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BMY and MRK were down Friday 4.3%/3.9%, respectively—AZN’s approval in 1L-NSCLC (#msg-170426455) may have been the impetus for part of the selloff.
MRK and LLY have stayed near their highs. BMY and ABBV are still way off their lows,
ZEUS up on earnings (though much lower earnings) - has held up better than many:
https://finance.yahoo.com/news/olympic-steel-reports-third-quarter-203000767.html
BMY has probably been at the top this year, but MRK, LLY, and ABBV are all doing very well too. LLY has been pretty spectacular over the last few years. I
Three 1 million share option bets at 20, 22.50, and 30 strikes.
BMY sets all-time intraday and closing highs.
Location, Location Location - 17 rooms
https://www.howardhanna.com/Property/Detail/16800-Parkland-Drive-Shaker-Heights-OH-44120/NorthernOH/4371971
Treasury forwards are pricing in that two-year yields will be at about 2.29% by June, one basis point more than the expected yield on 10-year bonds in similar contracts. That gap is up slightly from 0.4 basis points on Friday, when the forward market priced in such an inversion in that segment of the yield curve for the first time since 2007.
ABBV continues to hit all-time highs. Has done it many times this year. I am sure that I am jinxing it now (seems to always happen).
The current FY 2022 estimates are not calling for a huge EPS decrease at CLF, X and NUE unlike ZEUS.
CLF --- FY 2022 EPS estimated flat with 2021 (~$5.40)
Like all the steel companies (NUE, X, CLF, etc), the estimates for 2022 earnings are for huge decreases. The average of the three analysts for ZEUS would put the p/e at ~15. I am willing to bet that the ZEUS earnings for 2022 will be better than the current estimates, even though it is very likely that they will be down from 2021. Many here are betting that the CLF 2022 earnings will be better than the current estimates.
The ZEUS 4th quarter earnings will be announced next week. The guidance will be interesting.
ZEUS raises dividend to ~1.5%. Still selling at 2-3 P/E.
https://finance.yahoo.com/news/olympic-steel-announces-increased-quarterly-130000322.html
I think that the lawyers want to be "lead plaintiffs" where they can get the highest fees. To qualify, they need the clients who suffered the most damage. JMO.
ZEUS - quite a quarter - wonder how long this will last - not many things selling for 2-3 p/e, depending on whether you annualized quarterly earnings or use TTM
https://finance.yahoo.com/news/olympic-steel-reports-record-third-203000107.html
ZEUS - incredibly cheap steel company (as are many in industry based on current earnings). Anyone follow and care to give negative analysis?
Barrons' article on BMY/CELG CVR
https://www.barrons.com/articles/how-shareholders-missed-out-on-a-potential-6-billion-in-bristol-myers-deal-for-celgene-51619790942?mod=past_editions
Bristol Myers’ Deal Sweetener for Celgene Looked Good at the Time. Why Shareholders Missed Out on an Extra $6 Billion.
By Josh Nathan-Kazis
April 30, 2021 9:55 am ET
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When Bristol Myers Squibb bought the biotech Celgene for $80 billion in late 2019, it tacked on a sweetener: If three experimental Celgene treatments received Food and Drug Administration approval on time, Bristol would pay an extra $9 a share, for a total of over $6 billion.
There was one catch: All three drugs had to be approved. If one of the approvals came a day late, the obligations issued by Bristol Myers (ticker: BMY), called contingent value rights, would pay nothing.
The three drugs were approved—but one approval came roughly a month past its deadline after pandemic-related travel restrictions delayed an inspection by the FDA. Bristol says it did all it could to win the approvals and isn’t paying.
“You have shareholders who lost $6 billion because of Covid,” says Tom Giovine, a former hedge fund manager who holds the CVR. “It’s insanity, when you think about it.”
Now, a group of CVR holders are preparing to fight. In a statement, their lead counsel, David Elsberg of the law firm Selendy & Gay, said that 469 holders, who together own a majority of the outstanding CVRs, had committed $50 million for litigation.
