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Rig Counts declined last week!

Baker Hughes reports U.S. rig count down 9 to 711 rigs.

Baker Hughes (BKR) reports that the U.S. rig count is down 9 from last week to 711 with oil rigs down 5 to 570, gas rigs down 4 to 137 and miscellaneous rigs unchanged at 4.

The U.S. Rig Count is down 16 rigs from last year’s count of 727 with oil rigs down 4, gas rigs down 14 and miscellaneous up 2.

The international offshore rig count for April 2018 was 194. Stockwinners

The U.S. Offshore Rig Count is down 1 to 20, up 4 year-over-year.

The Canada Rig Count is up 2 from last week to 87, with oil rigs up 3 to 42, gas rigs down 1 to 45.

The Canada Rig Count is down 16 rigs from last year’s count of 103 with oil down 13, gas rigs down 3.

The Baker Hughes rig counts are counts of the number of drilling rigs actively exploring for or developing oil or natural gas in the U.S., Canada and international markets.

The Company has issued the rig counts as a service to the petroleum industry since 1944, when Hughes Tool Company began weekly counts of the U.S. and Canadian drilling activity. The monthly international rig count was initiated in 1975.

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West Texas Intermediate (WTI) is up $1.08 to $72.86 per barrel (52 weeks high of $122.10). Brent crude is up $1.07 to $77.12 per barre (52 weeks high of $123.58). Gasoline last traded at $2.702 per gallon (52 weeks high of $4.31 per gallon).

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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

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Japan’s Mizuho Financial buys Greenhill

Mizuho Financial Group to acquire Greenhill & Co. for $15 per share in cash

Mizuho Financial Group, Inc. (MFG) and Greenhill & Co., Inc. (GHL) announced a definitive agreement for Mizuho to acquire Greenhill in an all-cash transaction at $15 per share, reflecting an enterprise value of approximately $550M, including assumed debt.

Greenhill & Co., Inc.provides financial and strategic advisory services to corporations, partnerships, institutional investors, and governments worldwide. The company offers advisory services related to mergers and acquisitions, divestitures, restructurings, financings, private capital raising, and other similar transactions.

Through this transaction, Mizuho will accelerate its investment banking growth strategy, building on Greenhill’s 27-year history of advising important clients on significant mergers & acquisitions, restructurings and capital raising transactions.

Following completion of the transaction, Greenhill will operate globally from its 15 locations around the world as the M&A and restructuring advisory business of Mizuho.

That business will maintain the Greenhill brand, and the existing Greenhill leadership team will remain in place. Greenhill Chairman & Chief Executive Officer Scott Bok will become Chairman of the M&A and restructuring advisory business.

Current Greenhill Co-Presidents Kevin Costantino and David Wyles will become Co-Heads of the business.

The Greenhill business will sit within Mizuho’s banking division, led by Michal Katz, Head of Banking in the Americas.

With this transaction, Mizuho will welcome Greenhill’s 370 employees, as well as the valued client relationships they have built around the world.

Both management teams are committed to a seamless transition for all clients and employees.

The transaction is expected to close by year end and is subject to approval by Greenhill stockholders, as well as required regulatory approvals and other customary closing conditions.

GHL gained $7.88 to close at $14.66.

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Krystal Biotech shares jump as FDA approves Vyjuvek

Vyjuvek is designed to treat the genetic root cause of DEB

Krystal Biotech (KRYS) announced the U.S. Food and Drug Administration has approved Vyjuvek for the treatment of patients six months of age or older with dystrophic epidermolysis bullosa, or DEB.

DEB is a rare disease that appears at birth or during the first few years of life, and lasts a lifetime. Prognosis is variable, but tends to be serious. Life expectancy is 50 years, and the disease brings with it complications related to infections, nutrition and neoplastic complications.

“Vyjuvek is designed to address the genetic root cause of DEB by delivering functional copies of the human COL7A1 gene to provide wound healing and sustained functional COL7 protein expression with redosing.

Vyjuvek is the first-ever redosable gene therapy and the first and only medicine approved by the FDA for the treatment of DEB, both recessive and dominant, that can be administered by a healthcare professional in either a healthcare professional setting or in the home,” the company stated.

With this approval, the FDA issued the Company a Rare Pediatric Disease Priority Review Voucher, or PRV, which confers priority review to a subsequent drug application that would not otherwise qualify for priority review, the company noted.

“Vyjuvek is expected to be available in the United States in the third quarter of 2023, and the company will begin the promotion of Vyjuvek immediately.

