Almost all of the news in the obesity race has been made recently by three small biotech companies -- Arena Pharmaceuticals (ARNA), Vivus Inc. (VVUS) and Orexigen Therapeutics (OREX), but yesterday it was mid-cap Amylin Pharmaceuticals (AMLN) that signed the first partnership in what was originally perceived to be a three-horse race.

Amylin and Takeda Pharmaceutical Company Limited (TKPHF.PK) entered into a worldwide exclusive license, development and commercialization agreement to co-develop and commercialize pramlintide/metreleptin and davalintide, two phase II compounds for the treatment of obesity. As part of the transaction, Amylin will receive a one-time up-front payment of $75 million from Takeda.

For all the debate about possible reform to the U.S. medical system, it is easy to forget that the majority of major innovations in drugs and medical devices come from America. It is worth remembering that even with all the problems troubling the health care system, innovation continues to be a bright spot. Three of the biggest gains among individual stocks on Monday were from U.S. companies in the pharmaceutical sector largely because of this sort of innovation..

The biggest winner in today’s action are investors in Human Genome Sciences (HGSI) which is up more than 30% in afternoon trading following the completion of their second successful late stage clinical trials for a treatment of Lupus. We first wrote about this company after the completion of their first major trial on this drug in July (HGSI’s Lupus Drug Shows Great Potential), and the stock is up huge again after positive results for this difficult to treat disease. The stock is hitting multi-year highs above $24, and the stock is up more than 600% since the first trial was completed. With a lack of alternatives for those that suffer from Lupus, HGSI’s Benlysta could be a major source of revenue for the company if it can now get approval from regulators.

Usually I don't dwell much on Amylin (AMLN), because with at least 15 sell-side analysts covering it and all kinds of press, I don't see that the investing community is clamoring for another opinion. However, as of Monday a few good little obesity calls do seem to be getting lost in the hullabaloo.

