’s cash offer represents a 16 percent premium to the existing Twenty-First Century Fox, (FOXA) offer, and implies a value of $31 billion for the fully diluted share capital of Sky.

To provide financing in connection with the Acquisition, Comcast entered into an unsecured bridge credit agreement in an aggregate principal amount of up to GBP 16 billion and an unsecured term loan credit agreement in an aggregate principal amount of up to GBP 7 billion.

The Acquisition is subject to a number of pre-conditions and conditions as set forth in the UK Announcement, including receipt of antitrust and regulatory approvals and securing valid acceptances carrying in aggregate more than 50 percent of the voting rights then normally exercisable at a general meeting of Sky.


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Mitel sold for $2 billion

Mitel to be acquired by Searchlight Capital Partners affiliates for $2B in cash

Mitel sold for $2 billion. Stockwinners
Mitel sold for $2 billion. Stockwinners

Mitel (MITL) announced that it has signed a definitive arrangement agreement to be acquired by an investor group led by affiliates of Searchlight Capital Partners in an all-cash transaction valued at approximately $2B, including Mitel’s net debt.

Under the terms of the agreement, to be completed pursuant to a plan of arrangement, upon completion Mitel shareholders will receive $11.15 per common share in cash.

This exceeds Mitel’s 52-week and last three-year-high price and represents a premium of approximately 24% to the 90-calendar-day volume-weighted average price of Mitel common shares through April 23, 2018.

Upon completion of the transaction, Mitel will become a privately held company, which is expected to provide the company with additional flexibility to accelerate its move-to-the-cloud strategy.

The Mitel Board of Directors has unanimously determined that the transaction is in the best interests of Mitel and fair to Mitel shareholders, and will recommend that Mitel shareholders approve the arrangement. The arrangement is not subject to a financing condition.

The transaction is expected to close during the second half of 2018, subject to customary closing conditions, including receipt of shareholder, regulatory and court approvals.

The arrangement agreement includes a 45-day “go-shop” period, which permits Mitel’s Board of Directors and advisors to actively solicit, evaluate and potentially enter into negotiations with parties that make alternative acquisition proposals through June 7, 2018.

There can be no assurance that this process will result in a superior offer.

Mitel does not intend to disclose developments with respect to the solicitation process unless and until the Board of Directors makes a determination requiring further disclosure. Jefferies LLC is serving as financial advisor to Mitel.

Paul, Weiss, Rifkind, Wharton & Garrison LLP and Osler, Hoskin & Harcourt LLP are serving as legal advisors to Mitel. National Bank Financial Inc. is serving as independent financial advisor to the Mitel Board of Directors and provided a fairness opinion to the Mitel Board of Directors on a fixed fee basis.


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Wabtec higher on potential GE Transportation deal

Wabtec rises as analyst says buy on potential GE Transportation deal

Wabtec higher on potential GE Transportation deal, Stockwinners
Wabtec higher on potential GE Transportation deal, Stockwinners

Shares of Wabtec (WAB) are on the rise after Stifel analyst Michael Baudendistel upgraded the stock to Buy following a media report saying the company was in discussions to acquire GE Transportation from General Electric (GE).

Also commenting on the deal, Stephens analyst Justin Long told investors the transaction could be a significant catalyst for Wabtec.

POTENTIAL GE TRANSPORTATION SALE

On Friday, Bloomberg reported that General Electric was in talks to sell its century-old locomotive business to rail-equipment maker Wabtec.

The transportation unit could be worth as much as $6.8B in a sale, the report noted, adding that a deal has not been reached and talks may still fall apart. GE may also pursue an initial public offering or other strategic option for the business, sources said.

BUY WABTEC

In a research note to investors, Stifel’s Baudendistel upgraded Wabtec to Buy from Hold, while raising his price target on the stock to $99 from $75, citing Bloomberg’s report on a potential acquisition of GE Transportation.

While acknowledging that a standalone IPO or an acquisition by a machinery company are also possibilities, the analyst argued that a deal would be transformative for Wabtec.

Further, Baudendistel pointed out that he believes there is strategic rationale for the deal and the possibility improves his perspective on the reward-to-risk ratio for the shares. Wabtec would be buying the business at a cyclical low point, he contended.

Additionally, the analyst noted that Wabtec’s recent results have improved on growth in the aftermarket revenue, an area that held back 2017 results.