Outside of the US, the European Medicines Agency has granted Vyjuvek orphan drug designation and PRIME – PRIority MEdicines – eligibility for the treatment of DEB.

The Company anticipates starting the official Marketing Authorization Application procedure in the second half of 2023 with a potential approval in 2024.

The Company is also working with the Pharmaceuticals and Medical Devices Agency in Japan to study Vyjuvek and seek approval for potential launch in 2025,” the company added.

KRYS is up 8.7% to $95.00 per share on heavy trading volume.

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Eli Lilly Shares Higher on Alzheimer’s Drug!

Eli Lilly TRAILBLAZER-ALZ 2 met primary endpoint, all secondary endpoint

Eli Lilly (LLY) announced results of the TRAILBLAZER-ALZ 2 Phase 3 study showing that donanemab significantly slowed cognitive and functional decline in people with early symptomatic Alzheimer’s disease.

Eli Lilly announces Alimta label expanded by FDA, Stockwinners

Donanemab met the primary endpoint of change from baseline until 18 months on the integrated Alzheimer’s Disease Rating Scale, or iADRS.

The primary endpoint of iADRS measures cognition and activities of daily living such as managing finances, driving, engaging in hobbies, and conversing about current events.

All secondary endpoints of cognitive and functional decline were also met and showed highly statistically significant clinical benefits with similar magnitude.

Based on these results, Lilly will proceed with global regulatory submissions as quickly as possible and anticipates making a submission to the FDA yet this quarter.

Lilly will work with the FDA and other global regulators to achieve the fastest path to traditional approvals.

TRAILBLAZER-ALZ 2, a randomized, double-blind, placebo-controlled study, evaluated the safety and efficacy of donanemab, an investigational amyloid plaque targeting therapy.

The study enrolled people with early symptomatic Alzheimer’s disease, or AD, which includes mild cognitive impairment, or MCI, and the mild dementia stage of disease, with the confirmed presence of AD neuropathology, and participants completed their course of treatment with donanemab once they reached a prespecified level of amyloid plaque clearance.

Biogen sharply higher on data, Stockwinners

Participants in TRAILBLAZER-ALZ 2 were stratified by their level of the brain protein tau, a predictive biomarker for Alzheimer’s disease progression. The primary analysis population for which the study was powered was comprised of people with an intermediate level of tau and clinical symptoms of Alzheimer’s disease.

In this population, the primary endpoint (iADRS) showed 35% slowing of decline, and an important key secondary endpoint showed 36% slowing of decline over 18 months.

Additional pre-specified secondary analyses showed: 47% of participants on donanemab showed no decline on CDR-SB, a key measure of disease severity at 1 year. 52% of participants completed their course of treatment by 1 year and 72% completed by 18 months as a result of achieving plaque clearance.

Participants on donanemab had 40% less decline in ability to perform activities of daily living at 18 months. Participants on donanemab experienced a 39% lower risk of progressing to the next stage of disease compared to placebo.

The study also enrolled a smaller number of people with high levels of tau at baseline, representing a later stage of disease progression.

Because these participants were predicted to progress more quickly and be less responsive to therapy, the target population for the study was the intermediate tau population. The high tau participants were combined with the intermediate tau population in an additional primary analysis of all participants enrolled. In this combined population, donanemab also demonstrated meaningful positive results across all clinical endpoints, with CDR-SB and iADRS showing 29% and 22% slowing of decline, respectively. The incidence of amyloid-related imaging abnormalities was consistent with the TRAILBLAZER-ALZ Phase 2 study.

Infusion-related reactions occurred in 8.7% of participants with most cases mild to moderate in severity. In addition to slowing cognitive and functional decline in TRAILBLAZER-ALZ 2, donanemab produced significant reductions in brain amyloid plaque levels as early as 6 months after initiating treatment, as observed using amyloid positron emission tomography brain scan, with many patients reaching amyloid levels considered negative for pathology1.

Alzheimer’s disease is a progressive brain disorder that affects memory, thinking, and behavior. According to the World Health Organization (WHO), around 50 million people worldwide have dementia, and the most common cause of dementia is Alzheimer’s disease.

In the United States, it is estimated that around 6 million people have Alzheimer’s disease. This number is expected to increase as the population ages.

The economic effect of Alzheimer’s disease is significant. According to the Alzheimer’s Association, in 2021, the total cost of caring for people with Alzheimer’s and other dementias in the United States is projected to reach $355 billion. This includes the cost of medical care, long-term care, and lost wages for family caregivers. By 2050, these costs are projected to increase to $1.1 trillion.

