Canary in the mine, Homebuilders

Homebuilders continue tumble as Credit Suisse downgrades several in space

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Homebuilder shares tumble; Stockwinners

Many believe that housing market is the engine of the economy. If that is the case, we should expect a slow down in the economy. Housing prices have always been one of the first indicators of a slowdown or a coming out of a recession for the economy. We should brace ourselves for lower home prices!

Shares of homebuilders continued their decline after an analyst at Credit Suisse downgraded several companies in the space, saying that she expects more tempered demand and rising affordability concerns to weigh on homebuilding sentiment and broader group valuation, offsetting any near-term earnings beats.

A different analyst at the firm downgraded home improvement retailers Home Depot (HD) and Lowe’s (LOW) this morning, due to his concern that their recent results and stock prices have disconnected from housing.

HOMEBUILDERS DOWNGRADED

Credit Suisse analyst Susan Maklari told investors in a research note this morning that although she believes housing and macro fundamentals remain “intact,” including high consumer confidence and sustained low unemployment, unit gains are likely to moderate.

She sees any near-term earnings beats to be offset by even more tempered demand and rising affordability concerns. She sees average order growth for 2019 of 8%, compared to 11% in 2018 and 12% in 2017, and sees “relative” outperformance from builders who are able to capture above-trend gains due to product mix, like D.R. Horton (DHI), and geographic positioning, like PulteGroup (PHM). Maklari downgraded Lennar (LEN) and Meritage Homes (MTH) to Neutral from Outperform and lowered her respective price targets for the shares to $45 from $55 and to $36 from $50.

The analyst sees more limited upside to Lennar looking ahead as its strategic initiatives, as well as geographic exposure, are reflected in its current valuation.

While Meritage has benefited from efforts to drive improvements in operations in its East region as well as the rollout of its entry level targeted homes, Maklari believes much of the initial gains have been captured and she expects limited upside to the current valuation as comparisons become more difficult.

The analyst also downgraded KB Home (KBH) to Underperform from Neutral and lowered her price target to $18 from $27, saying that over the last several months her channel checks and Realtor Survey have pointed to slowing demand in higher cost MSAs, including California, which accounted for about 50% of the company’s 2017 revenues.

HOME DEPOT, LOWE’S ALSO DOWNGRADED

Another analyst at Credit Suisse, Seth Sigman, this morning downgraded Home Depot and Lowe’s, both to Neutral from Outperform, citing his concern that their recent results and stock prices have disconnected from housing. In a research note of his own, Sigman said his key concern is that home prices will continue to moderate, at least temporarily, as higher rates weigh on affordability.

Overall, Sigman still sees EPS growing, but sees less upside over the next 12 months relative to current estimates.

The analyst continues to view Home Depot as best-in-class in retail, but struggles to find multiple upside from its current premium level as housing sentiment shifts and some uncertainty arises. While he continues to expect meaningful improvement in sales and operating profit at Lowe’s under new CEO Marvin Ellison, Sigman thinks consensus estimates are baking that in. The analyst cut his price target on Home Depot to $204 from $222 and on Lowe’s to $111 from $115.

PRICE ACTION

Shares of Lennar dropped 3%, while Meritage Homes dropped 6.6% and KB Home declined 4.4%. Other homebuilders were dragged lower, including D.R. Horton, PulteGroup and Toll Brothers (TOL), which are all down over 3%.

Additionally, Home Depot and Lowe’s both declined over 4%. Further, XHB, the homebuilding ETF, is down nearly 3% today and about 10% month-to-date.


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Today’s stock disaster

GTx announces placebo-controlled ASTRID trial did not meet primary endpoint

GTx Phase 2 trial of enobosarm meets primary endpoint. Stockwinners.com
Today’s stock disaster

GTx (GTXI) announced that the ASTRID Trial, a Phase 2 double-blind, placebo-controlled clinical trial of orally-administered enobosarm in post-menopausal women with stress urinary incontinence, did not achieve statistical significance on the primary endpoint of the proportion of patients with a greater than 50% reduction in incontinence episodes per day compared to placebo.

The percentage of patients with a greater than 50% reduction after 12 weeks of enobosarm treatment was 58.9% for 3mg, 57.7% for 1mg and 52.7% for placebo.

Enobosarm was generally safe and well tolerated.

Reported adverse events were minimal and similar across all treatment groups.

