Wednesday, August 29, 2018
Tilray downgraded to Neutral on valuation at Roth Capital
Roth Capital analyst Charles Finnie downgraded Tilray (TLRY) to Neutral from Buy, citing valuation, noting that the stock has advanced nearly 2.5 times since going public last month. While Tilray reported strong results and “appears to be on track for a very impressive 2019,” Finnie believes the stock’s current levels reflect “a highly speculative M&A scenario” following Constellation’s (STZ) $4B investment in market leader Canopy Growth (CGC), he tells investors. Though he cut his rating, Finnie raised his price target on Tilray shares to $54 from $35.
https://bit.ly/2MXZkf6
Suit challenging petition to put Medicaid expansion before Neb. voters dismissed
A judge has tossed out a lawsuit intended to prevent voters from deciding whether more Nebraskans should qualify for Medicaid assistance.
Lancaster County District Judge Darla Ideus on Tuesday rejected arguments that the successful Medicaid petition is “invalid and legally insufficient.” The decision removes another potential barrier to putting Medicaid expansion on the November ballot.
Opponents of Medicaid expansion said during a hearing last weekthat the petition contains more than one subject, in violation of the Nebraska Constitution. They also argued that the petition does not properly disclose as a sponsor the Nebraska Appleseed Center for Law in the Public Interest.
J.L. Spray, the attorney for the plaintiffs, said Tuesday that he will need to read the ruling and discuss it with his clients before a decision is made on whether to appeal. State Sen. Lydia Brasch of Bancroft and former State Sen. Mark Christensen of Imperial brought the lawsuit, saying they worry about the tax implications of Medicaid expansion.
If appealed, the case would have to remain on a fast track to meet a Sept. 14 deadline for certification of issues and candidates on the Nov. 6 ballot.
Meg Mandy, manager of the petition campaign, said Tuesday that it’s “a great day for democracy.” She said Republicans, Democrats, independents and others signed the petition to let voters decide the issue after repeated attempts at Medicaid expansion failed in the State Legislature.
“If they decide to appeal, we’ll see them in the Nebraska Supreme Court,” she said. “If not, we’re going to work really hard until Election Day to see that it passes.”
Supporters of Medicaid expansion submitted almost 137,000 signatures to put the issue on the ballot. On Friday, Secretary of State John Gale certified almost 105,000 signatures as valid, far more than the 84,000 required to put the measure before voters.
The proposed expansion would provide health coverage to single adults and couples without minor children who cannot qualify for Medicaid now, as well as parents and disabled people with incomes up to 138 percent of the poverty level — $16,753 for a single person or $34,638 for a family of four.
The petition proposes the expansion of Medicaid and directs the State Department of Health and Human Services to maximize federal financial participation in funding medical assistance. Opponents argued that the two elements are separate and distinct, in violation of a state constitutional requirement that all initiative measures have a single subject.
But the judge said prior court rulings have allowed multiple elements to appear on an initiative measure as long as they have a “natural and necessary connection” to each other. She ruled that the two elements in the petition are closely related.
The plaintiffs also tried to get the petition declared invalid by arguing that Nebraska Appleseed should have been listed as a sponsor. The judge referred to a recent Nebraska Supreme Court ruling that said the law requires those who are responsible for the initiative petition to sign on as official sponsors but does not require the same of all active supporters of the measure.
The judge dismissed the plaintiffs’ claims with prejudice, meaning that they can’t be refiled in court.
Tilray Feeds Deal-Making Speculation on Analyst Call
Tilray (TLRY) CEO Brendan Kennedy fueled the fire around cannabis stocks with talk of more big corporate tie-ups in the space in his first Wall Street call since taking his company public.
With speculation around a major investment by Diageo (DEO) in the space driving up shares of Tilray and other cannabis stocks in recent sessions, Kennedy predicted pharmaceutical, tobacco, beverage and consumer product giants will wade in.
“I expect more strategic investors to enter this industry in coming months,” Kennedy said on the pot producing company’s earnings call with analysts late Tuesday after the companyreported earnings.
Kennedy said he could not comment on specific companies taking a look at the sector, but he said consumer package companies and others “are in a desperate search for growth” and that cannabis is already disrupting their business models.
Kennedy’s comments came as Tilray reported a 95% jump in second-quarter revenue to $9.7 million, ahead of the Wall Street estimate of $9 million, in its first earnings release since it went public on July 19. The company’s net loss was 17 cents a share, compared to the analyst estimate for a loss of 9 cents a share.
The pharmaceutical industry sees cannabis as a replacement for opioids, Kennedy said. Alcohol companies are “terrified” and have already made investments in the space.
