Government forecasts steady energy prices in 2020 and 21

EIA says U.S. crude oil production will average 13.3M b/d in 2020

According to the U.S. Energy Information Administration’s (EIA) forecasts Brent crude oil spot prices will average $65 per barrel in 2020 and $68/b in 2021, compared with an average of $64/b in 2019.

Domestic productions to rise in 2020, Stockwinners

EIA expects West Texas Intermediate, WTI, crude oil prices will average about $5.50/b lower than Brent prices through 2020 and 2021, compared with an average WTI discount of about $7.35/b in 2019.

Global liquid fuels inventories were mostly unchanged in 2019, and EIA expects they will grow by 0.3 million b/d in 2020 and then decline by 0.2 million b/d in 2021.

The international offshore rig count for April 2018 was 194. Stockwinners
Production in all regions to rise in 2020, Stockwinners

EIA estimates that U.S. crude oil production averaged 12.2 million b/d in 2019, up 1.3 million b/d from 2018.

EIA forecasts U.S. crude oil production will average 13.3 million b/d in 2020 and 13.7 million b/d in 2021.

  • On January 1, 2020, the International Maritime Organization (IMO) enacted Annex VI of the International Convention for the Prevention of Pollution from Ships (MARPOL Convention), which lowers the maximum sulfur content of marine fuel oil used in ocean-going vessels from 3.5% of weight to 0.5%.
  • EIA expects this regulation will encourage global refiners to increase refinery runs and maximize upgrading of high-sulfur heavy fuel oil into low-sulfur distillate fuel to create compliant bunker fuels.
  • EIA forecasts that U.S. refinery runs will rise by 3% from 2019 to a record level of 17.5 million b/d in 2020, resulting in refinery utilization rates that average 93% in 2020.
  • EIA expects one of the most significant effects of the regulation will be on diesel wholesale margins, which will rise from an average of 43 cents per gallon (gal) in 2019 to a forecast peak of 53 cents/gal in March 2020 and an annual average of 50 cents/gal in 2020. EIA expects diesel margins to decline to 49 cents/gal in 2021.
  • U.S. regular gasoline retail prices averaged $2.60/gal in 2019, and EIA forecasts that they will average $2.63/gal in both 2020 and 2021.
Oil Rigs, See Stockwinners.com Market Radar to read the latest on oil and rig count
Production to continue at record high, Stockwinners

Most of the production growth in the forecast occurs in the Permian region of Texas and New Mexico.

Publicly traded companies in the space include BP (BP), Chevron (CVX), ConocoPhillips (COP), Exxon Mobil (XOM), Royal Dutch Shell (RDS.A) and Total (TOT). 

Ocean Rig sold for $2.7B, Stockwinners
Consolidations should continue in the industry, Stockwinners


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Anixter sold for $4.5 billion

Wesco to acquire Anixter in cash, stock deal valued at $4.5B

WESCO (WCC) and Anixter (AXE) announced that their boards of directors have unanimously approved a definitive merger agreement under which WESCO will acquire Anixter in a transaction valued at approximately $4.5 billion.

Anixter’s prior agreement to be acquired by Clayton, Dubilier & Rice, has been terminated, following CD&R’s waiver of its matching rights under the agreement.

Under the terms of the agreement, each share of Anixter common stock will be converted into the right to receive $70.00 in cash, 0.2397 shares of WESCO common stock and preferred stock consideration valued at $15.89, based on the value of its liquidation preference.

Based on the closing price of WESCO’s common stock on January 10 and the liquidation preference of the WESCO preferred stock consideration, the total consideration represents approximately $100 per Anixter share, giving effect to the downside protection described below.

Based on transaction structure and the number of shares of WESCO and Anixter common stock currently outstanding, it is anticipated that WESCO stockholders will own 84%, and Anixter stockholders 16%, of the combined company.

The combined company will have pro forma 2019 revenues of approximately $17 billion.

With an extensive global reach and increased international exposure, approximately 12% of revenues will be generated outside of North America.

Anixter sold to Wesco, Stockwinners

The increased scale will enable the combined company to accelerate digitization strategies and provide a platform for growth in attractive emerging markets.

WESCO expects to realize annualized run-rate cost synergies of over $200 million by the end of year three through efficiencies in corporate and regional overhead, including duplicative public company costs, branch and distribution center optimization, and productivity in procurement, field operations, and supply chain. In addition, WESCO expects incremental sales growth opportunities to result by cross-selling the companies’ complementary product and services offerings to an expanded customer base and capitalizing on the enhanced capabilities across both networks.

The combination is expected to be accretive to WESCO’s earnings in the first full year of ownership and, with the realization of synergies, substantially accretive thereafter.

WESCO also expects the transaction to generate significant margin expansion and EPS growth.

The combined company will have strong free cash flow generation, supporting continued investments in the business and enabling a return of capital to stockholders in the future.

