Over half of stores sampled in Colorado study still selling cigarettes to minors

A study published today in the journal JAMA Pediatrics reports that the method federal regulators use to monitor illegal underage tobacco sales fails to detect most stores that sometimes sell cigarettes to adolescents.

The study, co-authored by several leading researchers of the topic, found that the federal method of a single purchase attempt by an undercover minor identified only one-third of the violators that were found when the same stores were visited six times over a period of weeks.

Less than half of the 201 randomly chosen stores always refused the underage tobacco purchase attempts, and more than one-fourth sold tobacco to the minors two or more times.

Federal and most state laws require stores to examine an ID when a tobacco customer looks underage. Although the stores asked for ID more than 90 percent of the time in the study, two-thirds of the violations occurred after the minor presented his or her ID showing that they were 15 or 16 years old.

“The argument the industry has started making is that they’ve shown themselves to be complying with the law and everyone should leave them alone and not try to enforce the laws more strictly. But the federally required method for doing these checks is inadequate, and it clearly does not estimate how many stores sell cigarettes to kids. It’s way off the mark,” says Arnold Levinson, Ph.D., investigator at the University of Colorado Cancer Center and associate professor at the Colorado School of Public Health, who directed the study.

The study hired minors and supervised them to visit 201 randomly selected retail stores in the suburban Denver area, for a total of six visits per store. The sample included convenience stores, liquor stores, grocery stores, pharmacies, tobacco stores and gas stations (bars, clubs and adult establishments were excluded). No type of store was statistically more or less likely than any other type of store to sell tobacco products to minors, nor did the demographics of test minors or store clerks predict the likelihood of a sale.

The average violation rate in each round was 18 percent, roughly ten percentage points higher than common federal rates (possibly because study minors showed IDs, whereas minors in federal tests do not). Overall, 54.7 percent of retailers violated at least once in six attempts, 26.4 percent violated at least twice, and 11.9 percent violated more than half the time.

The pattern of asking for IDs represents progress, Levinson said: “What we’ve seen is a change from the 1980s, when a kid could walk into a store and buy cigarettes almost all the time. Now kids walk into a store and are almost sure to be asked for their ID.”

“The problem is that when they do show an ID, a whole lot of the time the clerk doesn’t look at it carefully and ends up selling to the kids anyway. The stores have come one step forward in complying with one piece of the law, but there’s another piece they’re doing a poor job of,” Levinson says.

The study suggests that testing each store more than once, and testing whether they properly verify age from ID, would provide better enforcement and more accurate estimates of the problem.

States must remain below 20 percent Retailer Violation Rate (RVR) to earn federal block grants for substance abuse prevention and treatment. With the accepted, federal inspection method, states are generally far below this threshold. But the current study shows that many stores continue to sell tobacco products to minors, just not every time.

“We have been studying the problem of illegal sales of cigarettes to kids for nearly 30 years,” Levinson says of the authors who participated in the journal report. “Asking for ID most of the time has only partly fixed the problem.

“Fewer kids are smoking cigarettes these days, but vaping (e-cigarettes) has become wildly popular. Tobacco sales enforcement agencies can play an important role in preventing vaping from becoming a new adolescent epidemic, but only if they change their methods to address inconsistent store behaviors and poor validation of age.”

 Explore further: Tobacco ‘power wall’ linked to adolescents’ views about e-cigarettes

More information: JAMA Pediatrics (2018). DOI: 10.1001/jamapediatrics.2018.2038

https://bit.ly/2Lap7M6

Better Marijuana Stock: Cronos Group vs. Tilray

You can count on one hand the number of Canadian marijuana stocks that trade on the Nasdaq stock exchange. And you’d have three fingers left over. Cronos Group(NASDAQ:CRON) became the first Canadian marijuana grower to list on the Nasdaq in February. Tilray (NASDAQ:TLRY) followed suit in July.

