Healthcare

  • Friday, January 20, 2017
    • Bristol-Myers Squibb (NYSE:BMY) and Ono Pharmaceutical Company, Ltd. reach a global patent settlement with Merck (NYSE:MRK) related to cancer med Keytruda (pembrolizumab). BMY and Ono claimed that Keytruda, a PD-1 antibody, infringed on their patents related to the use of PD-1 antibodies [BMY's is Opdivo (nivolumb)] to treat cancer in the U.S., Europe, Australia and Japan.
    • Under the terms of the settlement, Merck will make an initial payment of $625M to BMY and Ono and pay a 6.5% royalty on Keytruda sales from January 1 of this year through the end of 2023 followed a 2.5% royalty from January 1, 2024 through 2026. BMY and Ono will share the royalties on a 75/25 basis, respectively.
    • The companies have also granted each other certain rights under their respective patent portfolios related to PD-1.
    • Inhibiting PD-1, an immune system checkpoint, enhances the immune system's anti-tumor response. Opdivo was the first such antibody to receive regulatory approval anywhere in the world.
    • BMY is up a fraction after hours while MRK is unchanged.
    • The first patient has been enrolled in Global Blood Therapeutics' (NASDAQ:GBT) Phase 3 clinical trial, HOPE, evaluating lead product candidate GBT440 in people with sickle cell disease (SCD) who have had at least one episode of vaso-occlusive crisis (VOC) in the previous year. The primary endpoint is the proportion of participants who achieve more than a 1 g/dL increase in hemoglobin at week 24 compared to baseline.
    • GBT440 is an oral, once-daily therapy that works by increasing hemoglobin's affinity for oxygen. It is also in development for the treatment of hypoxemia in patients with ideopathic pulmonary fibrosis.
    • Shares are up a fraction after hours.
    • In what it says will be the only hike this year, AbbVie (ABBV -0.2%) raises the price of top seller Humira (adalimumab) 8.4%. It usually bumps the price twice annually, most recently by 9.9% and 7.9%. Ten years ago, a Humira pen injector with two syringes sold for $1,258 while today the tab is $4,441, a compounded price gain per year of over 13%.
    • Humira is the top selling drug or biologic globally, expected to generate $17.6B in sales this year. Biosimilars are circling, however, which is the main source of differing views from analysts. The main patent covering Humira expired last year, but the company says the IP moat will enable it to protect it from biosimilar encroachment until 2022. The company's valuation will depend largely on its ability to do so.
    • Earnings should grow 14% this year and 16% next. Free cash flow should top $8B in 2017.
    • Out of 15 sell-side shops, five rate the stock a Buy, nine a Hold and one a Sell. Price targets range from $60 - 90 (2% downside risk - 47% upside).
    • Source: Barron's
    • Infinity Pharmaceuticals (INFI +21.3%) is up on triple normal volume in response to its announcement of positive preclinical data for lead oncology candidate IPI-549. The results were presented at the Keystone Symposia Conference "PI3K Pathways in Immunology, Growth Disorders and Cancer" in Sante Fe, New Mexico.
    • Results from nine patients with advanced solid tumors showed that IPI-549 was able to overcome checkpoint inhibition by remodeling the immune-suppressive tumor microenvironment, principally by its effect on myeloid cells.
    • IPI-549 in currently being evaluated in a Phase 1 study as monotherapy and in combination with Bristol-Myers Squibb's (BMY -11.1%) Opdivo (nivolumab) in patients with advanced solid tumors, including non-small cell lung cancer, melanoma and squamous cell carcinoma of the head and neck whose tumors are treatment resistant.
    • IPI-549 is an orally available inhibitor of an enzyme called phosphoinositide-3-kinase (PI3K)-gamma that plays a key role in inflammation, immunity and cancer.
    • TheStreet's Scott Gamm reports the potential appeal of the Affordable Care Act (ACA), known as Obamacare, may be bullish for health insurers since the health exchange approach was unprofitable. Individuals buying coverage will be a lot more agreeable to their bottom lines, at least conceptually.
    • Jon Lieber, U.S. practice director at consultancy Eurasia Group says without ACA's individual mandate and subsidies, though, few people will want to buy insurance. "They're (the insurers) are going to struggle to provide insurance in the individual market if Obamacare is repealed," an ever-increasing likelihood considering the Republican majority in Congress.
    • If the insurers withdraw from the individual market and focus on employers, it would bode well financially since they have healthier pools of people.
    • Related tickers: (UNH -0.4%)(AET -0.3%)(CI +0.2%)(HUM -1.3%)(ANTM +1.1%)(MOH +1.3%)(WCG +0.8%)
    • Interpace Diagnostics (IDXG +5.9%) enters into a securities purchase agreement with three institutional investors for the direct sale of 855K shares of common stock at $4.69. Each share bought will have an accompanying five-year immediately exercisable warrant to purchase one share of common at $4.69.
    • Gross proceeds will be $4M. Closing date is January 25.
    • Net proceeds will fund working capital, the repayment of indebtedness and general corporate purposes.
    • Yesterday's close was $4.60.
    • Affimed N.V. (AFMD -20.9%) slumps on a 10x surge in volume in response to the pricing of its public offering of 10M shares of common stock at $1.80. Underwriters over-allotment is an additional 1.5M shares. Net proceeds should be ~$16.9M. Closing date is January 25.
    • Yesterday's close was $2.15.
    • At the annual Davos meet-up between the globe's movers and shakers, the CEOs of leading pharma firms weigh in on the political headwinds potentially restraining their ability to routinely raise prices.