Wesco to buy Anixter, Stockwinners

At closing, WESCO estimates that its pro forma leverage on a net debt to EBITDA basis will be approximately 4.5x.

WESCO intends to utilize the strength of the combined company’s cash flows, including significant synergies, to reduce its leverage quickly and ultimately intends to be within its long-term target leverage range of 2.0x to 3.5x within 24 months post-close.

Under the terms of the agreement, each share of Anixter common stock will be converted into the right to receive $70.00 in cash, 0.2397 shares of WESCO common stock, and preferred stock consideration consisting of 0.6356 depositary shares, each whole share representing a fractional interest in a newly created series of WESCO perpetual preferred stock.

The common stock consideration is subject to downside protection, such that if the average market value of WESCO common stock prior to closing is between $47.10 per share and $58.88 per share, then the cash consideration paid at closing will be increased commensurately by up to $2.82 per share, such that the reduction in value of the WESCO common stock is offset by an increase in the cash consideration within that range. $2.82 per share will also be paid if the value of WESCO stock is below $47.10.

The preferred stock consideration consists of 0.6356 depositary shares, with each whole depositary share representing a 1/1,000th interest in a share of WESCO Series A cumulative perpetual preferred stock, with a liquidation preference of $25,000 per preferred share and a fixed dividend rate calculated based on a spread of 325 basis points over the prevailing unsecured notes to be issued to effect the transaction.

The fixed dividend rate will be subject to reset and the Series A preferred stock will have a five year non-call feature.

WESCO has agreed to list the depositary shares representing the newly created series of preferred stock on the NYSE, and the security is expected to receive equity treatment from the rating agencies.

The 0.6356 depositary share to be issued in the merger per share of Anixter common stock is valued at $15.89 based on the liquidation preference of the underlying interest in the Series A preferred stock represented thereby.

Under the terms of the merger agreement, WESCO may elect to substitute additional cash consideration to reduce the amount of the preferred stock consideration on a dollar-for-dollar basis based on the value of the liquidation preference of the preferred stock consideration. WESCO and Anixter currently anticipate completing the transaction during the second or third quarter of 2020.

WESCO International, Inc. distributes electrical, industrial, and communications maintenance, repair and operating (MRO) and original equipment manufacturers products and construction materials in North America and internationally. 

Anixter International Inc. distributes enterprise cabling and security solutions, electrical and electronic wire and cable solutions, and utility power solutions worldwide. 

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Hexcel and Woodward merge to form Woodward Hexcel

Hexcel, Woodward announce merger of equals

Woodward (WWD) and Hexcel (HXL) announced a definitive agreement to combine in an all-stock merger of equals “to create a premier integrated systems provider serving the aerospace and industrial sectors,” the companies said.

Woodward and Hexcel agree to merge, Stockwinners

Under the terms of the agreement approved by the Boards of Directors of both companies, Hexcel shareholders will receive a fixed exchange ratio of 0.625 shares of Woodward common stock for each share of Hexcel common stock, and Woodward shareholders will continue to own the same number of shares of common stock in the combined company as they do immediately prior to the closing.

Hexcel and Woodward to merge, Stockwinners

The exchange ratio is consistent with the 30-day average share prices of both companies.

Upon completion of the merger, existing Woodward shareholders will own approximately 55% and existing Hexcel shareholders will own approximately 45% of the combined company on a fully diluted basis.

In connection with the transaction, Woodward is increasing its quarterly cash dividend to 28c a share.

The merger is expected to be tax free for U.S. federal income tax purposes.

The combined company will be named Woodward Hexcel.

For each company’s respective fiscal year 2019 on a pro forma basis, the combined company is expected to generate net revenues of approximately $5.3B and EBITDA of $1.1B, or a 21% EBITDA margin.

The transaction is subject to the approval of the shareholders of both Woodward and Hexcel, as well as other customary closing conditions, including required regulatory approvals.

The parties expect the merger to close in the third calendar quarter of 2020, subject to satisfaction of these conditions.

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Felix Energy sold for $2.5 billion

WPX Energy acquires Felix Energy for $2.5B

WPX Energy (WPX) “is taking another significant step in its commitment to delivering shareholder value” with the $2.5B purchase of Felix Energy, “one of the highest quality Delaware Basin operators.”

Felix has approximately 1,500 gross undeveloped locations in the eastern portion of the basin, with expected production of approximately 60 MBoe/d (70% oil) at the time of anticipated closing. WPX plans to implement a dividend post-closing, targeting approximately $0.10 per share on an annualized basis at initiation.

WPX buys Felix Energy for $2.5B, Stockwinners

WPX Energy, Inc., an independent oil and natural gas exploration and production company, engages in the exploitation and development of unconventional properties in the United States. The company operates 657 wells and owns interests in 808 wells covering an area of approximately 130,000 net acres located in Delaware Basin, Texas and New Mexico; and operates 323 wells and owns interests in 87 wells that covers an area of approximately 85,087 net acres situated in the Williston Basin, North Dakota. 

