Teva Pharmaceutical suspends its dividend

Teva to cut over 25% of workforce, suspends dividend 

14,000 people will lose their jobs

Teva suspends its dividend

Teva Pharmaceutical Industries (TEVA) announced a restructuring plan intended to “significantly reduce its cost base, unify and simplify its organization and improve business performance, profitability, cash flow generation and productivity.”

The two year restructuring plan is intended to reduce Teva’s total cost base by $3B by the end of 2019, out of an estimated cost base for 2017 of $16.1B.

More than half of the reduction is expected to be achieved by the end of 2018.

The company expects to record a restructuring charge as a result of the implementation of the plan in 2018 of at least $700M, mainly related to severance costs, with additional charges possible following decisions on closures or divestments of manufacturing plants, R&D facilities, headquarters and other office locations.

These steps are expected to result in the reduction of 14,000 positions globally – excluding the impact of any future divestments – over 25% of Teva’s total workforce – over the next two years.

The majority of the reductions are expected to occur in 2018, with most of the affected employees being notified within the next 90 days.

Restructuring efforts will be done in accordance with applicable local requirements.

Consultations with the relevant employee representatives will begin in the near term.

In addition to the restructuring plan, Teva is announcing the following measures to address the company’s financial situation: The company will immediately suspend dividends on ordinary shares and ADSs, while dividends on mandatory convertible preferred shares will be evaluated on a quarterly basis per current practice; Teva’s annual bonus for 2017 will not be paid due to the fact that the company’s financial results are significantly below our original guidance for the year; The company will continue to review the potential for additional divestment of non-core assets;

Teva will provide full guidance for 2018 in February with the annual results and will share a longer-term strategic direction for the company later in 2018.

TEVA closed at $15.70. It last traded at $17.65.


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ANZ’s life insurance businesses sold for $2.14 billion

Zurich enters agreement to acquire ANZ’s life insurance businesses in Australia 

ANZ's life insurance businesses sold for $2.14B. See Stockwinners.com
ANZ’s life insurance businesses sold for $2.14B

Zurich Insurance Group (ZURVY) yesterday announced that it has entered into an agreement to acquire 100% of ANZ’s (ANZBY) life insurance businesses, OnePath Life, in Australia for A$2.85B, or $2.14B.

Both parties expect the transaction, which is subject to regulatory approval, to be completed by the end of 2018.

The transaction price comprises A$1B of upfront reinsurance commissions, expected to be paid subject to regulatory approval in May 2018 with the remaining balance paid on completion.

The acquisition is expected to contribute to the Group’s profitability from day one, generating strong cash flows which will support future dividend growth.

The transaction will also increase the proportion of stable life protection-based earnings, reducing overall Group earnings volatility and increasing the proportion of life earnings remitted as cash back to the Group.

In view of these earnings benefits, Zurich expects to raise its current BOPAT ROE target by 50 basis points by 2019.

The transaction is also expected to increase the level of overall cash remittances over the 2017-2019 planning period by A$300M.

As part of the transaction, Zurich will enter into a 20-year distribution agreement with ANZ in Australia to distribute life insurance products through bank channels.

The acquisition is expected to be funded through a mixture of Zurich’s internal cash resources and senior debt, and is expected to reduce Zurich’s capital position only modestly.

ZURVY closed at $30. ANZBY closed at $21.53.


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International rig counts decline

Baker Hughes reports November international rig count 942, down 9 rigs

Oil Rigs, See Stockwinners.com Market Radar to read the latest on oil and rig count
Oil Rig counts decline

Baker Hughes (BHGE), a GE company, announced that the Baker Hughes international rig count for November 2017 was 942, down 9 from the 951 counted in October 2017, and up 17 from the 925 counted in November 2016.

The international offshore rig count for November 2017 was 183, down 21 from the 204 counted in October 2017, and down 28 from the 211 counted in November 2016.

The average US rig count for November 2017 was 911, down 11 from the 922 counted in October 2017, and up 331 from the 580 counted in November 2016.

The average Canadian rig count for November 2017 was 204, unchanged from the 204 counted in October 2017, and up 31 from the 173 counted in November 2016.

The worldwide rig count for November 2017 was 2,057, down 20 from the 2,077 counted in October 2017, and up 379 from the 1,678 counted in November 2016.