The economic impact is not just limited to the United States. Alzheimer’s disease has a global economic impact, with estimated costs of around $1 trillion in 2018. As the population ages, the economic impact is expected to increase.

LLY shares are up $25 to $429.15 or 6% on the day. Shares of Biogen (BIIB) which has a competing drug are down $5 to $310.03.

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What is an Inverted Bond?

Bond market predicts a recession ahead

Inverted bond chart, also known as the yield curve inversion, is a powerful economic indicator that has garnered significant attention in recent years. In simple terms, an inverted bond chart is when the yield on short-term bonds exceeds the yield on long-term bonds. This event is considered a warning sign of an impending economic recession. In this article, we will explore what an inverted bond chart is, how it works, and what it means for investors.

What is an Inverted Bond Chart?

A bond is essentially an IOU issued by a borrower, such as a company or a government, to an investor. The bond pays interest to the investor at a certain rate, also known as the yield. The yield on a bond is determined by the prevailing interest rates in the economy and the creditworthiness of the borrower. Generally, the longer the maturity of the bond, the higher the yield investors demand. This is because investors demand a premium for lending their money for a longer period, as there is more risk involved.

An inverted bond chart is when the yield on short-term bonds exceeds the yield on long-term bonds. This is a rare occurrence and happens when investors lose confidence in the economy’s future prospects. Normally, investors expect to receive a higher yield on long-term bonds because they are taking a greater risk by lending their money for a longer period. However, when investors are worried about the economy’s prospects, they demand higher yields on short-term bonds as they are more concerned about the immediate future. This demand for short-term bonds drives down their yields and causes the yield curve to invert.

How Does an Inverted Bond Chart Work?

An inverted bond chart works by reflecting the market’s expectations of future economic growth and inflation. When investors are optimistic about the economy’s future prospects, they demand lower yields on short-term bonds as they believe that interest rates will remain low in the future. This optimism drives up the yields on long-term bonds as investors are willing to lend their money for a longer period.

Conversely, when investors are pessimistic about the economy’s future prospects, they demand higher yields on short-term bonds as they believe that interest rates will rise in the future. This pessimism drives down the yields on long-term bonds as investors are less willing to lend their money for a longer period. This creates an inverted bond chart as the yields on short-term bonds exceed those on long-term bonds.

What Does an Inverted Bond Chart Mean for Investors?

An inverted bond chart is a warning sign of an impending economic recession. Historically, every recession in the United States since 1950 has been preceded by an inverted yield curve. This is because an inverted bond chart signals that investors are worried about the future prospects of the economy and are demanding higher yields on short-term bonds. This demand for short-term bonds drives down their yields and causes the yield curve to invert.

Investors should take an inverted bond chart seriously, as it indicates that the economy is likely to experience a slowdown in the near future. This can have significant implications for their investment portfolios. During a recession, the stock market tends to perform poorly, and investors may experience significant losses if they are not properly diversified. Additionally, companies may cut dividends, leading to a decrease in income for investors who rely on dividends for income.

Investors should consider adjusting their portfolios in response to an inverted bond chart. This may involve reducing exposure to stocks and increasing exposure to bonds, particularly those with short maturities. Short-term bonds are less affected by changes in interest rates and are less volatile than long-term bonds, making them a good option for investors during a recession. Investors may also consider investing in defensive stocks, such as utilities and consumer staples, as these tend to perform well during economic downturns.

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Shares of Block lower on short seller report!

Block intends to explore legal action against Hindenburg Research

#Hindenburg Research has published a short report on Block (SQ), formerly known as Square, stating that the firm’s “2-year investigation has concluded that Block has systematically taken advantage of the demographics it claims to be helping.

The “magic” behind Block’s business has not been disruptive innovation, but rather the company’s willingness to facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as revolutionary technology, and mislead investors with inflated metrics.”

The firm, which discloses that it has taken a short position in shares of Block, contends that the company “has misled investors on key metrics, and embraced predatory offerings and compliance worst-practices in order to fuel growth and profit from facilitation of fraud against consumers and the government.”

In addition, it believes “Jack Dorsey has built an empire-and amassed a $5 billion personal fortune-professing to care deeply about the demographics he is taking advantage of. With Dorsey and top executives already having sold over $1 billion in equity on Block’s meteoric pandemic run higher, they have ensured they will be fine, regardless of the outcome for everyone else.”

Block Responds

Block said in a statement: “We intend to work with the SEC and explore legal action against #Hindenburg Research for the factually inaccurate and misleading report they shared about our Cash App business today.