    • Novartis' (NVS +0.1%) Joe Jimenez: "The new administration has been pretty vocal about supporting innovation. They understand that when you spend money on research and you develop [IP] there needs to be some level of return for that investment. I believe, based on who the president-elect has put in place around him, that there is a clear understanding of investment and return on investment."
    • Merck's (MRK +3.7%) Ken Frazier: "Pricing will remain a challenging issue for those of us who are in the research-based pharmaceutical industry, as well as a challenge for the overall healthcare system in terms of what it can afford."
    • Glaxo's (GSK -0.1%) Andrew Witty: "Clearly, the industry has an obligation to deliver value-creating innovation and it needs to price it at a level that is deemed to be acceptable."
    • Roche's (OTCQX:RHHBY) Severin Schwan: "If you provide true medical differentiation coupled with a strong [IP] position, I think the U.S. will continue to reward this kind of innovation. If you don't offer that then, frankly, I think it is the right thing that prices should come down."
    • Sanofi's (SNY +0.3%) Olivier Brandicourt: "It's very difficult to understand what all those comments and tweets will end up being. It's going to probably be very difficult to issue legislation on drug pricing."
    • Shire's (SHPG -1%) Flemming Ornskov: "I think we are in good position to prove the value of our products but, of course, there will be challenges."
    • Source: Reuters
    • The remarkable up moves in tiny biotechs this month includes nano cap Diffusion Pharmaceuticals (OTCQX:DFFN +18.2%). Shares almost tripled on January 10 before retracing 73%. With today's move, prices are still ahead 154% since January 9.
    • No particular news accounts for the action. The clinical-stage firm develops treatments designed to improve the efficacy of radiotherapy and chemotherapy in cancer patients. Its lead product candidate is Trans Sodium Crocetinate (TSC) which promotes the diffusion of oxygen through blood plasma and into the hypoxic (oxygen deprived) tumor microenvironment. Cancer cells thrive in hypoxic environments which involve changes that make the tumors resistant to treatment. TSC is in Phase 2 development in glioblastoma, the most common type of brain tumor.
    • The white knuckle ride with EnteroMedics (ETRM +51.3%) continues in early trading on triple normal volume. Shares rocketed almost 15-fold in five days recently after the company reported that two new medical centers had incorporated its vBloc obesity treatment into their practices. The gain was short-lived however. Shares retraced 80% before recovering.
    • Previously: EnteroMedics says two more institutions on line with vBloc; shares up 126% (Jan. 5)
    • The exciting ride for stockholders of Synergy Pharmaceuticals (SGYP -7.5%) continues. Shares are down on more than a 30% spike in volume and are down almost 15% since January 5 despite the recent FDA approval of Trulance.
    • This type of behavior regularly portends an equity offering.
    • Interpace Diagnostics (IDXG +30.4%) jumps out of gate on more than double normal volume in response to its announcement of an agreement with Tel Aviv-based Best Med Opinion Ltd, a provider of second opinion and clinical services for doctors and patients in Israel and certain other countries.
    • Best Med will provide its clients with information regarding the company's ThyGenX, ThyraMir and PancraGen tests and will manage the sample collecting and shipping logistics when the tests are selected to assist in treatment decisions. Best Med will be the exclusive provider of Interpace's products in Israel.
    • Financial terms are not disclosed.
    • In a prospectus for its $1.325B debt facilities, Herbalife (NYSE:HLF) reports that its expects Q4 GAAP and non-GAAP EPS to be within the previously announced ranges of $0.90 - 1.10 and $0.80 - 1.00, respectively. Volume will be toward the low end of guidance, however. Other highlights:
    • EPS guidance for 2017 lowered to $3.55 - 3.95 from $3.95 - 4.35. Non-GAAP EPS lowered to $4.20 - 4.60 from $4.60 - 5.00.
    • The SEC's investigation into possible corruption in China is ongoing, company documents requested. In parallel, the company is conducting its own review. It has discussed both inquiries with U.S. Department of Justice.
    • Pursuant to the FTC Consent Order, ~200K participants have been classified as "preferred" members, those who only purchase products at a discount. Beginning in mid-January, all new members must select either "preferred member" or "distributor" when they enroll. Members receive 25 - 50% discount on products purchased. Over 70% of Members purchase products for their own consumption.
    • 4.1M current Members, ~300K in China.
    • It is developing a receipt system that will enable it to better track and illustrate retail consumption. It will be used to drive rewards to distributors. Royalties up to 15% are paid on purchases by other members up to three levels below the distributor. A bonus up to 8% is paid based on volume points.  Total multi-level compensation for each sale is 23%. Sales Leaders are those who accumulate at least 4,000 Volume Points during any consecutive 12-month period.
    • The company cannot increase its rewards on documented sales by more than 110% of current levels. If it can appropriately document 80% of its U.S. sales, there is no limit on the awards it can provide on such sales. No more that 1/3 of the rewards can come from personal consumption.
    • Voyager Therapeutics (NASDAQ:VYGR) announces updates regarding the Phase 1b study of VY-AADC01 for patients with advanced Parkinson’s disease.
    • The clinical trial includes up to 20 patients and is progressing well with all five patients in Cohort 3 successfully completing treatment. Preliminary data show an increase in surgical coverage of the putamen achieved in Cohort 3 of 42% compared to 34% in Cohort 2 with similar infusion volumes whereas Cohort 1 achieved 21% coverage with a lower infusion volume. Six-month efficacy results are expected in mid-2017.
    • The primary objective of the trial is to assess the safety and surgical coverage of ascending doses of VY-AADC01 in the putamen, a region of the brain associated with impaired motor function in Parkinson’s disease.