“We are very disappointed that the ASTRID Trial did not achieve its primary endpoint,” said Robert Wills, executive chairman of GTx.

“We plan to conduct a full review of all the data. We want to thank the patients, physicians, study coordinators and the entire GTx team for their support of this novel study. We have an ongoing preclinical program assessing the potential of SARDs, our novel selective androgen receptor degrader technology, to treat castration-resistant prostate cancer. We are currently on target to have development candidates by year end, which we potentially plan to take into IND-enabling studies.”

GTXI closed at $23.29, it last traded at $2.00.


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L Brands drops after PINK CEO departs

L Brands slides after slashing earnings forecast, PINK brand CEO departure 

L Brands drops after PINK CEO departs, Stockwinners
L Brands drops after PINK CEO departs, Stockwinners

Shares of L Brands (LB) are sliding after the parent of Victoria’s Secret and Bath & Body Works reported better than expected quarterly earnings and revenue but lowered its profit outlook.

While Jefferies analyst Randal Konik reduced his price target for L Brands and recommended investors sell the shares, his peer at Citi argued that the guidance cut was expected and reiterated a Buy rating on the stock.

QUARTERLY RESULTS

Last night, L Brands reported second quarter adjusted earnings per share of 36c and revenue of $2.98B, both above the consensus of 34c and $2.93B, respectively.

The company also lowered its FY18 earnings per share view to $2.45-$2.70 from $2.70-$3.00, with consensus at $2.77.

Additionally, L Brands said second quarter consolidated same-store sales for Stores and Direct were up 3%, while same-store sales for the quarter at Victoria’s Secret were down 1% and up 10% at at Bath & Body Works.

Alongside quarterly results, the company announced that Denise Landman, CEO of Victoria’s Secret PINK, has made the decision to retire at the end of this year.

Pink CEO departs, Shares slide

Amy Hauk, currently president for merchandising and product development of Bath & Body Works, will replace Landman as CEO of Victoria’s Secret PINK.

JEFFERIES SAYS SELL SHARES

In a research note to investors this morning, Jefferies’ Konik lowered his price target for L Brands to $20 from $23 and recommended investors sell the shares.

The analyst argued that the company’s fiscal year earnings guidance cut is still not low enough, and sees PINK on “precipice of massive declines.” Further, the analyst thinks L Brands’ free cash flow guidance is too high as its net debt continues to grow.

The dividend is at risk in the medium-term and the company needs to save cash now “before the next recession,” Konik contended.

The analyst reiterated an Underperform rating on the stock.

Meanwhile, his peer at JPMorgan also lowered his price target for L Brands to $26 from $28.

While the stock was bracing for an earnings forecast reduction, the magnitude of management’s near-term third quarter cut was greater than expected, calling for break-even earnings at the low-end, the first time in more than a decade, analyst Matthew Boss contended.

He reiterated a Neutral rating on the shares. Voicing a similar opinion, Wells Fargo analyst Ike Boruchow lowered his price target for L Brands to $30 from $42 and kept a Market Perform rating on the shares as the core Victoria’s Secret concept continues to struggle.

Pointing out that the second quarter results “raised a number of red flags,” including “severe” margin contraction, “bloated” inventory, Bath & Body Works returning to margin contraction and issues at PINK, Nomura Instinet analyst Simeon Siegel reiterated a Neutral rating and $31 price target on L Brands’ shares.

CITI SAYS RISK/REWARD STILL ATTRACTIVE

Still bullish on the stock, Citi analyst Paul Lejuez told investors that while the turnaround path for Victoria’s Secret “remains unclear,” the market expected last night’s fiscal 2018 guidance cut.

With a 7.5% dividend yield, the stock’s risk/reward is attractive, particularly given actions by management that suggest “they have more than enough liquidity to continue funding the dividend,” Lejuez argued.

The analyst reiterated a Buy rating on the shares and said he views the dividend as safe.

While lowering her price target for L Brands to $44 from $49, B. Riley FBR analyst Susan Anderson kept a Buy rating on the stock as she believes Bath & Body Works continues to excel and Victoria’s Secret remains a work in progress.

While weaker PINK performance is “disappointing,” the analyst believes management is taking steps to correct lounge performance as well as improve performance in lingerie.

Further, Anderson highlighted that L Brands reiterated its commitment to share repurchases and dividend, and reiterated that the company has substantial liquidity to fund the dividend and other expenditures.