Hindenburg is known for these types of attacks, which are designed solely to allow short sellers to profit from a declined stock price. We have reviewed the full report in the context of our own data and believe it’s designed to deceive and confuse investors. We are a highly regulated public company with regular disclosures, and are confident in our products, reporting, compliance programs, and controls. We will not be distracted by typical short seller tactics.”

Robert Baird

Baird analyst David #Koning comments on a short report that is significantly weighing on Block shares in pre-market trading, noting that the report implies that the company’s CashApp is reasonably easy, or relatively easier than other banking services, for criminals to use and claims that CashApp is somewhat complicit in allowing this type of behavior.

However, the firm believes Block helps many underbanked access the financial markets and “like any organization probably has some clients that are criminals.” The firm views the stock as good value, but is concerned with the prevalence of any criminal activity and how this could impact investor sentiment, estimating that “in a pretty dire case” shedding 20% of accounts could impact about 8% of total gross profit. Baird has an Outperform rating and $92 price target on Block shares, which are down about 20% to $58.07 in early trading following Hindenburg Research’s short report.

KeyBanc

KeyBanc analyst Josh #Beck sees “no merit to the disparaging claims” made against Block by a “smaller outfit” that published a short report and rather views the report as “observations from a relatively novice industry outsider who is not familiar with standard operating practices and principles within the FinTech industry.”

The firm, which said Block is subject to numerous laws and regulations as a financial services provider, believes Block “fully complies with applicable regulations and laws and prevents the maximal amount of fraud possible within a business that is inherently subject to, while not immune to, any instances of fraud.” KeyBanc has an Overweight rating and $100 price target on Block shares, 

Mizuho

Mizuho analyst Dan #Dolev says Hindenburg Research’s short report “makes valid arguments,” such as the slowdown in inflows and sustainability of the instant deposit fees.

While this might increase regulatory scrutiny, other claims and risks around high, unregulated interchange fees and definition of monthly users are well known to investors, the analyst tells investors in a research note. The firm says other aspects of the report, like adding back stock based compensation after Block publicly shifted focus to include non-cash expenses in operating income, “may hold less water.”

Mizuho says the near-term bull case on Blok remains reaching better than expected profits helped by cost control. The long-term bull case remains creating a “unique” closed-loop payments network by connecting merchants and consumers, the firm adds. It has a Buy rating on the stock with a $93 price target.

Raymond James

Raymond James contends that this morning’s short report on Block issued by Hindenburg Research doesn’t include a lot of “new” news or a “bombshell” and argues that the biggest risk is potentially drawing scrutiny from regulators and politicians, which could create an overhang on the stock.

However, given the situation concerning SVB Financial (SIVB) and the current banking fallout, the firm would guess “this is way down the list of priorities” for financial regulators at this time.

The firm, which adds that “while being accused of overstating users certainly isn’t positive,” notes that there are no accusations of fraudulent accounting and the “revenue is real.” Raymond James has a Market Perform rating on Block shares.

RBC Capital

RBC Capital analyst Daniel Perlin made no change to the firm’s Outperform rating or $95 price target on shares of Block. The firm says the short report that was released today focuses on Block’s “underbanked” user base, as being a series of bad actors, enabling the overstatement of its users metrics, as well as BNPL via its acquisition of Afterpay, systematically embracing predatory pricing, the analyst tells investors in a research note.

RBC Capital’s view of the stock is unchanged, but thinks the negative overhang can persist for some time.

Shares of Block are down 20% to $58.10.

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Diversey Holdings sold for $4.6 billion

Diversey to be acquired by Solenis for $8.40 per share in cash

Solenis and Diversey Holdings (DSEY) announced they have entered into a definitive merger agreement under which Solenis will acquire Diversey in an all-cash transaction valued at an enterprise value of approximately $4.6B.

Diversey Holdings, Ltd. provides infection prevention and cleaning solutions worldwide. It operates in two segments, Institutional, and Food & Beverage. 

Upon completion of the merger, Diversey will become a private company.

Under the terms of the agreement, Diversey shareholders — other than shareholders affiliated with Bain Capital Private Equity — will receive $8.40 per share in cash, which represents a premium of approximately 41.0% over Diversey’s closing share price on March 7, 2023, the last full trading day prior to the transaction announcement, and a premium of approximately 59.0% over Diversey’s 90-day volume-weighted average price.

Bain Capital will receive $7.84 per share in cash and will rollover a portion of its shares of Diversey into an affiliate of Solenis in exchange for common and preferred units of such affiliate.