Felix Energy sold for $2.5B, Stockwinners

The acquisition and dividend program follow other steps WPX took in 2019 to enhance its value proposition, including reducing net debt, executing attractive midstream monetizations, launching a share buyback program and generating free cash flow.

The purchase price consists of $900M cash, subject to closing adjustments, and $1.6B in WPX stock issued to the seller.

WPX plans to fund the cash portion through issuance of $900M of senior notes on an opportunistic basis.

WPX also has obtained committed financing from Barclays in connection with the transaction and has full access to a $1.5B revolving credit facility.

The stock consideration comprises approximately 153M WPX shares, which is based on the 10-day volume-weighted average price as of Dec. 13.

The transaction is subject to customary closing conditions and approval by WPX shareholders. The parties anticipate closing the transaction early in the second quarter of 2020.

WPX’s board unanimously approved the transaction.

The acquisition is consistent with all of the tenets in WPX’s five-year vision for shareholders that the company introduced in November during its third-quarter report.

On a pro forma basis, WPX expects to generate significant free cash flow in 2020 at $50 oil.

Following the acquisition, cash flow per share, EPS, free cash flow per share, return on capital employed, and cash margins are all expected to increase.

WPX also expects to continue its opportunistic share buybacks, to implement the previously mentioned dividend program, and to reduce its leverage to 1.0x by year-end 2021.

WPX based all of its transaction economics on $50 oil, with no assumptions for improvements in development costs or operating efficiencies. However, WPX believes significant upside exists by capturing synergies associated with scale.

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Truck sales decline in November

Classes 5-8 truck orders soften in November amid trade and tariff worries

Truck sales downturn could be canary in the coal mine

There are eight classes of commercial motor vehicles in the United States, and they’re divided into three, more general categories: light-duty, medium-duty, and heavy-duty. Commercial motor vehicles or trucks that operate on U.S. highways can be classified based on their gross vehicle weight rating (GVWR).

ACT Research said in an earlier report:

“Preliminary November data show that Classes 5-8 net order volumes were uniformly soft. Combined NA Classes 5-8 intake fell 15% m/m and 38% y/y in November on a nominal basis. Preliminary North America Class 8 net order data show the industry booked 17,500 units in November, down 20% from October, while Classes 5-7 orders fell 8% m/m, to 15,300 units.

Complete industry data for November, including final order numbers, will be published by ACT Research in mid-December.

Various Classes of Vehicles, Stockwinners

ACT’s State of the Industry:

Classes 5-8 report provides a monthly look at the current production, sales, and general state of the on-road heavy and medium duty commercial vehicle markets in North America. It differentiates market indicators by Class 5, Classes 6-7 chassis and Class 8 trucks and tractors, detailing measures such as backlog, build, inventory, new orders, cancellations, net orders, and retail sales.

Additionally, Class 5 and Classes 6-7 are segmented by trucks, buses, RVs, and step van configurations, while Class 8 is segmented by trucks and tractors with and without sleeper cabs.

This report includes a six-month industry build plan, backlog timing analysis, historical data from 1996 to the present in spreadsheet format, and a ready-to-use graph package.

A first-look at preliminary net orders is also published in conjunction with this report.

“Preliminary November data show that Class 8 net orders failed to sustain October’s encouraging start to the order season,” said Tim Denoyer, ACT’s Vice President and Senior Analyst.

He continued, “The freight market downturn worsened in the past month and uncertainty surrounding trade and tariffs continue to weigh on truck buyers’ psyches. With rising pressure on carrier profits from the combined impact of lower rates and the recent, rather sudden jump in insurance premia, recent events have not developed in the industry’s favor.” Denoyer concluded,

“While private fleets continue to add capacity on the retail end, the market is increasingly heeding for-hire price signals and the stage is being set to right-size the fleet, bringing it closer to equilibrium with the work to be done.”

Historically, Dow Jones Transports have sold off prior to the rest of the market. The .djt has turned bearish as is shown above.

Publicly traded companies in the space include ArcBest (ARCB), J.B. Hunt (JBHT), Knight-Swift (KNX), Old Dominion (ODFL), Swift Transportation (SWFT), Werner (WERN), Paccar (PCAR), Navistar (NAV)and Cummins (CMI).

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The Medicines Co. sold for $9.7B

Novartis to pay $85 per share in cash for each MDCO share

The Medicines Company (MDCO) announced that it has entered into definitive agreement in which Novartis (NVS) will acquire the company for $85 per share in an all-cash transaction, implying a fully diluted equity value of $9.7B.

Novartis to pay $85 per share in cash for each MDCO share, Stockwinners

The stock closed Friday down $1.21 to $68.55. See our previous blog post.

The purchase price represents a premium of approximately 45% to The Medicines Company’s closing share price of $58.65 on November 18, the last trading day prior to news reports of a potential transaction between The Medicines Company and Novartis.

