Akorn’s (AKRX) trial with Fresenius (FSNUY) over the companies’ $4.3B merger agreement is set to begin on July 9 in Delaware Chancery Court and analysts at RBC Capital and Deutsche Bank are weighing the risks and rewards. AKORN FILES COMPLAINT: In April, Akorn filed a complaint in court asking that Fresenius Kabi be required to fulfill its obligations under the companies’ definitive merger agreement. Akorn said at that time that “Fresenius’ attempt to terminate the transaction on the pretext that the findings from the ongoing investigation are a breach of the merger agreement is completely without merit. The previously disclosed ongoing investigation, of which we have voluntarily notified and are in regular communication with the Food and Drug Administration, has not found any facts that would result in a material adverse effect on Akorn’s business and therefore there is no basis to terminate the transaction…We intend to vigorously enforce our rights, and Fresenius’ obligations, under our binding merger agreement.” Akorn had agreed to be acquired by Fresenius in April 2017 for approximately $4.3B, or $34 a share, plus the assumption of approximately $450M of debt. In February, Fresenius began an investigation into alleged FDA data breaches at Akorn and in April, the company decided to terminate the merger agreement saying the decision was “based on, among other factors, material breaches of FDA data integrity requirements.” Following Akorn’s filing in court, Fresenius said its probe uncovered fraud and accused the company of submitting phony data to the FDA on its antibiotic drug. RBC SEES ‘PATH TO CLOSING’: In a note published this Monday, RBC Capital analyst Randall Stanicky said the trial should bring some clarity to the ongoing deal uncertainty. He said he continues to see a path to closing and notes risk and reward are both high, as Akorn’s stock is trading at $16-$17 versus the $34 deal price. The analyst added he has not yet seen persuasive evidence justifying the deal break based on his review of litigation documents and a call with legal experts. AKORN UPSIDE/DOWNSIDE ‘LOOKS INTERESTING’: On Tuesday of this week, Deutsche Bank analyst Gregg Gilbert noted that Akorn is seeking a ruling that Fresenius be required to complete its acquisition per the merger agreement. The analyst believes the upside versus downside profile for Akorn from the current price is worth considering. He sees three potential scenarios: Fresenius is required to acquire Akorn for $34 per share, representing 102% upside; the deal breaks and Akorn trades down to single digits on a standalone basis, or 69% downside; the companies settle for a price below $34 but well above the current stock price, which could yield more upside than downside. Gilbert believes Akorn’s upside/downside “looks interesting” ahead of the key event, he told investors. PRICE ACTION: Akorn was up 3.5% to $18.15, while Fresenius rose 1.4% to $20.41 in late morning trading on Friday. The trial is set to begin on Monday and is scheduled to last through Friday July 13 at this point, RBC recently told investors. “Before the Move” is The Fly’s recurring series of exclusive stories that identify potentially market moving events, along with analyst predictions, ahead of the news.
Friday, July 6, 2018
Electrical Brain Stimulation Cuts Violent Impulses
In an experimental setting involving healthy volunteers, stimulating the prefrontal cortex with mild electrical current reduced aggressive impulses and brought moral judgments more into line with societal norms, researchers said.
Active transcranial direct current stimulation (tDCS) reduced the likelihood of intent to commit a physical assault by about half, and intent to commit sexual assault by 70%, reported Olivia Choy, MD, of the Nanyang Technological University in Singapore, and colleagues.
Approximately 31% of the results can be attributed to participants believing that the acts of assault were morally wrong, the researchers added.
“Understanding the etiology of aggression and the development of new interventions are paramount to a public health approach to violence reduction,” Choy and colleagues wrote. “This first known application of prefrontal tDCS to intentions to commit aggression takes a modest step towards advancing knowledge about the neural mechanisms that regulate aggression.”
“I think our approach to solving crime and violence is social,” study co-author Adrian Raine, PhD, of the University of Pennsylvania in Philadelphia, told MedPage Today.
“People blame [crime and violence] on poverty or racial discrimination, and those things are important, but I think what we’re saying is that there is another side of the coin that so far has been ignored: the biological part of the equation,” said Raine. “We hope we will open a new door to benign approaches to changing biology in a sensible manner in order to change behavior and reduce violence and victimization.”
In the study, published in the Journal of Neuroscience, 81 adults (36 males, 45 females) were randomly assigned to active or sham tDCS, and followed up 1 day after the experimental session. Participants were shown images of physical and sexual assault (e.g., smashing a beer bottle over a person’s head) and asked to rate their likelihood of acting them out for real, on a scale of 0-10, as well as the “moral wrongfulness” of doing so. In another exercise, conducted on a computer screen, they were shown a doll representing a partner or friend and were told they could “release negative energy” by sticking as many pins as they wished into the doll.
Participants in the active group received tDCS treatment targeting the dorsolateral prefrontal cortex, at 2 mA for 20 minutes, while the control group received current for only 30 seconds but remained hooked up to the stimulator device for the remaining time. Participants’ and experimenters’ guesses at study end about treatment assignments indicated that blinding was preserved.