Obesity Partnership For AMLN with Takeda

• King: Break up the banks! Bank of England Governor Mervyn King stepped up his call to break apart Britain's largest banks, saying more stringent capital requirements won't shield taxpayers from having to bail out more too-big-to-fail banks in the future. "The massive support extended to the banking sector around the world, while necessary to avert economic disaster, has created possibly the biggest moral hazard in history," King said in a speech (.pdf) late Tuesday. His comments were at odds with those of Chancellor of the Exchequer Alistair Darling, who said yesterday focusing on capital rules may be enough to ward off future crises. Meanwhile, on this side of the Atlantic, Paul Volcker keeps pounding the desk to split up banks, but no one's listening.
• State Street slapped with fraud suit. The California AG's office charged State Street (STT) with fraud Tuesday, accusing it of bilking the state's two largest pension funds - Calpers and Calstrs - of $57M, and seeking $200M in overcharges and penalties (complaint (.pdf)). The lawsuit stems from an inquiry launched after a whistleblower claimed State Street secretly and substantially marked up the price of its currency trades. State Street beat Q3 earnings estimates Tuesday, but shares dived 8.4% on news of the lawsuit and a sobering outlook.
• Yahoo defies bears. Shares of Yahoo (YHOO) are up 4.6% premarket after the internet giant beat Q3 earnings estimates handily with the help of some serious cost cutting ($0.13/share vs. $0.06), while revenue was steady from last quarter at $1.13B. "There's a change occurring in Yahoo," CFO Tim Morse said on Yahoo's earnings call (transcript), "that will value that kind of work - that good old-fashioned, get-your-hands-dirty kind of find ways to take costs down or make sure that they don't go up as much as they otherwise would have - type work." Analysts were impressed with the quarter, but said the real test of Yahoo's massive branding initiative would come in Q4. Bernstein's Jeffrey Lindsay summed it up: "The patient is off life support and back in the recovery ward. But it is certainly not out playing soccer again."
• Shedding light on the dark pools. In an effort to bring transparency to famously opaque "dark pool" off-exchange trading cliques on which Wall Street firms execute some of their largest trades, the SEC will reportedly today propose slashing the percent of daily volume in a company's shares that can be executed on the systems before quotes must be publicized to 0.25% from 5%. The move would force dark pools to either bring their prices in line with open markets, or risk losing their order flow. Trading executives warn sweeping rule changes could ultimately hurt the investors regulators are trying to empower.
• AT&T sues LCD makers over price fixing. AT&T (T) sued Samsung Electronics, LG Display (LPL), AU Optronics (AUO) Corp. and other LCD manufacturers, claiming they colluded to fix prices of panels sold in the U.S. "The conspiracy included communications and meetings in which defendants agreed to eliminate competition and fix the prices of LCD panels that were ultimately incorporated into LCD products that they knew would be sold in California and the U.S.," according to the complaint.
• Logi offer: does it make sense? An obscure hedge fund - logi Energy - said it offered to buy $1B of CIT Group's (CIT) debt, but wouldn't identify its source of capital. Logi said the deal could give CIT "wiggle room" as it works to sidestep bankruptcy. CIT wouldn't comment on whether it was seriously considering the offer.
• Volvo sale hits snag. Sources say China carmaker Geely's $2B attempt to buy Ford's (F) Volvo unit is in danger of stalling over disagreements about intellectual property rights. The impasse centers on Ford's concerns about sharing its proprietary technology and plans for new products.
• Morgan mulls giving away Crescent. Sources say Morgan Stanley (MS) may hand over its Crescent Real Estate Equities unit to Barclays (BCS), to whom the business owes $2B which comes due Nov. 2. Morgan bought Crescent for $6.5B in August 2007, and had planned to put its assets into real estate investment funds, but was left holding the bag when markets seized up.
• IRS watchdog says homebuyer plan fraught with fraud. The IRS's internal watchdog will warn the agency again about fraud in the multibillion dollar homebuyer tax credit program. The IRS faces significant challenges in preventing individuals from scamming the tax credit program.
• JPMorgan, Goldman cornering the M&A market. According to a study by Bloomberg News, JPMorgan (JPM) edged out Goldman Sachs (GS) in M&A advisory fees ($1.26B vs. $1.22B) for the first time since 2000. By deepening relationships with corporate clients, the two have created a deep moat around M&A counselling. "It's going to be very difficult for upstart or broad-based firms to come in and usurp what many believe are the insurmountable leads that Goldman and JPMorgan have over competitors," one analyst says.
• Business spending perks up. Industrial bellwether Caterpillar (CAT) joined the ranks of those who say the worst is behind us, as corporate buyers slowly begin reinvesting in their businesses. While Caterpillar's sales were 44% lower than a year ago, CFO David Burritt said he sees "encouraging signs that indicate a recovery may be under way," and predicted sales could rise 10-25% next year (read Caterpillar's Q3 earnings call transcript). Business spending accounts for about 9.5% of U.S. GDP - a fraction of the 68.2% accounted for by consumer spending - but still a potential catalyst for recovery.
• Get ready for pay as you play internet. Internet service providers including AT&T (T) and Time Warner Cable (TWC) are considering returning to usage-based pricing for internet, amid a surge in traffic as more people watch videos online, and after a push by the FCC to force ISPs to treat all web traffic equally. "Some type of usage-based model, for those customers who have abnormally high usage patterns, seems inevitable," an AT&T spokesman said, declining to provide details on the company's exact plans.