Both Cronos Group and Tilray have tremendous growth prospects. But which marijuana stock is the better pick for investors? Here’s how Cronos and Tilray stack up against each other.

The case for Cronos Group

Cronos Group’s opportunities are, in order of size, the medical marijuana market in Canada, the recreational marijuana market in Canada, and the global medical marijuana market. Let’s look at how Cronos is positioned in each of these areas.

For now, most of Cronos Group’s revenue is made in the Canadian medical marijuana market. In its Q2 results announced a few days ago, the company posted 234% year-over-year growth in medical cannabis sales of its Peace Naturals brand.

But Cronos’ prospects in Canada’s recreational marijuana market are much better. Some project that total recreational cannabis sales in the first year will top CA$5 billion. To become a major player in this market, companies must have ample production capacity and a solid distribution channel for the retail market. Cronos should have all of these bases covered.

Although the company currently can only produce around 6,650 kilograms of cannabis per year, Cronos is on track to have an annual production capacity of more than 40,000 kilograms later this year. It also formed a joint venture that plans to build a large greenhouse in Ontario with an annual production capacity of 70,000 kilograms.

Cronos already has a customer for much of that capacity. The company recently signed a five-year supply agreement with Cura Cannabis Solutions. Cura will buy a minimum of 20,000 kilograms each year from Cronos’ joint venture. In addition, Cronos Group is partnering with U.S.-based MedMen to launch retail cannabis stores throughout Canada.

What about Cronos Group’s global presence? The company is the exclusive medical cannabis supplier for Pohl-Boskamp, a pharmaceutical manufacturer that distributes to the important German market. Cronos also has a joint venture in Australia and recently signed a deal with Delfarma to supply medical cannabis in Poland.

The case for Tilray

Tilray has the same opportunities ahead of it that Cronos does. And it’s in pretty good shape to compete in each of the same markets.

In the domestic medical marijuana market, Tilray already ranks among the top suppliers. In 2017, the company reported sales of US$20.5 million, most of which came from medical cannabis sales in Canada.

Tilray should have plenty of capacity to meet the demand for recreational marijuana in its home country when the market opens in October. The company is expanding its facilities and expects to have 912,000 square feet of growing space by the end of this year, with 682,000 square feet of that space in Canada and the rest at its Portugal facility.

One area where Tilray has topped most of its competitors is in lining up agreements with provinces and territories to supply recreational marijuana. So far, the company has inked deals with five provinces and territories — British Columbia, Quebec, Manitoba, the Northwest Territories, and Yukon. It’s also gearing up for direct-to-consumer recreational cannabis sales.

Then there’s the global opportunity. Tilray was the first Canadian marijuana grower to export medical cannabis to Europe. The company partnered with Noweda, which has a network of 16,000 pharmacies, to supply medical cannabis in Germany. Tilray also has supply agreements in place with distributors in other countries across the world, including Argentina, Australia, Brazil, Chile, Croatia, Cyprus, the Czech Republic, New Zealand, Peru, and South Africa.

Better marijuana stock

Both of these companies should enjoy fantastic sales growth once Canada’s recreational marijuana opens for business. However, I think that Tilray’s growth will be stronger than Cronos Group’s.

My view comes down to the factors we’ve already covered. Tilray currently has greater production capacity than Cronos does. I suspect the company will be able to sell all that it grows. Tilray’s Portugal operations give it a great launching pad for supplying the European market. The company also has its foot in the door in more international markets than Cronos does.

I think that Tilray would be a great partner for a major alcoholic beverage maker wanting to keep up with Constellation Brands and Molson Coors Brewing, both of which have teamed up with Canadian marijuana growers. There’s no guarantee such a partnership deal will come along for Tilray, though.

In addition, the company faces the risk that global markets won’t expand as quickly as hoped, which could lead to high volatility for the stock. However, my take is that aggressive investors could see big gains over the long run by buying a small position in Tilray now.

https://bit.ly/2Mo46Dk

Primary Care Docs Not Up to Speed on Meningitis B Vaccine

Only half of pediatricians and around 30% of family physicians said they discussed the serogroup B meningococcal vaccine with their patients, researchers found.

