Merck invests $1B in Seattle Genetics

Merck to acquire $1B equity stake in Seattle Genetics as part of collaborations

Seattle Genetics (SGEN) and Merck (MRK) announced two new strategic oncology collaborations.

The companies will globally develop and commercialize Seattle Genetics’ ladiratuzumab vedotin, an investigational antibody-drug conjugate, or ADC, targeting LIV-1, which is currently in phase 2 clinical trials for breast cancer and other solid tumors.

Merck presents results from Phase 3 KEYNOTE-426 study, Stockwinners
Merck bets heavily on Seattle Genetics, Stockwinners

The collaboration will pursue a broad joint development program evaluating ladiratuzumab vedotin as monotherapy and in combination with Merck’s anti-PD-1 therapy Keytruda in triple-negative breast cancer, hormone receptor-positive breast cancer and other LIV-1-expressing solid tumors.

Under the terms of the agreement, Seattle Genetics will receive a $600M upfront payment and Merck will make a $1B equity investment in 5M shares of Seattle Genetics common stock at a price of $200 per share.

Seattle Genetics scores bug with Merck

In addition, Seattle Genetics is eligible for progress-dependent milestone payments of up to $2.6B.

Separately, Seattle Genetics has granted Merck an exclusive license to commercialize Tukysa, a small molecule tyrosine kinase inhibitor, for the treatment of HER2-positive cancers, in Asia, the Middle East and Latin America and other regions outside of the U.S., Canada and Europe.

Seattle Genetics will receive $125M from Merck as an upfront payment and is eligible for progress-dependent milestones of up to $65M.

Under the terms of the agreement, Seattle Genetics and Merck will collaborate and equally share costs on the global development of ladiratuzumab vedotin and other LIV-1-targeting ADCs.

Breast cancer drug Liv-1 is expected to do well

The companies have agreed to jointly develop and share future costs and profits for ladiratuzumab vedotin on a 50:50 basis worldwide. Merck will pay Seattle Genetics $600M upfront and make a $1B equity investment in 5M shares of Seattle Genetics common stock at a price of $200 per share.

In addition, Seattle Genetics will be eligible to receive up to $2.6B in milestone payments, including $850M in development milestones and $1.75B in sales milestones.

The companies will jointly develop and commercialize ladiratuzumab vedotin and equally share profits worldwide.

The companies will co-commercialize in the U.S. and Europe. Seattle Genetics will be responsible for marketing applications for approval in the U.S. and Canada, and will record sales in the U.S., Canada and Europe.

Merck will be responsible for marketing applications for approval in Europe and in countries outside the U.S. and Canada, and will record sales in countries outside the U.S., Europe and Canada. Including the upfront payment, equity investment proceeds and potential milestone payments, Seattle Genetics is eligible to receive up to $4.2B.

Under the terms of the agreement, Merck has been granted exclusive rights to commercialize Tukysa in Asia, the Middle East and Latin America and other regions outside of the U.S., Canada and Europe. Seattle Genetics retains commercial rights and will record sales in the U.S., Canada and Europe.

Merck will be responsible for marketing applications for approval in its territory, supported by the positive results from the HER2CLIMB clinical trial.

Merck will also co-fund a portion of the Tukysa global development plan, which encompasses several ongoing and planned trials across HER2-positive cancers, including breast, colorectal, gastric and other cancers set forth in a global product development plan.

Seattle Genetics will continue to lead ongoing Tukysa global development planning and operational execution.

Merck will solely fund and conduct country-specific clinical trials necessary to support anticipated regulatory applications in its territory.

Seattle Genetics will receive from Merck $125M as an upfront payment and is eligible to receive progress-dependent milestones of up to $65M. Seattle Genetics will also receive $85M in prepaid research and development payments to be applied to Merck’s global development funding obligations. In addition, Seattle Genetics would receive tiered royalties on sales of Tukysa in Merck’s territory.

SGEN is up 14.8% to $172.40. MRK is up 1.4% to $85.00.

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Intra-Cellular sharply higher on it’s Bipolar drug

Intra-Cellular says lumateperone 42 mg met primary endpoint in Study 402

Intra-Cellular Therapies (ITCI) announced positive topline results from its Phase 3 clinical trial evaluating lumateperone as adjunctive therapy to lithium or valproate in the treatment of major depressive episodes associated with Bipolar I or Bipolar II disorder.