Headquartered in Wilmington, Delaware, Solenis is a manufacturer of specialty chemicals used in water-intensive industries, which was acquired by Platinum Equity in 2021.

“The merger presents a unique opportunity to enhance value and create a more diversified business with increased scale, broader global reach, and superior customer service capabilities. It will enable the combined company to grow and provide a number of attractive cross-selling opportunities, including meeting increasing customer demand for water management, cleaning and hygiene solutions,” said Phil Wieland, Chief Executive Officer of Diversey.

Solenis CEO John Panichella will lead the combined company following the transition and integration.

Diversey’s Board of Directors formed the Special Committee to evaluate and negotiate the transaction with the assistance of independent financial and legal advisors.

Following this process, the Special Committee unanimously determined that the transaction with Solenis is in the best interests of Diversey and its shareholders, and, acting upon unanimous recommendation by the Special Committee, the Diversey Board of Directors unanimously approved the merger and recommended that Diversey shareholders vote in favor of the merger.

The Special Committee negotiated the terms of the merger agreement with assistance from its independent financial and legal advisors.

In connection with the transaction, Solenis has entered into a support agreement with Bain Capital, pursuant to which Bain Capital has agreed to vote all of its Diversey shares — which represent approximately 73% of Diversey’s outstanding shares — in favor of the transaction, subject to certain terms and conditions set forth therein.

Solenis intends to finance the transaction with a combination of committed debt and equity financing, including the contribution by Bain Capital.

The merger is expected to be completed in the second half of 2023, subject to the satisfaction of customary closing conditions, including approval by Diversey shareholders holding a majority of the outstanding shares of the Company and receipt of regulatory approvals.

Upon closing of the transaction, Diversey’s ordinary shares will no longer be listed on any public market.

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North American rail traffic declined 3.4% last week

North American rail traffic down 3.4% for the week ending February 25

The Association of American Railroads, AAR reported U.S. rail traffic for the week ending February 25, as well as volumes for February 2023.

U.S. railroads originated 905,744 carloads in February 2023, down 1.6% or 15,101 carloads, from February 2022.

U.S. railroads also originated 943,979 containers and trailers in February 2023, down 8.4%, or 86,351 units, from the same month last year.

Combined U.S. carload and intermodal originations in February 2023 were 1,849,723, down 5.2%, or 101,452 carloads and intermodal units from February 2022.

“Coal, chemicals, and grain together account for more than half of all non-intermodal U.S. rail volume.

When all three are down, like they were in February, it’s very hard for total carloads not to be down too,” said AAR Senior Vice President John T. Gray.

“On the positive side, several commodities including crushed stone and sand, petroleum products, steel products, grain mill and food products showed very strong performances.”

Total U.S. weekly rail traffic was 459,233 carloads and intermodal units, down 5.9% compared with the same week last year.

Total carloads for the week ending February 25 were 226,435 carloads, up 0.1% compared with the same week in 2022, while U.S. weekly intermodal volume was 232,798 containers and trailers, down 11.1% compared to 2022.

North American rail volume for the week ending February 25 on 12 reporting U.S., Canadian and Mexican railroads totaled 327,221 carloads, up 2.9% compared with the same week last year, and 308,029 intermodal units, down 9.3% compared with last year.

Total combined weekly rail traffic in North America was 635,250 carloads and intermodal units, down 3.4%.

Publicly traded companies in the space include CSX (CSX), Canadian National (CNI), Canadian Pacific (CP), Kansas City Southern (KSU), Norfolk Southern (NSC), Union Pacific (UNP), Greenbrier (GBX), Trinity Industries (TRN), FreightCar America (RAIL) and Wabtec (WAB).

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Netflix Outlines Methods to Stop Credential Sharing

Netflix provides update on sharing guidelines as 100M households share accounts

In an “update on sharing,” Netflix (NFLX) said that,

“Today, over 100 million households are sharing accounts – impacting our ability to invest in great new TV and films.

So over the last year, we’ve been exploring different approaches to address this issue in Latin America, and we’re now ready to roll them out more broadly in the coming months, starting today in Canada, New Zealand, Portugal and Spain.

Our focus has been on giving members greater control over who can access their account.

Set primary location: We’ll help members set this up, ensuring that anyone who lives in their household can use their Netflix account.

Manage account access and devices: Members can now easily manage who has access to their account from our new Manage Access and Devices page.

Transfer profile: People using an account can now easily transfer a profile to a new account, which they pay for – keeping their personalized recommendations, viewing history, My List, saved games and more.