Novartis receives positive CHMP opinion for Kymriah, Stockwinners
Novartis to pay $85 per share in cash for each MDCO share, Stockwinners , Stockwinners

The transaction was unanimously approved by the boards of both companies. Under the terms of the merger agreement, Novartis will commence a tender offer to purchase all outstanding shares of The Medicines Company for $85 per share in cash.

Following the completion of the tender offer, a wholly owned subsidiary of Novartis will merge with The Medicines Company and shares of The Medicines Company that have not been tendered and purchased in the tender offer will be converted into the right to receive the same price per share.

Completion of the transaction is expected in Q1 of 2020, pending the successful completion of the tender offer and other customary closing conditions.

Until that time, The Medicines Company will continue to operate as a separate and independent company. The company expects to file regulatory submissions for inclisiran in the U.S. in Q4 of 2019 and in Europe in the first quarter of 2020.

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Medicines Co. is in play

Novartis holds talks about potential acquisition of Medicines Co

Medicines Co. (MDCO) has attracted takeover interest from companies including Novartis (NVS), which has been holding talks about a potential acquisition of the New Jersey-based company, Bloomberg’s Ed Hammond, Nabila Ahmed and Dinesh Nair report, citing people familiar with the matter.

Novartis is eyeing Medicines Co., Stockwinners

According to the people, Novartis is conducting due diligence on Medicines Co. Other potential acquirers have also expressed interest in buying Medicines Co., they add.

Novartis is looking for products to replace its out of patent products, Stockwinners

The Medicines Company focuses on developing therapeutics for the treatment of therosclerotic cardiovascular disease. The company is developing Inclisiran, an investigational RNA interference therapeutic that inhibits production of proprotein convertase subtilisin/kexin type 9, which controls LDL-cholesterol levels.

Novartis has historically had a strong cardiovascular drug franchise, but lost ground when Diovan, once a $6 billion-per-year seller, lost patent protection in 2012 and left the company without an immediate, innovative follow-up product.

Novartis Chief Executive Officer Vas Narasimhan has relied on deals to sharpen the company’s focus on innovative drugs for cancer and rare diseases. The Basel, Switzerland-based company has announced close to $16 billion of acquisitions since he took over as CEO in February 2018, according to data compiled by Bloomberg. He has also spun off the Alcon Inc. eye-care division and ditched a stake in a consumer-health venture.

Baird’s Comments

Baird analyst Madhu Kumar said he has utter conviction that The Medicine’s Co. inclisiran can disrupt cholesterol therapy. The analyst cited its results from the ORION-9/10/11 trial which was released and supported his thesis. He said the remaining question is whether the company can find an acquirer or partner to help launch inclisiran.

Kumar reiterated his Outperform rating and $100 price target on The Medicine’s Co. shares.

JPMorgan’s Take

JPMorgan analyst Jessica Fye noted that Bloomberg is reporting that Novartis (NVS) and other potential acquirers have expressed interest in buying The Medicines Company (MDCO), adding that her talks with investors indicate that Novartis is viewed as the most likely buyer.

She further notes that Medicines Co. shares were trading above her standalone valuation at yesterday’s close, which she attributes to some anticipation of a deal, and that today’s move puts the stock in a price range greater than 40% above her standalone target.

Outside of Novartis, Fye also believes an acquirer could be a less expected company, but if only one company is interested they could try to “wait it out” to the point where investors might begin to worry that Medicines could have to take on the substantial inclisiran launch investment independently. However, if multiple players are interested, as Bloomberg suggests, she thinks “competitive tension” could lead to a near-term acquisition.

MDCO is up $12.35 to $71.00.

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Tech Data sold for $5.4 billion

Tech Data to be acquired by Apollo Global for $130 per share in cash

Tech Data (TECD) announced it has entered into a definitive agreement to be acquired by an affiliate of funds managed by affiliates of Apollo Global Management (APO).

Tech Data is taken private at $130 per share, Stockwinners

Through the agreement, the affiliate of the Apollo Funds will acquire all of the outstanding shares of Tech Data common stock for $130 per share in a transaction with an enterprise value of approximately $5.4B.

Apollo buys Tech Data for $5.4B, Stockwinners

The purchase price represents a 24.5% premium to the unaffected 30-day volume weighted average closing share price of Tech Data’s common stock ended October 15, the last trading day prior to published market speculation regarding a potential transaction involving the company.

The Tech Data Board of Directors has unanimously approved the transaction and recommends that Tech Data shareholders vote in favor of the transaction.

The transaction is not subject to a financing condition and is expected to close in the first half of calendar year 2020, subject to the satisfaction of customary closing conditions including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, foreign regulatory approvals and approval by the holders of a majority of the outstanding Tech Data shares.

Tech Data expects to hold a Special Meeting of Shareholders to consider and vote on the transaction agreement as soon as feasible after the mailing of the proxy statement to shareholders.