Intra-Cellular sharply higher on its bi-polar drug

In Study 402, once daily lumateperone 42 mg met the primary endpoint for improvement in depression as measured by change from baseline versus placebo on the MADRS total score.

Lumateperone 42 mg also met the key secondary endpoint, the CGI-BP-S Depression Score.

The lower lumateperone dose, 28 mg, showed a trend for a dose-related improvement in symptoms of depression but the results did not reach statistical significance.

Lumateperone demonstrated a favorable safety profile and was generally well-tolerated in the trial.

Lumateperone was successful in treating bipolar disorders

The most commonly reported adverse events that were observed at a rate greater than or equal to 5% and at least twice the rate of placebo were somnolence, dizziness, and nausea.

Rates of akathisia, restlessness, extrapyramidal symptoms, and changes in weight were similar to placebo.

This trial, in conjunction with our previously reported positive Phase 3 monotherapy study, Study 404, forms the basis for our sNDA for the treatment of bipolar depression in patients with Bipolar I or II disorder as monotherapy and adjunctive therapy which we expect to submit to the FDA in late 2020 or early 2021.

Study 402 was conducted globally in five countries including in the U.S. A total of 529 patients with moderate to severe major depressive episodes associated with either Bipolar I or Bipolar II disorder were randomized 1:1:1 to lumateperone 42 mg, 28 mg or placebo, while being maintained on lithium or valproate as mood stabilizers.

Lumateperone 42 mg met the primary endpoint by demonstrating a statistically significant improvement compared to placebo at week 6, as measured by change from baseline on the MADRS total score.

In the intent-to-treat study population, the least squares mean reduction from baseline for lumateperone 42 mg was 16.9 points, versus 14.5 points for placebo. Lumateperone 42 mg also met the key secondary endpoint of statistically significant improvement on the CGI-BP-S Depression Score.

Lumateperone 28 mg showed a trend for a dose-related improvement in symptoms of depression.

Though not formally tested against placebo since it did not separate on the primary endpoint, lumateperone 28 mg demonstrated a statistically significant improvement versus placebo on the CGI-BP-S. Lumateperone was generally well-tolerated with a favorable safety profile in the trial.

Adverse events were mostly mild to moderate and similar to those seen in prior studies in bipolar depression and schizophrenia, with no new adverse events observed. These findings provide further evidence supporting lumateperone’s favorable safety and tolerability profile across different patient populations.

 Importantly, lumateperone was generally safe and well tolerated in the study, adds the analyst. Hazlett believes that if approved in this indication, lumateperone would be differentiated as a potential first-line treatment option in depressive episodes associated with both bipolar I and bipolar II disorders.

ITCI is up 76% to $32.51

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TikTok suing Trump Administration

TikTok suing Trump Administration over efforts to ban TikTok in U.S.

TikTok stated in a post to its corporate website:

“Today we are filing a complaint in federal court challenging the Administration’s efforts to ban TikTok in the US…

TikTok sues Trump Administration

Today, 100 million Americans turn to TikTok for entertainment, inspiration, and connection; countless creators rely on our platform to express their creativity, reach broad audiences, and generate income; our more than 1,500 employees across the US pour their hearts into building this platform every day, with 10,000 more jobs planned in California, Texas, New York, Tennessee, Florida, Michigan, Illinois, and Washington State; and

On August 6th, Trump issued an executive order giving TikTok 90 days to sell

many of the country’s leading brands are on TikTok to connect with consumers more authentically and directly than they can elsewhere.

Put simply, we have a thriving community and we are grateful – and responsible – to them.

The Executive Order issued by the Administration on August 6, 2020 has the potential to strip the rights of that community without any evidence to justify such an extreme action, and without any due process.

TikTok is owned by ByteDance

We strongly disagree with the Administration’s position that TikTok is a national security threat and we have articulated these objections previously.”

ByteDance has reportedly been making progress in talks with potential acquirers of the U.S. operations of the short video app, including Microsoft (MSFT) and Oracle (ORCL), media reports have indicated. Reports have also indicated that Twitter (TWTR) is exploring a bid for TikTok.