Netflix Spain raises prices

Watch while you travel: Members can still easily watch Netflix on their personal devices or log into a new TV, like at a hotel or holiday rental.

Netflix Canada raises prices

Buy an extra member: Members on our Standard or Premium plan in many countries (including Canada, New Zealand, Portugal and Spain) can add an extra member sub account for up to two people they don’t live with – each with a profile, personalized recommendations, login and password – for an extra CAD$7.99 a month per person in Canada, NZD$7.99 in New Zealand, Euro 3.99 in Portugal, and Euro 5.99 in Spain.”

NFLX is up $1.26 to $364.15.

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Rig Counts Declined last week!

Baker Hughes reports U.S. rig count down 12 to 759 rigs

Baker Hughes (BKR) reports that the U.S. rig count is down 12 from last week to 759 with oil rigs down 10 to 599, gas rigs down 2 to 158 and miscellaneous rigs unchanged at 2.

The U.S. Rig Count is up 146 rigs from last year’s count of 613 with oil rigs up 102, gas rigs up 42 and miscellaneous up 2.

The U.S. Offshore Rig Count is down 1 to 12, down 4 year-over-year. The Canada Rig Count is up 2 from last week to 249, with oil rigs up 2 to 159, gas rigs unchanged at 90.

The Canada Rig Count is up 31 rigs from last year’s count of 218 with oil rigs up 23, gas rigs up 8.

The Baker Hughes rig counts are counts of the number of drilling rigs actively exploring for or developing oil or natural gas in the U.S., Canada and international markets.

The Company has issued the rig counts as a service to the petroleum industry since 1944, when Hughes Tool Company began weekly counts of the U.S. and Canadian drilling activity. The monthly international rig count was initiated in 1975.

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West Texas Intermediate (WTI) is down $2.05 to $73.81 per barrel (down from a high of $123.70). Brent crude is down $2.06 to $80.19 per barre (down from a high of $127.98). Gasoline last traded at $2.349 per gallon (down from a high of $4.31 per gallon).

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Stockwinners Portfolio returns 22.8% in 2022

S&P 500 declined 19.6% during the same period

The bear market of 2022 cost most investors dearly whereas Stockwinners readers were able to register double digit returns. Our experience in the past 24 years has taught us how to avoid pitfall of following crowds and Wall Street gurus. In fact, we stayed away from story stocks such Tesla (TSLA), Paypal Holdings (PYPL) and Meta Platform (META). We concentrated on small to medium cap stocks. These stocks typically do not have any exposure to overseas markets and are traded on their own fundamentals.

Russian invasion of Ukraine created unique trading opportunities for investors. The vicious invasion of Ukraine caused energy and commodity prices skyrocket thus offering opportunities in that space. In fact, one of our better performers on the year was EPAM System (EPAM). This software company has about 25 percent of its workforce located in the eastern European country. Those who bought the stock based on our recommendations were rewarded with a 23% return in two days.

Energy stocks were awakened with the invasion. Crude oil shot up to $106.50 from $70 per barrel. This price increase buoyed energy stocks. Amongst our better performers were shares of Par Pacific Holdings (PARR). The refiner shares gained fifteen percent following our recommendations.

Other commodity stocks that were featured in our portfolio included those involved in precious and rare minerals mining. Livent Corporation (LTHM) was one such name. The lithium miner was featured several times with solid returns. The returns were 14%, 12% and 18%. Sigma Lithium Corporation (SGML) was another name in the sector. It gained 14% following our recommendations.

Sierra Wireless, Inc. (SWIR) was another stock that came to our attention. The company provides device-to-cloud Internet of Things (IoT) solutions. Shares were featured in August with success. Stock gained 18 percents in two weeks.

We featured put options (shorting the stock) on several names. One of the names featured was Open Text Corporation (OTEX). Put option on the name returned 325% in 17 days. The put was featured at $1.50 and it was closed 17 days later at $6.40. Another name that was featured several times was Carvana (CVNA). Shares of the used car retailer have fallen from $300 to $3.55.

A strong employment market created opportunity in placement companies. Cross Country Healthcare, Inc. (CCRN) was such name. The company places medical staff. Shares were featured in August and gained 18% in less than two weeks.

Our portfolio can be downloaded here. Additionally, one may download our selections for the past 18 years in a spreadsheet format.