    • Parkinson’s disease is a chronic, progressive and debilitating neurodegenerative disease. Declining levels of dopamine in brain leads to the motor symptoms associated with Parkinson’s disease including tremors, slow movement or loss of movement, rigidity, and postural instability.
    • JPMorgan downgrades Teva Pharmaceutical Industries (NYSE:TEVA) and Endo International (NASDAQ:ENDP) to Neutral from Overweight citing the need for a "clearer picture of fundamentals." Price targets have been lowered to $40 (20% upside) and $20 (55% upside), respectively.
    • It doesn't expect a bottom in the generics industry until the second half as pricing pressures continue. Price erosion could be high single-digit to low double-digits this year. It adds that Mylan (NASDAQ:MYL) and Akorn (NASDAQ:AKRX) are in the best position.
    • TEVA is up a fraction and ENDP down a fraction in premarket trading.
    • Source: Bloomberg
    • Thinly traded micro cap Concert Pharmaceuticals (NASDAQ:CNCE) is up 8% premarket, albeit on only 1,170 shares, in response to its announcement that the FDA has designated Phase 2-stage CTP-656 an Orphan Drug for the treatment of cystic fibrosis. Among the benefits of Orphan Drug status is a seven-year period of market exclusivity in the U.S. for the indication, if approved.
    • CTP-656 is a deuterium-modified version of ivacaftor [Vertex Pharmaceuticals' (NASDAQ:VRTX) Kalydeco] that Concert says has a superior pharmacokinetic profile.
    • Results from the Phase 2 study should be available by year-end.
    • Johnson & Johnson's (NYSE:JNJ) Ethicon Endo-Surgery unit acquires privately held Megadyne Medical Products for an undisclosed sum. The Draper, UT-based firm markets devices used in electrosurgery (the use of electrical current to cut, ablate or coagulate tissue).
    • On a preliminary basis, Herbalife (NYSE:HLF) sees Q4 volume down 1.5% and sales down 4 - 6%. Non-GAAP EPS should be within the previously announced range of $0.80 - 1.00.
    • Source: Bloomberg
    • 2017 guidance: value point growth: 2.0 - 5.0%; net sales growth: 0.3 - 3.3%; EPS: $3.55 - 3.95; non-GAAP EPS: $4.20 - 4.60; currency adjusted non-GAAP EPS: $4.75 - 5.15.
    • Shares are off 6% premarket on modestly higher volume.
    • Corporate presentation
    • Bristol-Myers Squibb (NYSE:BMY) is off 7% premarket on average volume in response to yesterday's announcement that it will not seek accelerated approval of the combination of Opdivo (nivolumab) and Yervoy (ipilimumab) for the first-line treatment of lung cancer [competitor Merck (NYSE:MRK) is up 4% premarket].
    • Goldman Sachs says Bristol's announcement doesn't necessarily mean the end of its effort to develop the combo for lung cancer. It says the company did not take an interim look at the data and the Data Monitoring Committee did not recommend to stop the trial (the company based its decision on a "review of currently available data").
    • Goldman believes the interim analysis will occur in later this year with a potential regulatory filing in Q4. Its valuation models assume the launch of the combo by 2018, with $1B in sales in first-line lung cancer by 2020 (with a 25% risk adjustment). It adds that Bristol's current price reflects no value for Opdivo in lung cancer and any weakness represents a buying opportunity.
    • Previously: Bristol-Myers will not pursue accelerated approval of Opdivo for lung cancer (Jan. 19)
    • Amarin (NASDAQ:AMRN) announces that it and its wholly owned subsidiary, Corsicanto II Designated Activity Company, have entered into purchase agreements with certain investors pursuant to which Corsicanto will issue and sell $30M in aggregate principal amount of 3.50% Exchangeable Senior Notes due 2047 guaranteed by Amarin, at par.
    • The Notes will be exchangeable into Amarin ADSs at an initial exchange rate of ~$3.89 per ADS.
    • The expected net proceeds of $28.9M will be used for general corporate purposes. Closing date is January 25.
    • Portola Pharmaceuticals (NASDAQ:PTLA) initiated at Market Perform with a $28 (10% upside) price target by Oppenheimer.
    • Endo International (NASDAQ:ENDP) downgraded to Neutral with a $20 (55% upside) price target by JPMorgan.
    • Almost Family (NASDAQ:AFAM) announces that it has priced its upsized underwritten public offering of 3M shares of its common stock at a price of $44.50 per share.
    • The net proceeds of ~$125M from the offering will be used to repay outstanding indebtedness under its revolving credit facility borrowed to fund its recent acquisition.
    • Shares are up a fraction premarket.
    • Pluristem Therapeutics (NASDAQ:PSTI) amends its underwriting agreement with H.C. Wainwright to increase its "bought deal" offering to $15M. Under the bought deal arrangement, Wainwright will purchase the entire offering of 12,244,898 common shares at $1.225. It will also receive warrants to purchase up to 7,346,939 common shares at $1.40. Gross proceeds will be $15M.
    • Wainwright also has a 30-day option to buy up to an additional 1,836,735 common shares with/or warrants to purchase 1,102,041 shares of common. If exercised in full, gross proceeds will be $17.25M.
    • Wainwright will sell the equity as Units, each consisting of one common share and 0.6 of a warrant.
    • Net proceeds will fund R&D, clinical trial activities, investment in capital equipment, working capital and general corporate purposes.
    • Shares are off 17% premarket on increased volume.