WTI Crude is up 6 cents to $56.02 per barrel. Brent crude is up 27 cents to $61.49 per barrel. USO closed at $11.20.


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Barron’s is bullish on Salesforce.com

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

BULLISH  MENTIONS

Johnson & Johnson (JNJ) could rise further – In a follow-up story, Barron’s notes that Johnson & Johnson’s shares had a blockbuster year, as concerns about its big rheumatoid-arthritis drug Remicade proved too pessimistic, but shares could rise almost 20% as investors view the company’s drug pipeline in a new light.

Companies trading mostly in U.S. to benefit from tax reform – Investors in companies that trade mostly in the U.S. such as Southwest Airlines (LUV) should benefit greatly from what is arguably the signature provision of the tax reform bill, namely a drop in the federal corporate tax rate, John Kimelman writes in this week’s edition of Barron’s. Tech giants such as Apple (AAPL), Microsoft (MSFT) and Alphabet (GOOG; GOOGL) should experience a huge windfall from the legislation’s provision that could set the rate on the taxes of foreign earnings held in cash as low as 10%, thus encouraging repatriation, he says.

Transfer Partners situation to be resolved by 2019/2020 – Master limited partnerships have been dogged for the past several years by investor concerns, with Energy Transfer Partners (ETP) being one of the worst-performing large MLPs, Andrew Bary writes in this week’s edition of Barron’s. Its unit price has tumbled since the merger with Sunoco Logistics, even as the units of its sister company, Energy Transfer Equity (ETE) have held steady, he adds. The endgame probably will be a merger of the two companies, or an equity buyout of the IDRs by Energy Transfer Partners, Barron’s contends.

Start-ups dwelling in tech giants shadow – Tech giants such as Amazon (AMZN), Alphabet (GOOG; GOOGL) and Apple (AAPL) show no signs of slowing down, increasingly calling the shots in tech in a way that limits the scope within which small companies operate, Tiernan Ray writes in this week’s edition of Barron’s. While many start-ups show promise but “dwell in the shadow of the giants,” he adds. Commenting on recent IPOs, Barron’s notes that while Appian (APPN) and Roku (ROKU) have surged 39% and $85% respectively, cloud-computing darlings Mulesoft (MULE) and Tintri (TNTR) are down since their debuts.

Wall Street about to join in Bitcoin fun – Bitcoin shot past $11,000 last week but slid sharply right after before surging yet again, Avi Salzman writes in this week’s edition of Barron’s. Now Wall Street is about to join in the fun, he notes, adding that getting listed on some of the largest exchanges in the country is a “tectonic shift for Bitcoin.” Banks like Goldman Sachs (GS) are considering helping clients execute Bitcoin trades, and once “they dip their toes in,” there may be no turning back, Salzman contends.

 Salesforce.com has 25% upside – As Salesforce (CRM) launches new products, its “addressable market” expands, which means more opportunities for sales and potentially wider margins, Jack Hough writes in this week’s edition of Barron’s. The company’s shares should continue to outperform as revenue rises and margins improve, and a 25% increase in 2018 to $130 seems achievable, he adds.


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Shell paints a rosy picture

Shell annual organic free cash flow outlook increased to $25B-$30B by 2020

Shell annual organic free cash flow outlook increased to $25B-$30B by 2020

Royal Dutch Shell (RDS.a) CEO Ben van Beurden updated investors on the company’s strategy, setting out plans to grow returns and free cash flow, and outlining its ambition to reduce the net carbon footprint of its energy products.

Van Beurden highlighted three updates from his presentation:

“We have increased our outlook for organic free cash flow, which has been consistently strong over the past five quarters. We have also made significant progress with our divestment programme, allowing us to reduce net debt in that time.

Meanwhile, we intend to cancel our scrip dividend programme with effect from the fourth quarter 2017.”

The outlook for annual organic free cash flow has increased to $25 to $30 billion by 2020 at a Brent crude oil price of $60 per barrel (real terms 2016).

This is $5 billion more than the outlook Shell provided during its capital markets day in June 2016.

The delivery of new projects continues, and the company remains on track to deliver 1 million barrels of oil equivalent per day, and $10 billion of cash flow from operations from new projects by 2018, at $60 per barrel, real terms 2016.

