L3Harris Security Detection sold for $1 B

Leidos to acquire L3Harris security detection, automation businesses

Leidos (LDOS) announced that it has entered into a definitive agreement to acquire L3Harris Technologies’ (LHX) security detection and automation businesses, for $1B in cash.

The boards of both companies unanimously approved the transaction. L3Harris’ security detection and automation businesses provide airport and critical infrastructure screening products, automated tray return systems and other industrial automation products.

L3Harris sells its security division for $1B, Stockwinners

With headquarters in Tewksbury, Massachusetts and Luton, England, the combined businesses have 1,200 employees and a global sales and services operations footprint with more than 20,000 systems deployed world-wide across more than 100 countries.

The businesses serve customers in the aviation, transportation, government and critical infrastructure markets.

Leidos goes on $1B shopping spree, Stockwinners

This acquisition adds products that expand Leidos’ offerings to create a security and detection platform.

These products include checkpoint security products like checkpoint CT scanners, people scanners, comprehensive explosives trace detectors, checked baggage screeners and automated tray return systems, or ATRS.

This business expands customer penetration internationally, helping deliver on a stated objective to diversify revenue globally.

The deal will increase Leidos’ international security products revenue more than six-fold. The acquisition also enables the company to leverage technology investments across the combined portfolio to accelerate innovation and improve service efficiency for customers.

The transaction is expected to be immediately accretive to Leidos’ revenue growth, EBITDA margins, and non-GAAP diluted earnings per share upon closing.

Leidos expects to fund the $1B cash transaction through a combination of cash on hand and incremental debt.

The transaction is expected to close by the end of Q2, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals.

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Tesla shares lower as sales slowdown

Tesla registrations nearly halved in California in Q4

Tesla’s (TSLA) overall vehicle registrations nearly halved in California during the fourth quarter, according to a Dominion Cross-Sell report, which collates data from state motor vehicle records, Reuters reports.

https://stockwinners.com/blog/
Tesla shares lower as sales slow down, Stockwinners

The report showed registrations in California plunged 46.5% to 13,584 in the quarter ended December 2019, from 25,402 in the same period a year earlier.

Model 3 registrations, which accounted for about three-fourth of the total, halved to 10,694.

Tesla Model 3 named Popular Mechanics' Car of the Year
Tesla Model 3 named Car of the Year, Stockwinners

The massive drop comes as tax credit for Tesla buyers ended in 2019. It had fallen to $3,750 at the start of the year and had halved to $1,875 in July.

An existing $7,500 U.S. tax credit for electric vehicles (EVs), which allows taxpayers to deduct a part of the cost of buying an electric car, phases out over 15 months once an automaker hits 200,000 cumulative EV sales, which Tesla hit in July 2018.

Morgan Stanley

Morgan Stanley analyst Adam Jonas downgraded Tesla to Underweight from Equal Weight with a price target of $360, up from $250.

The analyst sees an unfavorable risk/reward at current valuation levels following the stock’s recent rally.

Tesla gets a boost from Bud. See Stockwinners.com
Tesla is expected to rollout is big rig soon, Stockwinners

Further, he believes risks to Tesla’s long-term Chinese business may not be fully appreciated by the market.

Four factors have driven Tesla’s share price up 105% over the last four months, namely stronger than expected global demand for its vehicles, China announcements that show the company’s expansion into the world’s largest electric vehicle market, supportive incentive developments and positive sentiment around its product expansion, Jonas tells investors in a research note.

The analyst, while admitting near-term momentum and sentiment around the stock is very strong, questions the “sustainability of the momentum.” Jonas increased his expectations for Tesla’s core auto business while decreasing his expectations for the mobility business, resulting in the price target raise to $360.

TSLA is down 2.75% to $504.

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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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ArQule sold for $2.7 billion

Merck to acquire ArQule for $20 per share

Merck (MRK) and ArQule (ARQL) announced that the companies have entered into a definitive agreement under which Merck, through a subsidiary, will acquire ArQule for $20 per share in cash for an approximate total equity value of $2.7B.