    • The first patient has been dosed in the "b" phase of a Phase 2b clinical trial, AIPAC, assessing Prima BioMed's (NASDAQ:PBMD) IMP321 for the treatment of metastatic breast cancer. The latter phase will randomize participants to receive either paclitaxel plus placebo or paclitaxel with IMP321. The primary endpoint is progression-free survival up to month 37.
    • According to ClinicalTrials.gov, the estimated final data collection date for the primary endpoint is June 2019. The estimated study completion date is December 2020.
    • IMP321 is a recombinant protein called an antigen presenting cell (APC) activator. It has demonstrated the ability to induce sustained immune responses in cancer patients when used at low dose as a cancer vaccine adjuvant or a systemic effect when used at higher doses (general APC activation).
    • The European Medicines Agency (EMA) accepts for review Gilead Sciences' (NASDAQ:GILD) Marketing Authorization Application (MAA) seeking approval of its once-daily single-table regimen of sofosbuvir 400 mg, velpatasvir 100 mg and voxilaprevir 100 mg (SOF/VEL/VOX) for the treatment of chronic hepatitis C virus (HCV) infection. The MAA has accelerated review status which shortens the review clock to 150 days from the usual 210 days.
    • The company's marketing application in the U.S. is currently under FDA review.
  • Thursday, January 19, 2017
    • Bristol-Myers Squibb (NYSE:BMY) -5% AH after announcing it will not seek accelerated approval of a combination of Opdivo and Yervoy as an initial treatment for lung cancer.
    • BMY says it made its decision based on a review of currently available data but offers no additional details, in order to protect the integrity on ongoing registrational studies.
    • The decision puts BMY further behind Merck's (NYSE:MRK) Keytruda, which last week was accepted for accelerated review by the FDA in combination with chemotherapy as an initial advanced lung cancer treatment; MRK +4.7% AH.
    • IntriCon (NASDAQ:IIN) exercises its option to acquire the rest of Hearing Help Express (HHE) that it did not own (it acquired a 20% stake in October 2016). Under the terms of the transaction, it will pay $650K in cash and guarantee HHE's $2M note. The deal, expected to close in H1, also includes an earn-out.
    • IntriCon chief Mark Gorder says, "Completing this acquisition will give IntriCon direct access toe consumers and the emerging value-based hearing healthcare market. HHE offers a lower-priced alternative for consumers to purchase devices directly - circumventing layers of costs associated with the conventional hearing aid channel."
    • Previously: IntriCon acquires 20% stake in direct-to-consumer mail order hearing aid provider, total buyout expected by year end (Nov. 14, 2016)
    • Synergy Pharmaceuticals (NASDAQ:SGYP) is off 5% after hours on robust volume in a hefty "sell on the news" response to the FDA approval of plecanatide, branded as Trulance, for the treatment of adult patients with chronic ideopathic constipation (CIC). The PDUFA date was January 29.
    • Plecanatide is the first investigational therapy designed to replicate the activity of uroguanylin, a naturally occurring human gastrointestinal peptide, by working locally in the proximal small intestine to stimulate digestive fluid movement and support regular bowel function.
    • The company plans to file a supplemental New Drug Application (sNDA) this quarter for irritable bowel syndrome with constipation (IBS-C).
    • Update: Shares reversed and are now up 6% after hours on heavy volume.
    • Yesterday's sell-off in Mallinckrodt (MNK +3.7%) was short-lived. Shares are up more than triple normal volume after yesterday's 13.6M-turnover session that saw prices rebound 9% from the intraday low of $42.67.
    • Investors are clearly relieved over the less-than-it-could-have-been $100M fine related to its aggressive price hikes of Acthar gel.
    • Previously: Mallinckrodt to pay $100M to settle price gouging charges; shares up 2% after hours (Jan. 18)
    • Omnicell (OMCL +4.4%) tries to recapture past glory, albeit on light volume. Shares have been in an intermediate downtrend since early December and a longer-term downtrend since late last summer.
    • Dougherty's Gene Mannheimer just started covering the stock. He rates is a Buy with a $44 (29% upside) price target citing an attractive valuation, especially after the recent sell-off stoked by a soft H1 outlook. He adds that H2 should be strong led by the release of the new XT product line which he refers to as a "game changer."
    • Source: Bloomberg
    • Jefferies' David Windley says Cigna (CI +1.6%) may not be idle for long if its proposed merger with Anthem (ANTM +1%) is blocked by the courts. The company will have $5B in deployable capital by the end of year, which could rise to $14B with a more aggressive posture towards M&A. Its ammunition will be further enhanced with the $1.85B breakup fee from Anthem.
    • Mr. Windley believes WellCare Health Plans (WCG +0.2%) is logical candidate, also Humana (HUM +0.4%), albeit a bit more difficult.
    • He rates CI a Buy with a price target of $155 (8% upside).
    • Source: Bloomberg
    • The market's down day notwithstanding, buyers of Align Technology (ALGN -3.7%) are in short supply. Shares have been in a downtrend for a month, giving up 11% of their value. Investors are apparently concerned that President-elect Donald Trump's proposed border tax will crimp earnings. The company manufactures its dental appliance in Mexico and sells it here. Almost 61% of its Q3 revenues were generated in the U.S.
    • Short interest is 3.3% of shares outstanding. Most sell-side shops rate the stock a Buy with price targets ranging from $95 - 114 (4 - 25% upside).
    • Source: Bloomberg
    • Privately held kaleo appears unconcerned about the potential fallout over its pricing strategy for EpiPen competitor Auvi-Q (epinephrine injection, USP) 0.15 mg/0.3 mg auto-injector. Its plan mirrors the now-discredited and much-reviled method used by Mylan (MYL -0.9%) and Valeant Pharmaceuticals (VRX -0.1%) of setting an exorbitant list price ($4,500) for the product with reimbursement activities managed by specialty pharmacies.