Of the 86 participants, those who received tDCS reported an average score of 1.15 for committing a physical assault, compared with 2.19 for those in the placebo group. Similarly, the active group reported a score of 0.26 for intent to commit an act of sexual assault, compared with 0.86 for those in the placebo group.
The reductions in the active group can be at least partly explained by higher ratings of moral wrongfulness (b=-0.51, 95% CI -1.14 to -0.10, P<.05, in the aggressive acts; and b=-0.34, 95% CI -1.11 to -0.03, P<.05 in the sexual assaults), the authors said.
Active electrical stimulation did not appear to affect outcomes in the doll-based task.
The investigators explained that the study follows previous research that correlated prefrontal damage and deficits that result in aggressive physical behavior, an increased likelihood of sexual assault, and antisocial behavior.
For this study, the team targeted the dorsolateral prefrontal cortex, although aggressive behavior has also been tied to other sub-regions such as the ventromedial prefrontal cortex and the anterior cingulate cortex, Choy and colleagues explained.
While the control group contained equal parts males and females (21 of 42), the active group had more females (24 of 39). All subjects were over the age of 18 and in order to participate, could not have any contraindications to brain stimulation such as having metallic implants; neurological, cardiovascular, or psychiatric illness; or a history of adverse reactions to tDCS.
The researchers also adjusted for factors such as childhood placement in a foster home, parental divorce and unemployment, and having used food stamps in their youth.
Study limitations, the team said, were first, that the sample was taken from a healthy population, excluding subjects diagnosed with mental or physical health disorders. Second, the study measured moral judgment and aggression concurrently and did not establish a control region of the brain to test alongside dorsolateral prefrontal cortex stimulation. Lastly, since the aggression levels were measured just 1 day after the intervention, only short-term effects were evaluated.
“A stronger evidence base which includes more consistent findings, documentation of long-term beneficial effects, and a comprehensive effort to rule out potentially aversive side effects is required before this technique can be considered in practice to reduce aggression perpetration,” Choy and colleagues concluded.
The authors reported having no competing financial interests.
LAST UPDATED
Primary Source
Journal of Neuroscience
FDA: No Need to Test Donated Blood for Zika
The FDA will move away from testing all donated blood and blood products for Zika virus, the agency said Friday.
Citing the decrease in Zika cases in the U.S., as well as cost effectiveness and a desire to make the process less burdensome, the FDA revised its interim guidance from August 2016, which stated that all blood and blood products should be tested for the virus.
The agency released a revised final guidance document explaining the new policy. They stated “in order to comply with applicable testing regulations, blood establishments must continue to test all donated Whole Blood and blood components for Zika virus using a nucleic acid test.” But they added that pooled donation using an FDA-licensed screening test may be sufficient, unless there is a higher risk of local mosquito-borne transmission of the virus in a specific geographic area, which would trigger the need for individual donation testing.
“When Zika virus first emerged, the unknown course of the epidemic and the observed severe effects from the disease indicated that individual donor testing was needed to ensure the continued safety of the blood supply,” Peter Marks, MD, PhD, director of FDA’s Center for Biologics Evaluation and Research, said in a statement. “Now, given the significant decrease in cases of Zika virus infection in the U.S. and its territories, we are moving away from testing each individual donation to testing pooled donations.”
When the interim guidance emerged, the U.S. was less than a month removed from the first cases of locally transmitted Zika virus in south Florida. But the Red Cross protested these interim guidelines at a meeting that November with the FDA, saying that this was cost prohibitive and burdening hospitals, and that the process had uncovered only “a handful” of donations that tested positive for the virus.
Bolstering this argument was a study published in the New England Journal of Medicinein May that found just nine confirmed positive cases of Zika among almost four million donations, and that the projected annual cost for national screening would be $137 million.
The FDA said they will “continue to monitor the situation closely, and as appropriate, and will reconsider what measures are needed to maintain the safety of the blood supply,” Marks said.
Amazon May Push Walgreens To Expand UnitedHealth And LabCorp Deals
With Amazon officially entering the pharmacy business, pressure may be emerging for Walgreens Boots Alliance to expand its relationship with UnitedHealth Group, which is developing urgent care centers attached to Walgreens pharmacies.
For now, the collaboration between UnitedHealth Group’s MedExpress urgent care centers and Walgreens has connected primary care with the corner drugstore in 15 locations across the U.S. The relationship to date has been considered a pilot.
But the UnitedHealth venture and other Walgreens pilots are suddenly taking on urgency among some investors after Amazon last week said it would buy the online pharmacy PillPack, potentially threatening Walgreens drugstore revenues should customers opt not to come inside a brick-and-mortar pharmacy.
Some observers think Walgreens should be taking steps to lock in more sales from their patients and customers as rival CVS Health is doing by buying Aetna, the nation’s third-largest health insurer. Because Aetna provides health benefits to more than 20 million Americans, the deal with CVS is expected to eventually bring those customers inside CVS drugstores for prescriptions and primary care services. CVS and Aetna have already been discussing developing more healthcare services like urgent care inside the drugstores.