Merck buys ArQule for $2.7B, Stockwinners

ArQule’s lead investigational candidate, ARQ 531, is a novel, oral Bruton’s tyrosine kinase, or BTK, inhibitor currently in a Phase 2 dose expansion study for the treatment of B-cell malignancies.

BTK inhibition has been shown to prevent B-cell receptor signaling that is critical for the survival and proliferation of leukemic cells in many B-cell malignancies.

Merck presents results from Phase 3 KEYNOTE-426 study, Stockwinners
Merck buys ArQule, Stockwinners

ARQ 531 is a selective, reversible inhibitor that blocks both wild-type BTK and the C481S mutant form of the enzyme that is commonly associated with resistance to other BTK inhibitors.

In early clinical trials, ARQ 531 demonstrated a manageable safety profile and early signs of anti-tumor activity for the treatment of patients with relapsed or refractory chronic lymphocytic leukemia, or CLL, and Richter’s Transformation.

ArQule lead investigative drug is ARQ531

Final data from the Phase 1 study of ARQ 531 will be presented on December 9 at the 61st American Society of Hematology, or ASH.

Under the terms of the acquisition agreement announced, Merck, through a subsidiary, will initiate a tender offer to acquire all outstanding shares of ArQule.

The closing of the tender offer will be subject to certain conditions, including the tender of shares representing at least a majority of the total number of ArQule’s outstanding shares, the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions.

Upon the successful completion of the tender offer, Merck’s acquisition subsidiary will be merged into ArQule, and any remaining shares of common stock of ArQule will be canceled and converted into the right to receive the same $20 per share price payable in the tender offer.

The transaction is expected to close early in Q1 of 2020.

ARQL closed at $9.66, last traded at $19.90.

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ChemoCentryx shares soar on data

ChemoCentryx, VFMCRP say pivotal phase-III ADVOCATE trial met primary endpoints

Vifor Fresenius Medical Care Renal Pharma, or VFMCRP, and ChemoCentryx (CCXI) announced positive topline data from the pivotal phase-III ADVOCATE trial of avacopan, an orally administered selective complement 5a receptor inhibitor, for the treatment of patients with anti-neutrophil cytoplasmic antibody-associated vasculitis (ANCA-associated vasculitis or ANCA vasculitis).

ChemoCentryx shares soar on its ANCA drug, Stockwinners

ANCA vasculitis is an autoimmune disease affecting small blood vessels in the body. It is caused by autoantibodies called ANCAs, or Anti-Neutrophilic Cytoplasmic Autoantibodies.

This global study, in which a total of 331 patients with ANCA vasculitis were enrolled, met both of its primary endpoints, disease remission at 26 weeks and sustained remission at 52 weeks, as assessed by the Birmingham Vasculitis Activity Score, or BVAS.

Remission was defined as a BVAS score of zero and being off glucocorticoid treatment for ANCA vasculitis for at least the preceding four weeks.

BVAS remission at week 26 was achieved in 72.3% of the avacopan treated subjects vs. 70.1% of subjects in the glucocorticoid standard of care control group.

Sustained remission at 52 weeks was observed in 65.7% of the avacopan treated patients vs. 54.9% in the glucocorticoid standard of care control group, achieving both non-inferiority and superiority to glucocorticoid standard of care.

Importantly, subjects who received avacopan experienced additional benefits compared to those in the glucocorticoid standard of care control group.

These benefits, assessed as pre-specified secondary endpoints, include: Significant reduction in glucocorticoid-related toxicity; Significant improvement in kidney function in patients with renal disease at baseline; Improvements in health-related quality of life metrics.

The topline safety results revealed an acceptable safety profile in this serious and life threatening disease with fewer subjects having serious adverse events in the avacopan group than in the glucocorticoid standard of care control group.