Other publicly traded companies in the social media space include Facebook (FB) and Snap (SNAP).

TikTok/Douyin is a Chinese video-sharing social networking service owned by ByteDance, a Beijing-based Internet technology company founded in 2012 by Zhang Yiming. 

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FTC to fine Twitter over misuse of data

Twitter faces FTC fine of up to $250M over alleged misuse of email, phone data

On July 28, 2020, Twitter (TWTR) received a draft complaint from the Federal Trade Commission alleging violations of the company’s 2011 consent order with the FTC and the FTC Act, the company said in a regulatory filing.

Twitter books a $150M charge., Stockwinners

The allegations relate to the company’s use of phone number and/or email address data provided for safety and security purposes for targeted advertising during periods between 2013 and 2019.

The company estimates that the range of probable loss in this matter is $150M to $250M and has recorded an accrual of $150M.

The accrual is included in accrued and other current liabilities in the consolidated balance sheet and in general and administrative expenses in the consolidated statements of operations.

FTC complaint relates to misuse of phone number and email addresses

The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.

The company is also currently involved in, and may in the future be involved in, legal proceedings, claims, investigations, and government inquiries and investigations arising in the ordinary course of business.

These proceedings, which include both individual and class action litigation and administrative proceedings, have included, but are not limited to matters involving content on the platform, intellectual property, privacy, data protection, securities, employment and contractual rights.

Class Action suits have been filed against Twitter

Legal fees and other costs associated with such actions are expensed as incurred.

The company assesses, in conjunction with its legal counsel, the need to record a liability for litigation and contingencies.

Litigation accruals are recorded when and if it is determined that a loss related matter is both probable and reasonably estimable.

Material loss contingencies that are reasonably possible of occurrence, if any, are subject to disclosure.

Twitter used customer phone numbers for marketing purposes, Stockwinners

As of June 30, 2020, except for the referenced class actions, derivative actions and FTC matter, there was no litigation or contingency with at least a reasonable possibility of a material loss.

Except for the aforementioned accrual of $150M recorded in relation to the FTC matter, no other material losses were recorded during the three and six months ended June 30, 2020 and 2019 with respect to litigation or loss contingencies.

TWTR closed at $36.39.

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Lexicon shares jump on it’s type 2 diabetes drug

Lexicon says all four Phase 3 sotagliflozin studies met primary objectives

Lexicon Pharmaceuticals (LXRX) announced topline data from four Phase 3 sotagliflozin studies in type 2 diabetes: SOTA-MONO, SOTA-SU, SOTA-GLIM and SOTA-INS.

All four Phase 3 sotagliflozin studies met their primary objectives of lowering A1C in patients with type 2 diabetes.

The observed safety profile of sotagliflozin in these studies was generally consistent with that of approved SGLT2 inhibitors.

Diarrhea, an event consistent with gastrointestinal SGLT1 inhibition, was generally more common on sotagliflozin than placebo, although it was not a meaningful cause of treatment discontinuation.

Genital mycotic infections were dose-related.

The absolute increase in the incidence of genital mycotic infections over placebo ranged from 0% to 3.7% in studies of the 200 mg dose and from 3.2% to 6.3% in studies of the 400 mg dose.

In one study, sotagliflozin showed less hypoglycemia than glimepiride, and in the other three studies, the incidences of hypoglycemia in patients on sotagliflozin were similar to those on placebo.

Lexicon does not intend to pursue any regulatory approvals of sotagliflozin for type 2 diabetes in the absence of a strategic partnership for the commercialization of sotagliflozin in such indication.

In the Phase 3, multicenter, randomized, double-blind, placebo-controlled SOTA-MONO study, sotagliflozin 400 mg and 200 mg as monotherapy was tested for superiority versus placebo in reducing A1C after 26 weeks of treatment in patients with type 2 diabetes and inadequate glycemic control.

The study enrolled 142 patients on sotagliflozin 400 mg, 107 patients on sotagliflozin 200 mg and 150 patients on placebo. The study met its primary endpoint, demonstrating that sotagliflozin 400 mg and 200 mg significantly reduced A1C in patients with type 2 diabetes and inadequate glycemic control on diet and exercise alone.