It expects to deliver an incremental $5 billion cash flow from operations by 2020. Annual capital investment will continue to be between $25 and $30 billion, and at current oil prices capital investment will be managed towards the bottom end of that range, or lower if needed.

Annual underlying operational expenditure will remain below $38 billion until 2020, with efficiency gains expected to deliver further reductions, building on the more than 20% reduction in operational expenditure since 2014. The company expects to continue to grow organic free cash flow throughout the 2020s at a more moderate rate.

Increased distributions to shareholders in the form of share buybacks in line with the plans confirmed below is expected to support a stronger growth in its metrics per share.

RDS-a closed at $61.85.


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Meredith to buy Time for $2.8 billion

Meredith will pay $18.50 per share for publisher of Fortune and Time

TIME sold to Meredith for $2.8 B

Meredith Corp.  (MDP) said it will acquire Time Inc.  (TIME) in a deal valued at $2.8 billion, a further sign of consolidation in the print magazine industry.  Meredith has agreed to pay $18.50 a share for the publishing company that owns magazines  such as Time, Fortune and Sports Illustrated.

The deal includes $1.85 billion in cash and the assumption of debt. It had been approved by both firms’ boards of directors and is expected to close in the first quarter in 2018.

The transaction received financial backing from the billionaire Koch brothers. Meredith said it secured $650 million from Koch Equity Development, the investment arm of Koch Industries, but the publisher said Koch Equity Development would not have a seat on the Meredith board and “will have no influence on Meredith’s editorial or managerial operations.”

Meredith Corporation is the owner of Family Circle, Better Homes and Gardens and AllRecipes, and is based in Des Moines Iowa.  The company also owns local television stations — that has allowed Meredith to better weather the economic storm that has faced print publishers.

A deal between Meredith and Time Inc. fell apart in 2013 after Meredith reportedly said that it did not want to acquire some of Time Inc.’s best-known titles, including Time, Fortune and Sports Illustrated. Meredith also expressed interest in buying Time Inc. earlier this year before it walked away — in part because it could not secure sufficient financing. The Kochs helped the company overcome that problem.

MDP closed at $61.00. TIME closed at $16.90.


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Bitcoin hits an all time high, thanks to Square

Bitcoin hits record high amid Square inclusion on Cash app

Bitcoin hits $8000. See Stockwinners.com for details

Bitcoin hit a new record high on Sunday, breaking the $8,000 threshold for the first time.

WHAT’S NEW:

Bitcoin reached $8,121.56 on Monday at 12:25 p.m. London Time after breaking the $8,000 value on Sunday, CNBC reported, citing the Coindesk website. The high comes after a sell-off on November 12, in which the cryptocurrency’s price dropped to roughly $5,500, resulting from the cancellation of a potential November 16 upgrade called SegWit2X, which was designed to increase transaction speeds to the bitcoin network.

Positive news including favorable regulation in Japan, increasing interest from institutional investors and planned new market products including CME Group’s (CME) bitcoin future contracts have supported the bitcoin price.

SQUARE TESTS BITCOIN

On Wednesday, Forbes reported Square (SQ) is now offering users the option to buy, sell or hold Bitcoin on its Cash app.

“We’re always listening to our customers and we’ve found that they are interested in using the Cash App to buy Bitcoin,” the spokesperson said.

“We’re exploring how Square can make this experience faster and easier, and have rolled out this feature to a small number of Cash App customers. We believe cryptocurrency can greatly impact the ability of individuals to participate in the global financial system and we’re excited to learn more here.”

CREDIT SUISSE RAISES SQUARE PRICE TARGET

Credit Suisse analyst Paul Condra raised his price target for Square to $37 from $31 following its announcement that it is piloting bitcoin sales via its Square Cash app.

While the analyst is positive on Square’s strategy, to the extent it confers legitimacy on Bitcoin and prompts adoption by other providers, the biggest beneficiary may be the crypto-asset industry. He added that he believes there is low risk that bitcoin will disrupt mainstream payments as the cryptocurrency requires traditional bank accounts, it has fees for consumers to send it, merchant knowledge of bitcoin is very low and buyers are more interested it on holding it than spending it.

The analyst estimates that if Square can attract 10M bitcoin buyers over 10 years, it could drive an incremental $30M in revenue. Condra reiterated a Neutral rating on the shares.