A full analysis of the data is underway and expanded results are expected to be announced in the coming weeks. “These results exceed our expectations,” said Thomas J. Schall, Ph.D., President and Chief Executive Officer of ChemoCentryx.

“Today we mark the dawn of a new and historic period in the lives of ANCA vasculitis patients. This day we have for the first time demonstrated that a highly targeted therapy aimed at the very center of the ANCA disease process is superior to the traditional approach of broad immune suppression therapy; a therapy which the present findings may make obsolete. Until now ANCA vasculitis patients have had to endure regimens that contain chronic high doses of steroids and all their noxious effects, but with today’s data it is clear that the time of making patients sick with steroid therapy in an attempt to make their acute vasculitis better may at last be over. Working with our partner VFMCRP, we plan to make regulatory submissions for full marketing approval to both the European Medicines Agency and the FDA in 2020.”

CCXI is up $26.68 to $34.65

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Shares of Aravive soar on its ovarian cancer drug

Aravive reports data from ongoing Phase 1b portion of AVB-500 trial

Aravive (ARAV) announced new data from the ongoing Phase 1b portion of the Phase 1b/2 clinical trial of AVB-500 in platinum-resistant recurrent ovarian cancer patients.

Ovarian cancer data sends shares sharply higher, Stockwinners

The data from the first 31 patients treated at the 10 mg/kg dose are maturing and affirm earlier findings on the relationship between AVB-500 levels and anti-tumor response.

In this data analysis, high serum drug levels of AVB-500 were strongly predictive of anti-tumor activity with statistically significant correlation to progression-free survival.

PFS is the primary endpoint for platinum-resistant ovarian cancer clinical trials.

At the 10 mg/kg dose, patients that met or exceeded the minimal efficacious concentration of AVB-500 demonstrated a greater than four-fold increase in median PFS over those with low exposure and approximately two-fold improvement in overall response rate, including one complete response.

How AVB-500 works, Stockwinners

Patients who achieved sufficient AVB-500 exposure also showed improvements in duration of response and clinical benefit rate, with reduced chance of progressing by 3.2-fold.

The open-label, Phase 1b portion of the Phase 1b/2 clinical trial of AVB-500 enrolled patients with platinum-resistant recurrent ovarian cancer in two cohorts, one investigating a combination of AVB-500 with pegylated liposomal doxorubicin and the other a combination with paclitaxel.

All patients were treated with 10mg/kg AVB-500 every other week.

The company previously reported drug exposure-response relationship among the initial patients receiving 10 mg/kg.

The study identified a minimal efficacious concentration that is consistent with at least 95% target engagement based on independent pharmacokinetic modeling.

At the 10 mg/kg dose, 17 of 31 patients in the study achieved the minimal efficacious concentration after the first dose of AVB-500. The baseline characteristics, demographics and safety parameters were comparable between patients who achieved the minimal efficacious concentration and those who fell below that threshold.

The analysis shows that the clinical benefit at this dose level in the study can be primarily attributed to AVB-500 exposure.

Other notable findings: The patient with CR that is pending confirmation achieved the MEC of AVB-500 and was on paclitaxel. She had a baseline serum GAS6 level typical of the platinum-resistant ovarian cancer population and two-fold higher than that observed in healthy volunteers. She also exhibited poor prognostic factors, including two prior lines of therapy and platinum-free interval of less than three months.

Among the patients who responded to AVB-500, four of seven remain responders and continue on study, and two patients remain on AVB-500 as a single agent.

All four patients achieved the minimal efficacious AVB-500 concentration. Among the 13 patients whose best response was SD, four achieved the MEC of AVB-500 and remain on study. One SD patient, whose trough level was below the minimal efficacious concentration, did not progress but withdrew consent.

Because the study is still ongoing and includes only patients above the MEC, duration of response and PFS may continue to evolve.

These data confirm the company’s strategy to investigate higher doses in the current Phase 1b study, to determine if a greater proportion of patients can exceed the MEC.

