Supreme Court ruling moves retail stocks

Physical retailers rise, online retailers drop after Supreme Court tax ruling

Supreme Court ruling moves retail stocks, Stockwinners
Supreme Court ruling moves retail stocks, Stockwinners

Shares of brick-and-mortar retailers are rising, while shares of e-commerce firms are slipping, after the Supreme Court ruled that online retailers can be required to collect sales taxes in states where they have no physical presence.

SUPREME COURT RULING

On Thursday, the Supreme Court sided with the state of South Dakota in a fight it brought against Wayfair (W) to require a business that has no physical presence in the state to collect its sales tax.

Supreme Court ruling moves retail stocks, Stockwinners
Supreme Court ruling moves retail stocks, Stockwinners

The Supreme Court ruled in a 5-to-4 vote that a 1992 judgement in Quill Corporation v. North Dakota regarding the physical presence rule was “unsound and incorrect,” according to a judgement posted to the high court’s website.

Justice Anthony Kennedy, in writing for the majority opinion, said the Quill decision had distorted the economy and resulted in states losing annual tax revenues between $8B-$33B.

“Quill puts both local businesses and many interstate businesses with physical presence at a competitive disadvantage relative to remote sellers,” he wrote.

“Remote sellers can avoid the regulatory burdens of tax collection and can offer de facto lower prices caused by the widespread failure of consumers to pay the tax on their own.”

WHAT’S NOTABLE:

Following the ruling, industry trade organization National Retail Federation issued a statement saying,

“Retailers have been waiting for this day for more than two decades. The retail industry is changing, and the Supreme Court has acted correctly in recognizing that it’s time for outdated sales tax policies to change as well.

This ruling clears the way for a fair and level playing field where all retailers compete under the same sales tax rules whether they sell merchandise online, in-store or both.”

ANALYST COMMENTARY

KeyBanc analyst Edward Yruma called the ruling a negative for Wayfair, arguing that it may reduce some of the price differential that has helped it gain share from traditional peers.

The ruling is also a negative, but to a lesser degree, for eBay (EBAY) and Etsy (ETSY), said Yruma, who views the impact on those two as more related to compliance and implementation.

He adds that the news could be a modest positive for retailers of high-ticket and branded products, such as Best Buy (BBY), Home Depot (HD), Lowe’s (LOW), La-Z-Boy (LZB), Kirkland’s (KIRK), RH (RH) and Williams-Sonoma (WSM).

PRICE ACTION

At Thursday midday, Target (TGT) rose 1.8%, Walmart (WMT) was up 0.7%, Costco (COST) rose roughly 1.1% while Amazon (AMZN) was down 0.4%, Etsy dropped about 2.5%, eBay fell 1.4% and Wayfair (W) was down 1.2%.

In addition, Avalara (AVLR), a software company focused on automated tax compliance that recently held its initial public offering, gained 17.1%.


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Incyte says REACH1 trial met primary endpoint

Incyte says REACH1 trial met primary endpoint of ORR for Ruxolitinib

Incyte says REACH1 trial met primary endpoint, Stockwinners
Incyte says REACH1 trial met primary endpoint, Stockwinners

Incyte (INCY) announced positive topline results from its ongoing pivotal Phase 2 REACH1 trial evaluating ruxolitinib, or Jakafi, in combination with corticosteroids for the treatment of patients with steroid-refractory acute graft-versus-host disease.

The study met its primary endpoint, demonstrating an overall response rate of 55% at Day 28.

In addition, the best overall response rate , the number of patients achieving a response at any time point during the study, was 73%.

The most common treatment-emergent adverse events of any grade were anemia, thrombocytopenia and neutropenia.

Based on these data from REACH1, Incyte plans to file a Supplemental New Drug Application for the approval of ruxolitinib for the treatment of steroid-refractory acute GVHD with the U.S. FDA during the third quarter of 2018.

“The results of the REACH1 study demonstrate the potential of ruxolitinib to meaningfully improve the outcomes of allogeneic transplant patients who develop steroid-refractory acute GVHD and further underscore the promise of JAK inhibition to advance the treatment of this potentially-devastating condition,” said Steven Stein, M.D., Chief Medical Officer, Incyte.

“We look forward to sharing additional results from this study with the medical community, and to working with U.S. regulatory authorities to submit our supplementary new drug application seeking approval of ruxolitinib in this indication later this year.”

INCY closed at $73.43, it last traded at $74.65.


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Tesaro could be sold shortly

Analysts weigh in on Tesaro buyout value amid report of Roche interest 

 

Tesaro could be sold soon, Stockwinners
Tesaro could be sold soon, Stockwinners

According to a report by Intereconomia, Roche (RHHBY) is working with Citibank on a potential acquisition of Tesaro (TSRO).

While both companies are not commenting on the article, Citi analyst Robyn Karnauskas said Tesaro could be valued at $140-$213 per share in an M&A situation, while her peer at Suntrust sees a potential buyout value range of $109-$196.

INTERECONOMIA REPORT

Spanish media group Intereconomia reported that Roche, following its acquisition of Foundation Medicine (FMI) (see our blog here), is working with Citibank on a potential deal to buy Tesaro.