Consistent with the Board’s commitment to maximizing shareholder value, the terms of the agreement provide that Tech Data will be permitted to actively solicit alternative acquisition proposals from third parties during a “go-shop” period from the date of the agreement until December 9.

There is no guarantee that this process will result in a superior proposal. Following the close of the transaction, Rich Hume will continue to lead Tech Data as CEO, and the company will continue to be headquartered in Clearwater, Florida.

Tech Data will become a privately held company, and Tech Data’s common shares will no longer be publicly listed.

Tech Data Corporation operates as an IT distribution and solutions company. The company offers endpoint portfolio solutions, including personal computer systems, mobile phones and accessories, printers, peripherals, supplies, endpoint technology software, and consumer electronics. It also provides advanced portfolio solutions, such as data center technologies comprising storage, networking, servers, advanced technology software, and converged and hyper-converged infrastructure, as well as specialized solutions. 

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Watch shares of Mirati Therapeutics

Mirati presents data from sitravatinib in combination with nivolumab trials

Mirati Therapeutics (MRTX) announced the presentation of initial data from its ongoing Phase 2 clinical trial of sitravatinib in combination with nivolumab in metastatic urothelial cancer patients with documented progression on a platinum-chemotherapy and checkpoint inhibitor.

Mirati is in focus on cancer data, Stockwinners

The data were presented in an oral presentation at the Society of Immunotherapy of Cancer 34th Annual Meeting.

Preliminary results from the ongoing Phase 1 study of neoadjuvant sitravatinib combined with nivolumab in patients with resectable squamous cell carcinoma of the oral cavity, SNOW trial, were also presented in a poster session.

The preliminary data suggest that the combination of neoadjuvant sitravatinib and nivolumab is safe and active in patients with squamous cell carcinoma of the oral cavity who are candidates for resection.

Chart shows Sitravatinib in action, Stockwinners

Tumor reduction was observed in all eight patients who were eligible for evaluation, including one complete pathological response.

All patients received postoperative radiation therapy, and none required postoperative chemotherapy.

With a median follow-up of 31.4 weeks, all patients are alive with no disease recurrence to date.

In most patients, treatment with sitravatinib led to a decrease in myeloid-derived suppressor cells and a shift towards M1-type macrophages in the tumor microenvironment, supporting previous preclinical findings.

“Sitravatinib is a spectrum-selective kinase inhibitor that potently inhibits receptor tyrosine kinases, including TAM family receptors that has the potential to increase responsiveness in patients whose tumors are resistant to checkpoint inhibitors. The initial efficacy data from the Phase 2 clinical trial presented today in patients with checkpoint refractory mUC is promising and extends the clinical benefit data beyond what has already been demonstrated by sitravatinib combined with nivolumab in checkpoint refractory non-small cell lung cancer,” said Charles Baum, M.D., CEO of Mirati.

Sitravatinib offers hope for cancer patients, Stockwinners

“In addition, we are evaluating sitravatinib in patients who have progressed on checkpoint therapy, including those with NSCLC and renal cell cancer, and we continue to expand development efforts of sitravatinib through our collaboration with BeiGene in multiple indications including NSCLC, renal cell cancer, hepatocellular cancer, ovarian cancer, and gastric cancer.”

MRTX closed at $104.78.

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Nektar Therapeutics is in focus

Nektar presents new clinical, preclinical data from immuno-oncology pipeline

Nektar Therapeutics (NKTR) announced the presentation of five clinical and preclinical data abstracts focused on its immuno-oncology portfolio at the 2019 Society for Immunotherapy of Cancer Annual Meeting.

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Nektar Therapeutics is in focus, Stockwinners

New clinical results from the PIVOT-02 Phase 1/2 study were shared in an oral presentation titled, “Clinical activity of BEMPEG plus NIVO in previously untreated patients with metastatic melanoma: updated results from the Phase 1/2 PIVOT-02 Study” during the Combination Phase 1-2 Clinical Trials Session on Saturday, November 9th.

Additional preclinical data presented at the annual meeting highlighted NKTR-255, an IL-15 agonist discovered by Nektar.

The presentations demonstrated that NKTR-255 enhanced activity of antibody-dependent cellular cytotoxicity against tumor cells in vitro, and that it also enhanced in vivo efficacy of ADCC-inducing antibodies in models of human solid tumors.

NKTR-255 is designed to engage the IL-15 pathway to stimulate and expand natural killer cells and promote the survival and expansion of memory CD8+ T cells without inducing suppressive regulatory T cells.

Nektar product pipeline, Stockwinners

NKTR-255 is currently being evaluated in a Phase 1/2 clinical trial in patients with either relapsed or refractory Non-Hodgkin’s lymphoma or multiple myeloma.