PRICE ACTION

In Thursday’s trading, shares of L Brands have plunged over 12% to $28.50.


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Zynerba lower following disappointing results

Zynerba says target blood levels in ZYN001 THC-Prodrug patch study not achieved

Zynerba lower following disappointing results, Stockwinners
Zynerba lower following disappointing results, Stockwinners

Zynerba Pharmaceuticals (ZYNE) announced top line results from a Phase 1 clinical program studying ZYN001, the Company’s patent-protected, pro-drug of tetrahydrocannabinol delivered via a transdermal patch, in healthy volunteers.

The program assessed the safety and pharmacokinetics in single and multiple doses of several formulations of ZYN001.

The top line results of this Phase 1 study indicate that target blood levels of 5 to 15 ng/ml THC were not achieved.

ZYN001 was very well tolerated with minimal skin erythema.

There were no serious adverse events or discontinuations for subjects receiving ZYN001.

As a result of these data, the Company will focus its development efforts and investments on the ZYN002 Fragile X syndrome, developmental and epileptic encephalopathy and adult refractory epilepsy programs.

The company expects that this change will extend its cash runway into the second half of 2019.

This Phase 1 study was a single and multiple dose, placebo-controlled first-in-man study to assess the safety and pharmacokinetics of ZYN001 administered as a transdermal patch to healthy adult subjects.

Several formulations and patch wear times ranging from 24 hours to 14 days were assessed in in 60 healthy subjects who were randomized to ZYN001 or placebo.

ZYNE closed at $9.61, it last traded at $7.60.


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Esperion falls after drug failure

Esperion falls after Phase 3 study of bempedoic acid met primary endpoint

Esperion announces 'positive' top-line results from bempedoic acid study, Stockwinners.com
There were no clinically relevant differences between the bempedoic acid and placebo groups

Esperion (ESPR) announced top-line results from the second pivotal, Phase 3 study, the long-term safety study of bempedoic acid 180 mg, in this case evaluating the safety, tolerability and efficacy of bempedoic acid versus placebo in high-risk patients with atherosclerotic cardiovascular disease who are inadequately controlled with current lipid-modifying therapies, including maximally tolerated statin therapy.

The study included 2,230 patients and met the primary endpoint of safety and tolerability and the key efficacy endpoint with on-treatment LDL-C lowering of an additional 20% at twelve weeks, the company said.

Patients treated with bempedoic acid also achieved a significant reduction of 22% in high-sensitivity C-reactive protein, an important marker of the underlying inflammation associated with cardiovascular disease, Esperion added.

There were no clinically relevant differences between the bempedoic acid and placebo groups in the occurrence of adverse events with 78.5% and 78.7% respectively; or serious adverse events with 14.5% and 14.0% respectively, it added.

Discontinuations due to AEs were 10.9% and 7.1%, respectively for the bempedoic acid and placebo groups; discontinuations due to muscle-related AEs were 2.2% and 1.9%, respectively, in the bempedoic acid and placebo groups.

“In this study, the largest in our Phase 3 program, bempedoic acid was observed to be safe and well tolerated over a 52-week period, while providing clinically and statistically significant LDL-cholesterol lowering and reductions in hsCRP when added on to maximally tolerated statin therapy,” said Tim Mayleben, CEO of Esperion.

“In the coming months, results from our three remaining pivotal Phase 3 studies are expected to further validate the safety, efficacy and tolerability profile of bempedoic acid and the bempedoic acid / ezetimibe combination pill, definitively establishing these once-daily oral therapies as convenient and complementary to existing treatments for the 13 million people in the U.S. with ASCVD who live with elevated levels of LDL-cholesterol despite taking maximally-tolerated lipid-modifying therapy and remain at high risk for further cardiovascular disease or events, including heart attack and stroke.”

Esperion shares in premarket trading are down 27% to $52.40.


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Barron’s is bearish on Fitbit, L Brand and Nokia

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names:

Stockwinners offers Barron's review of Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin
Stockwinners offers Barron’s review of stocks to buy

BULLISH   MENTIONS:

Invesco stock weakness a buying opportunity – U.S. stocks are down 5% from their January 26 peak, while shares of Invesco (IVZ) have fallen much more, which gives investors a buying opportunity, Jack Hough writes in this week’s edition of Barron’s. Driven by strong exchange-traded fund lows, BlackRock’s (BLK) shares have skyrocketed in recent years while Invesco’s have lagged behind, he notes, adding that the latter’s forward price-earnings multiple now represents a bargain-basement 44% discount to BlackRock’s.