Earlier this month Tesaro entered into a clinical collaboration with Roche unit Genentech to evaluate the combination of the PD-L1 antibody atezolizumab.

Intereconomia, citing sources close to the situation, added that Roche could announce the acquisition of Tesaro in the coming days.

Tesaro said it does not “comment on market rumors,” while Roche gave a similar answer to Bloomberg.

TESARO TAKEOUT VALUE

In a research note to investors this morning, Citi’s Karnauskas said that her M&A analysis for Tesaro suggests the company could be valued at $140-$213 per share in a takeover scenario.

Karnauskas noted, however, that she does not assign any value to Zeluja expansion opportunities in platinum resistant ovarian cancer and metastatic castration resistant prostate cancer.

The analyst reiterated a Buy rating and $100 price target on Tesaro shares.

Meanwhile, SunTrust analyst Peter Lawson told investors that his takeover analysis suggests a potential buyout value of $153 per share for Tesaro, with a range of $109-$196.

The analyst argued that Intereconomia’s report could also be a potential positive for the biotechnology space, mainly Clovis Oncology (CLVS) and oncology peers.

Lawson reiterated a Buy rating and $150 price target on Tesaro’s shares.

PRICE ACTION

In Wednesday afternoon trading, shares of Tesaro have gained almost 15% to $45.92, while Roche’s stock has advanced over 2% to $27.11 and Clovis shares are up 5% to $48.10.


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Foundation Medicine sold for $2.4 billion

Roche acquires Foundation Medicine for $137 per share or $2.4B

Foundation Medicine sold or $2.4B, Stockwinners
Foundation Medicine sold or $2.4B

Roche (RHHBY) and Foundation Medicine (FMI) announced they have entered into a definitive merger agreement for Roche to acquire the outstanding shares of Foundation Medicine not already owned by Roche and its affiliates at a price of $137.00 per share in cash.

This corresponds to a total transaction value of $2.4B on a fully diluted basis, and a total company value of $5.3B on a fully diluted basis. This price represents a premium of 29% to FMI’s closing price on June 18.

The merger agreement has been unanimously approved by the board of Roche and a Special Committee of the independent directors of FMI and by its full board of directors with the Roche designated directors abstaining from the deliberations and vote.

All current members of the FMI board have indicated that they intend to tender their FMI shares in the tender offer. Under the terms of the merger agreement, Roche will promptly commence a tender offer to acquire all of the outstanding shares of FMI’s common stock not already owned.

The closing of the tender offer will be subject to a majority of FMI’s outstanding shares not already held by Roche being tendered in the tender offer, it noted.

In addition, the transaction is subject to other customary closing conditions. Following completion of the tender offer, Roche will acquire all remaining shares at the same price of $137 per share through a second step merger.

The closing of the transaction is expected to take place in the second half of 2018. Daniel O’Day, CEO Roche Pharmaceuticals, said, “This is important to our personalised healthcare strategy as we believe molecular insights and the broad availability of high quality comprehensive genomic profiling are key enablers for the development of, and access to, new cancer treatments.

We will preserve FMI’s autonomy while supporting them in accelerating their progress.”

FMI closed at $106.45. RHHBY closed at $26.39.


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Bluebird Bio reports data from Phase 1 HGB-206

Bluebird Bio reports interim data from Phase 1 HGB-206 study of LentiGlobin

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Bluebird Bio reports interim data from Phase 1 HGB-206 study of LentiGlobin

bluebird bio (BLUE) announced new interim data from the ongoing HGB-206 Phase 1 multicenter clinical study of LentiGlobin investigational gene therapy in patients with severe sickle cell disease will be presented in an oral presentation on Saturday, June 16 at the 23rd Congress of the European Hematology Association by Julie Kanter, M.D., Medical University of South Carolina, Charleston, South Carolina.

“The consistent production of increased amounts of anti-sickling HbAT87Q in the Group C patients reflects the substantial positive impact of the changes introduced with the amended HGB-206 study protocol and refined manufacturing process.

All four Group C patients with greater than or equal to three months follow-up are making over 30 percent anti-sickling HbAT87Q.

The first patient treated, now with six months of follow-up, is producing over 60 percent anti-sickling HbAT87Q with a normal total hemoglobin level of 14.2 g/dL,” said David Davidson, M.D., chief medical officer, bluebird bio.

“The upward trajectory in Group C at these early time points suggests the potential for these patients to exceed the initially proposed therapeutic target of 30 percent anti-sickling HbAT87Q. We continue to define the development plan with regulatory authorities, and with further follow-up, we hope to see even higher levels of HbAT87Q, as well as sustained clinical benefit for patients.”

“The early data from Group C patients are very exciting and provide increasing confidence that LentiGlobin has the potential to deliver transformative benefit to patients. The longer-term data from patients treated earlier in the study show that levels of anti-sickling HbAT87Q in patients with SCD treated with LentiGlobin remain stable for at least two years,” said Dr. Kanter, a lead investigator of the HGB-206 study.

“Treatment options that can address the underlying cause of sickle cell disease are limited and LentiGlobin gene therapy has the potential to prevent or substantially reduce damaging symptoms associated with this debilitating disease.”