Consumer packaged goods companies are looking at CBD-infused water products and exercise recovery drinks.
While Tilray has been more active in Canada, Portugal and supplying medical cannabis in the U.K. and Germany, the U.S. market is also on its radar.
“We’re a lot closer to federal legalization in the US than most people realize,” Kennedy said. “Whenever it happens, Tilray will be ready.”
Meanwhile, the Toronto company expects its growth to accelerate as it ramps up production of cannabis and looks to boost its international sales.
High Park Holdings, its subsidiary for the pending adult-use market in Canada, will supply seven provinces. Tilray is working to set up alliances with retailers for the private retail market in Ontario. It will supply the Ontario government with cannabis for legal online adult use sales after October 17. It’s advancing its Tilray medical products in Canada and getting ready to boost cannabis producction in Portugal. It’s also hiring more executives and refinancing its debt.
Shares of Tilray have moved up sharply in recent days on reports that Diageo was in talks to ink a marijuana drink deal. Earlier this month, Constellation Brands (STZ) and Canopy Growth (CGC) teamed up to launch cannabis products, just weeks after Molson Coors(TAP) also inked a pact with a Canadian firm.
Valent BioSciences, ADAPCO Form Strategic Partnership in Public Health
Valent BioSciences Corporation, the global leader in biorational solutions for public health, forest health, and agriculture, announced it has entered into a strategic partnership with ADAPCO, the world’s largest distributor of products to the professional mosquito control industry. As part of the agreement, ADAPCO will become the exclusive distributor of VBC’s broad range of biological-based mosquito control technologies in the US, Puerto Rico, and the Cayman Islands.
The move aligns two of Public Health’s most respected companies in an effort to better serve vector management programs across the US and Caribbean.
“This partnership creates an exciting future for VBC’s Public Health business, its customers, and the people we protect,” said Steve Krause, Global Business Director for VBC’s Public Health and Forestry businesses. “We operate in a highly technical industry, and ADAPCO’s proven history of excellence in the design and operation of equipment, field support, customer service, and the handling of our solutions made it a clear choice going forward.”
Krause indicates the partnership blossomed through ADAPCO’s work with VBC’s award winning technology across five Western states. VBC won a 2017 Chicago Innovation Award for its Wide Area Larvicide Spray (WALS™) application technology. Developed through more than 20 years of global research, WALS leverages VectoBac®, VBC’s advanced Bacillus thuringiensis spp. israelensisStrain AM65-52 (Bti) technology using a breakthrough method for delivering biorational larvicides into the hard-to-reach areas where Dengue- and Zika-transmitting mosquitoes breed.
“We are excited to foster a new era of vector control and mosquito suppression,” said Steve Burt, Managing Director, Specialty Ag/Hort, Azelis Americas. “This alignment of industry-leading teams – Valent Biosciences’ leadership in the space of biorational larvicides, together with ADAPCO’s field and application expertise – will usher in a transformational future for vector control in these regions.”
The effective date for the distribution agreement is October 1, 2018.
GT CEO on Affimed/Roche-Genetech Collaboration Impact
GT Biopharma Inc. (GTBP) and (Euronext Paris: GTBP.PA) is an immuno-oncology biotechnology company focused on innovative treatments based on the company’s proprietary NK-engager and Bispecific Antibody Drug Conjugate platforms.
Monday was a monumental and reassuring day for those of us involved in the Natural Killer cell (NK) immuno-oncology field. For years, if not decades, visionary researchers such as Dr. Jeffrey Miller at the Masonic Cancer Center, University of Minnesota, understood the potential of NK cells in the treatment of cancers. They remained committed to this concept even as T-cells became the most focused upon immune cell leading to T-cell platforms such as Iovance’s TILs, Amgen’s BiTEs as well as Juno and Kite’s CAR-T. However, each of these platforms and individual therapies has their limitations whether they be safety issues, burden on patients, accessibility issues or cost. Fortunately, a few companies, including GT Biopharma, stayed true to the NK cell hypothesis and continued to drive the science behind this concept.
The recent collaboration, $96M upfront with $5B in milestone/royalty payments, announced on August 27th between Affimed and Roche/Genentech not only provides validation of the NK cell hypothesis but more specifically of the NK cell – engager concept. GT Biopharma, since its inception on September 1, 2017 has been diligently working, along with our colleagues at the Masonic Cancer Center, on bringing our TriKE and TetraKE NK cell-engager platforms into and through the regulatory pathway and into clinical development.