According to our modeling, a dose of 20 mg/kg should allow greater than 90% of the patients to achieve the MEC.

It is anticipated 6 to 12 patients will be treated with 15mg/kg and an additional 12 patients will be treated with 20mg/kg.

An independent safety monitoring group will review data from the 15mg/kg group prior to escalation to the 20 mg/kg dose.

AVB-500 continues to be well-tolerated and there have been no serious and unexpected adverse reactions or dose-limiting toxicities to date.

ARAV closed at $6.51, last traded at $17.20.

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Wesco Aircraft sold for $1.9 billion

Wesco Aircraft to be acquired by Platinum Equity affiliate for $1.9B

Wesco Aircraft sold to Carlyle Group affiliate, Stockwinners

Wesco Aircraft Holdings (WAIR) announced that it has entered into a definitive merger agreement to be acquired by an affiliate of Platinum Equity in a transaction valued at approximately $1.9B.

Upon closing, Wesco will be combined with Platinum Equity portfolio company Pattonair, a provider of supply chain management services for the aerospace and defense industries based in the United Kingdom.

Under the agreement, which has been unanimously approved by Wesco’s Board of Directors, Wesco shareholders would receive $11.05 per share in cash.

The cash purchase price represents a premium of approximately 27.5 percent to the 90-day volume weighted average share price for the period ended May 24, 2019, the last trading day prior to media speculation regarding a potential transaction involving Wesco Aircraft.

Wesco’s three largest shareholders, affiliates of The Carlyle Group (CG) and Makaira Partners, as well as the Snyder Family Trusts, support the transaction and have entered into voting and support agreements to vote their shares in favor of the transaction.

CG to buy Wesco Aircraft, Stockwinners

The transaction will be financed through a combination of committed equity financing provided by affiliates of Platinum Equity Capital Partners IV, L.P., as well as debt financing that has been committed to by Bank of America Merrill Lynch.

The transaction is expected to be completed by the end of calendar 2019 and is subject to Wesco shareholder approval, regulatory clearances and other customary closing conditions.

Upon the completion of the transaction, Wesco will become a privately held company, and shares of its common stock no longer will be listed on any public market.

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Vail Resorts buys Peak Resorts for $11.00 per share

The deal is valued about $170 million

Peak Resorts (SKIS) announced that it has entered into a definitive merger agreement with Vail Resorts, Inc. (MTN) pursuant to which Vail Resorts will acquire all outstanding shares of common stock of Peak Resorts for $11.00 per share in cash.

Vail Resorts to buy Peak Resorts, Stockwinners

The transaction represents a 116% premium to Peak Resorts’ closing stock price on July 19, 2019.

The transaction is expected to close in fall 2019 and is subject to certain conditions, including a vote of Peak Resorts shareholders and antitrust clearance.

Vail Resorts buys Peak Resorts, shares jump. Stockwinners

The transaction was approved by the Boards of Directors of both companies. Peak Resorts’ Board of Directors also recommends that the Company’s shareholders approve the transaction.

Moelis & Company LLC is serving as financial advisor to Peak Resorts. Perkins Coie LLP, Sandberg Phoenix & von Gontard P.C. and Armstrong Teasdale LLP are serving as legal counsel to Peak Resorts.

About the Companies

Peak Resorts, Inc. owns, operates, and leases day and overnight drive ski resorts in the United States. Its resorts activities and amenities include skiing, snowboarding, terrain parks, tubing, dining, lodging, equipment rentals and sales, ski and snowboard instruction, golf, zip lines, mountain coasters, mountain biking, hiking, paint ball, and other summer activities. It operates 17 ski resorts primarily located in the Northeast, Mid-Atlantic, and Midwest.