‘SIGNIFICANT’ CATALYST FOR WABTEC

Meanwhile, Stephens’ Long told investors in a research of his own this morning that he is “a bit surprised” by the news given the potential size of the transaction, which he estimates to be around $8B.

That said, the analyst noted he thinks it would be a “great strategic fit” primarily due to GE Transportation’s services business that features technologically advanced rail-related products.

Additionally, Long believes the deal could be “highly accretive” to Wabtec earnings per share, with his “best guess” putting the deal probability at over 50%. The analyst reiterated an Overweight rating on Wabtec’s shares.

PRICE ACTION

In Monday’s trading, shares of Wabtec have gained almost 2% to $88.98, while General Electric’s stock has advanced about 1% to $14.62.


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Vectren Corporation sold for $72 a share

Vectren investors to receive $72/share cash for each share in CenterPoint deal

Vectren Corporation sold for $72 a share, Stockwinners
Vectren Corporation sold for $72 a share

CenterPoint Energy (CNP) and Vectren Corporation (VVC) announced they have entered into a definitive merger agreement to form an energy delivery, infrastructure and services company serving more than 7 million customers across the United States.

Under the terms of the agreement, which have been unanimously approved by both CenterPoint Energy’s and Vectren’s Boards of Directors, Vectren shareholders will receive $72.00 in cash for each share of Vectren common stock.

CenterPoint Energy will also assume all outstanding Vectren net debt.

Vectren Corporation sold for $72 a share, Stockwinners
Vectren Corporation sold for $72 a share, 

The combined company is expected to have electric and natural gas delivery operations in eight states with assets totaling $29 billion and an enterprise value of $27 billion.

With the merger, CenterPoint Energy expects to maintain an annual guidance basis EPS growth target of 5 to 7 percent in 2019 and 2020, excluding any one-time charges related to the merger.

At the closing of the transaction, Scott M. Prochazka will serve as president and CEO of the combined company.

The full executive team for the combined company will be announced prior to or in conjunction with the closing of the merger.

The natural gas utilities operations of the combined company, as well as that businesses’ lead executive, will be headquartered in Evansville.

Additionally, CenterPoint Energy will establish a chief business officer for Vectren’s electric business who will directly report to CenterPoint Energy’s CEO and spearhead southwestern Indiana’s electric grid modernization and generation transition initiatives recently underway.

In addition to utility field employees, CenterPoint Energy will retain key operational activities in support of the utilities in Evansville.

Pursuant to the merger agreement, CenterPoint Energy will contribute an additional $3 million per year for a minimum of five years after the closing of the merger to the Vectren Foundation, which will continue to operate out of Evansville.

The closing of the transaction is subject to Vectren shareholder approval, approvals from the Federal Energy Regulatory Commission and Federal Communications Commission, and expiration or termination of the Hart-Scott-Rodino waiting period.

In addition to these conditions, the company will make certain regulatory filings in Indiana and Ohio. Subject to these conditions, the merger is expected to close by the first quarter 2019. Until the closing, CenterPoint Energy and Vectren will remain separate companies.


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Barron’s is bullish on GM and Delta

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

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Stockwinners offers Barron’s review of stocks to buy

BULLISH   MENTIONS:

Delta, GM look cheap, with growth potential – While a solid start to earnings season helped push share prices higher earlier this week, some remain deeply discounted, Jack Hough writes in this week’s edition of Barron’s. Despite Delta Air Lines’ (DAL) pessimistic valuation, consolidation has left only a handful of key players and the company faces less competition in key markets than some of its peers, the report adds. Additionally, Goodyear Tire (GT), General Motors (GM) and Lincoln National (LNC) also made the valuation cutoff, Hough says.

General Mills shares fall to ‘bargain territory.’  – General Mills (GIS) has fallen 27% so far this year and while the drop seems deserved because earnings growth has stalled, a closer look suggests sales trends are improving, thanks in part to new-product launches, Jack Hough writes in this week’s edition of Barron’s.

Cruise operators can offer ‘nice’ yields, solid dividend growth – Cruise operators, like Carnival (CCL), Royal Caribbean (RCL) and Norwegian Cruise Line (NCLH), can offer nice yields and solid dividend growth, but economic downturns can pressure payouts, Lawrence Strauss writes in this week’s edition of Barron’s. Another option for investors looking for yield among cruise operators is Walt Disney (DIS), the report added. The entertainment company has a wide variety of holdings, and while its cruise business did not account for a large portion of its $55B of sales last year, it is not insignificant either.