Safety results were similar to those in other studies of sotagliflozin in type 2 diabetes, with similar incidences of hypoglycemia on sotagliflozin and placebo.

SOTA-SU was a 507-patient, randomized, double-blind, placebo-controlled, parallel group, multicenter Phase 3 study that evaluated the efficacy and safety of sotagliflozin 400 mg added to a sulfonylurea, alone or in combination with metformin, in patients with type 2 diabetes who had inadequate glycemic control on a sulfonylurea or metformin alone.

The primary endpoint was the change in A1C from baseline to Week 26. Patients were followed for a total of 79 weeks. The study met its primary endpoint, demonstrating that sotagliflozin 400 mg significantly reduced A1C in patients with type 2 diabetes who were on sulfonylurea alone or in combination with metformin with inadequate glycemic control on a sulfonylurea or metformin alone at Week 26.

Importantly, A1C reduction persisted through 79 weeks. Safety results were similar to those in other studies of sotagliflozin in type 2 diabetes.

Mean estimated glomerular filtration rate was estimated at Week 79, and was similar for sotagliflozin and placebo. Despite the presence of sulfonylurea background therapy, the incidences of hypoglycemia were similar on sotagliflozin and placebo.

SOTA-GLIM was a 954-patient, randomized, double-blind, double-dummy, active- and placebo-controlled, parallel group, multicenter Phase 3 study that evaluated the efficacy and safety of sotagliflozin 400 mg compared to glimepiride or placebo added to metformin in patients with type 2 diabetes who had inadequate glycemic control with metformin therapy.

The primary objective of the study was to demonstrate the non-inferiority of sotagliflozin 400 mg compared to glimepiride on A1C at Week 52.

Patients were followed for a total of 52 weeks. The study met its primary objective, as the change from baseline in A1C reduction to Week 52 was the same on sotagliflozin 400 mg and glimepiride, and the 95% confidence interval excluded the pre-specified margin of non-inferiority.

Safety results were similar to those in other studies of sotagliflozin in type 2 diabetes, with less hypoglycemia on sotagliflozin than glimepiride. SOTA-INS was a 571-patient, randomized, double-blind, placebo-controlled, parallel group, multicenter, 52-week Phase 3 study that evaluated the efficacy and safety of sotagliflozin 400 mg and 200 mg or placebo in patients with type 2 diabetes who had inadequate glycemic control on basal insulin alone or in addition to oral antidiabetic agents.

The primary endpoint was a change in A1C from baseline to Week 18. Patients were followed for a total of 52 weeks. The study met its primary endpoint, demonstrating that sotagliflozin 400 mg and 200 mg significantly reduced A1C in patients with type 2 diabetes who had inadequate glycemic control on basal insulin alone or in addition to oral antidiabetic agents.

Importantly, A1C reduction persisted at the same magnitude at 52 weeks.

Safety results were similar to those in other studies of sotagliflozin in type 2 diabetes. Despite the presence of background insulin therapy, the incidences of hypoglycemia were similar on sotagliflozin and placebo.

LXRX closed at $2.10, last traded at $3.25.

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Optinose shares soar on its potential Covid-19 treatment

Optinose announces anti-COVID-19 product candidate

Optinose (OPTN) announced initiation of development of a new product candidate, OPN-019.

OptiNose, Inc. focuses on the development and commercialization of products for patients treated by ear, nose, and throat; and allergy specialists in the United States.

OPN-019 will combine the Company’s proprietary nasal Exhalation Delivery System technology with an antiseptic that has been recently shown in vitro to kill the virus that causes COVID-19.

Because components of the drug-device combination product candidate, including both the active drug and delivery device, are currently commercially available in the U.S., the Company expects to be able to rapidly progress to a meeting with FDA to discuss an IND and then onward to clinical trials.

OptiNose uses this device to deliver its medicine

The Company is focused on supporting the initial stages of development within its current operating expense plan and intends to seek grants, partnerships, and/or other sources of capital to fund future development.

The company offers XHANCE, a therapeutic product utilizing its proprietary optinose exhalation delivery system that delivers a topically-acting and anti-inflammatory corticosteroid for the treatment of chronic rhinosinusitis with and without nasal polyps. It is also developing XHANCE, which is in Phase IIIb clinical trial for the treatment of chronic sinusitis; and OPN-300 for the treatment of Prader-Willi syndrome, a rare genetic obesity disorder, as well as autism spectrum disorder. 