Investors want Walgreens to escalate its partnership strategy and expand its pilots across the country.
“For us, the biggest issue is the lack of revenue diversification, which could make (Walgreens) more vulnerable to market share gains over the long term than CVS,” Mizuho Securities USA analyst Ann Hynes said in a report out this week.
Hynes suggested a “strategic relationship with a high-quality partner that drives customers to the retail stores” like UnitedHealth Group or the diagnostic test maker LabCorp, which has been working with Walgreens since last year to provide lab-testing services in its stores in limited areas of the U.S. The retail approach of UnitedHealth’s Optum healthcare delivery unit also includes not only the MedExpress urgent care facilities but ambulatory surgery centers, doctor practices and related locally based community health clinics.
Walgreens executives have said they are currently evaluating whether to broaden the relationship with UnitedHealth as well as whether to expand its collaboration with LabCorp.
“In the quarter, LabCorp opened a number of clinics in our Gainesville (Fla.) stores as part of the extension of the trials we have been running with LabCorp in the last months,” Walgreens president Alex Gourlay told analysts last week on the drugstore chain’s fiscal third quarter earnings call. “These clinics have performed well. As this relationship continues to prove advantageous for both partners, we are looking at how we can expand the service further and faster throughout our network.”
Orion takes repurposed heart failure drug into phase 3 for ALS
Finnish drugmaker Orion Pharma is pressing ahead with a pivotal trial for its amyotrophic lateral sclerosis drug ODM-109, despite mixed results in a phase 2 trial.
The first patients have now been recruited into its phase 3 trial of ODM-109—an oral formulation of Orion’s heart failure drug Simdax (levosimendan)—in the hope of showing that it can help support breathing function in patients with the devastating neurodegenerative disease.
Orion said it plans to enroll 450 subjects in the placebo-controlled trial at sites in Europe, North America and Australia, with patients taking the drug for a year to see if it can slow down the respiratory difficulties that are the usual cause of death in ALS.
In a phase 2 trial involving 66 ALS patients, ODM-109 missed its primary endpoint of an improvement in sitting slow vital capacity (SVC)—a measure of lung function—but was able to improve SVC when patients were lying on their backs.
“If the results of the [phase 3] trial are positive, the aim is to file for marketing authorization in the U.S. and Europe,” according to Orion. Results from the study are due in 2020.
For years, ALS only had one FDA-approved therapy—Sanofi’s Rilutek (riluzole)—which has limited efficacy, with most patients still dying three to five years after diagnosis. In 2017, Mitsubishi Tanabe got FDA approval for free radical scavenger Radicava (edaravone), after filing the drug at the agency’s request, based on a six-month study that showed a slower decline in physical function compared to placebo.
Not all are convinced by the data for Radicava just yet, however, and it’s widely recognized that other new therapies are desperately needed that can definitively slow down the loss of function in ALS.
Prospects for a new therapy for ALS took a big knock last year after the high-profile failure in phase 3 of Cytokinetics’ tirasemtiv, despite major tweaks to the trial protocol, but the company is hoping a clutch of new drugs, along with ODM-019, could end the drought.
Another European biotech, France’s AB Science, had a marketing application for its masitinib drug for ALS provisionally turned down in Europe in April, with regulators saying a phase 2/3 trial that showed efficacy at the highest dose used wasn’t sufficient to support approval. The company has filed additional information to the EMA and is planning a confirmatory trial that it hopes will also support a U.S. filing.
Biogen bullishness spreads to AC Immune
Thinly traded AC Immune (ACIU +32.4%) is up a 16x surge in volume in apparent concert with Biogen’s (BIIB +17.9%) rally related to positive Phase 2 data on early Alzheimer’s candidate BAN2401, a humanized anti-amyloid beta protofil monoclonal antibody.
One of AC Immune’s Alzheimer’s candidates is crenezumab, in Phase 3 development by licensee Genentech, a humanized monoclonal antibody that binds to all forms of misfolded proteins, including Tau and beta amyloid.
Previously: Biogen +6% after Alzheimer’s drug succeeds in trial (July 5)
Previously: Biogen’s Alzheimer’s candidate BAN2401 flunks mid-stage study(Dec. 21, 2017)
Abbott Q2 organic growth estimated near 7% at RBC
RBC Capital analyst Glenn Novarro keeps his Outperform rating and $67 price target on Abbott Laboratories ahead of its Q2 results, saying he expects the company’s accelerated growth in its Established Pharmaceuticals segment and continued strength in Medical Devices to produce organic growth close to 7%. Novarro adds that in spite of the more challenging comps coming in the second half of this year, Abbott’s diversified portfolio performance discussed in the company’s most recent investor event in May should help it achieve organic growth of 6.5%-7.0% in FY18. The analyst recommends that investors buy Abbott stock heading into the earnings report.
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