Tech giants may make own custom chips to get edge on one another. – There has been a tension between the world’s largest tech companies- Alphabet (GOOG; GOOGL), Amazon (AMZN), Facebook (FB), Apple (AAPL), Microsoft (MSFT), Baidu (BIDU), and Alibaba (BABA)-and the chip companies they rely on, especially Intel (INTC) and Nvidia (NVDA), Tiernan Ray writes in this week’s edition of Barron’s. While the giants buy massive quantities of Intel’s microprocessors, and Nvidia’s graphics chips, or GPUs, to power their data centers, they are also in an arms race to have the best artificial-intelligence-based machine-learning functions, the report noted, adding that there was always the possibility they may decide to buy fewer off-the-shelf parts and make their own custom chips to get an edge on one another.

 MPL valuations look cheap – Master limited partnerships’ valuations appear cheap, and U.S. energy production is thriving, lifting cash flows for pipeline firms, Darren Fonda writes in this week’s edition of Barron’s. MLP, such as Enterprise Products Partners (EPD), Magellan Midstream Partners (MMP), MPLX (MPLX), Plains All American Pipeline (PAA), could reward investors with higher yields as cash flows rise, Fonda adds.

OTHER MENTIONS

Trump’s tweets politicize U.S. markets, Barron’s says – With President Donald Trump, both politics and business appear personal as he continues his tweets aimed at individual companies, Vito Racanelli writes in this week’s edition of Barron’s. Before and after the election, he consistently aimed arrows at Amazon.com (AMZN) and at the proposed acquisition of Time Warner (TWX) by AT&T (T), the report noted. The President is not alone in singling out companies, Racanelli points out, adding that Democratic candidate Hillary Clinton also took issue with Mylan’s (MYL) price increases for its EpiPen. Maybe it is a sign of the times, but the rise of powerful social-media platforms is the key enabling factor, the report said.


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Ionis Pharmaceuticals is in focus

Biogen, Ionis Pharmaceuticals expand drug development collaboration

Biogen will pay Ionis $1B in cash

Biogen (BIIB) and Ionis Pharmaceuticals (IONS) announced they have expanded their strategic collaboration through a new ten-year collaboration agreement to develop novel antisense drug candidates for a broad range of neurological diseases.

This collaboration capitalizes on Biogen’s expertise in neuroscience research and drug development and Ionis’ leadership in RNA targeted therapies with the goal of developing a broad pipeline of investigational therapies.

Biogen says BAN2401 did not meet primary endpoint. Stockwinners.com
Biogen will pay Ionis $1B in cash

It builds upon a productive collaboration that produced SPINRAZA, the first and only approved treatment for patients with spinal muscular atrophy.

Under the terms of the collaboration, Biogen will pay Ionis $1B in cash, which will include $625M to purchase 11,501,153 shares of Ionis common stock at a price of $54.34 per share, at an approximately 25% cash premium, and a $375M upfront payment.

Biogen will have the option to license therapies arising out of this collaboration and will be responsible for their development and commercialization.

In addition, Biogen may pay milestone payments, license fees and royalties on net sales.

The companies plan to advance programs for a broad range of neurological diseases for which few treatment options exist today.

Disease areas include dementia, neuromuscular diseases, movement disorders, ophthalmology, diseases of the inner ear, and neuropsychiatry.

Biogen will have the first choice of neurology targets on which to exclusively collaborate with Ionis.

In this collaboration, Ionis will be responsible for the identification of antisense drug candidates based on selected targets, while Biogen will be responsible for and pay for non-clinical studies, clinical development, manufacturing, and commercialization. Biogen and Ionis expect the deal to close in the second quarter of 2018.

IONS closed at $45.85. BIIB closed at $266.02.


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Abeona Therapeutics granted Orphan Drug Designation

Abeona Therapeutics granted Orphan Drug Designation for ABO-202 in Europe

Abeona Therapeutics granted Orphan Drug Designation, Stockwinners
Abeona Therapeutics granted Orphan Drug Designation, 

Abeona Therapeutics (ABEO) announced that the European Medicines Agency Committee for Orphan Medicinal Products has granted Orphan Drug Designation for Abeona’s gene therapy program ABO-202 for the treatment of subjects with neuronal ceroid lipofuscinosis, also known as Batten Disease, a fatal lysosomal storage disease that primarily affects the nervous system in children.

ABO-202 is an adeno-associated virus developed to introduce a functional copy of the CLN1 gene into cells in order to restore the enzyme activity that is needed to break down certain lipopigment proteins that are deficient in patients with CLN1 disease.