Separately, bluebird bio announced that new data from the completed Phase 1/2 Northstar (HGB-204) study in adolescents and adults with transfusion-dependent beta-thalassemia and any genotype, and its ongoing, Phase 3 Northstar-2 (HGB-207) multicenter clinical study of LentiGlobin investigational gene therapy in patients with TDT and non-beta0/beta0 genotypes, will be presented in an oral session on June 16 at the 23rd Annual Congress of the European Hematology Association by Franco Locatelli, M.D., Ph.D., of the IRCCS Ospedale Pediatrico Bambino Gesu of Rome, Italy.

“The maturing data from HGB-204 and HGB-207 suggest that one-time treatment with LentiGlobin may address the underlying genetic cause of TDT.

With our refined manufacturing process, the majority of patients with TDT and non-beta0/beta0 genotypes are transfusion-free and producing total hemoglobin at normal or near-normal levels,” said David Davidson, M.D., chief medical officer, bluebird bio.

“We are on track to submit a marketing authorization application in the European Union later this year, and we continue to work closely with clinical investigators and regulatory authorities to complete our ongoing clinical trials and bring this important treatment option to patients as soon as possible.”

“Consistently higher in vivo vector copy numbers and HbAT87Q hemoglobin levels in patients indicate that LentiGlobin manufacturing refinements have resulted in improved gene therapy characteristics and may enable sustained transfusion independence for a great majority of patients,” said Professor Locatelli, the lead investigator of the Northstar-2 study.

“Further, we are now seeing more than three years of data from the Northstar study indicating that LentiGlobin therapy may enable long-term transfusion independence in the majority of patients with non-beta0/beta0 genotypes.

These results hold the promise to change the natural history of many patients with this severe genetic disorder of hemoglobin production.”

BLUE closed at $197.00. It last traded at $204.65.


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Oracle lower after losing business to Amazon, Microsoft

Oracle slides as JPMorgan cuts rating on business lost to Amazon, Microsoft

Oracle slides as JPMorgan cuts rating on business lost to Amazon, Microsoft , Stockwinners
Oracle slides as JPMorgan cuts rating on business lost to Amazon, Microsoft ,

Shares of Oracle (ORCL) are sliding after JPMorgan analyst Mark Murphy downgraded the stock to Neutral, citing negative results from a survey of Chief Information Officers about their spending.

The analyst noted that the survey showed spending contraction ahead as Oracle’s databases are being unplugged in favor of Microsoft (MSFT) and Amazon (AMZN) databases.

SURVEY SAYS

In a research note this morning, JPMorgan’s Murphy downgraded Oracle to Neutral from Overweight as specific metrics in the firm’s large-scale CIO survey have arced over into negative territory.

The analyst told investors that while Oracle’s shares have risen from the $30s into the high $40s in the last 2 years, the company’s fundamental performance has remained inconsistent. Citing his survey of 154 CIOs, Murphy noted that Oracle received the largest number of indications for planned spending contraction this year, materially more than the second-worst company, which was IBM (IBM) with 25 indications of spending contraction.

Further, while ranking the top 8 or 9 mega-vendors in terms of who will be most critical and indispensable to CIOs’ IT environment in the future, Oracle only received 6.5% of votes, down from 11% in previous surveys, the analyst highlighted.

At the same time, Murphy pointed out that Amazon AWS improved from 9.5% of votes last year to 14.9% of votes this year, creating the appearance of a “sucking sound” out of Oracle and into AWS.

The company also ranked number 8 in terms of association with Digital Transformation projects, disappointing relative to its scale and lagging behind the likes of SAP (SAP), IBM, and Cisco (CSCO), he added, noting that despite Oracle’s efforts to build a Cloud presence, it rated no better than SAP in terms of association with Cloud Computing plans, and is nowhere close to the leaders Microsoft, Amazon, and Google (GOOGL; GOOG) in this respect. Oracle was mentioned by only 2% of the CIOs as the platform that will be “most integral” to their cloud computing plans, Murphy said.

Overall, the analyst questions where Oracle’s business and stock are heading in the next couple of years if the largest-scale CIO survey shows Oracle now has negative spending intentions, is lagging in Digital Transformation projects, is trailing in Cloud Computing plans, its databases are being unplugged in favor of Microsoft and Amazon databases, its applications are being unplugged in favor of Salesforce (CRM) and Workday (WDAY) applications, and customers are weary of its unpopular commercial tactics.

Murphy also lowered his price target on Oracle’s shares to $53 from $55.

WHAT’S NOTABLE

In a research note of his own, Nomura Instinet analyst Christopher Eberle lowered his price target for Oracle to $60 from $64 ahead of the company’s fourth quarter results on June 19.

The analyst trimmed his estimates to account for currency and expectations for more modest revenue acceleration in fiscal 2019. He remains optimistic, however, on Oracle’s transition and model growth reacceleration as the year progresses. Eberle reiterated a Buy rating on the shares.

PRICE ACTION

In Wednesday’s trading, shares of Oracle dropped almost 5% to $46.14.