Nordstrom, TJX appear to have most staying power– Department store stocks have rebounded in recent months, but they are not all likely to emerge as winners, Avi Salzman writes in this week’s edition of Barron’s. Nordstrom (JWN) and TJX (TJX) appear to have the most staying power, with the former the more attractive choice in terms of valuation, he notes. Kohl’s (KSS) and Macy’s (M) are showing new life but need to prove they can repeat their fourth quarter performances, Salzman says, adding that JCPenney (JCP) and Dillard’s (DDS) remain “tricky.”

BEARISH  MENTIONS:

L Brands shares may still go lower given multiple problems – Shares of L Brands  (LB) tumble after quarterly results, with the stock trading at just 13.5 times 12-month earnings forecasts, Ben Levisohn writes in this week’s edition. While it may look tempting, Levisohn cannot help think that the multiple problems facing the company could send them lower still.

Not much time left for Fitbit – In a follow-up story, Barron’s notes that plenty of people still use fitness trackers and Fitbit (FIT) still sells millions of them, but the company has acknowledged that the market is “rapidly changing.” Fitbit CEO James Park has pledged to expand the company’s line of watches, putting it in direct competition with Apple (AAPL), but there is no indication that Fitbit knows how to nurture an “ecosystem” of software developers.

VMware investors not happy with possible Dell deal – VMWare (VMW) fell on Thursday and Friday in the wake of a CNBC report that Dell and VMware are considering a reverse merger in which the latter would issue shares to Dell Technologies and allow it to go public without doing an IPO, Andrew Bary writes in this week’s edition of Barron’s. A Dell/VMware combination could benefit Dell’s tracking stock for VMware, he notes, while adding that VMware investors are not happy about a possible transaction as it would link a thriving, cash-rich company with a highly leveraged Dell.

5G cannot deploy fast enough for Ericsson/Nokia – While the battle to dominate the future of wireless networks would be a boon for any wireless arms merchant such as Nokia (NOK) or Ericsson (ERIC), the race to build the new technology dubbed 5G is not going to produce a boom in revenue overnight, and both companies are struggling to get back on their feet, Tiernan Ray writes in this week’s edition of Barron’s. If they stabilize this year, and sentiment starts to warm about 5G, it could boost their stock prices even if 5G takes a while to pay off, he adds.


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Gun stocks fall as pressure mounts on NRA

Gun stocks fall as corporate pressure mounts on NRA

Gun stocks fall as pressure mounts on NRA. Stockwinners.com
Gun stocks fall as pressure mounts on NRA – AR15

The National Rifle Association, or #NRA, an American organization that advocates for gun rights, is seeing public pressure mount from corporations that it has partnered with in the wake of the Parkland, Florida school shooting, which resulted in 17 deaths.

PARTNERSHIPS DROPPED

The nation’s largest privately owned bank, First National Bank of Omaha, said on Thursday that it will not renew its contract with the NRA for a branded Visa card.

A spokesman for the bank said in a statement, “Customer feedback has caused us to review our relationship with the NRA. As a result, First National Bank of Omaha will not renew its contract with the National Rifle Association to issue the NRA Visa Card.”

Additionally on Thursday, privately held Enterprise Holdings, which owns the Enterprise, Alamo, and National car rental brands, said it will end its partnership with the NRA — which gave NRA members discounts — next month.

FORMER PARTNERS DISTANCING THEMSELVES

Hotel companies Best Western and Wyndham Hotels, which were previously targeted for boycotts following the Newton, Connecticut elementary school shooting in 2012, have posted dozens of tweets each, letting customers know they are no longer affiliated with the NRA.

Wyndham tweeted repeatedly, “Please know, Wyndham is no longer affiliated with the NRA,” while Best Western tweeted a similar message, “Best Western Hotels & Resorts does not have an affiliation with and is not a partner of the National Rifle Association.”

MORE PARTNERSHIPS DROPPED

Over the course of the day, more companies joined the growing chorus, including Hertz (HTZ), which ended its rental car discount program with the NRA, Symantec (SYMC), which stopped its discount program with the NRA, Metlife (MET), which ended its insurance discount program with the NRA, and Chubb (CB), which will stop underwriting a NRA-branded insurance policy for gun owners.