Batten Disease, a fatal lysosomal storage disease that primarily affects the nervous system in children, Stockwinners
Batten Disease, a fatal lysosomal storage disease that primarily affects the nervous system in children

ABO-202 is anticipated to enter clinical trials in 2018. ABO-202 has been granted Orphan Drug and Rare Pediatric Disease Designations from the US Food and Drug Administration.

Preclinical data from the program were recently presented at the WORLDSymposium held in San Diego and an update will be presented at the American Society for Gene and Cell Therapy later this year.

Key findings reported included: The data demonstrate that a single intravenous, single intrathecal or combination therapy utilizing both administration routes of a self-complementary adeno-associated virus encoding the human CLN1 gene to CLN1 mice significantly increased their survival, improved behavior and reduced motor deficits.

Higher doses further improved these observations, suggesting that methods increasing total CNS exposure may be beneficial and provided some survival and behavioral benefit to symptomatic mice.

A combination approach delivering ABO-202 by both intravenous and intrathecal routes of administration further increased survival efficacy and improved potential treatment options for older animals with advanced disease manifestations.

ABEO closed at $20.05.


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Generic drug makers tumble on pricing

Generic drug makers under pressure following Aceto, Novartis news

Generic drug makers tumble on pricing, Stockwinners
Generic drug makers tumble on pricing

On Wednesday, Aceto (ACET) withdrew its guidance, citing the continued intense competitive and pricing pressures in the generic industry.

On Thursday, Novartis (NVS) reported that net sales at its generic unit Sandoz dropped 4% in the quarter.

Following both announcements, Wells Fargo analyst Davis #Maris told investors that he is not ready to call the bottom in generics pricing and sees a negative read-through for companies with large U.S. commodity generic exposure, such as Teva (TEVA) and Mylan (MYL).

Generic drug makers tumble on pricing, Stockwinners
Generic drug makers tumble on pricing, Stockwinners

GUIDANCE SUSPENSION, DIVIDEND REDUCTION

Last night, Aceto’s chairman Al Eilender said, “Given continued headwinds in the generics market, the Board has taken decisive action by bolstering the company’s senior leadership, engaging in proactive discussions with its secured lenders, and initiating a thorough evaluation of strategic alternatives.

” Strategic alternatives to be considered may include the sale of a key business segment, a merger or other business combination with another party, continuing as a standalone entity or other potential alternatives.

The company’s Board also anticipates a significant reduction of its dividend going forward and announced the appointment of Rebecca Roof as Interim CFO and the resignation of CFO Edward Borkowski, who has decided to pursue another opportunity.

Additionally, Aceto said that, in light of the persistent adverse conditions in the generics market, it is negotiating with its bank lenders a waiver of its credit agreement with respect to its total net leverage and debt service coverage financial covenants in the fiscal third quarter, and that the financial guidance issued on February 1, should no longer be relied upon.

The company also anticipates recording non-cash intangible asset impairment charges, including goodwill, in the range of $230M-$260M on certain currently marketed and pipeline generic products as a result of continued intense competitive and pricing pressures.

NOVARTIS RESULTS

This morning, Novartis reported first quarter core earnings per share of $1.28 and revenue of $12.69B, with consensus at $1.29 and $12.57B, respectively. The company also announced Sandoz net sales of $2.5B in the first quarter as 6 percentage points of price erosion, mainly in the U.S., were partly offset by volume growth of 2 percentage points. U.S. sales declined 18% mainly due to continued competitive pressure, the company added.

NEGATIVE READ-THROUGH

In a research note this morning, Wells Fargo’s Maris told investors that he thinks Aceto and Sandoz’s news show that the data continues to be negative for U.S. generic industry pricing. He sees a negative read-through for companies with large U.S. commodity generic exposure, such as Teva and Mylan.

Further, the analyst noted that he is not yet ready to call the bottom in generics pricing and believes those that have are “premature.”

WHAT’S NOTABLE

Citing a rapid degradation of the company’s asset-light business model in the wake of continued pressures for commoditized generics, Canaccord analyst Dewey Steadman downgraded Aceto two notches to Sell from Buy.

The company’s core human health business has been under significant pressure and has been unable to swiftly adapt to market conditions, he added. The analyst also lowered his price target on the shares to $2 from $10.