Earnings: Wed. Before Open

• Air Products and Chemicals (APD): FQ4 EPS of $1.14 beats by $0.02. Revenue of $2.13B (-21.6%) in-line. (PR)
• AirTran (AAI): Q3 EPS of $0.08 in-line. Revenue of $597M (-11.3%) vs. $600M. Shares -0.9% premarket. (PR)
• Allegheny Technologies (ATI): Q3 EPS of $0.01 misses by $0.02. Revenue of $698M (-49.9%) vs. $738M. Says the worst appears to be behind us, but many customers remain cautious due to the uncertain global economy and are keeping inventories low. Shares -8.8% premarket. (PR)
• Altria (MO): Q3 EPS of $0.48 beats by $0.01. Revenue of $4.32B (+0%) vs. $4.66B. Shares -1.4% premarket. (PR)
• Boeing (BA): Q3 EPS of -$2.23 misses by $0.11. Revenue of $16.69B (+9.1%) vs. $17.16B. Sees full-year EPS of $1.35-1.55 vs. $1.54 consensus. "The 787 cost reclassification and the 747 charge for increased costs and difficult market conditions clearly overshadowed what continues to be otherwise solid performance across our commercial production programs and defense business, We look forward to getting the 787 and 747-8 in the air soon and moving forward with flight test and certification for these two important programs." Shares -2.5% premarket. (PR)
• Deutsche Bank (DB): Q3 net income of €1.4B vs. consensus of €811M and last year's €435M. Pretax profit of €1.3B vs. consensus of €1.19B. Tier 1 capital ratio rose to 11.7% from 11% in Q2. Shares -2.3% premarket. (Bloomberg)
• Continental (CAL): Q3 EPS of $0.02 beats by $0.08. Revenue of $3.32B (-20.2%) in-line. (PR)
• Elan (ELN): Q3 EPS of -$0.06 beats by $0.07. Revenue of $399M (-19.5%) vs. $382M. (PR)
• Eli Lilly (LLY): Q3 EPS of $1.20 beats by $0.18. Revenue of $5.56B (+6.8%) vs. $5.41B. Gross margin as a percent of total revenue increased by 3.7% to 81.1%. Shares +0.4% premarket. (PR)
• FLIR Systems (FLIR): Q3 EPS of $0.38 beats by $0.03. Revenue of $286M (+3.2%) vs. $281M. Shares +2.9% premarket. (PR)
• Freeport-McMoRan Copper & Gold(FCX): Q3 EPS of $2.07 beats by $0.73. Revenue of $4.14B (-10.2%) vs. $4.24B. Reinstates dividend due to strong performance. Shares -0.1% premarket. (PR)
• KeyCorp (KEY): Q3 EPS of -$0.50 misses by $0.09. Takes a $733M provision for loan losses, which KEY says drove the miss. Average deposits were +6% (+$3.6B). Shares -4.7% premarket. (PR)
• Knight Capital Group (NITE): Q3 EPS of $0.32 misses by $0.07. Revenue of $300M (+24.5%) vs. $282M. Shares -6.4% premarket. (PR)
• Manpower (MAN): Q3 EPS of $0.26 beats by $0.09. Revenue of $4.19B (-26%) vs. $3.95B. Sees Q4 EPS of $0.17-0.27 vs. $0.28. "We continued to experience sluggish demand for our services as the labor markets throughout the world were hampered by lack of demand for companies' products and services... the uptick in revenue is muted at this time compared to previous recoveries." Shares -5.3% premarket. (PR)
• Morgan Stanley (MS): Q3 EPS of $0.38 beats by $0.11. Revenue of $8.7B vs. $6.99B. Assets under management $386B vs. $483B last year. Declares $0.05 quarterly dividend. Shares +0.9% premarket. (PR)
• Northern Trust (NTRS): Q3 EPS of $0.72 misses by $0.12. Revenue of $928M (-1.2%) vs. $985M. Shares -5% premarket. (PR)
• Northrop Grumman (NOC): Q3 EPS of $1.29 beats by $0.11. Revenue of $8.73B (+4.1%) vs. $8.58B. (PR)
• Omnicom Group (OMC): Q3 EPS of $0.53 in-line. Revenue of $2.83B (-14.4%) in-line. (PR)
• Penn National Gaming (PENN): Q3 EPS of $0.33 misses by $0.02. Revenue of $620M (+0.4%) vs. $642M. Shares -8.2% premarket. (PR)
• St. Jude Medical (STJ): Q3 EPS of $0.59 beats by $0.01. Revenue of $1.16B (+7%) in-line. Sees Q$ EPS of $0.61-0.63 vs. $0.66. "We are lowering our expectations for our fourth quarter results to accommodate the issues we are experiencing from a limited portion of our customer base in the U.S., but we are confident that our long term growth program is on track." Shares -0.9% premarket. (PR)
• U.S. Bancorp (USB): Q3 EPS of $0.30 beats by $0.03. Revenue of $4.25B (+2.2%) vs. $4.12B. Says credit deterioration moderated somewhat. Shares +0.8% premarket. (PR)
• Wells Fargo (WFC): Q3 EPS of $0.56 beats by $0.19. Revenue of $22.47B (+116.5%) vs. $21.63B. Q3 chargeoffs of $5.1B, up from $4.4B in Q2. Sees credit losses peaking in 2010, "with consumer losses potentially peaking in first half of the year and gradually declining, absent further economic deterioration." Shares -1% premarket. (PR)