SUNTRUST SAYS BITCOIN “GAME-CHANGING” FOR SQUARE

Suntrust Robinson analyst Andrew Jeffrey said the news of Square offering Bitcoin on its Cash app is bullish, if not game changing, for Square as it creates Cash app differentiation and supports potential monetization.

He added the move is also bullish for Bitcoin adoption as it eliminates friction in buying/selling the cryptocurrency via a P2P app.

Jeffrey also said a broader launch of the feature may boost new user growth for the app, drive increased engagement among existing users and allow Square to monetize Square Cash through transaction fees.

While the analyst believes the news is a slight negative to legacy ecosystem participants, he does not see mainstream Bitcoin adoption in the “investable horizon.” Jeffery has a Hold rating on Square.

Standpoint Research

Standpoint Research analyst Ronnie Moas raised his 2018 price target for bitcoin to $14,000 from $11,000. The price just crossed $8,180 and is now split-adjusted at $9,518 when you factor in the August fork spinoff bitcoin cash and the October fork spinoff bitcoin gold at $158, Moas writes in an email. The analyst sees the price of bitcoin hitting $60,000 five years. He says this is reached by 0.5% of the global total money invested currently in cash, stocks, bonds and gold going into the cryptocurrency.

PRICE ACTION

Bitcoin rose 2.1% to 8,198.99 in morning trading, while Square (SQ) was up 3.1% to $45.56.


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Cavium sold for $6 billion

Marvell to acquire Cavium for $40.00 per share in cash plus 2.1757 MRVL stock

Cavium sold for $6 billion. See Stockwinners.com

Marvell Technology Group (MRVL) and Cavium (CAVM) announced a definitive agreement, unanimously approved by the boards of directors of both companies, under which Marvell will acquire all outstanding shares of Cavium common stock in exchange for consideration of $40.00 per share in cash and 2.1757 Marvell common shares for each Cavium share.

Upon completion of the transaction, Marvell will become a leader in infrastructure solutions with approximately $3.4B in annual revenue.

The transaction combines Marvell’s portfolio of leading HDD and SSD storage controllers, networking solutions and high-performance wireless connectivity products with Cavium’s portfolio of leading multi-core processing, networking communications, storage connectivity and security solutions.

The combined product portfolios provide the scale and breadth to deliver comprehensive end-to-end solutions for customers across the cloud data center, enterprise and service provider markets, and expands Marvell’s serviceable addressable market to more than $16B.

This transaction also creates an R&D innovation engine to accelerate product development, positioning the company to meet today’s massive and growing demand for data storage, heterogeneous computing and high-speed connectivity.

The transaction is expected to generate at least $150M-$175M of annual run-rate synergies within 18 months post close and to be significantly accretive to revenue growth, margins and non-GAAP EPS. Under the terms of the definitive agreement, Marvell will pay Cavium shareholders $40.00 in cash and 2.1757 Marvell common shares for each share of Cavium common stock.

The exchange ratio was based on a purchase price of $80 per share, using Marvell’s undisturbed price prior to November 3, when media reports of the transaction first surfaced.

This represents a transaction value of approximately $6B.

Cavium shareholders are expected to own approximately 25% of the combined company on a pro forma basis. Marvell intends to fund the cash consideration with a combination of cash on hand from the combined companies and $1.75B in debt financing.

Marvell has obtained commitments consisting of an $850M bridge loan commitment and a $900M committed term loan from Goldman Sachs Bank USA and Bank of America Merrill Lynch, in each case, subject to customary terms and conditions. The transaction is not subject to any financing condition.

The transaction is expected to close in mid-calendar 2018, subject to regulatory approval as well as other customary closing conditions, including the adoption by Cavium shareholders of the merger agreement and the approval by Marvell shareholders of the issuance of Marvell common shares in the transaction.

Matt Murphy will lead the combined company, and the leadership team will have strong representation from both companies, including Marvell’s current CFO Jean Hu, Cavium’s Co-founder and COO Raghib Hussain and Cavium’s Vice President of IC Engineering Anil Jain.

In addition, Cavium’s Co-founder and CEO, Syed Ali, will continue with the combined company as a strategic advisor and will join Marvell’s Board of Directors, along with two additional board members from Cavium’s Board of Directors, effective upon closing of the transaction.