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Alexion Pharmaceuticals presents results from ALXN1210

Alexion to present results from ALXN1210 Phase 3 study at EHA

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Alexion to present results from ALXN1210 Phase 3 study at EHA

Alexion Pharmaceuticals (ALXN) announced that results from one of the two large Phase 3 studies of ALXN1210, the company’s investigational long-acting C5 complement inhibitor, in patients with paroxysmal nocturnal hemoglobinuria were selected for presentation during the Late-Breaking Oral Session on Sunday, June 17, 2018 at the Annual Conference of the European Hematology Association in Stockholm, Sweden.

“We are very excited about EHA’s recognition of the robustness and importance of these data in complement inhibitor treatment-naive patients. We enrolled a very broad patient population, representative of patients with PNH in clinical practice, including patients with a history of aplastic anemia, and ‘classic’ PNH, as well as transfused and non-transfused patients,” said John Orloff, M.D., EVP and Head of Research & Development at Alexion.

“We look forward to discussing the data with leading hematologists in Europe at the conference later this week as part of our ambition to make ALXN1210 the new standard of care for patients with PNH.”

As previously announced, weight-optimized treatment every eight weeks with ALXN1210 demonstrated non-inferiority to treatment every two weeks with Soliris in complement inhibitor treatment-naive patients with PNH on the two co-primary endpoints and all four key secondary endpoints.

The numeric results for all these endpoints, including breakthrough hemolysis, favored ALXN1210 and are consistent with the immediate and complete C5 inhibition observed by the end of the first infusion of ALXN1210 and sustained throughout the entire 26-week treatment period.

The safety profile of ALXN1210, based on almost 180 patient years of experience, was similar to that of Soliris.

Paroxysmal nocturnal hemoglobinuria (PNH) is a chronic, progressive, debilitating, and potentially life-threatening ultra-rare blood disorder that can strike men and women of all races, backgrounds, and ages without warning, with an average age of onset in the early 30s.

PNH often goes unrecognized, with delays in diagnosis ranging from one to more than 10 years. In patients with PNH, chronic, uncontrolled activation of the complement system, a component of the body’s immune system, results in hemolysis (the destruction of red blood cells), which in turn can result in progressive anemia, fatigue, dark urine, and shortness of breath.

The most devastating consequence of chronic hemolysis is thrombosis (the formation of blood clots), which can damage vital organs and cause premature death.

Historically, it had been estimated that one in three patients with PNH did not survive more than five years from the time of diagnosis.

PNH is more common among patients with disorders of the bone marrow, including aplastic anemia (AA) and myelodysplastic syndromes (MDS).9,10,11 In certain patients with thrombosis of unknown origin, PNH may be an underlying cause.

ALXN closed at $118.20.


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Tesla higher on Model 3 production

Tesla jumps after Musk keeps dual role, voices optimism on Model 3 output

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Tesla jumps after Musk keeps dual role, voices optimism on Model 3 output

Shares of Tesla (TSLA) are higher as much as 4% on Wednesday morning following the company’s annual meeting in California.

At the meeting, shareholders rejected two proposals, including one that would have separated the roles of chairman and chief executive officer. Additionally, Elon Musk said the company will likely reach its goal of producing 5,000 Model 3 sedans “by the end of this month.”

SHAREHOLDERS REJECT SEPARATION OF CHAIRMAN, CEO ROLES

Tesla shareholders rejected two proposals that would have changed the company’s board, including one that would have removed CEO Elon Musk from the chairman role.

According to a CNBC report, Jiang Zhao, a shareholder who owns 12 shares of Tesla stock, brought forward the proposal to have an independent chairman, as he believes it is necessary to prevent conflicts of interest.

In May, proxy advisory firm ISS recommend that investors split the role of chairman and CEO, saying shareholders would “benefit from the strongest form of independent board oversight in the form of an independent chair.”

Shareholders also rejected a proposal to remove three Tesla board members up for re-election this year, which was brought by the CtW Investment Group.

CtW, which works with pension funds for unions, said in a letter last month that board members Antonio Gracias and Elon’s brother Kimbal Musk were too close to the CEO to ensure needed independence, while 21st Century Fox (FOX, FOXA) CEO James Murdoch lacked relevant experience.

According to Bloomberg, which viewed a copy of the letter, CtW said that “instead of recognizing the need for independent and effective board leadership, Tesla has re-nominated three directors who exemplify the company’s failure to evolve.”

‘QUITE LIKELY’ TO MEET MODEL 3 OUTPUT GOAL

At the meeting, Musk said that the carmaker’s goal of making 5,000 Model 3 vehicles per week by the end of June was “quite likely” as the car maker’s production lines were now demonstrating the ability to build 3,500 vehicles a week, Reuters reported. “This is the most excruciating hellish several months I’ve ever had… but I think we’re getting there,” Musk said.

Tesla Model 3 named Popular Mechanics' Car of the Year
Tesla Model 3 named Popular Mechanics’ Car of the Year

OTHER ANNOUNCEMENTS

Robin Ren, Tesla’s head of worldwide sales, announced at the meeting that the company intends to build its first factory outside of the U.S. in Shanghai, China, CNBC reported.

Unlike Tesla’s first U.S. factories, the company’s new “Dreadnought” factories should produce both batteries and assemble vehicles in one place.