Earnings: Tue. After Close

• Amylin Pharmaceuticals (AMLN): Q3 EPS of -$0.19 beats by $0.10. Revenue of $211M (-3%) vs. $219M. Shares -1.1% AH. (PR)
• Canadian National Railway Company (CNI): Q3 EPS of C$0.94. Revenue of C$1.85B (-18%) in-line. Shares -1.6% AH. (PR)
• C.H. Robinson Worldwide (CHRW): Q3 EPS of $0.57 beats by $0.01. Revenue of $1.95B (-16%) vs. $1.96B. Shares -0.8% AH. (PR)
• Cree (CREE): FQ1 EPS of $0.30 beats by $0.08. Revenue of $169M (+20%) vs. $165M. Sees Q2 EPS of $0.28-0.30 vs. $0.23 and revenue of $180M-190M vs. $173M. Shares +3.6% AH. (PR)
• Gilead Sciences (GILD): Q3 EPS of $0.78 beats by $0.11. Revenue of $1.8B (+31%) vs. $1.75B. Shares -2.2% AH. (PR)
• Infinera (INFN): Q3 EPS of -$0.03 beats by $0.09. Revenue of $83M (+3%) vs. $80M. Shares +2.5% AH. (PR)
• Intuitive Surgical (ISRG): Q3 EPS of $1.64 beats by $0.16. Revenue of $280M (+19%) vs. $258M. Shares -5.9% AH. (PR)
• Nabors Industries (NBR): Q3 EPS of $0.18 beats by $0.02. Revenue of $804M (-44%) vs. $820M. Shares flat AH. (PR)
• Polycom (PLCM): Q3 EPS of $0.31 misses by $0.01. Revenue of $243M (-16%) vs. $236M. Shares -5.2% AH. (PR)
• SanDisk (SNDK): Q3 EPS of $0.75 beats by $0.49. Revenue of $935M (+14%) vs. $788M. Shares +0.2% AH and halted. Updated 4:30 p.m.: Shares resume trading, +10.2% AH. (PR)
• Seagate Technology (STX): FQ1 EPS of $0.58 beats by $0.11. Revenue of $2.66B (-12%) vs. $2.62B. Shares -2.9% AH. (PR)
• SLM Corp. (SLM): Q3 EPS of $0.26 beats by $0.22. Net interest income after provision for loan losses of $204M (-29%). Shares +7.8% AH. (PR)
• STMicroelectronics (STM): Q3 EPS of -$0.23 misses by $0.14. Revenue of $2.28B (-16%) vs. $2.25B. Shares +3.7% AH. (PR)
• Stryker (SYK): Q3 EPS of $0.69 in-line. Revenue of $1.65B (+1%) vs. $1.62B. Shares +3.5% AH. (PR)
• Tupperware (TUP): Q3 EPS of $0.54 beats by $0.12. Revenue of $514M (flat) vs. $486M. Raises full-year EPS guidance to $2.84-2.89 from $2.59-2.64, vs. $2.73. Shares +4.5% AH. (PR)
• Walter Industries (WLT): Q3 EPS of $0.45 beats by $0.18. Revenue of $278M (-10%) vs. $223M. Shares +1.7% AH. (PR)

Today's Markets

Overseas markets sustained losses Wednesday. U.S. futures moved lower overnight.