There were 51% of pediatricians and 31% of family physicians who reported that during routine visits, they “always or often” discussed the MenB vaccine, reported Allison Kempe, MD, of the University of Colorado Anschutz Medical Campus, and colleagues.

Moreover, greater awareness about outbreaks of the disease was linked with a greater likelihood of discussing the vaccine (RR 1.25, 95% CI 1.07-1.45), the authors wrote in Pediatrics.

They noted that the CDC Advisory Committee on Immunization Practices (ACIP) recommended that young people, ages 16-23 years, may be vaccinated with the MenB vaccine, with ages 16-18 as the preferred age of administration (Category B recommendation). A prior recommendation had said all persons ages ≥10 who were at increased risk for MenB disease should be vaccinated (Category A recommendation).

Because this is the “first widespread use of a Category B recommendation, it was unclear how the MenB vaccine would be adopted,” the authors said, adding that no national data are available about how state or local public health agencies advised implementing the MenB vaccine recommendations for healthy adolescents and young adults.

Researchers surveyed a nationally representative sample of 660 pediatricians and family physicians. The authors found that among pediatricians and family physicians who “always or often” initiated a discussion about the MenB vaccine during routine visits for patients ages 16-18, over 90% recommended the MenB vaccine (with 66% recommending it strongly). Conversely, among those who “never or rarely” initiated a discussion, only 11% recommended the vaccine (with 3% recommending it strongly), the authors said.

“The fact that the MenB vaccine was given a Category B as opposed to a Category A recommendation by the ACIP was the major issue identified by both specialties with not recommending the MenB vaccine,” they wrote. Recommendation for another meningococcal vaccine (MenACWY) and “consistency of reimbursement” were linked to a lower likelihood of recommendation, the authors added.

In addition to the occurrence of MenB outbreaks, the authors found that incidence of the MenB disease, effectiveness, and safety of the MenB vaccine, as well as the duration of protection of the MenB vaccine, were associated with a higher likelihood of recommending the MenB vaccine.

Providers who said they were “somewhat aware” of the MenB vaccine and those who were “not at all aware” were associated with a lower frequency of initiating a discussion about the vaccine at routine well visits for their patients ages 16-18 (RR 0.35, 95% CI 0.27-0.45 and RR 0.19, 95% CI 0.09-0.40, respectively).

The authors addressed the potential varying interpretations of a Category B recommendation from the ACIP, arguing that “physicians may interpret ‘individual clinical decision-making’ to reflect their own decision about whether to initiate a discussion of the MenB vaccine, given their assessment of the risks and benefits of vaccinating, without involving parents or providers in decision-making.”

They concluded that because Category B recommendations are likely to occur in certain situations, “it will be key for national clinical organizations, such as the AAP [American Academy of Pediatrics] and AAFP [American Academy of Family Physicians] to provide as much guidance as possible about how to implement Category B recommendations for different vaccines.”

Currently, the AAFP has frequently asked questions about the MenB vaccine, “but no specific talking points,” while AAP recommendations encourage providers to work with patients and “determine what is in their best interest” in terms of benefits, risks, and costs of the vaccine.

The study was supported by the CDC.

The authors disclosed no conflicts of interest.

• Primary Source

  Pediatrics

  Source Reference: Kempe A, et al “Adoption of serogroup B meningococcal vaccine recommendations” Pediatrics 2018; DOI:10.1542/peds.2018-1633.

https://bit.ly/2OOlEVK

Pfizer to Webcast Data from August 27 European Society of Cardiology Congress

Pfizer Inc. invites investors and the general public to view and listen to a webcast of a conference call with investment analysts on Monday, August 27, 2018 at 9:00 a.m. EDT. The purpose of the call is to review the Tafamidis data presentation at the ESC Congress 2018 organized by the European Society of Cardiology.