Vail Resorts has been on a shopping spree, Stockwinners

Vail Resorts, Inc. operates mountain resorts and urban ski areas in the United States. The company operates through three segments: Mountain, Lodging, and Real Estate. The Mountain segment operates 11 mountain resorts, including Vail Mountain, Breckenridge Ski, Keystone, and Beaver Creek resorts in Colorado; Park City resort in Utah; Heavenly Mountain, Northstar, and Kirkwood Mountain resorts in the Lake Tahoe area of California and Nevada; Whistler Blackcomb in Canada; Stowe Mountain resort in Vermont; and Perisher in Australia, as well as 3 urban ski areas, such as Wilmot Mountain in Wisconsin, Afton Alps in Minnesota, and Mount Brighton in Michigan.

Vail Resorts expands its footprint by purchasing Peak Resorts, Stockwinners

Its resorts offer various winter and summer recreational activities. The Lodging segment owns and/or manages various luxury hotels and condominiums under the RockResorts brand, and other lodging properties; various condominiums located in proximity to the company’s mountain resorts; destination resorts; and golf courses, as well as offers resort ground transportation services. This segment operates approximately 5,400 owned and managed hotel and condominium units.

The Real Estate segment owns, develops, and sells real estate properties in and around the company’s resort communities. 

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Sotheby’s sold for $3.7 billion

Sotheby’s to be acquired in cash transaction valued at $3.7B

Sotheby’s to be acquired in cash transaction valued at $3.7B, Stockwinners

Sotheby’s (BID) announced that it has signed a definitive merger agreement to be acquired by BidFair USA, an entity wholly owned by media and telecom entrepreneur as well as art collector, Patrick Drahi.

Sotheby’s operates as an auctioneer of authenticated fine art, decorative art, jewelry, wine, and collectibles in the United States, the United Kingdom, Hong Kong, China, Switzerland, France, and internationally. The company operates in two segments, Agency and Finance. The Agency segment accepts property on consignment; and matches sellers to buyers through the auction or private sale process.

Under the terms of the agreement, which was approved by Sotheby’s Board of Directors, shareholders, including employee shareholders, will receive $57.00 in cash per share of Sotheby’s common stock in a transaction with an enterprise value of $3.7B.

The offer price represents a premium of 61% to Sotheby’s closing price on June 14, 2019, and a 56.3% premium to the company’s 30 trading-day volume weighted average share price.

The transaction would result in Sotheby’s returning to private ownership after 31 years as a public company traded on the New York Stock Exchange.

Tad Smith, Sotheby’s CEO, said, “Patrick Drahi is one of the most well-regarded entrepreneurs in the world, and on behalf of everyone at Sotheby’s, I want to welcome him to the family. Known for his commitment to innovation and ingenuity, Patrick founded and leads some of the most successful telecommunications, media and digital companies in the world.

He has a long-term view and shares our brand vision for great client service and employing innovation to enhance the value of the company for clients and employees.

This acquisition will provide Sotheby’s with the opportunity to accelerate the successful program of growth initiatives of the past several years in a more flexible private environment.

It positions us very well for our future and I strongly believe that the company will be in excellent hands for decades to come with Patrick as our owner.”

The closing of the deal is subject to customary conditions, including regulatory clearance and shareholder approvals, but is not subject to the availability of financing.

The transaction is expected to close in the fourth quarter of 2019 following shareholder approval. LionTree Advisors is serving as financial advisor to Sotheby’s in connection with the transaction, and Sullivan & Cromwell LLP is serving as the company’s legal counsel.

BNP Paribas and Morgan Stanley are acting as financial advisors to BidFair, BNP Paribas acted as sole financing provider, and Hughes Hubbard & Reed LLP and Ropes & Gray International LLP are serving as its legal advisors.

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Bio-Path Holdings presents positive pancreatic cancer data

Bio-Path Holdings presents BP1003 data at AACR

Bio-Path Holdings presents positive pancreatic cancer data, Stockwinners

Bio-Path Holdings (BPTH) announced that data from pre-clinical studies supporting the potential of BP1003, a liposome-incorporated STAT3 oligodeoxynucleotide inhibitor, for the treatment of pancreatic cancer, non-small cell lung cancer, or NSCLC, and acute myelogenous leukemia, or AML, were presented in a poster at the American Association for Cancer Research, or AACR.