“The data presented at this year’s SITC meeting continue to showcase the potential of our I-O portfolio, most notably our key IL-2 pathway program, bempeg, and our new IL-15 pathway program, NKTR-255,” said Jonathan Zalevsky, Ph.D., Chief Research & Development Officer at Nektar.

“The 18-month follow-up data presentation for the Stage IV melanoma patients in our PIVOT-02 study reinforces the promise of BEMPEG and NIVO to work synergistically to achieve a deepening of response over time, while maintaining a favorable safety and tolerability profile. We’re pleased that at this 18 month timepoint, 85% of patients who achieved responses have ongoing responses and median PFS has not yet been reached.”

Separately, Nektar Therapeutics (NKTR) announced updated results from the first-in-human Phase 1a study of NKTR-358, a novel T regulatory cell stimulator in development for the treatment of autoimmune and other chronic inflammatory conditions.

Nektar reports new data, Stockwinners

The data, which were presented at the 2019 Annual Meeting of the American College of Rheumatology in Atlanta, show that treatment with NKTR-358 led to a marked and selective dose-dependent expansion in the numbers and proliferative capacity of FoxP3+CD25bright Treg cells, and a measurable activation of Treg cells.

These data are a continuation of initial results reported at 2019 Annual European Congress of Rheumatology in June 2019.

NKTR-358 is designed to treat autoimmune and inflammatory conditions by correcting the immune system imbalance that results from reduced numbers and impaired function of immune-regulating Treg cells.

NKTR-358 works by targeting the interleukin-2 receptor complex to stimulate the proliferation and activation of Treg cells.

NKTR-358 was discovered by Nektar and is being co-developed and commercialized in partnership with Eli Lilly (LLY).

Eli Lilly announces Alimta label expanded by FDA, Stockwinners
Eli Lilly and Nektar report new data, Stockwinners

“We’re pleased to report that final results from our first-in-human Phase 1a study continue to support the positive safety and tolerability profile of NKTR-358, while reinforcing its selective and measurable impact on the numbers, expansion and activation of regulatory T cells or Tregs,” said Brian Kotzin, M.D., senior VP, Clinical Development and NKTR-358 Program Lead at Nektar.

“Autoimmune and inflammatory diseases are marked by an imbalance in the body’s self-tolerance and self-regulatory immune pathways, and the ability of NKTR-358 to expand functional Tregs could help restore normal balance.

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Watch shares of ShockWave Medical

ShockWave Medical initiates study of coronary intravascular lithotripsy in Japan

Shockwave Medical (SWAV) announced that the company has initiated the DISRUPT CAD IV study of IVL in heavily calcified coronary arteries that is intended to support regulatory device approval in Japan.

Shockwave begins heart study in Japan, Stockwinners

The first CAD IV patient was enrolled earlier this week by the principal investigator of the study, Shigeru Saito, M.D., Director of Cardiology and Catheterization Laboratories and Vice President, Shonan Kamakura General Hospital.

DISRUPT CAD IV is a prospective, multicenter, single-arm study to demonstrate the safety and effectiveness of the Shockwave Coronary IVL System with the Shockwave C2 IVL Catheter in the treatment of de novo, calcified, stenotic, coronary arteries prior to stenting.

The study is expected to enroll up to 64 patients at 8 sites in Japan. Similar to the DISRUPT CAD III Study protocol, CAD IV will assess the absence of major adverse cardiac events within 30 days of the index procedure as the primary safety endpoint.

Shock Wave system, Stockwinners

The primary effectiveness endpoint is procedural success, defined as stent delivery with a residual stenosis less than 50 percent, and without in-hospital MACE.

Study enrollment is expected to be completed by June 2020, from which enrolled patients will be followed for two years. Coronary artery calcium physically impairs stent expansion and is perhaps the single most important predictor of early stent thrombosis and restenosis after stent procedures.ii, iii, iv Coronary IVL is a therapy designed to treat calcified artery blockages with sonic pressure waves historically used to treat patients with kidney stones.

The technology seeks to minimize trauma within the artery by delivering pulsatile sonic pressure waves locally to fracture both intimal and medial calcium in the artery wall but pass through surrounding soft vascular tissue in a safe manner.

Shockwave C2 Coronary IVL catheters are commercially available for the treatment of de novo coronary artery disease in Europe and other select countries; in Japan they are limited to investigational use within the DISRUPT CAD IV Study. In the United States they are limited to investigational use within the DISRUPT CAD III Study.

SWAV closed at $34.83.

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BeiGene shares soar on Amgen stake

Amgen to buy 20.5% stake in BeiGene for $2.7B at $174.85 per ADS

BeiGene (BGNE) and Amgen (AMGN) announced a global strategic oncology collaboration for the commercialization and development in China of Amgen’s XGEVA, KYPROLIS, and BLINCYTO, and the joint global development of 20 oncology assets in Amgen’s pipeline, with BeiGene responsible for development and commercialization in China.