Additionally, according to Business Insider, Musk said the company plans to reveal the Model Y next March and will likely go into production in early 2020. The report also said that the Semi will go into production in 2020 and that it will be slightly different than what was revealed in 2017 because the company has made improvements.

The Tesla Roadster will follow the same timeline for production and will have a SpaceX option package available, BI also said.

WHAT’S NOTABLE

Musk has said that Tesla plans to be profitable and cash flow positive in Q3 and Q4, tweeting in April that there is “obviously no need to raise money.”

Musk previously said that the company was not planning to raise any capital before the end of 2019. He reiterated that during the shareholder meeting and said he is still confident that Tesla will become profitable in Q3 or Q4, BI reported.

Tesla originally sought to build 5,000 Model 3 vehicles a week by the end of 2017, but later revised its target to making 5,000 Model 3 cars by the end of the second quarter.

ANALYST COMMENTARY

Citi analyst Itay Michaeli told investors this morning that while he appreciates the bull case of ramping Model 3 deliveries and Tesla achieving profitability in the second half of the year, thereby easing cash concerns and cementing the carmaker’s electric vehicle lead, he “can’t get there on risk/reward at this point.” Michaeli cut his price target for Tesla to $313 from $347 and maintained a Neutral rating on the shares.

Baird analyst Ben Kallo, who remains bullish on Tesla, said the body language at the meeting was positive, noted that shareholders approved the board of directors by a significant margin and expects management to achieve positive GAAP net income and positive cash flow in Q3 and Q4. Kallo keeps his Buy rating and $411 price target on Tesla.

PRICE ACTION

Tesla is up about 5% in early trading to $305.76.


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Eli Lilly announces Alimta label expanded by FDA

Eli Lilly announces Alimta label expanded by FDA

Eli Lilly announces Alimta label expanded by FDA, Stockwinners
Eli Lilly announces Alimta label expanded by FDA

Eli Lilly (LLY) announced that the FDA has granted approval for a new indication for Alimta in combination with carboplatin and Keytruda for the initial treatment of patients with metastatic nonsquamous non-small cell lung cancer, or NSCLC, irrespective of PD-L1 expression status.

Under the FDA’s accelerated approval regulations, this indication is approved based on tumor response rate and progression-free survival, or PFS.

Continued approval for this indication may be contingent upon verification and description of clinical benefit in the confirmatory trials.

Merck (MRK) received accelerated approval for the combination of pembrolizumab with Alimta and carboplatin in May 2017.

This is the first and only combination of chemotherapy and immunotherapy to earn FDA approval for the first-line treatment of metastatic nonsquamous NSCLC.

This indication, now included in the Alimta prescribing information, is based on data from Merck’s KEYNOTE-021 study, Cohort G1.

The KEYNOTE-021, Part 2, Cohort G1, study included 123 previously untreated patients with locally advanced or metastatic nonsquamous NSCLC with no epidermal growth factor receptor, or EGFR, or anaplastic lymphoma kinase, or ALK, genomic tumor aberrations and irrespective of PD-L1 expression status.

The triplet combination of Alimta and carboplatin with pembrolizumab demonstrated a statistically significant improvement in objective response rate, or ORR, versus Alimta plus carboplatin alone and PFS.

Median PFS was 13 months for triplet and 8.9 months for Alimta plus carboplatin.

LLY closed at $85.07.


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Loxo Oncology shares higher on data

Loxo announces positive interim data from LOXO-292 dose escalation trial

Loxo Oncology presents positive data  at ASCO meeting

Loxo Oncology (LOXO) announced interim clinical data from the LOXO-292 global Phase 1 LIBRETTO-001 dose escalation trial.

LOXO-292 is an investigational, highly potent and selective RET inhibitor.

Resonance Energy Transfer (RET),  is a mechanism describing energy transfer between two chromophores.

These data are being presented at the 2018 American Society of Clinical Oncology Annual Meeting.

The LIBRETTO-001 Phase 1 trial contains a dose escalation phase and a dose expansion phase. The dose escalation phase follows a “3+3” design.

LOXO-292 is dosed orally in 28-day cycles. As dose cohorts are cleared, additional patients can enroll in these cleared cohorts.

Intra-patient dose escalation is also permitted as dose cohorts are cleared.

The primary endpoint of the trial is the determination of the maximum tolerated dose or recommended dose for further study.

Secondary endpoints include safety, overall response rate and duration of response. The dose expansion phase is designed to further characterize the overall response rate, durability of response, and safety of LOXO-292 in predefined groups of patients with activating RET alterations.

The data presented at ASCO were based on an April 2, 2018 data cut-off date.

Eighty-two total patients had been enrolled to eight dose escalation cohorts.

Pharmacokinetic analyses during the dose escalation demonstrated dose-dependent increases in LOXO-292 exposure with increasing dose.

Starting at the 40 mg BID dose and the 80 mg BID dose, respectively, LOXO-292 delivered sustained greater thanIC90 RET fusion and greater thanIC90 RET M918T-mutant target coverage, based on cell-based potencies.