The poster highlights four antisense oligo sequences directed against STAT3 mRNA identified by Bio-Path and manufactured using DNAbilize antisense RNAi nanoparticle technology.

Cell viability tests and western blots were conducted to determine the inhibitory effects of liposome-incorporated STAT3 antisense oligo on NSCLC and AML cells.

An ex vivo live tissue sensitivity assay was performed with a panel of 20 pancreatic ductal adenocarcinoma patient-derived xenografts to study the overall activity of BP1003 alone, and in combination with gemcitabine.

Using previously defined criteria, tissue slice viability inhibition greater than 30% and with a less than 0.05 value was considered to be a response.

For validation of ex vivo results, tumor bearing mice were administered BP1003 and gemcitabine twice a week for 28 days. Tumor volumes were monitored for up to 49 days.

The most potent liposome-incorporated STAT3 antisense sequence in decreasing NSCLC cell viability was selected as the drug candidate BP1003.

Further validation in AML cells demonstrated that BP1003 inhibited cell viability and STAT3 protein expression. In the ex vivo LTSA assay, BP1003 at a dose of 10 microM significantly inhibited the tissue slice viability in 9 out of 18 PDAC PDXs by more than 30%.

The combination of BP1003 and gemcitabine further enhanced ex vivo efficacy of BP1003 in a subset of PDXs.

In the in vivo study, a combination of BP1003 and gemcitabine caused tumor regression during the 28-day drug treatment period.

This anti-cancer activity was maintained for another 21 days, even when drug treatment had ceased.

Preclinical pancreatic cancer models demonstrated that BP1003 successfully penetrated the stroma into pancreatic tumors.

Finally, the results in pancreatic cancer showed that BP1003 inhibited tumor slice viability in nine of 18.

BPTH closed at $19.68, it last traded at $20.61.

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Bristol-Myers comments on Celgene’s purchase

Bristol-Myers sees ‘meaningful financial benefits’ from Celgene transaction.

Bristol-Myers treatment for colorectal cancer approved, Stockwinners

Bristol Meyers Comments on Celgene purchase, Stockwinners

Bristol-Myers Squibb (BMY) said an updated its investor presentation about the Celgene (CELG) transaction.

The company said, “The Celgene transaction is the natural next step in Bristol-Myers Squibb’s proven strategy that has consistently delivered results for over a decade.

Through a disciplined approach to driving innovation, focusing on high-value opportunities and sourcing innovation externally to complement its internal portfolio and pipeline, Bristol-Myers Squibb has generated consistently strong growth and increased its dividend for 10 consecutive years.

The combination with Celgene will create a leading biopharma with increased scale, while maintaining the same agility and a focus on delivering for patients in core disease areas of high-unmet medical need.

The pipeline of the combined company provides significant near-, medium- and long-term opportunities for value creation. Bristol-Myers Squibb is acquiring Celgene’s robust and complementary pipeline at an attractive price.

In addition to six expected near-term product launches representing more than $15B in revenue potential, the combination will greatly increase Bristol-Myers Squibb’s Phase I and II assets, which will provide the next set of registrational opportunities in core therapeutic areas.

With an expanded set of scientific platforms and research capabilities, Bristol-Myers Squibb will be well positioned to discover and develop highly innovative medicines and accelerate these new options to patients through one of the highest-performing commercial organizations in the industry.

Bristol-Myers Squibb is well positioned for 2025 and beyond with continued leadership across Oncology and a diversified portfolio of assets.

The combined company will have a broad, balanced and earlier life-cycle marketed portfolio with a significantly higher number of opportunities across multiple diseases to drive the growth of Bristol-Myers Squibb in the second half of the decade. These opportunities will support financial strength for continued investment and innovation.

The Celgene transaction is expected to generate meaningful financial benefits for all stockholders.