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JB Hunt and Wal-Mart to use Tesla’s trucks

J.B. Hunt reports reservation to purchase multiple Tesla Semi tractors

Wal-Mart says has pre-ordered 10 units of Tesla’s new heavy-duty electric vehicle for Wal-Mart Canada

[youtube https://www.youtube.com/watch?v=5n9xafjynJA&w=640&h=360]

J.B. Hunt Transport Services (JBHT) announced that it placed a reservation to purchase multiple Tesla (TSLA) Semi tractors to be manufactured by Tesla.

The electric tractor was unveiled by Tesla at an event on November 16.

J.B. Hunt plans to deploy electric tractors to its Intermodal and Dedicated Contract Services divisions to support operations on the West Coast.

In addition to the electric truck investment, J.B. Hunt is also supporting sustainable initiatives such as reducing engine idle time, governing top speed limits, converting over-the-road shipments to intermodal, engineering fleet routes that maximize efficiency, and using biodiesel fuels when possible.

In April, J.B. Hunt announced a five-year, $500M commitment to enhancing operating systems, developing cloud infrastructure, and creating innovative and disruptive technologies.

The additional investment in Tesla trucks further demonstrates J.B. Hunt’s commitment to meeting the needs of an evolving supply chain and introducing new technology for its customers and employees.

TESLA  TRUCKS

Tesla unveiled a sleek electric semi truck with semi-autonomous capabilities and a new roadster.

Emphasizing the truck’s “badass” performance, Tesla CEO Elon Musk pitched the new Tesla Semi as the safest, most comfortable truck ever.

The semi is a fully electric Class 8 truck, a category of freight vehicles that weigh more than 33,000 pounds, including tractor-trailer rigs that form the backbone of commercial road freight. This one, Musk said, can haul 80,000 pounds.

The truck can gain 400 miles of range with just a 30-minute charge from a “megacharger” and its operating cost per mile is 20 percent below that of conventional diesel semi trucks.

Tesla’s offering has a range of 500 miles at maximum weight at highways speeds, much higher than early spec reports of a range of 300 miles. Musk said the truck has a coefficient of drag of just 0.36, making it more aerodynamic than the Bugatti Chiron, a $2.7 million supercar with a drag coefficient of 0.38.

At the end of the event, Musk also presented the company’s new four-seat roadster, a car with 620 miles of range that can go from zero to 60 mph in 1.8 seconds. “The point of doing this is to give a hardcore smackdown to gasoline cars,” Musk said. It’s also claimed to be the fastest production car ever made.

ANALYST COMMENTS

Morgan Stanley analyst Ravi Shanker said Tesla “unveiled the future of trucking” with its Class 8 semi truck, which he contends appears to best current diesel truck performance in “almost every measurable way.” While what he heard was very impressive, questions remain about battery size, launch partners and third-party logistics services, said Shanker, who adds that “its now time to deliver.” The firm has an Equal Weight rating and $379 price target on Tesla shares.

Wal-Mart Gets Onboard

Following Tesla’s (TSLA) unveiling of a new electric semi-tractor-trailer last night, Wal-Mart issued the following statement to CNBC: “We have a long history of testing new technology – including alternative-fuel trucks – and we are excited to be among the first to pilot this new heavy-duty electric vehicle. We believe we can learn how this technology performs within our supply chain, as well as how it could help us meet some of our long-term sustainability goals, such as lowering emissions.”

Wal-Mart says has pre-ordered 10 units of Tesla’s new heavy-duty electric vehicle for Wal-Mart Canada.

TSLA closed at $313.00   JBHT closed at $102.98


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Tesla to unveil its electric semi-truck tonight

Tesla to unveil its electric big-rig truck tonight

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Tesla Inc (TSLA) to unveil a prototype electric big-rig truck, which may be able to drive itself, tonight at 8 pm PST.

Chief Executive Elon Musk has described electric trucks as Tesla’s next effort to move the economy away from fossil fuels through projects including electric cars, solar roofs and power storage.

Reuters in August reported that Tesla was working on self-driving technology for the truck. Several Silicon Valley companies see long-haul trucking as a prime early market for the self-driving technology, citing the relatively consistent speeds and little cross-traffic trucks face on interstate highways and the benefits of allowing drivers to rest while trucks travel.