Note that this company is losing money and none of its products have been approved by FDA yet.

OPTN closed at $6.42, last traded at $8.70.

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Tesla sues Fremont and Alameda county

Tesla to move HQ and future plants to Texas and Nevada

Tesla (TSLA) said that, “Contrary to the Governor’s recent guidance and support from the City of Fremont, Alameda County is insisting we should not resume operations.

This is not for lack of trying or transparency since we have met with and collaborated on our restart plans with the Alameda County Health Care Services Agency.

Unfortunately, the County Public Health Officer who is making these decisions has not returned our calls or emails. […] the County’s position left us no choice but to take legal action to ensure that Tesla and its employees can get back to work.

Tesla’s only U.S. manufacturing plant is located in California

We filed a lawsuit on May 9 asking the court to invalidate the County Orders, to the extent the County claims they prevent Tesla from resuming operations.

Tesla’s Alameda County Plant, Stockwinners

Meanwhile, CEO Elon Musk said in a series of tweets that, “Tesla is filing a lawsuit against Alameda County immediately. The unelected & ignorant “Interim Health Officer” of Alameda is acting contrary to the Governor, the President, our Constitutional freedoms & just plain common sense! […] Frankly, this is the final straw.

Musk plans to move Tesla out of California

Tesla will now move its HQ and future programs to Texas/Nevada immediately.

If we even retain Fremont manufacturing activity at all, it will be dependent on how Tesla is treated in the future. Tesla is the last carmaker left in CA.

In March, Musk clashed with California officials over whether his company had to halt production in Fremont – home to Tesla’s only U.S. vehicle factory.

A county official on Friday said that its health department has had many discussions with Tesla and recommended it wait at least another week to monitor infection rates and discuss safe ways to resume production.

TSLA closed at $819.42.

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Liberty Property Trust sold for about $61 per share

Prologis to acquire Liberty Property for $12.6B

Prologis (PLD) and Liberty Property Trust (LPT) announced that the two companies have entered into a definitive merger agreement by which Prologis will acquire Liberty in an all-stock transaction, valued at approximately $12.6B, including the assumption of debt.

Prologis buys Liberty Property Trust, Stockwinners

The board of Prologis and the board of trustees of Liberty have each unanimously approved the transaction.

Warehouses and logistics facilities — Liberty’s specialty — have become a hot part of the real estate market as more shopping moves online and demand for the space increases. 

The acquisition gives Prologis a portfolio of 107 million square feet of logistics properties that’s owned or managed, as well as buildings under construction and land for future development. It also includes 4.9 million square feet of office space.

Prologis plans to dispose of approximately $3.5B of assets on a pro rata share basis. This includes $2.8B of non-strategic logistics properties and $700M of office properties.

This transaction is anticipated to create immediate cost synergies of approximately $120M from corporate general and administrative cost savings, operating leverage, lower interest expense and lease adjustments.

Initially, this transaction is expected to increase annual core funds from operations per share by 10c-12c. Upon stabilization of the acquired development assets, completion of the planned non-strategic asset sales and redeployment of the related proceeds, annual stabilized core FFO per share is forecasted to increase by an additional 4c per share for a total of 14c-16c.

Liberty holds mostly class A properties, Stockwinners

Further, there are future synergies with the potential to generate approximately $60M in annual savings, including $10M from revenue synergies and $50M from incremental development value creation.

“Liberty’s logistics assets are highly complementary to our U.S. portfolio, and this acquisition increases our holdings and growth potential in several key markets,” Prologis Chairman and Chief Executive Hamid R. Moghadam said in the statement.

Under the terms of the agreement, Liberty shareholders will receive 0.675x of a Prologis share for each Liberty share they own.

The transaction, which is currently expected to close in Q1 of 2020, is subject to the approval of Liberty shareholders and other customary closing conditions.

Liberty shares have risen 21% this year, compared with the 55% jump in Prologis shares. 