PRICE ACTION

Publicly traded gunmakers are down in Friday’s trading on a day the broader markets are rising. American Outdoor Brands Corp (AOBC), formerly known as Smith & Wesson, is down 5.5% to $9.56, while Sturm Ruger & Company (RGR) is down 3.67% to $47.20.


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MiMedx tumbles on questionable “sales practices”

MiMedx sinks after announcing internal investigation into sales practices

MiMedx tumbles on questionable "sales practices". Stockwinners.com
MiMedx tumbles on questionable “sales practices”

Shares of MiMedx (MDXG) are sinking after the company delayed its Q4 results to conduct an internal investigation.

The biopharmaceutical company said earlier that its Audit Committee has engaged independent legal and accounting advisors to conduct an internal investigation into current and prior-period matters relating to allegations regarding certain sales and distribution practices.

Company executives are also reviewing, among other items, the accounting treatment of certain distributor contracts.

MiMedx believes, however, that based on information available to date, the “outcome of such investigation should not have a material impact on revenue guidance for 2018.”

The company’s CEO Pete Petit stated, “”Our Board of Directors and executives believe it is in the best interests of our Company and shareholders for our Audit Committee to address these allegations in an internal investigation with the support of independent legal and accounting advisors. We look forward to releasing our 2017 financial results as soon as this process is complete.

MiMedx has been experiencing rapid growth over the last few years as our product portfolio continues to meet significant, unmet needs in the marketplace. We are literally saving lives by saving limbs, and we expect to continue to deliver operational and clinical success in the months and years to come.”

MDXG closed at $14.47. It last traded at $11.50.


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Algos and VIX

Algos are manipulating the VIX according to a whistleblower complaint

CBOE Global Markets falls amid VIX swings - Stockwinners.com
CBOE Global Markets falls amid VIX swings 

Algorithms  (Algos) are manipulating the VIX according to a whistleblower complaint filed with the SEC and CBoE, according to a Bloomberg report filed late yesterday.

“Algos,” as they’re called, automatically execute trades based on pre-programmed criteria. They can process millions of trades in seconds, predict market movements, take advantage of arbitrage opportunities, speculate on trends and otherwise do whatever programmers design them for.

The letter filed by the lawyer for the unnamed whistleblower claims that derivative VIX equity volatility index can be targeted and moved by posting quotes on options on the underlying S&P 500 without needing to actually trade them or deploy capital.

This has reportedly cost investors $100’s of millions/month in profits and may have contributed to the flat-line on the VIX followed by its surge to 50.3 last week, according to the report.

The CBoE denied the validity of the manipulation charge, citing factual errors and fundamental misunderstanding of the relationship between the VIX index, VIX futures and volatility.

The search for a scapegoat will no doubt continue after the VIX surge last week contributed to the 10-11% correction on underlying stocks, along with the demise of the XIV inverse VIX short-volatility index.

CBOE Global Markets (CBOE) is up 24 cents to $110.92′


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Newell Brands tumbles on outlook

Newell Brands announces resignation of three directors from board

Newell Brands exploring portfolio reconfiguration to simplify operations

Newell Brands tumbles on outlook, Stockwinners.com
Newell Brands tumbles on outlook

Newell Brands (NWL) announced preliminary estimated results for 2017.

The company currently anticipates core sales growth of approximately 0.8%, down from previous guidance 1.5% to 2.0%, and normalized EPS in the range of $2.72-$2.76, down from previous guidance $2.80-$2.85.

Sees approximately $1B of operating cash flow generated in the fourth quarter of 2017, resulting in full year operating cash flow of approximately $930M, versus previous guidance of $700M-$800M.

The company’s core sales results were impacted by an acceleration of the gap between sell-in and sell-through results due to a continuation of retailer inventory rebalancing in the U.S. and the bankruptcy of a leading baby retailer.

Margins were impacted by the negative mix effect of lower Writing sales and a reduction of fixed cost absorption due to shorter cycle runs on self-manufactured products, designed to reduce inventories and maximize operating cash flow.

Newell Brands CEO says majority of brands performing well despite difficult 2H17

“We believe that exiting non-strategic assets, reducing complexity and focusing on our key consumer-focused brands will make us more effective at unlocking value and responding to the fast-changing retail environment,” said Michael Polk, Newell Brands CEO.

