Marinus Pharmaceuticals initiated with a Buy at Ladenburg. Ladenburg Thalmann analyst Michael Higgins started Marinus Pharmaceuticals with a Buy rating and $20 price target.
Wednesday, June 6, 2018
Athenahealth to explore strategic alternatives, CEO steps down
Athenahealth Inc. ATHN, +4.17% said Wednesday it has begun exploring “strategic alternatives,” in which the hospital and ambulatory services company will consider a sale, merger or other transaction. The stock is currently halted for news. The company said Chief Executive Jonathan Bush has stepped down from his role, which he has held since co-founded the company in 1997, effective immediately. The New York Post reported last week that sexual harassment claims against Bush were settled in 2009. The company said Jeff Immelt, who was CEO of General Electric Co. GE, -1.16% from 2001 to 2017, was appointed executive chairman. The company said it has initiated a search for a new CEO. Also in May, Elliott Management said it planned to buy the company in a deal valued at about $7 billion. The stock is set to resume trade at 9:50 a.m. ET. It has run up 13.6% year to date through Tuesday, while the SPDR Health Care Select Sector ETF XLV, +1.13% has edged up 1.0% and the S&P 500 SPX, +0.86% has gained 2.8%.
DaVita started at buy by Blair
DaVita assumed with an Outperform at William Blair. William Blair analyst Matt Larew assumed coverage of DaVita from Margaret Kaczor and keeps an Outperform rating on the shares. The company’s renewed focus on execution within the kidney care business will provide more predictable results in the United States, while the international business should become profitable in 2018 and beyond, Larew tells investors in a research note.
Ironwood gets FDA orphan status for sickle cell med
The FDA granted Ironwood Pharmaceuticals orphan status for olinciguat, its treatment of sickle cell disease.
Investors pour back into Nektar after selloff
Shares of Nektar Therapeutics (NASDAQ:NKTR) rose as much as 17% today as investors poured back into the biopharma stock following a sharp sell-off earlier this week. The huge drop days ago was caused by a disappointing weekend presentation at the American Society of Clinical Oncology’s annual meeting, in which the company shared preliminary data on an important ongoing program evaluating a combination of drug candidate NKTR-214 with Opdivo from Bristol-Myers Squibb to treat various solid tumor cancers.
Today, investors are simply betting that the more than 40% stumble was overdone. The argument isn’t entirely invalid. While Nektar Therapeutics saw its market cap shoot up from less than $4 billion this time last year to over $16 billion in April, the biopharma is far from a one-trick pony.
As of 3:35 p.m. EDT, the stock had settled to a 8.2% gain.
The ASCO presentation was just the latest reminder that incredible results from small trials should be viewed with cautious optimism (and probably more caution than optimism). Nektar Therapeutics showed that the efficacy of the NKTR-214 and Opdivo combination didn’t hold up from smaller, earlier studies.
At the previous study checkpoint, 11 of 13 melanoma patients showed a response to the combo. But at the latest check-in, only 14 of 28 patients responded to treatment. A similar slide in efficacy was uncovered in kidney cancer, which previously demonstrated responses in seven of 11 patients, compared to only 12 of 26 most recently.
Considering the study is now partnered with Bristol-Myers Squibb, which handed over $1.85 billion in February and lucrative royalty rights should the combo gain marketing approval, investors became worried the therapy may not be destined to become a blockbuster product.
While the most recent results are deflating, Nektar Therapeutics has quite a few shots on goal. That includes four separate drug candidates in trials further along than the NKTR-214 combo, and several other trials investigating NKTR-214 as part of a combination with other oncology drugs and as a stand-alone treatment. And, of course, the company has the $1.85 billion from Bristol-Myers Squibb no matter what, which can fund pipeline development for about two years at the current cash burn rate.
Bounces like the one Nektar Therapeutics is experiencing today are pretty commonplace for biopharma stocks that encounter major sell-offs. Does it prove that the drop was overdone? Well, it’s true that the pipeline has a healthy amount of potential. But it’s also true that the current $10 billion market cap could prove difficult to justify right now. Investors should expect volatility to continue for the foreseeable future, and simply have to await further clinical updates coming down the pipe in the next several quarters.
