US Studies How To Guarantee All $18 Trillion In US Bank Deposits

 After repeated laments by the likes of Bill Ackman, who most recently said that "I continue to believe that the best course of action is a temporary @FDICgov deposit guarantee until an updated insurance regime is introduced" (and who just flip-flopped on his "Fed must hike with shock and awe" call from 2022 and is now urging for a Fed hiking pause), and following a Bloomberg weekend report that US mid-sized banks demanded a two-year total deposit insurance scheme from the FDIC, and warned if it doesn't arrive, there may lots more shotgun weddings (or shotguns), moments ago Bloomberg reported that "US officials are studying ways they might temporarily expand Federal Deposit Insurance Corp. coverage to all deposits, a move sought by a coalition of banks arguing that it’s needed to head off a potential financial crisis." Guess our March 12 tweet was ahead of its time yet again.

The BBG report explains that "Treasury Department staff are reviewing whether federal regulators have enough emergency authority to temporarily insure deposits greater than the current $250,000 cap on most accounts" without formal consent from a deeply divided Congress, and goes on to note that "authorities don’t yet view such a move as necessary, especially after regulators took steps this month to help banks keep up with any demands for withdrawals" which is an important caveat, and is the same one that hawks are using to justify why a Fed pause would be self-defeating ("why is the Fed blowing up their last bit of inflation-fighting credibility; what do they know that we don't): the same question can be applied to the Treasury: "what does the Treasury know that we don't."

Most likely nothing - after all bank crises are non-linear, but as Bloomberg notes, "still, they are developing a strategy out of due diligence in case the situation worsens."

“We will use the tools we have to support community banks,” White House spokesman Michael Kikukawa said, without directly addressing whether the measure is being studied. “Since our administration and the regulators took decisive action last weekend, we have seen deposits stabilize at regional banks throughout the country and, in some cases, outflows have modestly reversed.”

Still, the report notes, the behind-the-scenes deliberations show there are concerns in Washington’s corridors of power as midsize banks call for broader government intervention after three lenders collapsed this month when uninsured depositors pulled their money, and as a fourth firm strives to avoid a similar fate. Shares of that one, First Republic Bank, tumbled an additional 47% on Monday as industry leaders tried to find a way to bolster the company’s finances.

Ok, that's the theory. What about the practice? After all, as regular readers know there are $18 trillion in total deposits, all of which will have to be insured...

... and just $125 billion in the FDIC's Deposit Insurance Fund, which makes an outright guarantee of all deposits just a small mathematical impossibility.

Well, there's always printing. According to Bloomberg, one legal framework under discussion for expanding FDIC insurance would use the Treasury Department’s authority to take emergency action and lean on the Exchange Stabilization Fund. The same magical Exchange Stabilization Fund which the Treasury is already using to backstop its latest bank bailout facility, the Bank Term Funding Program, or BTFP.

Here too there is a small problem: that ESF pot of money is used to buy or sell currencies and to provide financing to foreign governments. A bigger problem: the ESF only has $25 billion currently in it as parts of its BTFP backstop.... but it has to do, as it is the only pot of money under the full authority of Janet Yellen, with other spending and financing under the jurisdiction of Congress.

Any mechanism using the ESF as a bailout mechanism uses the cash from the fund as a first-loss equity tranche to which the Fed then applies leverage. LOTS of leverage, because if authorities plan on backstopping the $18 trillion in total US deposits, the Fed will need to cover the difference... of some $17.975 trillion (unless Congress reaches a bipartisan deal to infuse more capital in the ESF, the same way the ESF was expanded to $500BN during the covid crisis

Meanwhile, in keeping with the tradition of saying the polar opposite of what it is doing, a Treasury spokeswoman said in a statement that “due to decisive recent actions, the situation has stabilized, deposit flows are improving and Americans can have confidence in the safety of their deposits”

Which of course explains why First Republic is about to join the collapse contagion and why Treasury is planning a full deposit backstop.

Finally, such a program will likely have to also be the result of an executive order since it has little hope of passing in Congress where members of both the left and right will be vehemently against it. 

“Any universal guarantee on all bank deposits, whether implicit or explicit, enshrines a dangerous precedent that simply encourages future irresponsible behavior to be paid for by those not involved who followed the rules,” the House Freedom Caucus said in a statement, and we are confident most of the progressive wing will not be too excited about bailing out billionaires and corporations with orders of magnitude more in the bank than the FDIC limit.