To view and listen to the webcast, visit our web site at www.pfizer.com/investors. Information on accessing and pre-registering for the webcast will be available at www.pfizer.com/investorsbeginning today. Participants are advised to pre-register in advance of the conference call.

You can also listen to the conference call by dialing either (855) 895-8759 in the United States and Canada or (503) 343-6044 outside of the United States and Canada. The password is “ESC”.

Visitors to www.pfizer.com/investors will be able to view and listen to an archived copy of the webcast of the conference call.

https://bit.ly/2BszdIv

Roche Gets China Approval for Lung Cancer Drug Alecensa

Swiss Pharma giant Roche expanded its presence in China with the approval of its lung cancer drug, Alecesna. Roche said the medication was approved by the China National Drug Administration (CNDA) under a priority review.

In China, Alecensa (alectinib) was approved as a monotherapy for patients with anaplastic lymphoma kinase (ALK)-positive, advanced non-small cell lung cancer (NSCLC). The Chinese approval came nine months after the U.S. Food and Drug Administration (FDA) approved Alecensa in the United States, and eight months after the European Medicines Agency (EMA)approved it in Europe.

Roche Chief Medical Officer Sandra Horning said the approval of Alecensa “marks a new era for ALK-positive lung cancer patients in China.” Those patients have a new treatment option that provides a “meaningful, sustained benefit, in comparison with the previous standard of care available,” added Horning, who is also head of global product development for Roche.

Honing also noted that the quick approval of Alecensa in China marked a significant change in the way that nation’s regulatory agency is looking at drug approvals.

“It… represents a significant regulatory shift, with the approval received under unprecedented timelines. We are proud to be at the forefront of healthcare innovation in China by helping to bring Alecensa to patients as quickly as possible,” Horning said in a statement.

Reuters reported that Roche’s Chinese presence is “modest but increasing in importance.” The company’s revenue grew 9 percent in the first six months of 2018, Reuters said.

The approval of Alecensa in China is an important one for that nation, as lung cancer rates continue to rise there. It is the most commonly diagnosed cancer type, Roche noted in its announcement. NSCLC is the most common form of lung cancer in China and the ALK-positive form of the disease is often diagnosed in younger patients, Roche noted. About 5 percent of NSCLC patients are ALK-positive, Roche added. Lung cancer is the leading cause of cancer-related deaths in China.

Oncology drugmakers continue to look at China as a significant market for medications. There are approximately 700,000 new cases of cancer diagnosed in China annually. China has about one-third of new cancer patients in the world, BioSpace has noted in past articles. With the growth of cancer patients in China, that country has seen a rise in the number of CAR-T treatments aimed at that market.

In June, the CNDA approved Bristol-Myers Squibb’s Opdivo as a treatment for patients with previously treated NSCLC. That was a significant step in China. The approval makes Opdivo the first PD-1 inhibitor approved in China. BMS Chief Commercial Officer Murdo Gordon said at the time of the approval that Opdivo, now approved in more than 60 countries, is a “global standard of care for previously treated NSCLC.”

Chinese officials quickly approved a second PD-1 inhibitor, though. In July Merck snagged approval for its blockbuster checkpoint inhibitor Keytruda as a treatment for patients with advanced melanoma. Joseph Romanelli, president of MSD China, said in July that the approval of Keytruda “reflects the Chinese government’s strong commitment to expedite the introduction of innovative therapies to Chinese patients.”

While there are numerous western-developed cancer treatments now available in China, the issue of cost and drug availability has been a hurdle for patients. Chinese news agency XinhuaNet reported in July that the government has introduced policies to address the issue. XinhuaNet reported that the government has lifted tariffs on many imported drugs, including cancer treatments, which has helped reduce the price burden for patients in that country.

https://bit.ly/2w5teEL

Allergan poised to turn corner?