Q3 2009 Earnings Call

October 20, 2009 5:00 pm ET

The global economy seems to be on the road to recovery, although it is a jobless recovery so far, according to economic indicators. Although there were no major deals during the past week, biotech companies kept busy with a bevy of smaller licensing agreements, drug discovery collaborations, and M&A activity. And Facet Biotech (FACT) responded to partner Biogen Idec’s (BIIB) $355 million hostile takeover bid with a strongly worded rejection.

Although a controversial topic, activist hedge funds and private equity firms typically use a small equity stake in an underperforming company to put public pressure on its management and board of directors with the goal of increasing stakeholder value through cost cutting, changes in corporate strategy or management, capital restructuring, asset divestiture and other tactics. Biotechnology investors with recent activist roles include Biotechnology Value Fund, Third Point LLC, Eastbourne Capital Management, and DellaCamera Capital Management among others.

Perhaps the most prominent shareholder activist in biotechnology is billionaire investor Carl Icahn, largely through his Icahn Management LP investment fund. He has created value for some biotechnology stakeholders, including a very quick return with MedImmune, Inc. and a longer-term payoff with ImClone Systems, Inc.

Q2 2009 Earnings Call Transcript

July 21, 2009 5:00 pm ET

• Bernanke defends Fed independence. Bernanke gave his semi-annual monetary policy testimony in the House of Representatives yesterday, and continues today with testimony to the Senate. Bernanke stressed the importance of central bank independence, warning against the dangers of too much political scrutiny of the Federal Reserve, and told lawmakers they should focus on cutting 'unsustainable' budget deficits. In terms of the economy, Bernanke pointed to 'notable improvements' in recent months, although financial markets 'remain stressed,' and downplayed the risk of inflation. Supportive policies will continue to be necessary to prevent rising unemployment from hurting a recovery. (Read Bernanke's testimony)
• Apple shines on profit beat. Apple (AAPL) reported better-than-expected quarterly earnings (see details below) as price cuts helped attract more first-time buyers for Macintosh computers. Mac sales rose 4% in the quarter, compared to an industrywide decline of 3.1%. iPhone sales beat estimates as well, increasing sevenfold to 5.2M units. iPod sales slipped, as executives noted "we expect our traditional MP3 players to decline over time as we cannibalize ourselves with the iPod Touch and the iPhone."
• China plans buying spree. China plans to use its foreign exchange reserves, the largest in the world, to speed overseas expansion and acquisitions by Chinese companies. Premier Wen Jiabao said the reserves should be used to "hasten the implementation of our ‘going out’ strategy," the first time an official has publicly articulated a policy of getting Chinese companies, particularly large state-owned industrial groups, to buy offshore assets.
• Reining in the credit raters. The Treasury released its plan to reform credit rating agencies, sending a draft bill to Congress where financial overhaul efforts are being slowed by growing doubts among lawmakers. The plan tries to limit conflicts of interest by preventing consultation between rating agencies and the companies they rate, and by requiring companies to disclose 'pre-ratings' to investors to limit companies' ratings shopping. The Treasury also wants to empower the SEC to set up a special office for overseeing rating agencies. (Read the Treasury's fact sheet)