Although there are many similarities between Affimed and GT Biopharma, there are significant differences. Both platforms utilize fusion proteins with one end binding to NK cells and the other targeting a tumor antigen. Significant differences in the platforms reside in the way the proteins are constructed and how they address the NK activation and proliferation issue. Like first-generation CAR-T, without a specific stimulatory agent, the cells become exhausted as their numbers dwindle. GT Biopharma’s innovative NK cell-engager platform incorporates IL-15, a potent activator and proliferator of NK cells. No other, including Affimed’s, NK cell technology has this.
I believe that the NK cell field, much like the T-cell field did some years ago, is about to explode onto the scene with rapid advances in both the science and the clinical development spheres. I also believe that GT Biopharma will be leading that charge and bringing to the clinic innovative and formidable new NK cell-engager based therapies.
Generic Drugmakers Push Back on Renegotiation of NAFTA
As President Donald Trump attempts to revise the North American Free Trade Agreement (NAFTA) between the U.S., Mexico and Canada, generic drugmakers have expressed concern over some of the negotiating points.
Bloomberg writes, “In the abstract, the theory behind President Donald Trump’s renegotiation of NAFTA makes sense. His view is that multilateral trade agreements require the approval of too many parties, take too long to negotiate and end up watered down. So the U.S. might do better with bilateral negotiations. America might even have more bargaining power, due to its size and its resulting ability to dictate terms.”
So far so good, except there are reasons to believe that won’t work. The Trans-Pacific Partnership (TPP) was already in place, which would have revised NAFTA, because it also includes Canada and Mexico. Trump, however, chose to pull the U.S. out of the TPP, even though the TPP would have solved some of what Trump views as “the China problem.”
To date, the revisions to NAFTA are modest. Bloomberg notes, “To avoid tariffs, 75 percent of a car has to be made in either the U.S. or Mexico, as opposed to the previous 62.5 percent. Some 40 to 45 percent of the content has to be made by workers earning at least $16 an hour, which would cover U.S. but not Mexican workers. That would shift some production back to the U.S., but would also raise the price of cars for U.S. consumers. Rules on intellectual property protection would be enforced more strictly, which has been the global trend in any case. The pact does not resolve the ongoing tariff crisis between the U.S. and Mexico on steel and aluminum, nor is Canada at the moment included.”
In terms of generic drugs, U.S. and Mexico agreed to 10 years of data protection for biologics and expanded the categories of products eligible for protection. Generic drugmakers, however, oppose the deal, because that would be longer than what both Mexico and Canada already have. Mexico has a period of five years of data exclusivity for biologics and Canada has 10 years.
“The announced trade understanding between the U.S. and Mexico to extend brand name biologic data protection to ten years will harm patients who seek more affordable medicines,” the Association for Accessible Medicines, Canadian Generic Pharmaceutical Associationand Mexican Association of Generic Medicines said in a statement. “The U.S., Mexico and Canada should reject these provisions, which would benefit brand name drug companies to the detriment of public health and the affordability of medical care.”
Brand-name drugmakers have actually pushed for 12 years of protection, which is the case in the U.S., and didn’t act particularly enthused by the preliminary announcement of 10 years.
Trade industry group PhRMA stated, “We encourage the administration to continue pushing for strong trade deals that protect and value the life-saving medicines our companies develop and deliver to patients. We look forward to analyzing the final text of the agreement once completed to ensure it includes policies that protect against global free-riding, promote research and development and reward the innovation being pioneered by America’s biopharmaceutical companies for patients across the globe.”
Tyler Cowen, a Bloomberg Opinion columnist and professor of economics at George Mason University, writes, “Overall, this is probably a better deal for the U.S., economically speaking. It may improve if Canada joins, and given the legislative calendar, Trump can be expected to present Canadian officials with a take-it-or-leave-it offer. Note also that many parts of the deal are likely to bear a resemblance to TPP. But again: At what price? Canadians and Canadian politicians now feel slighted, and it will be harder for Canada to support U.S. initiatives, especially those led by Trump, in the future. It may be a long time before Canada feels like an even vaguely equal partner again.”
Evofem advancing Amphora gel for prevention of certain STDs in women
Thinly traded nano cap Evofem Biosciences (EVFM +14.5%) is up on a 4x surge in volume, albeit on turnover of only 259K shares. The stock has rallied over 60% since touching $1.83 on August 8.
This morning, it announced new CDC data that showed increasing rates of sexually transmitted diseases (STDs) in the U.S. Specifically, 2.3M cases were reported, up almost 10% in a year.
The company’s lead candidate is Amphora, a vaginal gel in Phase 3 development as an on-demand hormone-free contraceptive (topline data expected by year-end) and in Phase 2b development for the prevention of STDs chlamydia and gonorrhea.
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