Why Traders Are ‘Whispering’ About A 500,000 Jobs Print Tomorrow

The key economic catalysts for yesterday’s dramatic spike in Treasury yields was the two-punch combo of surprisingly strong September ADP payrolls which came in at 230K (184K expected), and a blowout ISM non-manufacturing report, which printed at 61.6 (58.0 expected) – the highest reading since August 1997 – but it was the employment component which was the highlight of the report, and stunned traders: at 62.4, it printed at the highest level on record.

Between the blockbuster ADP and ISM reports, and together with Fed Chair Powell’s surprisingly hawkish speech after hours, it is hardly a surprise that yields moved up as much as they did: after all, if accurate these numbers suggest that the US economy is now well into “overheating” territory.

This morning, SocGen’s FX strategist Kit Juckes tried to put some numbers to this qualification, and in highlighting the ISM employment print, writes that “there’s a strong positive correlation between changes in private sector payrolls and the ISM non-manufacturing employment sub index, though the monthly miss can still be huge too.”

Putting the two series side by side, Juckes observes that “yesterday’s record 62.4 reading for the ISM employment component would ‘imply’ a 500k increase in private sector jobs, which would be the best since 1983.”

This is shown in the chart below.

The SocGen analyst summarizes the potential for a blockbuster jobs report tomorrow as follows:

I don’t think we’re supposed to rush out and revise our forecasts for tomorrow’s data as a result, but the market will be braced for a strong outcome despite the potential drag from Hurricane Florence, and the underlying message is that the US economy isn’t just in fine fettle, it’s on fire. That has been enough to take 10year Note yields out of their recent range and to levels (2.23% and still rising) that we haven’t seen since 2011. Ed Chairman Powell acknowledges that the funds rate is likely to get above ‘neutral’ (i.e., above 3%) at some point, albeit slowly.

And with emerging markets cracking again as the dollar surges and yields soar sending EM currencies plunging, the cost of gasoline soaring and capital flowing out at an accelerating pace, tomorrow’s jobs report may just be one of the most important, if not for the US economy – which is still basking in the soft glow of Trump’s $1.5 trillion fiscal stimulus – then for the rest of the world, where any print even remotely close to 500,000 will unleash a new market tantrum and economic turmoil.

https://www.zerohedge.com/news/2018-10-04/why-traders-are-whsipering-about-500000-jobs-print-tomorrow

Lilly’s diabetes drug data impresses, hurts rival Novo

Eli Lilly and Co (LLY.N) said on Thursday its new two-in-one diabetes drug was successful in lowering blood sugar and reducing weight, sending its shares to a record high and weighing on those of arch-rival Novo Nordisk (NOVOb.CO).

The novel drug targets two key gut hormones at the same time, and could pose a threat to currently available single-hormone drugs, which form a large and growing part of Novo’s business.

Lilly’s treatment reduced blood sugar levels in type 2 diabetes patients by up to 2.4 percent and produced an average weight reduction of up to 12.7 percent in a mid-stage study by targeting the GLP-1 and GIP hormones.

The trial results set a new industry gold standard versus marketed GLP-1s, including Novo’s Ozempic for both blood sugar lowering and weight loss, Citi analyst Andrew Baum said.

Lilly’s shares were rose 6.5 percent to a record high of $115.68 in early trading, while those of Novo fell nearly 8 percent.

Novo’s existing GLP-1 products include Victoza and Omzepic, and the company is also developing an oral version of semaglutide, the active ingredient in Ozempic.

Lilly said it intends to complete its late-stage study for the drug in late 2021, and is also evaluating the drug for treating obesity, among other conditions.

BMO Capital Markets analyst Alex Arfaei said the treatment provides Lilly with a reasonable shot at the large obesity market and should meaningfully strengthen the company’s position in the rapidly growing GLP-1 market.

Eli Lilly and Co113.05

LLY.NNEW YORK STOCK EXCHANGE

+4.43(+4.08%)

• LLY.N
• NOVOb.CO

About 30 million adults in the United States have diabetes, with 90 percent to 95 percent of them suffering from type 2 diabetes.