• Now you C-it, now you don't. CIT Group (CIT) unveiled more of its restructuring plan that will significantly shrink the company's size, including the possible sale of its Utah bank, its rail-car and aircraft-leasing arm and its credit/cash-advance business. However, the company warned in an SEC filing that failure to complete any of the outlined steps could still land the lender in bankruptcy court. CIT received an expensive $3B emergency loan from bondholders but faces another $7B in debt coming due in the next year. In a further setback, some companies have already begun to cut ties with CIT, including Microsoft (MSFT), which terminated a vendor-financing agreement with CIT yesterday. (Read CIT's 8-K filing)
• P&G closes in on drug unit sale. Procter & Gamble (PG) is reportedly moving closer to the sale of its prescription-drug unit, and is in late-stage discussions with several firms, including specialty drug maker Warner Chilcott (WCRX) and Cerberus Capital Management. The unit could fetch around $3B. In a sign that acquisition financing may be easing, sources say Cerberus has already lined up preliminary financing from several Wall Street banks.
• Recession hurts Yahoo earnings. Yahoo (YHOO) reported quarterly earnings Tuesday evening (see details below), posting a 13% fall in overall revenue amid steep declines in both display ads and graphical ads. Cost-cutting allowed the company to post a year-on-year profit gain of 7.8%, which CFO Timothy Morse said was "not too bad in this type of environment," though he admitted the future looks cloudy as the recession exacerbates some long-standing Yahoo problems related to its search business and flagging brand. Separately, Yahoo is reportedly looking to sell HotJobs and Yahoo Small Business as part of its efforts to shed non-core assets.
• Exelon moves on. Exelon (EXC) dropped its $7.7B hostile bid to acquire NRG Energy (NRG) after shareholders rejected Exelon's slate of directors. The four directors nominated by NRG gained 75% approval. Exelon CEO John Rowe said "the NRG shareholders have spoken, and Exelon will move on."
• New Freddie CEO, again. Freddie Mac (FRE) confirmed Charles E. Haldeman Jr. will be the company's new chief executive, becoming Freddie's fourth CEO in less than a year.
• MBA apps rise. Mortgage applications rose 2.8% last week, MBA said. The average interest rate on 30-year fixed-rate mortgages rose to 5.31% from 5.05%.
• Retail sales. Chain store sales fell 1.7% in the first two weeks of July, Redbook said, worse than the -0.9% expected. According to ICSC, weekly sales were up 0.5%, with the increase spread across most segments.
• Chicago Fed index still negative. The Chicago Fed's National Activity Index was -1.8 in June, vs. -2.3 in May and -2.27 in April. All four broad categories of indicators continued to make negative contributions to the index, with employment and housing-related indicators leading the laggards.
• Consumer confidence. ABC's Consumer Confidence Poll came in at -50, up from last week's -51 but on its fifth week at -50 or below. Just 22% of Americans say it's a good time to buy things.