The original agreement had no clause to allow the investors to demand that an exception be made because of the pandemic. It did, however, require Bristol to undertake “diligent efforts” to meet the milestones.
Bristol said it wouldn’t speculate about possible litigation. The company said it believed it would have been able to meet the CVR timeline if not for the pandemic-related travel delays.
The dispute provides a lesson for investors. CVRs, glittering prizes often offered in biopharma acquisitions, rarely end in smiles and handshakes.
Swinging for the Fences
Selected acquisitions of biopharma firms for more than $1 billion since 2010 that included a CVR
Target
Acquirer
Date
CVR Description
Current Status
Celgene Bristol Myers Squibb Nov. 2019 $9 a share, all or nothing Cancelled
Genzyme Sanofi-Aventis April 2011 Up to $14 a share Settled for $315 million
Dyax Shire Jan. 2016 $4 a share, all or nothing Paid
Furiex Pharma Forest Labs July 2014 Up to $30 a share Paid out $10 a share
Achillion Pharma Alexion Pharma Jan. 2020 Up to $2 a share Active
Sources: FactSet; company reports
Biopharma deal makers use CVRs when they can’t agree on the value of an asset, so they set payments pegged to future milestones. They are a cousin to the earn-out provisions familiar from buyouts of tech start-ups.
But there is a key difference: Brian Quinn, a professor at Boston College Law School, notes that beneficiaries of earn-outs are often working for the acquirer when the milestones come up. “In most cases, it turns out that buyers just pay,” he says.
Not so in the case of CVRs.
The record of CVRs in biopharma acquisitions of billion-dollar public companies over the past decade or so is rocky, at best. Few appear to have fully paid out. Others have ended unhappily. Holders of a CVR that was created when Sanofi-Aventis, now Sanofi (SNY), bought the biotech Genzyme sued, claiming that the company had slow-walked the approval of a drug and then under-marketed it to intentionally miss milestones. Sanofi eventually settled for $315 million, though didn’t admit it did anything wrong.
Even among these CVRs, Celgene’s stands out. Few others trade on the public markets, as Celgene’s did, and few are all-or-nothing deals. Hedge funds built up substantial positions in the CVR, which generally traded at about a 70% discount to the $9 it would have paid.
All was going smoothly until mid-2020. The first of the three Celgene drugs, ozanimod, received FDA approval in March 2020. But soon Bristol began to warn in filings that the pandemic could derail the payout.
In May, Bristol said that the FDA had delayed its deadline to make a decision on the second drug, a cancer therapy known as liso-cel, until mid-November. That was still ahead of the CVR deadline of Dec. 31, but left little wiggle room when, in November, the FDA missed its own deadline after travel restrictions kept inspectors from visiting a Texas facility.
The inspectors eventually visited, but when Dec. 31 came, the FDA had yet to issue its approval, and on New Year’s Day, Bristol said that the CVR had “automatically terminated.”
The FDA approved liso-cel in February, and then the third Celgene drug, another cancer therapy called ide-cel, by its deadline.
It was too late for the CVR, which no longer trades on the New York Stock Exchange.
Since it was taken off the exchange, there has been some limited trading of the CVRs among institutions, with individual shares priced around $1.
As far as Bristol is concerned, the CVR is dead. But the holders of the CVR are far from done.
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“I do think there is a case here,” says Salim Syed, an analyst at Mizuho who covers the CVR. “There are a lot of question marks about it,” he says of liso-cel missing the CVR deadline.
In a note in early April, Syed flagged FDA documents that he said showed that the liso-cel approval delay wasn’t a result only of the pandemic, but of other pending issues as well. If that’s the case, that could reflect on whether Bristol did its best to meet the milestone.
In a statement, Bristol said it had done all it could. “We believe in the strength of our [new drug] filing for [liso-cel] and that the FDA would have been able to complete the review at the revised, extended [deadline] within the CVR timeline had it not been for Covid-related inspection delays,” the company said.