    • Kaleo defends its approach by saying patients who have commercial insurance will pay $0 for Auvi-Q whether their insurer pays or not. It also plans to give the product away to families with annual incomes less than $100K. For people paying cash who do not quality for free product, the price will be $360. In other words, the insurers who do reimburse will have to base their payments on the $4,500 price which will finance the giveaways.
    • Kaleo first launched Auvi-Q with Sanofi (SNY -1.5%) in 2013 at about the same price as EpiPen but it was later withdrawn due to manufacturing problems it says it has now fixed.
    • Analyst Richard Evans opines, "It's a very weak position. If I'm a payer I'm just going to block the product. I'm not going to pay for it. If you're going to give it away, fine. Knock yourself out. What is my motive to pay $4,500 or any derivative of $4,500?"
    • Impax Labs' (IPXL -1.6%) generic version of EpiPen, called Adrenaclick, presents another impediment to Auvi-Q sales. It intends to sell its product for $109.99/two-pack. Commercially insured customers will be eligible for a $100 coupon that will lower their out-of-pocket costs to $9.99.
    • Source: Barron's
    • Penny stock Amedica (AMDA -32%) slumps on more than a 4x surge in volume in response to the pricing of its $4.5M public equity offering. The company is offering one share of common stock paired with 0.45 of a warrant to purchase one common share at $0.55 for a combined price of $0.51. Closing date is January 24.
    • Yesterday's close was $0.633.
    • Thinly traded micro cap ViewRay (VRAY +17.5%) perks up on increased volume, albeit on turnover of less that 58K shares, in response to its announcement that the German Research Foundation has purchased a MRIdian Linac guided radiation therapy system to treat patients at the University Clinic Heidelberg. It is the first installation in Europe.
    • MRIdian Linac is an MRI-guided linear accelerator and adjusts the radiation dose in real time.
    • ViewRay went public about two years ago.
    • The NY Post reports that U.S. District of Columbia Judge Amy Berman Jackson is expected to rule against the marriage of Cigna (CI +2%) and Anthem (ANTM +1.5%) on antitrust concerns. Her decision may be issued as early as today.
    • Both companies filed 8-K's today in what appears to be a bit of jockeying ahead of the ruling. Anthem extended the termination date for the merger agreement to April 30, potentially allowing time for an appeal, while Cigna disclosed that it would "evaluate its options" as provided for under the agreement if the ruling is negative. According to sources, Cigna believes that testimony during the bench trial showed that Anthem failed to hold up its end of the merger agreement.
    • Investors appear unswayed, both stocks are up as are fellow insurers Aetna (AET +1.2%) and UnitedHealth Group (UNH +1.3%).
    • TheStreet's Sarah Pringle reports that UnitedHealth Group's (UNH +1.1%) recent $2.3B takeout of Surgical Care Affiliates (SCAI) bodes well for competitor Surgery Partners (SGRY -2.2%) which debuted in September 2015.
    • The company's network includes 99 ambulatory surgery centers, five surgical hospitals, 53 physician practices and eight urgent care sites. A likely buyer would be Envision Healthcare (EVHC -2.2%) which operates (no pun intended) in the same space. The value of a potential transaction could reach $2.7B based on a 12x multiple of SGRY's 2018 expected EBITDA of $225M.
    • Tenet Healthcare (THC -2.1%), which paid $425M in 2015 for a majority stake in United Surgical Partners International, could be another potential suitor.
    • Raymond James' John Ransom believes a takeover is at least 12 months away due to the company's high leverage, ~$1.37B in net debt, that would need trimming in order to make a deal more attractive.
    • Cigna (CI) appears to be stepping back a bit from its proposed merger with Anthem (ANTM -0.1%). In a regulatory filing, it states that it "intends to evaluate its options" in accordance with the merger agreement following a district court's ruling on the merger, expected shortly.
    • In June 2016, the U.S. Department of Justice and certain attorneys general sued to block the transaction. The trial concluded on January 4.
    • Earlier today, Anthem reported that it had extended the termination date for the merger until April 30.
    • Previously: Anthem extends termination date for Cigna merger to April 30 (Jan. 19)
    • Enrollment is underway in Otonomy's (OTIC) Phase 2 clinical trial assessing OTO-104 for the prevention of hearing loss in cancer patients undergoing chemotherapy with platinum-based agents. The estimated completion date for the 60-subject study is June 2018.
    • Up to 90% of patients receiving cisplatin or other related chemotherapies experience hearing loss.
    • OTO-104, a sustained-exposure formulation of the steroid dexamethasone, is being developed to treat a range of balance and hearing disorders. It is administered directly into the middle ear via injection through the eardrum.
    • Zynerba Pharmaceuticals (NASDAQ:ZYNE) is down 16% premarket on robust volume in response to its public offering of 2.8M shares of common stock at $18. Underwriters over-allotment is an additional 420K shares. Closing date is January 24.
    • Net proceeds will fund the clinical development of ZYN002 and ZYN001, R&D and general corporate purposes.
    • Yesterday's close was $22.46.
    • Xtant Medical Holdings (NYSEMKT:XTNT) issues new convertible promissory notes to two investors to cover interest payments due, specifically, $1.56M owed under the company's July 31 2015 Indenture and $67,145 of interest from certain convertible promissory notes issued on April 14, 2016.
    • The new convertible notes, issued on January 17, bear 6.00% interest and are convertible into common stock at $0.7589/share.