Earnings: Wednesday Before Open

• Air Products & Chemicals (APD): FQ3 EPS of $1.05 beats by $0.07. Revenue of $2B (-28.1%) vs. $2.1B. (PR)
• AirTran (AAI): Q2 EPS of $0.34 beats by $0.02. Revenue of $604M (-12.9%) vs. $601M. (PR)
• Allegheny Technologies (ATI): Q2 EPS of $0.03 in-line. Revenue of $710M (-51.4%) vs. $817M. (PR)
• Altria Group (MO): Q2 EPS of $0.50 beats by $0.03. Revenue of $6.7B (+32.9%) vs. $5.35B. (PR)
• Bank of New York (BK): Q2 EPS of $0.46 misses by $0.07. Revenue of $3.2B (-17.7%) vs. $3.3B. (PR)
• Boeing (BA): Q2 EPS of $1.41 beats by $0.20. Revenue of $17.15B (+1.1%) in-line. Shares +2.2% premarket (7:45 ET). (PR)
• Delta Air Lines (DAL): Q2 EPS of -$0.24 beats by $0.05. Revenue of $7B (+27.3%) in-line. (PR)
• Eli Lilly & (LLY): Q2 EPS of $1.12 beats by $0.10. Revenue of $5.3B (+0.8%) in-line. Raises FY '09 EPS guidance to $4.20-4.30 vs. $4.00-4.25 previous guidance. (PR)
• Entegris (ENTG): Q2 EPS of -$0.20 in-line. Revenue of $83M (-44.2%) vs. $74M. (PR)
• Gentex (GNTX): Q2 EPS of $0.09 beats by $0.04. Revenue of $117M (-31.2%) vs. $115M. (PR)
• Host Hotels & Resorts (HST): Q2 FFO of $0.27 beats by $0.03. Revenue of $1.1B (-23.3%) in-line. (PR)
• Illinois Tool Works (ITW): Q2 EPS of $0.36 beats by $0.02. Revenue of $3.4B (-25.5%) in-line. (PR)
• KeyCorp (KEY): Q2 EPS of -$0.69 vs. consensus of $0.41 (may not be comparable). Loss largely stems from increase in loan loss provisions, which rose to $2.5B (3.53% of total loans) in Q2 vs. $1.4B (1.87% of total loans) in the year-ago period. (PR)
• Knight Capital Group (NITE): Q2 EPS of $0.52 beats by $0.12. Revenue of $314M (+65.4%) vs. $259M. (PR)
• Morgan Stanley (MS): Q2 EPS of -$1.37 misses by $0.88. Revenue of $5.4B (-11.3%) in-line. Shares -4.9% premarket (8:20 ET). (PR)
• Northern Trust (NTRS): Q2 EPS of $0.95 beats by $0.40. Revenue of $1B (-4.5%) in-line. (PR)
• PepsiCo (PEP): Q2 EPS of $1.06 beats by $0.06. Revenue of $10.6B (-3.2%) vs. $11B. (PR)
• Pfizer (PFE): Q2 EPS of $0.48 beats by $0.01. Revenue of $11B (-9.4%) in-line. (PR)
• SEI Investments (SEIC): Q2 EPS of $0.22 beats by $0.01. Revenue of $252M (-23.5%) vs. $250M. (PR)
• St. Jude Medical (STJ): Q2 EPS of $0.63 in-line. Revenue of $1.2B (+4.2%) in-line. (PR)
• Suncor Energy (SU): Q2 EPS of C$0.20 misses by C$0.13. Cash flow from operations C$342M vs. C$1.4B in Q2 2008. (PR)
• SunTrust Banks (STI): Q2 EPS of -$0.41 beats by $0.11. Revenue of $2.2B (-15.6%) in-line. (PR)
• TCF Financial (TCB): Q2 EPS of $0.08 misses by $0.02. Revenue of $297M (+8.3%) vs. $264M. (PR)
• US Bancorp (USB): Q2 EPS of $0.12 beats by $0.02. Revenue of $4.2B (+7.1%) vs. $4B. (PR)
• USG (USG): Q2 EPS of -$0.41 misses by $0.04. Revenue of $829M (-33.7%) vs. $956M. Shares -5.9% premarket (8:45 ET). (PR)
• Wells Fargo (WFC): Q2 EPS of $0.57 beats by $0.23. Revenue of $22.5B (+28%) vs. $20.5B. Shares -7.1% premarket (8:20 ET). (Wells Fargo News Release (.pdf))
• Whirlpool (WHR): Q2 EPS of $1.04 beats by $0.53. Revenue of $4.2B (-17.9%) in-line. (PR)

Earnings: Tuesday After Close

• Advanced Micro Devices (AMD): Q2 EPS of -$0.62 misses by $0.15. Revenue of $1.18B (-13.1%) vs. $1.13B. Gross margin was 37%, down from 43% in Q1. "While we increased cash, exceeded our revenue plan and reduced operating expenses in the second quarter, gross margin was disappointing." (PR)

My two most recent books, Game Over and The Coming Economic Collapse were in part inspired by the work of Joseph Tainter, author of The Collapse of Complex Societies.

At last, the uncertainty regarding Sanofi-Aventis' (SNY) Lantus (generic name insulin glargine) seems to be over. Today, the company released a statement by a board of experts regarding the potential link of Lantus with increased cancer risk. They have come to the conclusion that all the four cases had significant methodological limitations and shortcomings, thus making the results inconclusive.