Most treatment-emergent adverse events were Grade 1 in severity. The expansion cohorts of the LIBRETTO-001 trial are now open and enrolling at the 160 mg BID dose. This dose was selected for initial expansion based on its promising activity and tolerability profile.

Additional dose exploration above 160 mg BID is ongoing and patients enrolled to the expansion cohorts may dose escalate should a higher dose be advanced.

ANALYST COMMENTS

Citi analyst Yigal Nochomovitz raised his price target for Loxo Oncology to $235 saying the company is the “star of ASCO.” The analyst now believes LOXO-292 has advanced into an advantageous competitive position in RET fusions. He expects the shares to continue to trade up and keeps a Buy rating on Loxo.

Morgan Stanley analyst Matthew Harrison said he expects Loxo Oncology shares to trade near $200 in the wake of data on LOXO-292 presented at the ASCO meeting that he said “sets a high bar for competitors.” The data positions LOXO-292 to rapidly advance to registration, said Harrison, who raised his market share estimate for LOXO-292 to 70% from 60%, increased his LOXO-292 peak sales estimate to $1B from $700M, and lowered his risk-adjustment, all of which drove his price target on Loxo shares to $215 from $170. He maintains an Overweight rating on Loxo Oncology, which is up 13% to $210.50 in pre-market trading.

JMP Securities analyst Konstantinos Aprilakis said the Phase 1 study data presented on LOXO-292 in patients with RET-altered cancers at the ASCO meeting came in “far above expectations” with respect to both efficacy and safety. Citing the overall response rate in RET fusion cancers of 77%, Aprilakis called the efficacy data “exceedingly impressive” and increased his price target on Loxo Oncology to $221 from $182 following the presentation. Aprilakis maintains his Outperform rating on Loxo shares.


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Merck says KEYTRUDA demonstrated long-term survival benefit

Merck says KEYTRUDA demonstrated long-term survival benefit

Merck says KEYTRUDA demonstrated long-term survival benefit, Stockwinners
Merck says KEYTRUDA demonstrated long-term survival benefit

Merck (MRK) announced long-term efficacy data from the Phase 3 KEYNOTE-006 study and the melanoma cohort of the Phase 1b KEYNOTE-001 study investigating KEYTRUDA, Merck’s anti-PD-1 therapy, in patients with advanced melanoma.

KEYTRUDA is not chemotherapy or radiation therapy—it is an immunotherapy and it works with patient’s immune system to help fight certain cancers. KEYTRUDA can cause immune system to attack normal organs and tissues in any area of your body and can affect the way they work.

A new analysis from KEYNOTE-006 demonstrated durable efficacy benefits among patients who completed two years of KEYTRUDA treatment, combined with updated overall survival results across both studies, confirming anti-tumor activity in advanced melanoma patients.

At a median follow-up of 20.3 months after completion of KEYTRUDA in KEYNOTE-006, 86 percent of patients remained progression-free, the co-primary endpoint for the study.

For the primary endpoint of OS in KEYNOTE-006, the four-year OS rate was 41.7 percent in the pooled KEYTRUDA arms vs. 34.1 percent in the ipilimumab arm; in treatment-naive patients, OS rates were 44.3 percent in the pooled KEYTRUDA arms and 36.4 percent in the ipilimumab arm.

In KEYNOTE-001, the five-year OS rate, a secondary endpoint for the study, was 34 percent in all patients and 41 percent in treatment-naive patients.

The safety profile of KEYTRUDA in both studies was consistent with what has been seen in previous trials among patients with advanced melanoma.

KEYNOTE-006 is a global, open-label, randomized, pivotal, Phase 3 study evaluating KEYTRUDA compared to ipilimumab in patients with unresectable stage III or IV melanoma who had either not been treated previously or who had received a prior targeted therapy for BRAF-mutation positive melanoma/ The study randomized 834 patients to receive KEYTRUDA 10 mg/kg every three weeks, KEYTRUDA 10 mg/kg every two weeks, or four cycles of ipilimumab 3 mg/kg every three weeks.

Treatment continued until unacceptable toxicity or disease progression; patients without disease progression could be treated for up to 24 months.

Upon disease progression, eligible patients could receive an additional one year of KEYTRUDA. The co-primary endpoints were progression-free survival and OS; secondary endpoints were overall response rate, duration of response and safety, with an exploratory analysis for health-related quality of life.

With a median follow-up of 45.9 months, the four-year OS rate was 41.7 percent in the pooled KEYTRUDA arms and 34.1 percent in the ipilimumab arm; investigator-reported ORR was 42 percent and 17 percent, respectively.

Median DOR was not reached for KEYTRUDA or ipilimumab; 62 percent of patients in the KEYTRUDA arms and 59 percent of patients in the ipilimumab arm had a response lasting greater than or equal to 42 months.

In treatment-naive patients, the four-year OS rates were 44.3 percent in the pooled KEYTRUDA arms and 36.4 percent in the ipilimumab arm; ORR was 47 percent and 17 percent, respectively.

Median DOR was not reached for KEYTRUDA or ipilimumab; 65 percent of patients in the KEYTRUDA arms and 68 percent of patients in the ipilimumab arm had a response lasting greater than or equal to 42 months. Per study protocol, 18.5 percent of patients completed two years of KEYTRUDA.