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FDA panel approves Aimmune Therapeutics’ peanut allergy treatment

FDA Panel approves peanut allergy treatment, Stockwinners

A Food and Drug Administration panel voted 8-1 in favor of the benefits of Aimmune Therapeutics’ (AIMT) peanut allergy treatment outweigh the risks. The panel also voted 8-1 in favor of the drug’s safety. The body of independent advisers voted 7-2 in favor of effectiveness.

If approved, Palforzia could come with a Risk Evaluation and Mitigation Strategy, or REMS. A REMS includes special steps a physician must take when prescribing a medication to limit serious side effects.

Side effects are key when it comes to Palforzia. In a key study, 11.6% of patients who received the peanut allergy treatment dropped out due to side effects vs. 2.4% of patients who took a placebo. Further, Palforzia patients needed emergency allergy shots more frequently.

Peanut allergy is expected to be a $3.9B market by 2027, Stockwinners

The advisory committee vote is not binding, but is a recommendation to the full FDA.

Peanut allergies are the leading cause of death from food-induced allergic reactions in the United States but a lack of approved preventive treatments has left patients and caregivers desperate for options.

Palforzia, previously known as AR101, is an oral immunotherapy consisting of fixed doses of powdered peanut that is sprinkled over food daily.

While it does not aim to cure peanut allergy, the treatment’s clinical trials have shown that patients consuming small doses of the substance to which they are allergic become desensitized over time, reducing the likelihood or severity of a reaction to it.

Stockwinners.com

If approved, Palforzia is expected to have a black box warning, the FDA’s harshest, and strict restrictions requiring the therapy to be administered in a certified facility.

Aimmune expects to win approval for use of Palforzia in patients aged 4 to 17 and said it is considering a list price range of between $3,000 and $20,000 a year.

Analyst Comments

Piper Jaffray analyst Christopher Raymond kept an Overweight rating and $60 price target on Aimmune after an FDA’s Allergenic Products Advisory Committee, or APAC, voted in favor of the company’s AR101 peanut allergy drug on both efficacy and safety.

The analyst said, after the vote, he “increasingly likes the chances for Palforzia approval by late January 2020 (if not sooner).” Raymond noted that the stock is likely to open sharply higher on Monday as there is a 30% short interest in Aimmune, and said he is a buyer on the open as he sees “a lot of room to go.”

AIMT last traded at $24.67.

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Neff Sold to United Rentals

United Rentals to acquire Neff for $25 per share

Neff Corp sold for $1.2 Billion. See Stockwinners.com Market Radar to read more.

United Rentals (URI) and Neff Corporation (NEFF), operating as Neff Rental, announced that they have entered into a definitive agreement under which United Rentals will acquire Neff for $25 per share in cash, representing a total purchase price of approximately $1.3B.

The transaction is expected to be immediately accretive to cash EPS and free cash flow.

For the full year 2017, Neff is expected to generate $207 million of adjusted EBITDA at a 49.5% margin on $419 million of total revenue.

As of June 30, 2017, Neff had approximately $867 million of fleet based on original equipment cost.

The boards of directors of United Rentals and Neff unanimously approved the agreement.

Private investment funds managed by Wayzata Investment Partners LLC, which hold approximately 62.7% of the outstanding common shares of Neff, have executed a written consent to approve the transaction, thereby providing the required stockholder approval.

The transaction is expected to close in the fourth quarter of 2017, subject to Hart-Scott-Rodino clearance and customary conditions.

Immediately prior to entering into the definitive merger agreement with United Rentals, Neff terminated its previously announced merger agreement with H&E Equipment Services, Inc.

In connection with this termination, United Rentals has paid H&E a termination fee of approximately $13.2 million on behalf of Neff.

The company plans to update its 2017 financial outlook to reflect the combined operations upon completion of the transaction.

The company expects to realize significant cost synergies in operational efficiencies and corporate overhead, with a targeted adjusted EBITDA impact of approximately $35 million by the end of year two. The company expects to realize approximately $220 million in net present value of tax benefits included in the $1.3 billion purchase price.

Net of synergies, the purchase price represents a multiple of 5.4 times adjusted EBITDA for the year ended December 31, 2017, and an adjusted purchase multiple of 4.5 times, including the net present value of acquired tax benefits.

The acquisition is expected to be immediately accretive to cash earnings per share and to free cash flow generation.


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