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Horizon Therapeutics sold for $28.3 billion

Amgen to acquire Horizon Therapeutics for $116.50 per share in cash

The board of directors of Horizon Therapeutics (HZNP) and the board of directors of Amgen (AMGN) announced that they have reached agreement on the terms of a cash offer for the company by Pillartree, a newly formed private limited company wholly owned by Amgen, which is unanimously recommended by the company board and pursuant to which acquirer sub will acquire the entire issued and to be issued ordinary share capital of the company.

Under the terms of the acquisition, each company shareholder at the Scheme Record Time will be entitled to receive: $116.50 for each Company Share in cash.

The acquisition represents: a premium of approximately 47.9% to the closing price of $78.76 per company share on November 29 and a premium of approximately 19.7% to the closing price of $97.29 per company share on December 9.

The acquisition values the entire issued and to be issued ordinary share capital of the company at approximately $27.8B on a fully diluted basis and implies an enterprise value of approximately $28.3B.

Amgen has entered into a Bridge Credit Agreement, dated December 12, for an aggregate amount of $28.5B.

Having taken into account the relevant factors and applicable risks, the company board, which has been so advised by Morgan Stanley, which as financial advisor to the company board has rendered a fairness opinion, considers the terms of the acquisition as set out in this announcement to be fair and reasonable.

In providing its advice to the company board, Morgan Stanley has taken into account the commercial assessments of the company directors.

The company board has unanimously determined that the transaction agreement and the transactions, including the scheme, are advisable for, fair to and in the best interests of, the company shareholders.

Accordingly, the company board unanimously recommends that company shareholders vote in favor of the scheme meeting resolution and the Required EGM Resolutions, or, if the acquisition is implemented by a takeover offer, accept or procure acceptance of such takeover offer.

It is agreed that the acquisition will be implemented by way of an Irish High Court-sanctioned scheme of arrangement under Chapter 1 of Part 9 of the Irish Companies Act.

The acquisition will be subject to the satisfaction or waiver of the conditions, which are set out in full in Appendix 3 to this announcement, including, in summary: the requisite approval by company shareholders of the scheme meeting resolution and the required EGM Resolutions; the sanction of the scheme by the Irish High Court and the receipt of required antitrust clearances in the United States, Austria and Germany and the receipt of required foreign investment clearances in France, Germany, Denmark and Italy.

It is expected that the scheme document, containing further information about the acquisition and notices of the scheme meeting and the EGM, the expected timetable for completion and action to be taken by company shareholders, will be published as soon as practicable.

It is anticipated that the scheme will, subject to obtaining the necessary regulatory approvals, be declared effective in the first half of 2023. An expected timetable of key events relating to the acquisition will be provided in the scheme document.

Horizon Therapeutics Public Limited Company is an Irish biotechnology company, It focuses on the discovery, development, and commercialization of medicines that address critical needs for people impacted by rare, autoimmune, and severe inflammatory diseases. Its portfolio comprises 12 medicines in the areas of rare diseases, gout, ophthalmology, and inflammation.

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Prometheus Biosciences reports positive data, shares jump!

Prometheus announces results for PRA023 in APOLLO-CD Phase 2 study

Prometheus Biosciences (RXDX) reported results from its ARTEMIS-UC Phase 2 and APOLLO-CD Phase 2a studies of PRA023 demonstrating strong efficacy and favorable safety results in both studies.

Based on the totality of the data in these two studies, Prometheus intends to advance PRA023 into Phase 3 studies for ulcerative colitis and Crohn’s disease in 2023.

Results from the APOLLO-CD Phase 2a Study: Prometheus’ Phase 2a APOLLO-CD clinical trial was a 12-week open-label study that enrolled 55 patients with moderate-to-severely active CD with endoscopically active disease who had failed conventional or biologic therapy.

Crohn’s Disease

The study enrolled a highly refractory patient population with 70.9% of patients previously treated with at least one biologic therapy and 52.7% treated with two or more biologic therapies.

The results on the key endpoints were as follows: 26.0% of patients on PRA023 achieved endoscopic response; 49.1% of patients on PRA023 achieved clinical remission; PRA023 was well tolerated in the APOLLO-CD study.

There were no treatment-emergent serious adverse events, adverse events leading to discontinuation, or severe AEs assessed as related to PRA023 by the investigator.

The predictive power of the company’s prespecified genetic markers was validated using an alternative Crohn’s-specific CDx algorithm which showed 45.0% endoscopic response relative to all-comers of 26%.

While the original algorithm provided limited benefit on some of the endpoints, the alternative algorithm demonstrated enhanced performance across both clinical and endoscopic outcomes.