With more than $45B of expected free cash flow generation over the first three full years post-closing, the combination will enable rapid debt reduction to de-lever the balance sheet and strengthen Bristol-Myers Squibb’s credit profile.

Bristol-Myers Squibb expects to realize run-rate cost synergies of approximately $2.5B by 2022 from the combination, and the combined company is expected to grow revenue and EPS every year through 2025.”

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Harvey, August Job Report Delay Another Rate Hike

Fed funds futures rallied on the tepid employment report, Harvey damage

Harvey, August Job Report Delay Another Rate Hike. See Stockwinners.com Market Radar

Fed funds futures rallied on the tepid employment report, suggesting reduced risk for a third rate hike this year.

Indeed, implied rates have slipped to about a 25% risk for 25 bp increase, from 30% previously, and it had been hovering in the 33% range for much of August.

Note that September employment data is notoriously volatile, though with the broad-based nature of sluggishness in the report, it could take some time to recover the lost momentum.

Analysts are still bullish on growth into year-end, especially with the amount of rebuilding that will be needed in the aftermath of Hurricane Harvey (and with Hurricane Irma on the horizon).

However, it’s not clear there will be enough time between now and the December 13 FOMC decision to get the Committee on board for a tightening, especially if inflation remains tame.

AUGUST JOB REPORT

The U.S. jobs report undershot estimates with a 156k August payroll rise after 41k in downward revisions, though nearly all of the disappoint was concentrated in government, where analysts saw a 9k drop after 51k in downward bumps, and August payrolls historically underperform before upward revisions.

Analysts saw a 0.2% hours-worked decline with a workweek downtick to 34.4, and a 0.1% hourly earnings gain that left a fifth consecutive 2.5% y/y rise. The goods sector showed a 0.1% hours-worked drop despite a 70k payroll gain.

Analysts saw a 74k civilian job drop despite a 77k labor force increase that boosted the jobless rate to 4.44%, while the participation rate remained at 62.9%. Hurricane Harvey occurred after the BLS survey week and had no August payroll impact.

The disruptive effect of the hurricane may be fully offset by a rebuilding effect before the BLS survey week ending September 16, which lies a full three weeks from when the storm first struck.

HURRICANE  DAMAGE

Hurricane Harvey could be the costliest natural disaster in U.S. history with a potential price tag of $190 billion, according to a preliminary estimate from private weather firm AccuWeather.

This is equal to the combined cost of Hurricanes Katrina and Sandy, and represents a 1% economic hit to the gross national product, AccuWeather said. This is equal to a 25 bp rate hike by the Feds according to some estimates while others see that more like a 50 bp rate hike.

[youtube https://www.youtube.com/watch?v=ZZKo-159lvY?rel=0&controls=0&w=560&h=315]


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McDonald’s to Offer Delivery

Delivery is now available at more than 2,000 McDonald’s locations

In June, 3500 MCD stores will offer delivery

mcd
MCD to expand its delivery business

#McDonald’s ($MCD) will expand delivery of its food to 3500 stores in the U.S. by June. McDonald’s already has well-established delivery services in Asia and the Middle East, where for some restaurants delivery is 40 percent of sales. Last year, the DJIA component garnered nearly $1 billion in delivery sales globally.  McDonald’s CEO Steve Easterbrook said delivery will be available in 3,500 locations by June, up from the more than 2,000 locations that currently offer delivery.

In the U.S., 60 percent of delivery orders were placed in the evening or late at night, and arrived, on average, within 30 minutes, he said.

“We are encouraged by early results in the U.S. where delivery is resonating well, particularly with our younger customers,” Easterbrook said.

Delivery has become a key priority in fast food, but hiring a fleet of drivers can be a huge undertaking for chains. Companies like Uber and GrubHub ($GRUB) can help ease the financial burden on restaurants by acting as a third-party delivery service. The trade-off is the chain doesn’t have direct control over the employees making the deliveries.