Amgen takes 20% stake in BeiGene, Stockwinners

In connection with the collaboration, Amgen will purchase a 20.5% stake in BeiGene for approximately $2.7B in cash at $174.85 per American Depositary Share, or ADS.

Amgen will receive one seat on BeiGene’s Board of Directors.

Under the agreement, BeiGene will commercialize XGEVA, KYPROLIS and BLINCYTO in China for five or seven years, during which time the parties will equally share profits and losses.

Amgen enters Chinese market by taking stake in BeiGene, Stockwinners

Following the commercialization period, BeiGene will have the right to retain one product and will be entitled to receive royalties on sales in China for an additional five years on the products not retained; and XGEVA was approved in China in 2019 for patients with giant cell tumor of the bone and is in development for prevention of skeletal-related events in cancer patients with bone metastases.

Blincyto is indicated for acute lymphoblastic leukemia, Stockwinners

KYPROLIS is in late-stage development in China for patients with multiple myeloma, and BLINCYTO is in late-stage development in China as a treatment for adult patients with relapsed or refractory acute lymphoblastic leukemia.

Kyprolis is indicated for multiple myeloma , Stockwinners

BeiGene has agreed to jointly develop 20 Amgen oncology pipeline assets globally, which include targeted small-molecule agents such as AMG 510, a first-in-class investigational KRAS G12C inhibitor, as well as BiTE antibodies, for solid and hematologic malignancies; Amgen and BeiGene will co-fund global development costs, with BeiGene contributing up to $1.25B worth of development services and cash over the term of the collaboration.

BeiGene is entitled to receive royalties from global sales of each product outside of China, with the exception of AMG 510; For each pipeline asset that is approved in China, BeiGene will receive commercial rights for seven years from approval, during which time the parties will share equally in profits and losses.

BeiGene is also entitled to receive royalties from sales in China for five years after the seven-year commercial term; and BeiGene will also have the right to retain approximately one of every three approved pipeline assets, up to a total of six, other than AMG 510, for commercialization in China, during which time the parties will share in profits and losses.

The transactions have been approved by the boards of directors of both companies and are expected to close in the first quarter of 2020, subject to approval by a majority vote of BeiGene’s shareholders pursuant to the listing rules of the Hong Kong Stock Exchange, the expiration or termination of applicable waiting periods under applicable antitrust laws, and satisfaction of other customary closing conditions.

BeiGene has already received commitments from shareholders holding approximately 40% of its outstanding shares to vote in favor of the transactions.

BGNE closed at $138.34, last traded at $174.58.

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LVMH offers to buy Tiffany for $120 per share or $14.5B

Tiffany is expected to reject the offer

According to several sources including Bloomberg, Financial Times and Reuters, Louis Vuitton owner LVMH has approached Tiffany & Co (TIF) with a $14.5 billion acquisition offer, people familiar with the matter said, at a time when the U.S. luxury jeweler grapples with the impact of tariffs on its exports to China.

LVMH, which has for years been looking for ways to expand in the U.S. market, submitted a preliminary, non-binding offer to Tiffany earlier this month, one of the sources said.

LVMH is looking to boost U.S. sales, Stockwinners

LVMH’s offer valued Tiffany at about $120 per share, another of the sources added. Tiffany shares ended trading on Friday at $98.55.

Tiffany is expected to reject the $14.5B offer, Stockwinners

Financial Times reports that Tiffany is expected to rebuff the takeover approach from French luxury group LVMH, with the US jeweller believing the offer undervalues the company, according to people familiar with the matter. Tiffany’s advisers were on Sunday still assessing the surprise indicative offer from LVMH, the world’s largest luxury group by sales, with the board set to consider the next move. 

LVMH, which is behind brands such as Fendi, Christian Dior and Givenchy, as well as Veuve Cliquot champagne, has stood out for several years as one of the top performers in the upscale retail sector in China.

Tiffany, on the other hand, has not been as resilient. Beyond the tariffs that have been triggered by the trade war between the United States and China, a lower Chinese domestic sales tax has also contributed to double-digit decreases in its sales to Chinese tourists in the United States and in other destinations.

High-end brands have also long relied on Hong Kong as a major shopping hub drawing visitors from mainland China in particular, and four months of pro-democracy demonstrations are starting to take their toll.

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Watch Shares of Adverum Biotechnologies!

Adverum Biotechnologies reports additional data from Phase 1 trial of ADVM-022

Adverum Biotechnologies (ADVM) announced additional clinical data for the first cohort of patients in the ongoing OPTIC phase 1 clinical trial of ADVM-022, the company’s intravitreal injection gene therapy, in treatment-experienced patients with wet age-related macular degeneration.

Adverum Biotechnologies reports additional data from Phase 1 trial of ADVM-022 in patients with wet age-related macular degeneration, Stockwinners

Adverum also announced enrollment plans for the third and fourth cohorts in the ongoing OPTIC trial.