“Despite a very difficult commercial outcome in the second half of 2017, the vast majority of our brands are performing well in the marketplace.

Our e-commerce business grew at a strong double-digit pace, our market shares have continued to increase and sell-through growth has accelerated with Q4 2017 growth rates ahead of Q3 2017 in the U.S., which strengthens our confidence in our brand, design and innovation-led strategy.

Importantly, our early efforts to improve working capital metrics look to have yielded good results with operating cash flow of nearly $1 billion dollars in Q4, despite the increased margin pressure from planned downtime in our factories and input cost inflation. We are committed to achieving our transformation objectives and are taking decisive action with speed to adapt our agenda to the unprecedented volatility in our retailer landscape,” Polk added.

PORTFOLIO CHANGES

Newell Brands announced that it will explore a series of strategic initiatives to accelerate its transformation plan, improve operational performance and enhance shareholder value.

Key components include: Focusing Newell’s portfolio on nine core consumer divisions with approximately $11B in net sales and $2B of EBITDA;

Exploring strategic options for industrial and commercial product assets, including Waddington, Process Solutions, Rubbermaid Commercial Products and Mapa;

Exploring strategic options for the smaller consumer businesses, including Rawlings, Goody, Rubbermaid Outdoor, Closet, Refuse and Garage, and U.S. Playing Cards;

Newell Brands exploring portfolio reconfiguration to simplify operations. Stockwinners.com
Newell Brands exploring portfolio reconfiguration

 

Execution of these strategic options would result in a significant reduction in operational complexity through a 50% reduction in the company’s global factory and warehouse footprint, a 50% reduction in its customer base and the consolidation of 80% of global sales on two ERP platforms by end of 2019.

If fully actioned, Newell Brands would expect to be an approximately $11B focused portfolio of leading consumer-facing brands with attractive margins and growth potential in global categories. These brands would leverage the company’s advantaged capabilities in brands, innovation, design and e-commerce.

The company expects proceeds after tax to be greater than that required to achieve a leverage ratio below the lower end of its current leverage ratio target range.

Newell Brands intends to begin the evaluation process immediately and expects any resulting transactions to be completed by the end of 2019.

DOWNGRADES

Barclays analyst Lauren #Lieberman downgraded Newell Brands to Equal Weight from Overweight and cut her price target for the shares to $26 from $35.

“Put simply, we’ve lost confidence,” the analyst says following this morning’s preannounced Q4, announced strategic overhaul and departure of certain board members.

Lieberman has concerns given the scale of Newell’s transformation expected in 2018. She also sees a lack of visibility around cash flow.

SunTrust said Newell reset the bar with a number of announcements today announcing Q4 results, below consensus 2018 guidance, a new strategic initiative to simplify its portfolio, and BOD changes.

The firm’s analyst actually views today’s announcements as a positive and said the news makes shares even more investable for 2018.

NWL is down 22% to $24.20.


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Kala Pharmaceuticals falls following its dry eye drug failure

Kala Pharmaceuticals announces topline results for clinical trials of KPI-121

Kala Pharmaceuticals announces topline results for clinical trials of KPI-121. Stockwinners
Kala Pharmaceuticals announces topline results for clinical trials of KPI-121

Kala Pharmaceuticals (KALA) announced topline results from its two Phase 3 clinical trials, STRIDE 1 and STRIDE 2, evaluating the safety and efficacy of KPI-121 0.25% versus placebo in patients with dry eye disease.

In the STRIDE 1 trial, statistical significance was achieved for the primary sign endpoint of conjunctival hyperemia change from baseline to day 15 in the ITT population and the primary symptom endpoint of ocular discomfort severity change from baseline to day 15 in the ITT population.

Statistical significance was also achieved for a second pre-specified primary symptom endpoint of ocular discomfort severity change from baseline to day 15 in patients with more severe baseline ocular discomfort.

Statistical significance was not achieved for a second pre-specified primary sign endpoint, inferior corneal staining change from baseline to day 15.

A positive treatment effect for ocular discomfort was also observed in the ITT population at day 8. KPI-121 was well tolerated in this trial with the most common adverse event in STRIDE 1 being instillation site pain, which was observed in 6.1% of patients in both the KPI-121 treatment group and the placebo group.

The only other adverse event reported by greater than 1% of patients was eye irritation, which was reported in 1.1% of patients on KPI-121 vs. 1.5% of patients on placebo.