Other fast food restaurants have adopted various ways to increase their sales. Domino’s Pizza (DPZ), the king of pizza delivery business, has been remodeling its stores to encourage diners to dine in its restaurants. It is expected that other fast food chains will join the delivery craze. Companies that are expected to offer delivery include Burger King (QSR) and Jack In the Box (JACK).

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AstraZeneca to present Cancer Drugs at ASCO Meeting

American Society of Clinical Oncology Annual Meeting is in Chicago from June 2 to June 6

AstraZeneca to present data on its drug candidates for Ovarian Cancer, Bladder Cancer, Neck and Shoulder Cancer and Lung Cancer

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#AstraZeneca $AZN , along with its global biologics research and development arm, #MedImmune, will demonstrate its progress on the company’s cancer medicine development at the 2017 American Society of Clinical Oncology Annual Meeting in Chicago, IL, June 2 to June 6.

“With three new oncology medicines addressing the unmet needs of patients with ovarian, lung, and bladder cancers approved in under three years, AstraZeneca is now halfway to delivering on its promise to launch six new medicines for cancer by 2020,” the company says.

“This progress is reflected in the 100 company-sponsored and supported abstracts, including five Best-of-ASCO presentations, 11 oral presentations and eight poster discussions, accepted for the meeting.”

These include new data on approved and potential new medicines from the company’s pipeline across multiple scientific platforms and tumor types.

‘Late-breaker’ data from the #OlympiAD trial of olaparib versus chemotherapy in HER2-negative germline #BRCA1 or BRCA2 mutated breast cancer patients are the first positive Phase III results for a poly ADP-ribose polymerase inhibitor beyond #ovarian cancer.

Additional #olaparib data will include: SOLO-2: Oral presentation of Phase III data on the relationship between health-related quality of life and patient-centered and clinical outcomes with olaparib maintenance following chemotherapy in patients with BRCA-mutated platinum-sensitive relapsed serous ovarian cancer and Study 19: Randomized Phase II overall survival and updated progression-free survival data for the combination of olaparib and cediranib versus olaparib alone in recurrent platinum-sensitive ovarian cancer.

AstraZeneca’s unique DDR pipeline will also be illustrated through an oral presentation of Phase I data on the WEE1 inhibitor, AZD1775, in combination with radiation therapy and temozolomide in patients with newly diagnosed glioblastoma multiforme and evaluation of intratumoral drug distribution in patients with recurrent GBM.

Additional information will also be presented from a Phase I trial of AZD1775 in combination with neoadjuvant weekly cisplatin and docetaxel in borderline-resectable head and neck squamous cell #carcinoma.

Latest #osimertinib investigational data from the AURA3 trial to be released during an oral presentation will provide further evidence of the response to treatment in patients with epidermal growth factor receptor T790M mutation-positive non-small cell lung cancer and central nervous system metastases. Further insights into the ability of osimertinib to cross the blood-brain barrier will be provided through updated results from the #BLOOM trial of osimertinib in patients with EGFR mutation-positive NSCLC and leptomeningeal disease.

AstraZeneca will be presenting updated data from the NSCLC and bladder cancer cohorts of the Phase I/II Study 1108 of #durvalumab in patients with advanced solid tumors. New data in locally advanced or metastatic urothelial carcinoma reinforce the May 2017 US FDA approval of #Imfinzi for the treatment of patients with locally advanced or mUC who have disease progression during or following platinum-containing chemotherapy, or whose disease has progressed within 12 months of receiving platinum-containing chemotherapy before or after surgery.

Updated durvalumab monotherapy Study 1108 results in Stage IIIB/IV NSCLC will also be presented.

These data underline AstraZeneca’s forward momentum in lung cancer following the positive top-line results of the Phase III PACIFIC trial of #durvalumab as sequential treatment in patients with locally advanced, unresectable NSCLC.

In an oral presentation, MedImmune will present data on a novel relationship in NSCLC between EGFR pathway activation and the immunosuppressive molecule CD73.

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