    • XTNT closed yesterday at $0.5191.
    • Bovie Medical (NYSEMKT:BVX) is up 6% premarket on light volume in response to its announcement that it has inked a deal with CONMED (NASDAQ:CNMD) under which it will sell Bovie's PlazXact Ablator, marketed as the UltrAblator Bipolar, starting in March.
    • The product, compatible with all standard electrosurgical generators with footswitch control, is used to cut, coagulate and vaporize soft tissue.
    • AquaBounty Technologies (NASDAQ:AQB) completes the listing of its common shares on the NASDAQ Stock Market and finalized the equity subscription from Intrexon (NYSE:XON).
    • AquaBounty's listing on NASDAQ will broaden company's exposure to the U.S. markets as it plans for commercial production of its approach to fish farming.
    • The Company will trade under the symbol AQB on NASDAQ commencing on January 19.
    • Proceeds will be used to provide ongoing working capital and investment requirements.
    • Thinly traded nano cap Catabasis Pharmaceuticals (NASDAQ:CATB) is up 12% premarket, albeit on only 1,270 shares, in response to its announcement that data from a Phase 1 study assessing edasalonexent in adult subjects has just been published in the Journal of Clinical Pharmacology. The product candidate is being developed to treat Duchenne muscular dystrophy (DMD).
    • The results showed that edasalonexent was safe, well-tolerated and inhibited activated NF-kB.
    • Edasalonexent (CAT-1004) inhibits an protein activated in DMD called NF-kB which plays a key role in inflammation and fibrosis. The company is collaborating with Sarepta Therapeutics (NASDAQ:SRPT) to explore a combination approach of exon skipping and NF-kB inhibition for treating the disorder.
    • DMD-related tickers: (NASDAQ:PTCT)(NASDAQ:SMMT)(NASDAQ:BMRN)(NYSE:MNK)(NYSE:PFE)(NASDAQ:MRNA)
    • Novocure (NASDAQ:NVCR) announces that doctors at 500 U.S. cancer centers have been certified to prescribe Optune to treat newly diagnosed and recurrent glioblastoma patients.
    • Optune is a non-invasive device that creates alternating "wave-like" electric fields called Tumor Treating Fields (TTFields). It delivers its therapy to brain tumors through four transducer arrays placed on the scalp. In a large clinical study, it was as effective as chemo in treating recurrent glioblastoma.
    • Shares are up 10% premarket on modest volume.
    • The FDA approves Allergan's (NYSE:AGN) RHOFADE cream for the treatment of persistent facial redness (erythema) associated with rosacea in adults. Rosacea is a facial skin disorder of unknown origin that affects over 16M Americans.
    • RHOFADE is an alpha1A adrenoreceptor agonist. U.S. commercial launch will commence in May.
    • Cytori Therapeutics (NASDAQ:CYTX) announces that it will acquire certain assets from privately held Azaya Therapeutics.
    • Under the terms of the Purchase Agreement, Cytori will issue $2M in Cytori common stock up front and will also pay off ~$2M of Azaya’s trade payables. At closing, expected in late February, Cytori will also assume the obligation to make future payments to Azaya contingent on the achievement of certain milestones and asset-generated revenue. The aggregate milestones payable to Azaya will not exceed $16.25M and the aggregate royalty payment obligations based on product revenues will not exceed $100M.
    • Cytori says the deal will provide it with a proprietary liposomal nanoparticle technology that will boost its position in regenerative medicine.
    • Shares are up 11% premarket.
    • Anavex Life Sciences (NASDAQ:AVXL) is up 4% premarket, albeit on only 300 shares, in response to its announcement that the International Rett Syndrome Foundation has committed a minimum grant of $600K to finance a Phase 2 clinical trial assessing lead product candidate ANAVEX 2-73 for the treatment of Rett syndrome, a rare and severe neurological disorder that affects mostly girls.
    • The U.S.-based, randomized, double-blind, placebo-controlled study should commence this year and will last up to 12 weeks. ANAVEX 2-73 has Orphan Drug status for the indication.
    • Orally available ANAVEX 2-73 is a sigma-1 receptor (S1R) agonist. S1Rs play a key role in the modulation of neurotransmission.
    • Can-Fite BioPharma (NYSEMKT:CANF) inks a $5M capital raise with institutional investors. The offering consists of 2.5M American Depositary Shares (ADSs) at $2.00 per ADS. For each ADS purchased, buyers will receive an unregistered warrant to purchase 1/2 of an ADS at $2.25. The warrants will be exercisable six months following issuance and will expired 5 1/2 years from the issuance date. Closing date is January 24.
    • Shares are off 6% premarket on increased volume.
    • The FDA has acknowledged receipt of Shire plc's (NASDAQ:SHPG) Class 2 resubmission of its New Drug Application (NDA) seeking approval of SHP465 for the treatment of Attention Deficit Hyperactivity Disorder (ADHD). The action (PDUFA) date should be on or around June 20. A Class 2 resubmission provides for a six-month review.
    • It has been a long haul for SHP465. The  original NDA was submitted in July 2006. In May 2007, the agency send an Approvable Letter to the company requesting additional clinical studies and classified the resubmission as Class 2. The updated application includes data from 16 clinical studies involving over 1,600 subjects.
    • SHP465 [triple-bead mixed amphetamine salts (MAS)] is an oral stimulant medication under development for the treatment of ADHD. It is designed to control symptoms up to 16 hours.
    • Matinas BioPharma Holdings (OTCQB:MTNB) announces the successful completion of its tender offer to amend and exercise certain categories of existing warrants. Net proceeds of $12.7M will help the company to further advance its lead anti-infective product candidates, MAT2203 and MAT2501 beyond key clinical data readouts this year.