As The Chicago Fed wrote in a paper in 1986 - after the deposit runs at Penn Square National Bank and Continental Illinois Bank - uninsured deposits are a source of market discipline for banks. Herbert Baer and Elijah Brewer go further, warning that doing away with insured deposits (i.e. by insuring every deposit as is being considered currently) would actually increase risk in the banking system.

"While such proposals might reduce the likelihood of bank runs, they would at the same time reduce banks' incentives to control risk."

Will US bank regulators learn from the mistakes of the past?

https://www.zerohedge.com/markets/us-studies-how-guarantee-all-18-trillion-us-bank-deposits

Mexican president calls U.S. State Department 'liars' after rights report

 Mexican President Andres Manuel Lopez Obrador on Tuesday forcefully rejected criticism of his government's record on human rights, describing reports of official abuses made in a new U.S. State Department study as "lies."

The report issued on Monday said there were credible reports in Mexico of unlawful or arbitrary killings by police, military, and other officials; forced disappearance by government agents; as well as torture and inhuman treatment by security forces.

The report also stated that "impunity and extremely low rates of prosecution remained a problem for all crimes, including human rights abuses and corruption," and criticized violence against journalists in Mexico.

Asked about the report at a news conference, Lopez Obrador dismissed it, saying, "they're lying," and noted the U.S. "believes it's the government of the world."

"It's not worth getting angry about, that's just how they are," said Lopez Obrador, who is due to meet with former U.S. Secretary of State John Kerry in Mexico later on Tuesday. The report "is not true, they're liars."

Lopez Obrador has pushed back against recent U.S. criticism of his record on security, which has come under increased scrutiny since the abduction of four American citizens in northern Mexico earlier this month. Two of them were later found dead.

The leftist president, who says he is rooting out corruption and impunity in Mexico, has argued his country is safer than the U.S. - despite a much higher murder rate - and criticized U.S. efforts to prevent dangerous drugs from entering the United States.

https://www.marketscreener.com/news/latest/Mexican-president-calls-U-S-State-Department-liars-after-rights-report--43303096/

Obesity dropouts hurt Altimmune

 Last month Altimmune said it was looking for weight loss of 8-10% with its obesity project pemvidutide, and today’s interim data from the Momentum trial reveal that it hit that target pretty much on the nose. What Altimmune was emphatically not looking for was nearly a quarter of the patients in the high-dose group dropping out because of side effects. 

This makes the GLP-1/glucagon agonist appear notably more toxic than both Novo’s Wegovy and Lilly’s Mounjaro. There are reasons to believe that the picture might not be quite as bleak as it seems, but so far Altimmune’s investors have not been swayed by these: the group’s shares were down 53% in early trading.

The highest dose tested in Altimmune’s phase 2 Momentum trial, 2.4mg, caused mean placebo-adjusted weight loss of 9.7%, a respectable figure at the 24-week time point. But adverse event rates were high, and the eye-catching discontinuation rate at this dose – 24.2%, placebo adjusted – compares poorly with the phase 3 obesity trials of Wegovy and Mounjaro. 

Obesity cross-trial comparison
Company	Novo Nordisk	Lilly	Altimmune
Trial	Step 1 (Ph3, NCT03548935)	Surmount-1 (Ph3, NCT04184622)	Momentum (Ph2, NCT05295875)
Project and dose	Wegovy 2.4mg	Mounjaro 15mg (high dose)	Pemvidutide 1.2mg	Pemvidutide 1.8mg	Pemvidutide 2.4mg
Efficacy
Pbo-adj weight loss at 24wk (% points)	~9	~12	6.3	8.4	9.7
Safety (all pbo-adj)
Nausea (% points)	28.0	21.5	14.9	49.9	46.2
Diarrhoea (% points)	14.0	15.7	2.4	-0.1	9.6
Vomiting (% points)	18.0	10.5	5.0	15.0	24.4
Constipation (% points)	13.0	5.9	7.5	2.5	12.2
Discontinuations due to adverse events (% points)	3.6	3.6	4.9	7.4	24.2
AE data at 68wks for Wegovy, 72wks for Mounjaro and 24wks for pemvidutide. Source: company releases, FDA, NEJM.

On a call today, Altimmune’s management sought to play down the tolerability issues. The group pointed out that the discontinuation rate was similar to that seen with Mounjaro in its phase 2 diabetes trial – here, 25% of the patients given the highest 15mg dose dropped out owing to adverse events.