While the CVR holders might yet gain something, the takeaway for investors is clear: Those deal sweeteners aren’t always as juicy as they look.
$EYES - huge move on approval for product that may or may not get made - https://finance.yahoo.com/news/second-sight-medical-products-inc-130000781.html
$EARS Caveat Emptor Nearly a 4 bagger on some PRE CLINICAL In Vitro data released using wording typically seen in reporting Ph III results
Anyone else think that it is weird that page 35 of the ENTA slide deck lists 12 months results from 09/30/19 year instead of current year? At least gives the 09/30/20 quarterly results.
Guess it could be to emphasize how good the year was. But since it very unlikely that that year will ever be duplicated given the price competition for HCV drugs and the general decline in new patients, it really seems out of place.
This has traded sideways for so long it's hard to imagine it ever trading up again, even with a clean label,
I will take the other side of the undervalued position.
1. HCV cases are on the rise and still have a healthy run rate - but revenue will continue to decrease and will be nowhere enough to cover expenses but agree that current cash will cover deficit for many years
2. RSV vaccines are a very long way out with a poor track record and there are bound to be many cases still even in a post vaccine world. Also testing for viruses (RSV included) is going to ramp up in a post covid world - true but when and what revenue is likely
3. ENTA has as good a chance as anyone in HBV - again true, what is the chance - pretty unlikely - I am not optimistic
4. The follow on NASH drug may have legs - and it may not, which is much more likely
5. You would think a successful antiviral company in the midst of a pandemic might have some added appeal overall (not just interest from pharma but also public funding, etc.) - it does but again what is the likelihood and when and what revenue is likely
IMO, the most convincing argument for undervaluation is how IPOs are being priced, Having lived through the tech IPOs of '99-'01, I doubt that these IPOs will end well either.
Seven Eleven buys Speedway from Marathon Petroleum - https://finance.yahoo.com/news/marathon-petroleum-sells-speedway-7-223530563.html
Quote:
EYES decided to remain in business after all
My read is a little different - more like "EYES can't do a deal fast enough to not run out of cash, and raises enough to last a few more months, while trying to get someone to commit to continue research"
No real ability to "stay in business"
JMO
Add Sweden and Belgium - higher than US
Besides Sweden, why Britain and Belgium in particular?
Is EYES worth salvaging, IYO?
EYES decided to remain in business after all
That seems to be why people are late to present themselves to the ER. A $20 pulse-ox meter can be your best tool at this point.
Page 43 of GILD slide deck shows GILD at 61% of US HCV market - up 19% from Jan 19. Also interesting is that patient starts have stayed very high (JMO). Since US HCV revenue flat YOY when starts are up >30%, it must be from lower pricing (generic).
Besides Sweden, why Britain and Belgium in particular?
Good analysis for "extra" deaths worldwide -
NEW: we have updated our excess-mortality tracker with the latest data for several countries (the page is free to read). In some places, the overall number of deaths now seem to be falling. (1/11) pic.twitter.com/IyrVhcbSZn
— James Tozer (@J_CD_T) April 28, 2020
That's what I did, but I would take Metro-North into Grand Central and then walk to work.
Subway -- especially the percentage of the population who take it. Packed to the gills.
The virus is a hoax
New lifetime low
Coronavirus vs SARS/MERS/Ebola/Swine Flu 😬 https://t.co/iRmeV0kWoI
— Dave Jones (@WelshGasDoc) February 25, 2020
Yes, but there is essentially ZERO risk given the nice cash flow from Hep-C treatment using Mavyret.
what does bother me is that they mis-priced it and might have to start over.
Why do you think that? It is a done deal. I am not aware of any offering that goes through and is pulled for price issues. Lots of IPOs that never regained offering price. Nothing here to change it. People who bought offering have made bad buy (so far), nothing more.
*ABBV’s HCV sales for the first three quarters of 2019 were $2.297B ($815M + $784M + $698M); $3.0B - $2.297B = $703M.