    • The FDA approves the use of AbbVie's (NYSE:ABBV) IMBRUVICA (ibrutinib) to treat marginal zone lymphoma, a type of B-cell lymphoma that accounts for ~12% of B-cell lymphomas.
    • IMBRUVICA was previously approved to treat mantle cell lymphoma, chronic lymphocytic leukemia and Waldenstrom's macroglobulinemia.
    • Related ticker: (NYSE:JNJ)
    • In a regulatory filing, Anthem (NYSE:ANTM) reports that it has extended the termination date for its proposed merger with Cigna (NYSE:CI) until and through April 30 citing the need for more time to complete the transaction.
    • PharmAthene (NYSEMKT:PIP) and privately held Altimmune ink an agreement to merge in an all-stock transaction. Under the terms of the deal, Altimmune will become a wholly owned subsidiary of PharmAthene although Altimmune shareholders will own 58.2% of the shares in the combined company. Shares will trade on the NYSE MKT under the symbol "ALT."
    • Altimmune CEO Bill Enright and CFO and EVP of Corporate Development Elizabeth Czerepak will continue to serve in their roles in the post-merger organization which should have ~$20M in quick assets.
    • The transaction will not affect PIP's previously announced one-time cash dividend of $2.91 per common share.
    • Zynerba Pharmaceuticals (NASDAQ:ZYNE) initiates a public offering of common stock. Price, volume and terms have yet to be announced. Shares are off 10% premarket but only on 50 shares. Yesterday's close was $22.46.
    • Evotec AG (OTC:EVOTF) announces that it has entered into an integrated drug discovery collaboration on an ion channel target with Asahi Kasei Pharma Corporation (OTCPK:AHKSY).
    • Under the terms of the agreement, Evotec will apply its integrated drug discovery platform to optimize hit compounds identified and selected from the Evotec compound library collection through a screening campaign executed at Evotec.
    • Financial details were not yet disclosed.
    • Heron Therapeutics (NASDAQ:HRTX) prices its $150M (~12.3M shares) public offering of common stock at $12.20, almost a 5% discount from yesterday's close of $12.80. Underwriters over-allotment is an additional $22.5M (1.84M shares).
    • Net proceeds will be used for general corporate purposes.
    • The global head of pharmaceuticals at GlaxoSmithKline (NYSE:GSK), Abbas Hussain, is leaving the company and will be replaced by Luke Miels from AstraZeneca (NYSE:AZN).
    • Hussain had been seen as a potential contender to take over from CEO Andrew Witty, who steps down at the end of March, but the job went to Glaxo's consumer health division boss Emma Walmsley.
  • Wednesday, January 18, 2017
    • The company is offering $150M of common stock, with the underwriters getting a greenshoe option for another 15% of shares sold.
    • HRTX was initially lower, but now flat in after hours action.
    • Mallinckrodt (NYSE:MNK) has agreed to fork over $100M to settle FTC and state charges that it used its monopoly to jack up the price of Acthar gel by 2,165%. Under the terms of the settlement, the company must license the rights for synthetic Acthar alternative Synacthen withing 120 days. A monitor has been assigned to ensure that this happens.
    • Alaska, Maryland, New York, Texas and Washington will each receive $10M from the judgement plus $2M for attorney fees.
    • Source: Bloomberg
    • Previously: Mallinckrodt reverses, turns higher (Jan. 18)
    • Synthetic Biologics (NYSEMKT:SYN) perks up 3% after hours on average volume in response to its announcement that it has finalized the design of its Phase 2b/3 clinical trial assessing lead product candidate SYN-010 for the treatment of irritable bowel syndrome with constipation (IBS-C). The study should commence this quarter.
    • The 12-week, randomized, double-blind, placebo-controlled study will enroll ~840 subjects and will evaluate two dosages (21 mg, 42 mg) of SYN-010. The primary endpoint will be the improvement from baseline in overall weekly responders compared to placebo.
    • SYN-010 is a proprietary, modified-release formulation of the statin, lovastatin, which is intended to reduce methane production by certain gut microorganisms (M. smithii), believed to be the main cause of pain, bloating and constipation associated with IBS-C. 
    • A Massachusetts district court has granted CardiAQ's motion for pre- and post-judgement interest to be paid by alleged patent infringer Neovasc (NVCN -6%). The court awarded CardiAQ $20,675,154 in pre-judgement interest and assessed a running rate of $2,354.27 per day starting on November 16, 2016 until the judgement is satisfied unless, of course, Neovasc prevails on appeal.
    • All of the amounts are stayed pending the completion of the appeal process. Neovasc is already on the hook for $91M in damages so the total potential tab is ~$112M and counting.
    • Previously: Neovasc gets thumped in patent case, on the hook for $91M; shares plummet 41% (Nov. 1, 2016)
    • According to the NY Post, the FTC is prepping a suit against Mallinckrodt (MNK -8.3%) over jacking up the price of Achtar, which it lifted to $28K a vial after acquiring Questcor in 2014.
    • Posting on Facebook, Martin Shkreli suggests he was the whistleblower on MNK.
    • Responding just a few minutes ago, the company says it has entered a settlement agreement with FTC staff and is awaiting approval by the Commission.
    • Shares are currently under trading halt.
    • Thinly traded nano cap Neuralstem (CUR -1.8%) provides the latest example of the dangers of chasing "big pops" in biotech. The stock has completely retraced its 59% move on January 10 stoked by the issuance of a new patent covering its stem cells. Shares are currently exchanging hands at ~$3.79, slightly below the close of $3.81 on January 9.