If you don’t own any pharmaceutical stocks right now, you can’t be blamed. Patent expiration and price wars always threaten sales and profitability, and consolidation has saddled many with monstrous debt that’s hamstringing growth.

Nevertheless, a good argument can be made that the risks associated with the pharmaceutical industry have made stocks incredibly cheap — especially since these companies produce tremendous cash flow that’s fueling dividends and buyback programs. If you’re interested in adding a drugmaker to your portfolio for those reasons, the one stock that I’d recommend buying this month is the beat-up Botox maker Allergan (NYSE:AGN).

The backstory

Before buying this stock, it’s important to understand why Allergan has found itself in the stock market’s bargain bin.

Although Allergan’s been around awhile, it’s only existed in its current form a few years. In 2014, acquisition-hungry Valeant Pharmaceuticals offered to buy Allergan for $46 billion, kick-starting a contentious back-and-forth that resulted in a hostile attempt by Valeant to buy Allergan, which was ultimately acquired in a $70 billion friendly takeover by generic drugmaker Actavis.

The tie-up with Actavis was savvy: Soon after being rebuffed by Allergan, Valeant saw its shares crash in the wake of scrutiny over skyrocketing price increases, a suspect relationship with its specialty-drug distributor, and allegations of improper prescription fulfillment and reimbursement practices.

The newly formed Allergan arguably dodged a bullet by avoiding a tie-up with Valeant, but it didn’t escape unscathed. In order to finance its combination with Actavis, the newly created company had to take on a mountain of debt, and that debt has been a millstone. In early 2015, Actavis issued shares and $21 billion in senior unsecured notes to finance the deal; in June 2015, the newly created company reported total long-term debt of $42.7 billion.

Although Allergan forecast free cash flow of $8 billion in 2016 that would allow it to “rapidly de-lever the balance sheet,” it didn’t quite work out that way. Under pressure following Valeant’s fall from grace, Allergan announced in mid-2015 it would sell Actavis’ legacy generic-drug business toTeva Pharmaceutical (NYSE:TEVA) for $40.5 billion, including $33.75 billion in cash, a move that would allow it to reduce its debt far faster than it would’ve been able to otherwise. Following that announcement, rumors began swirling that Pfizer (NYSE:PFE) wanted to acquire Allergan to capture tax savings associated with Allergan’s being domiciled in low-tax Ireland, rather than the United States, where taxes were much higher. Allergan confirmed those rumors in October and soon after announced a massive $160 billion deal that valued Allergan’s shares at $363.63 each.

The deal wasn’t meant to be. Tax inversions like the one Pfizer was planning with Allergan drew the ire of regulators in Washington, D.C., and rule changes effectively put the kibosh on the tax advantages associated with them. Once that happened, Pfizer walked away. Although the sale to Teva proceeded, giving Allergan financial flexibility, it had been delayed. The delay, loss of exclusivity on some important drugs (including dementia treatment Namenda), and ongoing concerns about debt levels from investors all contributed to Allergan’s shares slipping from their Pfizer deal peak north of $340 to a low earlier this year below $150.

AGN DATA BY YCHARTS.

Why buy now

The Teva Pharmaceutical deal provided Allergan with a pile of cash that it’s used to reduce its debt to $25.3 billion as of the end of June. As a result, the company’s quarterly interest payments on debt have fallen dramatically. In Q2, interest expense was $230 million, down from $277 million in the prior-year quarter; through the first six months of 2018, interest expense was $481 million, down from $567 million in the first six months of 2017. Because management continues to reduce its debt, it’s forecasting that total interest expense will drop to $900 million this year. For perspective, interest expense was $1.1 billion in 2017 and $1.3 billion in 2016.

Reducing its debt provides a nice tailwind to the company’s bottom line; however, the potential for profit to improve because of less debt wouldn’t matter too much to me if it didn’t also appear that Allergan has a good plan to continue growing its top line, despite patent expiration-related headwinds to sales.