The truck would have a working range of 200 to 300 miles, at the low end of what is considered “long-haul” trucking, Reuters reported. Diesel trucks are capable of traveling up to 1,000 miles on a single tank of fuel.

Musk said this week that the truck would “blow your mind clear out of your skull” when it was introduced in a webcast on Thursday at 8 p.m. PST.

He later tweeted, the truck “can transform into a robot, fight aliens and make one hell of a latte.” Musk seems to be embracing the criticism and he’s a hype man and making light of it.

“Semi specs are better than anything I’ve seen reported so far. Semi eng/design team work is aces, but other needs are greater right now,” Musk tweeted in October.

A Tesla truck with a range of 300 to 450 miles would be able to address less than half of the total semi-truck market, estimated Bernstein analyst .

The original debut date for the truck was October 26, which was delayed because of Model 3 production delays, and Tesla’s battery projects in Puerto Rico after the hurricane took out power on the island country after Hurricane Maria.

“A lot of people don’t think you can do a heavy-duty, long-range truck that’s electric, but we are confident that this can be done,” Musk told Tesla shareholders at its annual meeting in September. “So we’ll be showing off a working prototype not too long from now, at the end of September.”

Musk has said the Tesla Semi Truck will hit the roads in 2019. “We will probably reach scale production on the semi in about two years,” he said at the shareholder meeting in September. “Maybe 18 months, but probably about two years.”

TSLA last traded at $313.92.


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Ultragenyx announces FDA approval of its Sly Syndrome drug

Ultragenyx announces FDA approval of MEPSEVII

Ultragenyx announces FDA approval of MEPSEVII. See Stockwinners.com for details

Ultragenyx Pharmaceutical (RARE) announced that the U.S. Food and Drug Administration has approved MEPSEVII, the first medicine approved for the treatment of children and adults with Mucopolysaccharidosis VII.

MEPSEVII is an enzyme replacement therapy designed to replace the deficient lysosomal enzyme beta-glucuronidase in MPS VII patients.

MPS VII is a mucopolysaccharide disease also known as Sly syndrome.

MPS VII is a rare genetic, metabolic lysosomal storage disorder caused by the deficiency of beta-glucuronidase, an enzyme required for the breakdown of the glycosaminoglycans dermatan sulfate, chondroitin sulfate and heparan sulfate. These complex GAG carbohydrates are a critical component of many tissues.

The inability to properly break down GAGs leads to a progressive accumulation in many tissues and results in a multi-system tissue and organ damage.

MPS VII is one of the rarest MPS disorders, with an estimated 200 patients in the developed world.

MEPSEVII was evaluated by the FDA with Priority Review, which is reserved for drugs that offer major advances in treatment or provide a treatment where no adequate therapy exists.

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

The rare pediatric disease review voucher program is designed to encourage development of new drugs and biologics for the prevention or treatment of rare pediatric diseases.

MEPSEVII will be available to patients in the U.S. later this month.

In Europe, the European Medicines Agency is currently reviewing the Marketing Authorization Application for vestronidase alfa, and an opinion from the Committee for Medicinal Products for Human Use is expected in the first half of 2018.

RARE last traded at $46.44, up 88 cents.


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Wal-Mart reports on Thursday

What to watch in Wal-Mart earnings report

Wal-Mart Guides Higher. See Stockwinners.com for details

Wal-Mart (WMT) is scheduled to report results of its third quarter before the market open on Thursday, November 16, with a conference call scheduled for 7:00 am EDT.

What to watch for:

1. GUIDANCE:

Wal-Mart is expected to update its guidance for the fiscal year. Wal-Mart previously forecast Q3 EPS of 90c-98c and comp sales for Walmart U.S. up 1.5%-2% excluding fuel and Sam’s Club comps excluding fuel up 1%-1.5%.

The company raised the low end of its FY18 adjusted EPS view to $4.30-$4.40 from $4.20-$4.40 and backed this guidance at its investor day.

Also at the investor day event, Wal-Mart forecast FY19 EPS to be up approximately 5% vs. FY18 adjusted EPS, with consolidated net sales growing at or above 3%. Baird analyst Peter Benedict expects a solid quarter with good comps and traffic momentum and a guide to earnings growth.