Elevations in IOP, a known side effect with topical corticosteroid administration, were similar between the two groups with 0.4% in the KPI-121 group experiencing an increase in IOP of 5 mm of mercury or greater resulting in an IOP of 21 mmHg or greater compared to 0.4% in the placebo group.

In the STRIDE 2 trial, statistical significance was achieved for the primary sign endpoint of conjunctival hyperemia change from baseline to day 15 in the ITT population.

Statistical significance was not achieved for the primary symptom endpoint of ocular discomfort severity change from baseline to day 15 in the ITT population, although a positive treatment effect was observed at day 8, a key secondary endpoint.

A trend towards a positive treatment effect was observed for ocular discomfort severity change from baseline to day 15 in the patients with more severe baseline ocular discomfort, which was a key secondary endpoint in this trial.

KPI-121 was well tolerated in this trial with instillation pain being the most common adverse event In STRIDE 2 as reported by 5.7% of patients in the KPI-121 treatment group vs. 4.4% in the placebo group.

The only other adverse event reported by greater than 1% of patients was blurred vision, which was reported in 0.2% of patients on KPI-121 vs. 1.3% of patients on placebo.

Elevations in IOP were similar between the two groups with 1.1% in the KPI-121 group experiencing an increase in IOP of 5 mmHg or greater resulting in an IOP of 21 mmHg or greater compared to none in the placebo group.

Mark Iwicki, CEO of Kala Pharmaceuticals, said that “We will continue to analyze the results of both Phase 3 trials and the totality of the data from all 3 trials conducted to date and expect to discuss our clinical program with the FDA.

We believe that our preliminary, unaudited December 31, 2017 cash balance of approximately $114M puts us in a strong position as we maintain our focus on moving this program forward to serve patients with dry eye disease.”

KALA closed at $17.33, it last traded at $16.50 in pre-market trading.


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Allergan receives $290 million in damages

Pershing to pay $193.75M, Valeant to pay $96.25M to settle lawsuits

Watch Allergan into better botox data. See Stockwinners.com
Allergan receives $290 million in damages

Pershing Square announced that it has reached an agreement in principle, subject to court approval, to settle lawsuits concerning the attempted acquisition of Allergan (AGN) by Pershing Square Capital Management and Valeant Pharmaceuticals (VRX) in 2014, which were filed in the Central District of California.

Pershing Square and Valeant have agreed to split the $290M total settlement such that Pershing Square will pay $193.75M and Valeant will pay $96.25M.

Pershing says, “While Valeant had originally agreed to pay 60% of the cost of the settlement, Valeant and Pershing Square had different views on the desirability and timing of settling the case, which previously prevented settlement.

On December 19, 2017, Pershing Square acquired control of the settlement of the litigation in exchange for agreeing to pay a greater percentage of the settlement amount.”

Pershing Square CEO Bill Ackman adds, “We continue to believe the case had absolutely no merit. We decided, however, that it was in the best interest of our investors to settle the case now instead of continuing to spend substantial time and resources pursuing the litigation.”

Pershing Square had previously set aside $75M in legal reserves related to the case. The incremental cost of settling the litigation will reduce the company’s and the private funds’ performance and net asset value by 132 basis points.


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Nova Lifestyle enters blockchain frenzy

Nova Lifestyle to launch blockchain-based digital community

Nova Lifestyle enters blockchain frenzy. Stockwinners.com
Nova Lifestyle enters blockchain frenzy

Nova LifeStyle (NVFY) announced that the company has initiated design of a digital community that brings together designers and customers to deliver real time product and user experience built on Blockchain-empowered technology platform named The iDesign Blockchain Platform, which it believes to be a first in the furniture industry.

“iDesign Blockchain Technology Inc.,” a Nova LifeStyle subsidiary intends to establish a trusted digital ecosystem that links the experiences of independent product designers, customers and manufacturers with Nova-branded products on a creative global digital platform powered by Blockchain technology.

The iDesign Blockchain Technology Platform plans to target various artistic creator or designer as an innovation center, focusing on their ideation process to deliver enhanced user experience.

The company will implement these new initiatives with cash flow from existing operations.