Loss of exclusivity puts $489 million in quarterly sales at risk between now and 2020, or about 12% of Allergan’s $4.1 billion in second-quarter 2018 revenue. Yet, the company’s top line still grew nearly 2% year over year last quarter, even after removing tailwinds from currency conversion. Importantly, Allergan believes that promotion of its existing brands will more than offset falling sales of those at-risk drugs.

In Q2, total revenue was $4.1 billion. Based on the company’s year-to-date performance, management recently boosted its full-year sales forecast to between $15.45 billion and $15.6 billion from its prior guidance for $15.15 billion to $15.35 billion. Management also says it’s on track to deliver on its compounded annual revenue growth forecast of 5% between 2017 and 2022.

If Allergan can deliver on that goal, it should be able to grow earnings even more quickly. In Q2, the company’s cost-consciousness helped reduce its operating expenses by 5.4% from one year ago, and the combination of revenue growth for key products, lower interest expense, and lower operating expenses resulted in adjusted net income growing 5% to $1.5 billion. An increase in cash flow that helped the company complete its prior $2 billion share-buyback plan meant that the extra profit was spread across fewer shares, which in turn led to a 10% increase in earnings per share to $4.42.

As long as cash flow continues, I think Allergan is in a pretty good position to continue reducing debt, while also buying back more shares and paying out a modest dividend. The company has a new $2 billion buyback plan it wants to complete within 12 months, it’s returned $564 million to investors through the first six months of 2018 via dividends, and its long-term capital deployment plan includes “prudently growing” its dividend over time.

A discount-rack valuation

Although the company is making headway on its financials, investors have yet to become very optimistic. The company’s declining share price has reduced its valuation significantly over the past three years, particularly on a price-to-book basis. As a refresher, price to book is calculated by dividing a company’s market capitalization by its total assets minus its total liabilities.

The price-to-book metric is a value-investor favorite because it shows how much investors are paying to own a company’s stock relative to the company’s break-up value. There’s no “magic” ratio for finding winners, but value investors often view a price-to-book value below 1 as reflecting a potential bargain.

As you can see in this next chart, Allergan’s price-to-book ratio is 0.88, and its recent price-to-book ratios are among the lowest on record for the company. Certainly, shares could fall further, making this stock even cheaper on this metric, but historically, buying shares when the price-to-book ratio has been in this area has made sense.

AGN PRICE TO BOOK VALUE DATA BY YCHARTS.

What to watch next

At 23% of sales, Botox is a significant component of Allergan’s top line. Sales of the treatment grew 14% last quarter from one year ago, in part because of increased use in migraine patients. Botox revenue is expected to grow double-digits through 2018, but diversifying revenue across new products could be key to the company’s long-haul success.

In a bid to do that, the company has a few intriguing drugs advancing toward the regulatory finish line. It’s reported positive phase 3 results for the acute-migraine drug ubrogepant, and if regulators cooperate, that drug could hit the market in 2020. It plans to file its major-depression drug, cariprazine, later this year, clearing the way for an FDA decision next year. It also expects to file FDA applications for approval of a glaucoma and an age-related macular degeneration drug next year. There’s no guarantee those drugs will reach the market, but each targets a billion-dollar blockbuster indication, so their approvals could move the revenue needle at Allergan.

Overall, Allergan seems to be turning a corner, and if I’m right, then buying its shares now, when they’re arguably inexpensive, could be a profit-friendly long-term decision.

https://bit.ly/2nSmpSc

Neogen one-hour Listeria Right Now receives AOAC approval

Listeria Right Now environmental pathogen detection system has officially achieved AOAC approval, license number #081802. The approval adds another level of assurance to the food safety community, as the product has now been validated by one of the industry’s leading third-party accreditation groups. Listeria Right Now is a complete system for taking environmental Listeria tests with molecular-level accuracy that requires no enrichment, so there’s no need for processors to grow bacteria cultures on-site. The system provides results in under one hour, much faster than traditional methods, which can take up to several days.

https://bit.ly/2PmIHIl