2. COMPETITION:

Retailers like Wal-Mart have been hurt by an increase in online shopping on sites like Amazon (AMZN) rather than at brick-and-mortar stores.

According to reports, Wal-Mart has raised prices for some food and household items on its U.S. website to be higher than prices for the same products sold in-store in an effort to increase profits and drive store traffic.

Wal-Mart, which has previously tried to keep online prices equal to in-store prices, is testing a new system, which has caused higher web prices for products that would otherwise be unprofitable to ship.

Wal-Mart recently sent a recreational vehicle to the University of Pennsylvania as part of a roughly dozen college recruitment tour to break into Ivy League recruitment, Bloomberg reported. The move comes after CEO Doug McMillon told investors Wal-Mart would “look even more like a tech company” to respond to competition from Amazon.

Recently, rival eBay (EBAY) said it will match rivals’ prices on many top Black Friday deals through Cyber Monday. Lidl is gaining little traction after expanding in the U.S. with grocers Wal-Mart and Kroger (KR) recovering most of the market share they lost when the German discounter opened its first nine U.S. stores in June, The Wall Street Journal reported last month.

In October, Wal-Mart said it expects to have grocery pickup in over 2,000 stores by the end of 2018 and noted that its Sam’s Club fresh food efforts are “really encouraging.”

3. OTHER INITIATIVES:

Wal-Mart is looking to grow its presence in the online fashion market, recently buying Bonobos, ShoeBuy, Moosejaw and ModCloth.

Wal-Mart President and CEO Doug McMillon said on the Q2 earnings call that the retailer is testing associate delivery of online orders in “a few” stores and plans to have approximately 100 automated pickup towers in stores across the U.S. by the end of the year, “where customers can pick up their orders within a matter of minutes.”

He also noted that Wal-Mart has tests going on with “digital endless aisle shopping, robotics and image analytics to scan aisles for outs and we’re using machine learning to assist our merchants with pricing.”

More recently, Walmart.com and Lord & Taylor said that Lord & Taylor will launch a flagship store on Walmart.com in Spring 2018.

4. HOLIDAY SEASON:

Wal-Mart is giving employees the opportunity to work extra hours during the holiday season rather than hire temporary seasonal workers.

In addition, the retailer said it will offer more than 2M items for free two-day shipping without a membership fee on orders over $35.

Also, Wal-Mart announced plans to bring back its Holiday Helpers, associates dedicated to assisting customers, and will increase the number of them in stores to help customers.

Wal-Mart will also host more than 20,000 holiday parties at its Supercenters.

WMT last traded at $90.58.


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Acorda lower on safety concerns over its tozadenant

Acorda increases blood cell count monitoring in Phase 3 tozadenant program

Acorda Therapeutics lower on safety concerns over its Parkinson drug. See Stockwinners.com for details

Acorda Therapeutics (ACOR) announced that it has increased the frequency of blood cell count monitoring for participants to weekly in its Phase 3 program of tozadenant for Parkinson’s disease.

The company took this action in response to cases of agranulocytosis, possibly drug-related, and in some cases associated with sepsis and death.

Agranulocytosis is the absence of white blood cells, which fight infection.

The company also has paused new enrollment in the long-term safety studies, pending further discussion with the independent Data Safety Monitoring Board and the United States Food and Drug Administration.

The Phase 3 program includes an ongoing pivotal efficacy and safety study and two long-term safety studies. Including the previously conducted Phase 2b study, approximately 890 patients have been exposed to tozadenant and 234 have been exposed to placebo.

This corresponds to approximately 300 patient years of tozadenant exposure and 75 patient-years of placebo.

There have been seven cases of sepsis, all in the tozadenant groups, five of which were fatal.

Four of the sepsis cases were associated with agranulocytosis, two had no white blood cell counts available at the time of the event and one had a high white blood cell count.

“We have taken these steps in the best interests of the safety of patients in the tozadenant studies, which is our top priority,” said Ron Cohen, M.D., Acorda’s President and CEO.

“Contingent on further input from the DSMB and FDA, we continue to expect to report efficacy and safety results of the double-blind Phase 3 study in the first quarter of 2018.”

ACOR closed at $28.20. It last traded at $17.40.