Altimmune contended that the only reason discontinuation rates were lower in Wegovy and Mounjaro’s pivotal trials was because those studies allowed dose reduction should tolerability prove an issue, whereas Momentum did not. Allowing dose reduction in phase 3 trials of pemvidutide is one of the strategies Altimmune is considering.

Another is using higher doses and longer titration periods. New patients receiving either Wegovy or Mounjaro must have their doses slowly adjusted upwards over a period of four to five months, something primary care physicians find difficult to oversee. Altimmune had hoped that pemvidutide could be given without a run-in period, or at least with a much shorter one, thereby gaining a sizeable advantage over Novo and Lilly’s drugs.

Altimmune has now more or less admitted that this dream is dead, at least for the high dose. But if titration is necessary anyway to sidestep toxicity, perhaps even higher dosing might be possible, they said. The result, theoretically, could be that the weight loss seen with pemvidutide in phase 3 ultimately exceeds that seen with Wegovy and Mounjaro.

This seems somewhat optimistic, although the group is convinced that pushing into phase 3 is the correct decision. It intends to finalise its plans before the full 48-week Momentum readout, due towards the end of this year. But competing with Wegovy and Mounjaro already looked like a tough task, and unless pemvidutide’s tolerability improves sharply in phase 3 it may prove impossible. 

https://www.evaluate.com/vantage/articles/news/trial-results/obesity-dropouts-hurt-altimmune

Daiichi, Zymeworks Terminate Seven Year-Cancer Antibody Pact

 

• Zymeworks Inc 
  ZYME+1.88%+ Free Alerts
   and Daiichi Sankyo 
  DSNKY
   terminated a license agreement dated September 26, 2016, as amended on September 25, 2018, July 2, 2021, and June 6, 2022.
• Under the 2016 agreement, Zymeworks licensed its Azymetric and EFECT platforms to Daiichi Sankyo to develop one bispecific antibody therapy for an upfront technology access fee payment of $2.0 million and research and commercial option-related payments totaling $4.5 million. 
• Zymeworks was also eligible to receive additional development milestone payments of up to $63.4 million and commercial milestone payments of up to $80.0 million.
• Zymeworks also gained non-exclusive rights to develop and commercialize up to three products (revised to up to six under the June 2022 amendment) using Daiichi Sankyo's proprietary immune-oncology antibodies. 
• Under the non-exclusive immune-oncology antibody license, Zymeworks was solely responsible for the resulting products' research, development, and commercialization.
• Zymeworks reported $492.2 million in cash resources as of December 31, 2022, with an expected cash runway through 2026.

https://www.benzinga.com/general/biotech/23/03/31421600/daiichi-zymeworks-terminate-seven-year-cancer-antibody-pact

Despite Failed Phase 3 Study, FDA Staff Says Biogen's ALS Drug May Have Clinical Benefit

 

• FDA's Peripheral and Central Nervous System Drugs Advisory Committee will virtually meet on Wednesday, March 22, to discuss Biogen Inc's 
  BIIB-0.69%+ Free Alerts
   ALS drug tofersen.
• FDA staff, citing a briefing document, said Biogen's investigational ALS drug might have a "clinical benefit" on a rare and aggressive form of the disease, despite failing a broader late-stage clinical trial last year. 
• "Despite the notable limitations of a failed study and the many post hoc exploratory analyses conducted after [the Phase III trial], the Division considers that the data may suggest a treatment effect of tofersen in SOD1-ALS," the FDA wrote. "This is a very rare and devastating disease; therefore, it is of utmost importance that we give full consideration to all available data."
• Tofersen did not achieve the primary goal of its Phase 3 VALOR trial, failing to prove it could slow SOD1-ALS patients' functional decline better than a placebo. Biogen said the p-value for the primary endpoint was p=0.97.
• "This is a situation where there is a negative clinical study that failed to show a statistically significant treatment effect in the prespecified primary analysis population," the report says. 
• It notes, however, that the study was limited in its ability to determine whether the drug affected the overall population because of how it was designed. 
• At the same time, the data indicate that targeted drug use was shown to reduce "a biomarker that is correlated with disease progression and prognosis in patients with ALS."
• The FDA accepted Biogen's application for full approval of tofersen in July. Last October, the agency extended its application review by three months, with a PDUFA date of April 25. 

https://www.benzinga.com/general/biotech/23/03/31433167/despite-failed-phase-3-study-fda-staff-says-biogens-als-drug-may-have-clinical-benefit