As a reminder, in the month of June, a study by the European Association for the Study of Diabetes observed that Lantus (generic name insulin glargine) increases the risk of cancer in diabetics taking the drug. The study, carried out on 127,000 patients in four European countries found that out of every 100 patients using Lantus for about 1 1/2 years, one additional person developed cancer.

Shares of the French drugmaker are getting pummeled over at least three analyst reports identifying a leak about a study or studies that could go public soon. Their research suggests the data is related to a suspected or "theoretical" higher cancer risk associated with SNY's Lantus.

Sanofi-Aventis (SNY) issued a statement defending the safety of Lantus, which it claims has been established in large clinical trials and in the monitoring of patients who've used it over the several years it's been on the market.

Sentiment

Stocks are trading mixed in a day of relatively uneventful action Friday. Economic data was in focus early. Before the opening bell on Wall Street, stock index futures showed little reaction to the latest personal/income spending report. Released at 8:30 a.m. eastern time, the data showed spending increased by .3 percent and incomes up 1.4 percent in May. Economists were looking for .3 percent gains in both incomes and spending.

A little later, the University of Michigan sentiment index showed some improvement. The index finished the month of June at 70.8, up from 69 earlier in the month and better than the 69 economists had predicted. Yet, the market showed little reaction to the news.

By Jeffrey Martini, PhD., Vice President of MD Becker Partners LLC

Approximately 250 million people worldwide have been diagnosed with diabetes mellitus and that number is growing with the increasing obesity population. Broadly, patients with diabetes are characterized by elevated blood glucose levels that result from either insufficient insulin secretion (type-1 diabetes) or ineffective insulin action (type-2 diabetes). The market for treating patients with diabetes is large and complex and is valued at over $90 billion (Ref 1).

Biogen Idec (BIIB) over-explained its drug development, then called for an extra long recess, in order to delay the shareholder vote whereby activist investor Carl Icahn was trying to repeat his success with Amylin (AMLN) Pharmaceuticals and add four representatives to Biogen Idec's board. It appears BIIB might have been contacting major institutional shareholders and trying to convince them to change their minds. Does the change of power for billion dollar companies really come down to whoever can delay a vote by boring an audience by talking amino acids all morning? Playground tactics in the world of biotech.

Nevertheless, in the end, Mr. Icahn managed to get two of his four nominees on the Biogen Idec board despite the Biogen filibuster. With the recent Amylin victory (added 2 board members there as well), Mr. Icahn is now clearly on a roll, undoubtedly helped by collapsed stock markets and biotech share prices which make any argument for management change more compelling. Still, the benefit of market sentiment aside, Icahn's victories are likely to be positive for AMLN and BIIB's future realization of value and stock price performance. It's nice to know that someone with influence is clearly lined up with shareholder interests, given Mr. Icahn's sizable stake. This is better than can be said for most companies.

By Jason Napodano, CFA

This past weekend, Amylin Pharmaceuticals (AMLN) presented several abstracts and oral presentations at the American Diabetes Association (ADA) meeting in New Orleans. At the meeting, Amylin presented long-term follow-up data from the 74-week open label portion of the DURATION-1 program that demonstrated clear and sustained improvement in HbA1c for patients taking exenatide once weekly long-acting release (LAR).

Last week it was announced that activist investors Carl Icahn and Eastbourne Capital Management had successfully elected Dr. Alexander J. Denner and Dr. Kathleen Behrens, respectively, to the board of directors of Amylin Pharmaceuticals (AMLN). On Tuesday, the activists received even more good news when they learned that among the two directors who lost their seats was Joseph C. Cook, Jr., Amylin's Chairman. Industry analysts expect the activist investors to use their new power to influence and alter the strategic direction of the company.

Throughout the heated proxy contest, Mr. Icahn had been very critical of Mr. Cook and had called for his resignation. Mr. Cook has been the Chairman of the Board since March 1998 and currently serves as chair of the company’s Finance Committee. He served as Chief Executive Officer of Amylin from March 1998 until September 2003.