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Loxo Oncology to receive $400 million

Loxo Oncology, Bayer enter into an exclusive global collaboration

Loxo Oncology to present at upcoming lung cancer conference. See Stockwinners.com for details

Bayer (BAYRY) announced that the company has entered into an exclusive global collaboration with Loxo Oncology (LOXO) for the development and commercialization of larotrectinib (LOXO-101) and LOXO-195.

Both compounds are being investigated in global studies for the treatment of patients with cancers harboring tropomyosin receptor kinase gene fusions, which are genetic alterations across a wide range of tumors resulting in uncontrolled TRK signaling and tumor growth.

Under the terms of the agreement, Loxo Oncology will receive an upfront payment of $400M and is eligible for $450M in milestone payments upon larotrectinib regulatory approvals and first commercial sale events in certain major markets and an additional $200M in milestones payments upon LOXO-195 regulatory approvals and first commercial sale events in certain major markets.

Bayer and Loxo Oncology will jointly develop the two products, larotrectinib and LOXO-195, and share development costs on a 50/50 basis.

Bayer will lead ex-U.S. regulatory activities, and worldwide commercial activities. In the U.S., where Bayer and Loxo Oncology will co-promote the products, the parties will share commercial costs and profits on a 50/50 basis.

Loxo Oncology will remain responsible for the filing in the U.S. Bayer will pay Loxo Oncology tiered double-digit percentage royalties on future net sales outside of the U.S., and U.S. and ex-U.S. sales milestones totaling $500M.

Bayer will pay Loxo Oncology a $25M milestone upon achieving a certain U.S. net sales threshold. Outside of the U.S., where Bayer will commercialize, Bayer will pay Loxo Oncology tiered, double-digit royalties on net sales, and sales milestones totaling $475M. Bayer will book revenues worldwide.

Loxo Oncology was advised by Fenwick and West in the transaction.

WHAT’S NOTABLE

In a clinical trial presented in June by Loxo, larotrectinib demonstrated a 76% objective response rate in patients with cancers that contained the TRK fusions but originated in different parts of the body.

In those studies 12% saw their tumors entirely disappear while 64% saw theirs tumors partially shrink. David Hyman, MD, of Memorial Sloan Kettering Cancer Center, said at the time that “We believe [these data] demonstrate that larotrectinib is profoundly effective in a durable manner in patients with TRK fusion cancers.”

Loxo expects to submit an NDA to the FDA for the larotrectinib program in late 2017 or early 2018, with the potential for an FDA decision by mid-2018. As the only selective pan-TRK inhibitor currently in clinical development, larotrectinib could “potentially be the first novel targeted therapy that’s developed and eventually used in a ‘tumor-agnostic’ manner,” Hyman said.

TRK fusions occur in between 1,500 and 5,000 cancer patients per year, or about 1%-3% of cancer cases.

PRICE ACTION

Though Loxo Oncology initially jumped, the stock is now down about 5.4% to $78.75 after pre-market trading was resumed.

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Qualcomm says no thank you

Qualcomm board unanimously rejects Broadcom’s unsolicited proposal

Broadcom proposes to buy Qualcomm for $70 per share. See Stockwinners.com for details

Qualcomm (QCOM) announced that its Board of Directors unanimously rejected the unsolicited proposal announced by Broadcom (AVGO) on November 6, 2017.

“It is the Board’s unanimous belief that Broadcom’s proposal significantly undervalues Qualcomm relative to the Company’s leadership position in mobile technology and our future growth prospects,” said Paul Jacobs, Executive Chairman and Chairman of the Board of Qualcomm Incorporated.

“No company is better positioned in mobile, IoT, automotive, edge computing and networking within the semiconductor industry. We are confident in our ability to create significant additional value for our stockholders as we continue our growth in these attractive segments and lead the transition to 5G,” said Steve Mollenkopf, CEO of Qualcomm Incorporated.

“The Board and Management are singularly focused on driving value for Qualcomm’s shareholders. After a comprehensive review, conducted in consultation with our financial and legal advisors, the Board has concluded that Broadcom’s proposal dramatically undervalues Qualcomm and comes with significant regulatory uncertainty. We are highly confident that the strategy Steve and his team are executing on provides far superior value to Qualcomm shareholders than the proposed offer,” said Tom Horton, Presiding Director for Qualcomm Incorporated.

QCOM closed at $64.57. AVGO closed at $264.96.

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