The third cohort has been initiated and patients will be treated with ADVM-022 at a dose of 2 x 10^11 vg/eye, the same dose used in the second cohort.

Subsequently, patients in the fourth cohort will be treated with ADVM-022 at a dose of 6×10^11 vg/eye, the same dose used in the first cohort.

Since inflammation has generally been mild and responsive to steroid eye drops, patients in the third and fourth cohorts will receive prophylactic steroid eye drops instead of prophylactic oral steroids.

Previously, on September 12, 2019, Adverum presented data from the first cohort in the ongoing OPTIC trial at a pre-specified 24-week time point.

Wet and Dry Macular Degeneration, Stockwinners

The additional data for this cohort includes key outcomes with a median follow-up of 34 weeks.

In treatment-experienced patients previously requiring frequent anti-VEGF injections to maintain vision, the data continue to demonstrate that the single ADVM-022 injection in this cohort was sufficient to maintain vision, with zero rescue injections required for any of the six patients.

Aaron Osborne, MBBS, chief medical officer of Adverum, added, “The clinical profile of ADVM-022 demonstrates this gene therapy’s potential to be a significant advance for patients with wet AMD. It is very encouraging that there continues to be zero rescue injections in this cohort of treatment-experienced patients with more than 6 months follow-up on all patients. We are expanding the development of ADVM-022 and are excited to share that enrollment is now open for the third cohort in OPTIC.

We look forward to being able to deliver this novel intravitreal gene therapy candidate as soon as possible to patients with wet AMD and diabetic retinopathy, our second indication for ADVM-022. We are grateful for all of the investigators, patients, and caregivers who continue to participate in the OPTIC trial.”

Adverum plans to begin dosing patients in the third cohort of the OPTIC trial in the fourth quarter of 2019 and plans to begin enrollment in the fourth cohort in the first quarter of 2020.

Adverum plans to present 52-week data from the first cohort of patients in the OPTIC trial as well as 24-week data from the second cohort of patients in the first half of 2020.

Adverum plans to submit an investigational new drug application for the treatment of ADVM-022 in diabetic retinopathy in the first half of 2020.

Piper Jaffray

Commenting on Adverum Biotechnologies update at AAO, Piper Jaffray analyst Tyler Van Buren notes that zero rescue injections have been required and disease activity by OCT and visual acuity has been maintained with 6 ADVM-022 patients now out to a median of 34 weeks.

Importantly, despite the intense criticism over inflammation and visual acuity fluctuations during the initial data disclosure last month, numerous KOLs at the conference were unconcerned and believe that ADVM-022 looks like a potential treatment option so far, he contends.

Overall, the analyst argues that safety continues to be clean in these initial patients and looks forward to the 52-week update in first half of 2020.

Van Buren reiterates an Overweight rating and $14 price target on the shares as ADVM-022 continues to look like a viable gene therapy candidate for wet AMD, which has $1B-plus potential.

ADVM closed at $5.29.

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Sarepta reports positive results for muscular dystrophy Type 2E treatment

Sarepta announces results from gene therapy trial for beta sarcoglycanopathy

Sarepta Therapeutics (SPRT) announced the nine-month functional results from three Limb-girdle muscular dystrophy Type 2E ,LGMD2E, clinical trial participants who received SRP-9003. SRP-9003 is an investigational gene therapy intended to transduce skeletal and cardiac muscle with a gene that codes for the full-length, native beta-sarcoglycan protein, the lack of which is the sole cause of LGMD2E.

Sarepta drops after U.K. trial halt,
Sarepta rises on muscular dystrophy data, Stockwinners

In Cohort 1 of the SRP-9003 study, three participants ages 4-13 were treated with an infusion of SRP-9003 at a dose of 5x1013vg/kg.

Improvements in functional outcomes were observed at day 270 for all three participants.

“We have now observed consistent functional improvements, in addition to high levels of expression of the missing protein of interest and strong results in related biomarkers, in both of our first cohorts for Duchenne muscular dystrophy and LGMD2E. We intend to test one higher dose of SRP-9003 in LGMD2E participants, select our clinical dose and then advance our SRP-9003 program, along with our other five LGMD programs, as rapidly as possible,” said Doug Ingram, Sarepta’s president and chief executive officer.

“With the results of our first LGMD2E cohort, Sarepta continues to build its gene therapy engine, an enduring model created to design, develop and bring to the medical and patient community transformative therapies for those living with, and too often dying from, rare genetic disease.”

No new safety signals were observed and the safety profile seen to date supports the ability to dose escalate in the next cohort of the study. As previously disclosed, two participants in the study had elevated liver enzymes, one of which was designated a serious adverse event (SAE), as the participant had associated transient increase in bilirubin. Both events occurred when the participants were tapered off oral steroids and, in both instances, elevated liver enzymes returned to baseline and symptoms resolved following supplemental steroid treatment.

SPRT is up $5.52 to $86.86.

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