With a median follow-up of 20.3 months 86 percent of patients remained progression-free. Eight patients received second-course KEYTRUDA; three discontinued treatment. Among the eight patients, there was one complete response and three partial responses; three patients had stable disease, while the remaining patient had progressive disease.

KEYNOTE-001 is a Phase 1b multicenter, open-label, multi-cohort trial evaluating KEYTRUDA in various advanced cancers, including 655 patients with advanced melanoma. Patients in the melanoma cohorts received 2 mg/kg or 10 mg/kg of KEYTRUDA every three weeks or 10 mg/kg of KEYTRUDA every two weeks until unacceptable toxicity or disease progression.

The primary endpoint was confirmed ORR. The secondary endpoints included PFS, OS and DOR. After median follow-up of 55 months, 35 patients remained on KEYTRUDA therapy.

The investigator-reported ORR, the primary endpoint for KEYNOTE-001, was 41 percent in all patients and 52 percent in treatment-naive patients.

The estimated five-year OS rate was 34 percent in all patients and 41 percent in treatment naive patients. Median OS was 23.8 months in all patients and 38.6 months in treatment-naive patients. Median PFS was 8.3 months and 16.9 months in all patients and treatment-naive patients, respectively. Median DOR was not reached in all responders and in treatment-naive patients; 73 percent of all responses and 82 percent of treatment-naive responses were ongoing at data cut-off.

The longest response observed in all patients was ongoing at 66 months.

The safety profile of KEYTRUDA was consistent with what has been seen in previously reported studies among patients with advanced melanoma. Treatment-related adverse events occurred in 86 percent of patients including 17 percent with grade 3-4 and eight percent who discontinued.

Twelve percent of patients experienced a serious TRAE including five percent who discontinued treatment. Immune-mediated adverse events and infusion reactions were reported in 23 percent of patients.

Most cases of immune-related adverse events, including hypothyroidism and pneumonitis, were grade 1 or 2. Hypothyroidism was the most commonly reported immune-mediated adverse event, followed by pneumonitis, colitis and skin disorders.

MRK closed at $60.56. It last traded at $61.65.


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SoftBank to invest $2.25B in GM

SoftBank Vision Fund to invest $2.25B in GM Cruise 

 

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SoftBank Vision Fund to invest $2.25B in GM Cruise 

General Motors (GM) announced that the SoftBank Vision Fund will invest $2.25B in GM Cruise Holdings, further strengthening the company’s plans to commercialize AV technology at large scale.

GM will also invest $1.1B in GM Cruise upon closing of the transaction.

“Our Cruise and GM teams together have made tremendous progress over the last two years,” said GM Chairman and CEO Mary Barra.

“Teaming up with SoftBank adds an additional strong partner as we pursue our vision of zero crashes, zero emissions and zero congestion.”

“GM has made significant progress toward realizing the dream of completely automated driving to dramatically reduce fatalities, emissions and congestion,” said Michael Ronen, managing partner, SoftBank Investment Advisers.

“The GM Cruise approach of a fully integrated hardware and software stack gives it a unique competitive advantage. We are very impressed by the advances made by the Cruise and GM teams, and are thrilled to help them lead a historic transformation of the automobile industry.”

The SoftBank Vision Fund investment will be made in two tranches.

At the closing of the transaction, the Vision Fund will invest the first tranche of $900M. At the time that Cruise AVs are ready for commercial deployment, the Vision Fund will complete the second tranche of $1.35B, subject to regulatory approval.

Together, this will result in the SoftBank Vision Fund owning a 19.6-percent equity stake in GM Cruise and will afford GM increased flexibility with respect to capital allocation.

The GM and SoftBank Vision Fund investments are expected to provide the capital necessary to reach commercialization at scale beginning in 2019.

GM (GM) Chairman and CEO Mary Barra confirmed the automaker’s plans to launch an autonomous ride-hailing vehicle in 2019.

President Dan Ammann noted that talks with SoftBank occurred over the course of several months. He said GM wasn’t looking for a partner, but found one that was “uniquely aligned” with it.

Ammann added that the Cruise team has grown to over 800 since the acquisition two years ago. He said the decision to report GM Cruise as a standalone segment is intended to enhance transparency around this part of the business.

ANALYST COMMENTS

Evercore ISI analyst George Galliers upgraded General Motors (GM) to Outperform from In Line after SoftBank’s (SFTBF) Vision Fund agreed to invest in the company’s Cruise autonomous driving unit in a deal that values the unit at $11.5B.

Galliers said he had been assigning no value to the Cruise assets before the announcement.

Under his new sum-of-the-parts valuation, Galliers applies a 6.0x multiple on GM’s core, attributes a value of about $8 per share for the Cruise assets and about 60c per share for GM’s stake in Lyft before applying a 25% discount to both of the latter. He raised his price target on GM shares to $50 from $47.