PRICE ACTION

In Thursday’s trading, shares of Aceto have plunged almost 62% to $2.85, while Novartis’ stock has dropped about 3% to $79.25. Also lower, shares of Teva and Mylan have slipped 2.5% and 0.25%, respectively.


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Amazon higher on Prime members

Amazon rises as Prime reaches 100M paid members

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Amazon higher on Prime members

Amazon’s (AMZN) CEO Jeff Bezos told investors that the company has exceeded 100M paid members globally and has shipped more than 5B items with Prime worldwide.

The good news for the e-commerce giant may not end there, as Morgan Stanley analyst Brian Nowak told investors that his analysis shows that Amazon has gained 1.5% of U.S. apparel market share in 2017 and may achieve number one U.S. apparel market share in 2018 as Prime members and Millennials shift spending to Amazon and away from traditional brick and mortar retailers.

100M PAID MEMBERS

According to a regulatory filing, Amazon said that it has exceeded 100M paid Prime members globally 13 years post-launch.

In 2017, Amazon shipped more than 5B items with Prime worldwide, and more new members joined Prime than in any previous year — both worldwide and in the U.S., the company said, adding that members in the U.S. now receive unlimited free two-day shipping on over 100M different items. The company expanded Prime to Mexico, Singapore, the Netherlands, and Luxembourg, and introduced Business Prime Shipping in the U.S. and Germany.

Additionally, CEO Jeff Bezos informed shareholders that Amazon Music now has tens of millions of paid customers, with Amazon Music Unlimited expanding to more than 30 new countries in 2017.

GAINING APPAREL MARKET SHARE

In a research note to investors this morning, Morgan Stanley’s Nowak said his analysis shows that Amazon gained 1.5% of U.S. apparel market share in 2017, largely at the expense of department stores.

According to his work around Amazon’s apparel gross merchandise value, the analyst estimates the e-commerce giant continues to be the second largest U.S. apparel retailer, trailing only Walmart (WMT), as the company has grown to about 7.9% of the overall U.S. apparel market, excluding shoes, or $21.1B apparel gross merchandise value.

Further, #Nowak told investors he expects Amazon to achieve the number one spot in 2018, as Prime members and Millennials shift spending to Amazon and away from traditional brick and mortar retailers.

The analyst pointed out that Amazon’s 2017 share gains look to have come largely at the expense of department stores, estimating Sears (SHLD), Macy’s (M) and J.C. Penney (JCP) lost 0.8% share in 2017, with shareholding remaining roughly flat for Target (TGT) and Kohl’s (KSS).

L Brands (LB) lost share due to the elimination of its swimwear and apparel categories, he contended.

Additionally, his U.S. apparel market deep-dive indicated that Walmart and Costco (COST) showed “impressive gains” despite a weak industry backdrop. Among the Softline retailers, Gap’s (GPS) Old Navy, Ross Stores (ROSS) and Nordstrom’s (JWN) Nordstrom Rack also added 10-15 bps of market share in 2017, he added.

Nowak reiterated an Overweight rating and $1,550 price target on Amazon shares.

PRICE ACTION

In Thursday’s trading, shares of Amazon have gained 2% to $1,554.90.


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21st Century Fox Says Thanks but Not Interested

 21st Century Fox rejected rival bid of $34.41 per share for assets

21st Century Fox Says Thanks but Not Interested, Stockwinners
21st Century Fox Says Thanks but Not Interested, Stockwinners

Disney (DIS) disclosed on Wednesday in a regulatory filing that on November 14, 2017, representatives of 21st Century Fox (FOXA) and “Party B” held discussions via conference call regarding a potential strategic transaction between the parties.

Party B, which Reuters reported last night to be Comcast (CMCSA), provided Fox a non-binding proposal to acquire the remaining company at a price of $34.41 per share payable in stock of Party B, subject to further discussions on the allocation of regulatory risk.

Disney’s filing further explained, “Representatives of Goldman Sachs and Centerview then discussed with the 21CF board the potential financial profiles of the surviving entities from potential strategic transactions with each of Party B and Disney.

In addition, representatives of Goldman Sachs discussed with the 21CF board illustrative financial implications of the potential strategic transactions as proposed by each of Disney and Party B, including illustrative future trading ranges for each of Disney and Party B on a pro forma basis, giving effect to the potential strategic transactions.

Goldman Sachs noted that the probability of Disney stock trading toward the higher ends of the range on a pro forma basis could be viewed as higher than such a likelihood for Party B.