Nova LifeStyle, Inc.  designs, manufactures, markets, and sells residential furniture for middle and upper middle-income consumers worldwide. The company develops upholstered, wood, and metal-based residential furniture for the living rooms, dining rooms, bedrooms, and home offices. It also offers sofas, chairs, dining tables, beds, entertainment consoles, cabinets, and cupboards.

CRYPTO TREND

Cryptocurrency revenues have been pointed to as reasons to be bullish on Advanced Micro Devices (AMD) and Nvidia (NVDA) in select research. Overstock (OSTK), Digital Power (DPW), Long Blockchain (LTEA), Seven Stars Cloud Group (SSC), Riot Blockchain (RIOT), Longfin (LFIN) and Social Reality (SRAX) are other stocks that have been touted, or promoted themselves, as a way to play the crypto theme.

NVFY closed at $2.51. It last traded at $2.95 in pre-market trading.


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Celgene’s Revlimid fails in lymphoma patients

Celgene’s Revlimid in follicular lymphoma shows no superiority vs. standard

Celgene tumbles
Celgene’s Revlimid fails in lymphoma patients

Celgene (CELG) and the Lymphoma Academic Research Organisation reported results from a phase III, randomized, open-label, international clinical study evaluating Revlimid plus rituximab – R2 – followed by R2 maintenance compared to the standard of care with rituximab plus chemotherapy followed by rituximab maintenance in patients with previously untreated follicular lymphoma.

The R2 treatment arm did not achieve superiority in the co-primary endpoints of complete response or unconfirmed complete response at 120 weeks and progression-free survival during the pre-planned analysis. Neither arm was superior for either of the co-primary endpoints.

The safety findings were consistent with the known profiles of the regimens investigated. Additional analyses are ongoing and planned.

ANALYST  REACTION

Piper cuts Celgene target to $100 on second Revlimid failure in lymphoma – Piper Jaffray analyst Christopher Raymond lowered his price target for Celgene to $100 from $109 after the Phase 3 Relevance trial evaluating Revlimid plus Rituximab in front line follicular lymphoma failed to show superior efficacy versus standard-of-care.

This is the second Revlimid failure in lymphoma following last year’s disappointment in diffuse large B-cell lymphoma,

#Raymond tells investors in a research note. This latest failure could have a near-term negative impact on Revlimid’s revenue trajectory since a “decent chunk” of off-label use in the U.S. likely stems from lymphoma, the analyst contends. He sees a “new element of uncertainty” and keeps a Neutral rating on Celgene.

Jefferies analyst Michael Yee says the failed Phase III Relevance study announced tonight by Celgene is irrelevant. The study had somewhat low expectations and it also makes Revlimid “less big,” which isn’t necessarily a bad problem, Yee tells investors in a research note.

The analyst says his thesis on the stock is unchanged and keeps a Buy rating on Celgene with a $125 price target.

The stock in after-hours trading is down 4% to $103.76. It has a 52-week trading range of $94.55 – $147.17.

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Insys Therapeutics sued by N. Carolina

N. Carolina AG Stein files lawsuit against Insys Therapeutics over Subsys

N. Carolina files lawsuit against Insys. Stockwinners.com
N. Carolina files lawsuit against Insys Therapeutics 

North Carolina Attorney General Josh Stein filed a lawsuit against drug manufacturer Insys Therapeutics (INSY) alleging an extensive scheme involving kickbacks, deception and fraud in marketing its drug #Subsys.

Subsys is a spray form of the synthetic opioid fentanyl, which is approximately 50 times stronger than heroin and 100 times more potent than morphine.

Subsys is approved only for adult cancer patients who are already on round-the-clock opioids for pain, but experience additional, breakthrough pain and for whom no other pain medications are effective.

The lawsuit alleges that Insys gave illegal kickbacks to doctors for promoting and prescribing Subsys for non-cancer patients, including through a multi-million dollar speaker program that rewarded physicians who wrote prescriptions for the drug.

Insys employees also allegedly pushed doctors to switch patients who were being prescribed non-equivalent fentanyl prescriptions to Subsys, and often at a starting dose of up to twelve or sixteen times larger than the label directed.

Finally, the suit alleges that Insys deceived health insurers into covering Subsys prescription claiming Insys employees often posed as prescribers or their staff and invented medical histories for patients to ensure the drug would be covered.

Only about 10% of prescriptions for which Insys sought prior authorization from insurers were for patients with breakthrough cancer pain, the only use the FDA had approved.

INSY is down 18 cents to $7.02.


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