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Armo BioSciences sold for $1.6 billion

Eli Lilly to acquire Armo BioSciences for $50 per share

Armo BioSciences sold for $1.6 billion, Stockwinners
Armo BioSciences sold for $1.6 billion, Stockwinners

Eli Lilly and Company (LLY) and ARMO BioSciences (ARMO) announced a definitive agreement for Lilly to acquire ARMO for $50 per share, or approximately $1.6B, in an all-cash transaction.

ARMO BioSciences is a late-stage immuno-oncology company that is developing a pipeline of novel, proprietary product candidates designed to activate the immune system of cancer patients to recognize and eradicate tumors.

The acquisition will bolster Lilly’s immuno-oncology program through the addition of ARMO’s lead product candidate, pegilodecakin, a PEGylated IL-10 which has demonstrated clinical benefit as a single agent, and in combination with both chemotherapy and checkpoint inhibitor therapy, across several tumor types.

#Pegilodecakin is currently being studied in a Phase 3 clinical trial in pancreatic cancer, as well as earlier-Phase trials in lung and renal cell cancer, melanoma and other solid tumor types.

ARMO also has a number of other immuno-oncology product candidates in various stages of pre-clinical development.

Under the terms of the agreement, Lilly will promptly commence a tender offer to acquire all shares of ARMO BioSciences for a purchase price of $50 per share in cash, or approximately $1.6B.

The transaction is expected to close by the end of the second quarter of 2018, subject to customary closing conditions, including receipt of required regulatory approvals and the tender of a majority of the outstanding shares of ARMO’s common stock.

Very shortly after the closing of the tender offer, Lilly will acquire any shares of ARMO that are not tendered into the tender offer through a second-step merger at the tender offer price.

This transaction will be reflected in Lilly’s reported results and financial guidance according to Generally Accepted Accounting Principles, and is subject to customary closing conditions.

There will be no change to Lilly’s 2018 non-GAAP earnings per share guidance as a result of this transaction.


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Walmart to pay $16B for about 77% in India’s Flipkart

Walmart to pay about $16B for initial stake of about 77% in India’s Flipkart

Walmart to pay about $16B for initial stake of about 77% in India's Flipkart, Stockwinners
Walmart to pay about $16B for initial stake of about 77% in India’s Flipkart, Stockwinners

Walmart (WMT) announced it has signed definitive agreements to become the largest shareholder in Flipkart Group.

The investment will help accelerate Flipkart’s customer-focused mission to transform commerce in India through technology and underscores Walmart’s commitment to sustained job creation and investment in India, the company said.

Subject to regulatory approval in India, Walmart will pay approximately $16B for an initial stake of approximately 77% in Flipkart, formally Flipkart Private Limited.

The remainder of the business will be held by some of Flipkart’s existing shareholders, including Flipkart co-founder Binny Bansal, Tencent Holdings (TCEHY), Tiger Global Management and Microsoft (MSFT).

While the immediate focus will be on serving customers and growing the business, Walmart supports Flipkart’s ambition to transition into a publicly-listed, majority-owned subsidiary in the future.

While Walmart and Flipkart will leverage the combined strengths of both companies, they will maintain distinct brands and operating structures.

Currently, Walmart India operates 21 Best Price cash-and-carry stores and one fulfillment center in 19 cities across nine states in India, with more than 95 percent of sourcing coming from India, aiding suppliers, creating skilled jobs and contributing to local economies across the country.

Krish Iyer, president and chief executive officer of Walmart India, will continue to lead that part of the business.


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Shire sold for $62 billion

Takeda reaches agreement to acquire Shire for $62B in cash and stock

Shire sold for $62 billion, Stockwinners
Shire sold for $62 billion, Stockwinners

Japan’s Takeda Pharmaceutical (TKPYY) and Shire (SHPG) announced that they have reached agreement on the terms of a recommended offer pursuant to which Takeda will acquire the entire issued and to be issued ordinary share capital of Shire.

Under the terms of the acquisition, each Shire shareholder will be entitled to receive $30.33 in cash for each Shire share and either 0.839 new Takeda shares or 1.678 Takeda ADSs. The transaction has been approved by both companies’ boards of directors, and is expected to close in the first half of calendar year 2019.

Upon the closing of the transaction, Takeda shareholders will own approximately 50% of the combined group. “With leading market positions in prioritized therapeutic areas, an attractive geographic footprint, greater scale and efficiencies, and an even more productive R&D engine, the combined group will be better positioned to deliver highly-innovative medicines and transformative care providing better health and a brighter future for patients around the world,” Takeda said.

Takeda has entered into a bridge facility agreement of $30.85B with, among others, J.P. Morgan Chase Bank, Sumitomo Mitsui Banking and MUFG Bank, part of the proceeds of which will be used to fund the cash consideration payable to Shire shareholders in connection with the acquisition.

It is currently contemplated that, prior to completion, the commitments under the bridge facility agreement will be reduced or refinanced with a combination of long-term debt, hybrid capital and available cash resources.

Shire plc, an Irish biotechnology company, researches, develops, licenses, manufactures, markets, distributes, and sells medicines for rare diseases and other specialized conditions worldwide.

Takeda Pharmaceutical Company Limited engages in the research and development, manufacture, marketing, and sale of pharmaceutical products worldwide. The company operates in three segments: Prescription Drug, Consumer Healthcare, and Other.


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