Goldman Sachs also noted the higher likelihood for revenue synergies in a Disney transaction over and above the cost synergies assumed in the Goldman Sachs valuation analyses.

At the end of the meeting, the 21CF board directed management to cease discussions with Party B and focus on finalizing negotiations with Disney.”

On December 7, 2017, Fox’s Rupert Murdoch informed the Chairman and CEO of Party B that Fox would not enter into an exclusivity arrangement with Party B at this time and that Fox would suspend discussions while it pursued other opportunities, Disney’s filing states.


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GW Pharmaceuticals could soar on its epilepsy drug

GW Pharma seen nearing historic approval for cannabinoid epilepsy treatment

GW Pharmaceuticals could soar on its epilepsy drug, Stockwinners
GW Pharmaceuticals could soar on its epilepsy drug, Stockwinners

GW Pharmaceuticals’ (GWPH) cannabis-based epilepsy treatment associated with Lennox-Gastaut syndrome and Davret syndrome, #Epidiolex, received what analyst called a favorable review from Food and Drug Administration staff ahead of an advisory committee meeting scheduled later this week.

Both Goldman Sachs and Leerink argued that the documents bode well for Epidiolex approval by its June 27 PDUFA date.

FDA ADCOM DOCUMENTS

The FDA released its advisory committee meeting briefing documents regarding CBD-OS for the treatment of LGS and DS ahead of the advisory panel vote on Thursday.

According to the documents: “In 3 consecutive Phase 3 studies, CBD-OS added to other AED therapy met the primary endpoint of reduction in seizure frequency in patients with LGS and DS. Doses of CBD-OS at 10mg/kg/day and 20mg/kg/day were superior to placebo at reducing drop seizure frequency, and efficacy was maximized during the 12-week maintenance period once the target dose was achieved in LGS patients.

Similar results were also seen in DS patients treated with CBD-OS 20mg/kg/day. […] The safety and tolerability profile of CBD-OS is predictable, and the potential risks are manageable through the proposed label and medication guide. […] Elevated transaminases were observed more frequently in CBD-OS patients than placebo, and increased AST and increased ALT were the most common reasons for discontinuing CBD-OS treatment.

Therefore, routine liver tests prior to CBD-OS use and periodically during treatment are recommended.

In addition, GW will implement a post-marketing enhanced pharmacovigilance program to monitor the safety profile of CBD-OS, with a focus on liver abnormality reports.

Overall, CBD-OS provides a positive benefit-risk for patients with drug-resistant LGS or DS and can satisfy an unmet need by providing an additional treatment option to reduce the number of seizures in LGS and the first indicated treatment option for DS.” CBD-OS, or cannabidiol oral solution, is the first-in-class antiepileptic drug for the adjunctive treatment of seizures associated with LGS and DS in patients 2 years of age and older.

GW Research, which is a part of GW Pharmaceuticals and operates under Greenwich Biosciences in the U.S., holds the Investigational New Drug application for CBD-OS.

DOCUMENTS SUPPORT APPROVAL

Commenting on the briefing documents, Goldman Sachs analyst Salveen Richter told investors that the “brevity of the relatively benign documents” along with the half day panel duration suggest a likely straightforward meeting.

The analyst noted that there is only one question for discussion – “Is the benefit-risk profile of cannabidiol favorable for the treatment of seizures associated with Lennox-Gastaut syndrome and Dravet syndrome in patients 2 years of age and older?” – which could support a broad label in “seizures associated with LGS/DS” and in children/adults.

Thus, Richter believes these documents should bode well for Epidiolex approval by the June 27 date assigned by the FDA.

The analyst recommended owning GW Pharmaceuticals shares into the Epidiolex launch, assuming widespread off-label use per physician feedback and optionality from Epidiolex Phase 2/3 Part A data in infantile spasms in the second quarter of 2018.

He reiterated a Buy rating and $177 price target on the stock.

Meanwhile, his peer at #Leerink told investors in a research note of his own that his review of the meeting materials suggests that the FDA is likely to approve Epidiolex, and the outcome of the advisory panel vote on April 19 should be positive.

Additionally, analyst Geoffrey Porges argued that Epidiolex’ review bodes well for Zogenix’ (ZGNX) ZX0008. The latter’s unprecedented efficacy in reducing seizures will allow it to gain significant market share within its first 12 months of approval, he contended.

PRICE ACTION

Shares of GW gained about 11% yesterday following the release of the documents, though they have given back about 2% in Wednesday’s trading to trade near $131 per share.


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