    • Other recent "big pops" have also given up much of their gains: GenVec (GNVC -10.8%), down 47% from its 1/10 peak; Signal Genetics (SGNL +1.2%), down 41% from its 1/11 peak; EnteroMediics (ETRM -37%), down 82% from its 1/10 peak and Transgenomic (TBIO -15.3%), down 49% from its 1/13 peak.
    • Immunomedics (IMMU +3.2%) perks up average volume in response to its announcement of new data related to lead antibody-drug conjugate (ADC) candidate IMMU-132 (sacituzumab govitecan) in triple negative breast cancer (TNBC). The results, presented at the company's R&D day, will support a Biologics License Application (BLA) by mid-year.
    • On an interim basis in 100 TNBC patients treated with IMMU-132, median overall survival was almost 19 months with 81% showing tumor shrinkage from baseline. There were two complete responders (CR) and 23 partial responders (PR) (three more have yet to be confirmed). The disease control rate (CR + PR + those with stable disease) was 44% with a median duration of response of almost 11 months. Twenty patients are continuing treatment.
    • IMMU-132 is an ADC consisting of an monoclonal antibody that binds to a protein found on the surface of many types of cancer cells called TROP-2. Specifically binding to the cancer cell enables the precise delivery of the cytotoxic payload, SN-38, the active metabolite of the chemo agent irinotecan. Its value proposition is the ability to deliver the drug over repeated cycles of therapy since SN-38 is less toxic than other chemotherapies.
    • Reuters reports that Orthofix International NV (OFIX) has agreed to pay $14M to settle charges that it paid doctors in Brazil to boost sales and improperly booked revenue.
    • In a statement, the SEC said its "accounting failure was widespread and significant, causing Orthofix to make false statements to the public about its financial condition."
    • The first patient has been dosed in Tetraphase Pharmaceuticals' (TTPH -1.6%) Phase 3 study, IGNITE3, assessing once-daily intravenous eravacycline compared to ertapenem in patients with complicated urinary tract infections (cUTI). The potential indication is the second for the antibiotic candidate. Another Phase 3, IGNITE4, evaluating eravacycline compared to meropenem in complicated intra-abdominal infections is ongoing.
    • The co-primary endpoints of the non-inferiority study are the responder rates at the end-of-IV-treatment visit and at the test-of-cure visit.
    • Eravacycline is a fully synthetic tetracycline antibiotic.
    • Takeda Pharmaceutical (OTCPK:TKPYY) inks a global collaboration agreement with privately held Ovid Therapeutics to develop and commercialize Takeda's Phase 1-stage TAK-935 to treat rare pediatric epilepsies. A Phase 1b/2a study should commence this year.
    • Under the terms of the deal, Takeda received equity in Ovid and will be eligible for milestone payments. Development and commercialization costs will be equally shared as will profits. Takeda will lead commercialization in Japan with an option to lead in Asia and certain other geographies. Ovid will lead clinical development and commercialization in the U.S., Europe, Canada and Israel. Specific financial terms are not disclosed.
    • TAK-935 inhibits an enzyme called cholesterol 24-hydroxylase (CH24H) that is primarily expressed in the brain where it plays a key role in maintaining stable levels of cholesterol. It is believed that CH24H is involved in the over-activation of the metabolic pathway for glutamate, a neurotransmitter that plays a significant role in the initiation and spread of seizure activity.
    • IRADIMED CORPORATION (IRMD -19.3%announces its financial guidance for the full year and Q1 2017.
    • For 2017, Company expects revenue of $23.9M -$24.3M, GAAP EPS of $0.07 - $0.08 and non-GAAP EPS of $0.14 - $0.18.
    • For Q1, Company expects revenue of $5.2M - $5.3M, GAAP EPS of $(0.01) - $(0.02) and non-GAAP EPS of $0.00 - $0.01.
    • The Company also expects 2016 and Q4 revenues of ~$32.6M and $6.1M respectively.
    • The Company plans to release its Q4 results before the market opens on February 6.
    • Thinly traded nano cap Apricus Biosciences (APRI +122.5%) rockets north on a whopping 105x surge in volume in apparent response to its announcement that commercialization partner Ferring Pharmaceuticals has received regulatory approval in Mexico for Vitaros, an on-demand topical cream to treat men with erectile dysfunction (ED).
    • Mexico is the 26th country worldwide that has OK'd the product and the second in Latin America (Argentina).
    • Under its Vitaros distribution deal with Ferring, Apricus has received $4.5M upfront and a regulatory milestone of $1.6M. It is eligible to receive up to an additional $28M in milestones plus royalties on future net sales.
    • With the recent sign-off from the U.S. Federal Trade Commission, privately held Boehringer Ingelheim is set absorb Sanofi's (SNY -0.1%) animal health unit Merial, making it the number two player in the veterinary medicine field behind Zoetis (ZTS +0.2%). With Merck (MRK) and Eli Lilly (LLY +0.4%), the four firms control the bulk of the industry.
    • According to Handelsblatt Global's Siegfried Hofman, the concentration of market heft makes further consolidation unlikely, although Bayer (OTCPK:BAYRY +1.2%) is rumored to be amenable to divesting its animal health business. Merck would be a likely acquirer. Judging by other transactions, the deal would probably be valued between €6B - 8B.
    • Top dog Zoetis can't get complacent. Boehringer's Joachim Hasenmaier says, "We intend to fight for market leadership." Zoetis generates about 10% more revenue than Boehringer, but it is growing at a slower rate (3% vs 7%).