As a result of these positive data, Prometheus plans to advance PRA023 into pivotal development in 2023, following discussions with regulators.

Based upon confidence in its precision approach and speed to market, the company conducted an interim companion diagnostic (CDx) analysis of Cohort 1 to evaluate the effectiveness of the CDx candidate in ARTEMIS-UC. Although from limited patient numbers, data from the subset of patients who tested positive on the CDx in Cohort 1 (N=32) demonstrated a placebo-adjusted clinical remission rate of 37.5%, compared with the placebo-adjusted remission rate of 25.0% for all-comers. The expansion cohort (Cohort 2), which is statistically powered to further assess the treatment effect of PRA023 in CDx+ patients will continue to enroll, and the company expects results in the second quarter of 2023.

RXDX is up $17 to $112.86.

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Mirati Theraputics shares jump on take over rumors!

Mirati Therapeutics shares are up 20% on heavy trading volume

Mirati Therapeutics (MRTX) is attracting fresh takeover interest from large pharma companies, sources tell Bloomberg’s Michelle Davis and Dinesh Nair.

Mirati Therapeutics, Inc. is a clinical-stage oncology company. It develops product candidates to address the genetic and immunological promoters of cancer in the United States.

The company develops MRTX849, a KRAS G12C inhibitor, which is in Phase 1/2 clinical trial for treating non-small cell lung (NSCL), colorectal, pancreatic, and other cancers; and Sitravatinib, an investigational spectrum-selective kinase inhibitor that is in Phase 3 clinical trial for the treatment of NSCL cancer, as well as a KRAS G12D inhibitor program, which is in preclinical development. It has a collaboration and license agreement with BeiGene, Ltd. to develop, manufacture, and commercialize sitravatinib.

Sitravatinib

Sitravatinib (MGCD516) is an orally-available, small molecule inhibitor of a closely related spectrum of receptor tyrosine kinases (RTKs) including MET, TAM (Tyro3, AXL, MERTK) family, VEGFR family, PDGFR family, KIT, FLT3, TRK family, RET, DDR2, and selected EPH family members. Nivolumab is a human IgG monoclonal antibody that binds to the PD-1 receptor and selectively blocks the interaction with its ligands PD-L1 and PD-L2, thereby releasing PD-1 pathway mediated inhibition of the immune response, including anti-tumor immune response. RTKs have been implicated in mediating an immunosuppressive tumor microenvironment, which has emerged as a potential resistance mechanism to checkpoint inhibitor therapy. Inhibition of these RTKs by sitravatinib may augment anti-tumor immune response and improve outcomes by overcoming resistance to checkpoint inhibitor therapy.

On November 8th, Mirati Therapeutics (MRTX) reported a 3rd Quarter September 2022 loss of $3.09 per share on revenue of $5.4 million. The consensus estimate was a loss of $3.46 per share on revenue of $4.6 million.

The stock has a 52-week trading range of $32.96 to $154.17. Shares last traded at $89.50.

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City of Cincinnati gets $1.62B from Norfolk Southern

Norfolk Southern to purchase assets of Cincinnati Southern Railway

Norfolk Southern (NSC) announced the execution of a purchase agreement under which the company’s operating subsidiary, Norfolk Southern Railway Company, will acquire substantially all of the assets of the Cincinnati Southern Railway, an approximately 337 mile railroad that runs from Cincinnati, Ohio to Chattanooga, Tennessee.

The CSR is currently owned by the City of Cincinnati and operated by the Cincinnati, New Orleans and Texas Pacific Railway Company, a wholly owned subsidiary of Norfolk Southern Railway, under a lease agreement expiring in 2026.

The agreement provides the company ownership of approximately 9,500 acres of land that sits under infrastructure maintained and operated by Norfolk Southern.

Further, it ensures Norfolk Southern will own the line in perpetuity, while eliminating uncertainty around future lease costs.

The line is one of the highest density segments of the company’s network, with as many as 30 trains a day traveling the route.

Upon the close of the transaction, projected to occur in the first half of 2024, the City of Cincinnati will receive cash consideration of approximately $1.62B.

Norfolk Southern intends to finance the transaction through a combination of internal and external sources.

The City of Cincinnati plans to use the proceeds of the transaction to form an infrastructure fund that will benefit the citizens of Cincinnati for generations to come.

The trust would solely fund the rehabilitation, modernization, or replacement of existing infrastructure such as streets, bridges, municipal buildings, parks, and green space.

The closing is subject to certain conditions, including approval by the voters of Cincinnati and the U.S. Surface Transportation Board.

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