Fortive offers to buy J&J sterilization unit for $2.7B cash
- Acquisition of Global Market Leader with Strong History of Market Creation, Innovation & Brands
- Provides Entry into the Attractive, Strong Growth Medical Sterilization and Disinfection Market with Runway for Advanced Solutions and International Growth
- Large Global Installed Base with Significant Recurring Revenue of +80%
- Aligned with Fortive’s Strategy to Help Customers Drive Better Safety, Compliance & Productivity
- Complementary to Fortive’s Expertise in Highly Regulated Critical Customer Workflows
- Expected to Achieve 10% ROIC in 4 Years
- Expected to be Accretive to Adjusted Net Earnings in First Full Year Following Acquisition
- Acquisition Expected to Close No Later than Early 2019
Fortive Corporation (“Fortive”) (NYSE: FTV) announced today that it has made a binding offer to Ethicon, Inc.*, a subsidiary of Johnson & Johnson, to purchase the Advanced Sterilization Products (“ASP”) business for approximately $2.7 billion in cash. Based on financial measures provided by Johnson & Johnson, ASP generated 2017 revenue of approximately $775 million (unaudited) and adjusted EBITDA margin of approximately 25% (unaudited).
ASP is a leading global provider of innovative sterilization and disinfection solutions and pioneered low-temperature hydrogen peroxide sterilization technology. ASP’s products, which are sold globally, include the STERRAD system for sterilizing instruments and the EVOTECH and ENDOCLENS systems for endoscope reprocessing and cleaning. ASP’s STERRAD systems are complemented with the industry leading VELOCITY rapid-read biological indicator, enabling operating room uptime. STERRAD systems with ALLClear Technology and the VELOCITY Biological Indicator Readers are fully-integrated and network-connected, minimizing the need for manual documentation of vital sterilization information in hospital centralized sterilization services departments. The seamless communication and integration with instrument tracking systems and hospital networks, thereby enhances hospital compliance and improves productivity. EVOTECH and ENDOCLENS systems are sold with the brand-leading CIDEX family of disinfecting solutions for endoscopes and other medical instruments.
James A. Lico, President and Chief Executive Officer of Fortive, stated: “We are excited about today’s announcement which demonstrates the continued evolution of our portfolio towards improving growth, increasing recurring revenue, and expanding positions in attractive markets. With ASP, we expect to acquire a global leader in medical sterilization and disinfection, with a large installed base and very strong brands. This acquisition is entirely consistent with our focus to help customers drive better safety, compliance and efficiency in critical workflows. We have conviction that the addition of ASP to our portfolio will create compelling value for both ASP and Fortive employees, our customers, and shareholders.”
Mr. Lico continued, “We are impressed by the strength of ASP’s innovative product portfolio and its customer relationships. ASP’s culture and commitment to quality and service lends itself to application of the Fortive Business System to drive both accelerated growth and operating synergies. We look forward to welcoming the ASP team to the Fortive family.”
Fortive expects the transaction to be accretive to adjusted net earnings in the first full year. The Company plans to finance the acquisition with available cash and proceeds from issuance of debt and/or equity.
The information and/or consultation processes with the employees’ representative bodies in applicable jurisdictions, including France, Germany, Italy, Switzerland and the European Works Council, will begin immediately. Upon completion of that process, Fortive expects to enter into a definitive purchase and sale agreement with Ethicon for the proposed acquisition.
The proposed transaction, which has been approved by Fortive’s Board of Directors, will also be subject to customary closing conditions, including regulatory approvals.
Goldman Sachs & Co. LLC. served as financial advisor to Fortive and Sidley Austin LLP and WilmerHale served as legal advisors to Fortive.
Fortive will hold a conference call today at 6:00 pm ET. The call and an accompanying slide presentation will be webcast on the “Investors” section of the website, www.fortive.com, under “Events & Presentations.” A replay of the webcast will be available at the same location shortly after the conclusion of the presentation.
The conference call can be accessed by dialing 844-443-2871 (toll-free domestic) or 213-660-0916 (international); Conference ID: 1199019. A replay of the call will be available until June 20, 2018, via telephone starting approximately two hours after the call ends. Once available, the replay can be accessed at 800-585-8367 (toll-free domestic) or 404-537-3406 (international); Conference ID: 1199019 or visit the “Investors” section of the website under “Events & Presentations.”
Tonix started at buy by B. Riley
Tonix Pharmaceuticals initiated with a Buy at B. Riley FBR. B. Riley FBR analyst David Buck started Tonix Pharmaceuticals with a Buy rating and $8 price target. The analyst sees an attractive risk/reward ahead of a potential near-term catalyst for the company’s treatment of post-traumatic stress disorder.
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