Obesity is a major risk factor for developing type 2 diabetes, and weight loss as little as 5 percent of the total body weight has been found to help improve type 2 diabetes in patients who are obese or overweight, according to American Society for Metabolic and Bariatric Surgery.

Lilly’s wide portfolio of diabetes drugs, including GLP-1 drug Trulicity, contributed at least 38 percent to its total sales of $6.36 billion in the latest reported quarter.

“With Trulicity representing a core growth driver for Lilly and competitive concerns regarding Ozempic and oral semaglutide causing an overhang on shares over the past year, we see today’s results as a clear positive for the Lilly story,” JP Morgan analyst Chris Schott said in a note.

https://www.reuters.com/article/us-lilly-study/lillys-diabetes-drug-data-impresses-hurts-rival-novos-shares-idUSKCN1ME11Z

Eli Lilly presents phase 2b trial data of dual GIP, GLP-1 receptor agonist

Results from a phase 2b clinical trial of Eli Lilly’s dual GIP and GLP-1 receptor agonist showed strong and clinically meaningful blood sugar reduction and weight loss in people with type 2 diabetes. The six-month data, showing average HbA1c reductions of up to 2.4 percentage points and an average weight reduction up to 11.3 kg ,were presented at the 54th annual meeting of the European Association for the Study of Diabetes and simultaneously published in The Lancet. The weekly dual glucose-dependent insulinotropic polypeptide, or GIP, and GLP-1 receptor agonist integrates the action of both incretins into a single novel molecule, aiming to build upon the clinical benefits seen with a selective GLP-1 RA. Two statistical approaches were used to evaluate the efficacy of four doses of GIP/GLP-1 RA compared to placebo and dulaglutide 1.5 mg in people with type 2 diabetes. The first was a dose response model evaluating the effect regardless of discontinuation of treatment and use of rescue medication. An additional analysis identified the effect while on treatment and without use of rescue medication. At 26 weeks, the primary analysis showed a robust dose response compared to placebo throughout the entire dose range of GIP/GLP-1 RA included in the study. The safety profile of GIP/GLP-1 RA was similar to the GLP-1 RA class. The most commonly reported side effects were gastrointestinal-related, and dose-dependent. These events included nausea, diarrhea and vomiting which were mild to moderate and generally temporary, most often occurring during the titration period. Dulaglutide 1.5 mg had a similar side effect profile to previous studies. No participants in any of the treatment groups experienced severe hypoglycemia. A further study examining an optimal titration schedule to help manage GI side effects was conducted and will be presented next year. The safety and efficacy of Lilly’s GIP/GLP-1 RA are being studied further in a large phase 3 clinical program that will be referred to as the SURPASS program. Phase 3 studies for type 2 diabetes are expected to begin no later than early 2019 and complete in late 2021. Lilly is evaluating next steps in the study of GIP/GLP-1 RA for obesity and other conditions.

https://thefly.com/landingPageNews.php?id=2799531

Syneos Health initiated at Evercore ISI

Syneos Health initiated with an Outperform at Evercore ISI. Evercore ISI initiated Syneos Health with an Outperform and $58 price target.

https://thefly.com/landingPageNews.php?id=2799533

SeaSpine price target raised to $22 from $16 at Cantor Fitzgerald

Cantor Fitzgerald analyst Craig Bijou raised his price target for SeaSpine to $22 and reiterates an Overweight rating on the shares after hosting a chat with the company’s CEO and CFO. The analyst now has more conviction that SeaSpine can consistently deliver growth in the high-single to low-double-digit range. He thinks the company is “finally starting to see the benefit of management’s hard work over the last three years.” Bijou views SeaSpine’s 2018 sales guidance as conservative and sees upside to 2019 consensus estimates.

https://thefly.com/landingPageNews.php?id=2799565

Alnylam reports updated ‘positive’ results from Phase 1/2 study of lumasiran

Alnylam Pharmaceuticals announced updated positive results from its Phase 1/2 clinical study of lumasiran, an investigational, subcutaneously administered RNAi therapeutic targeting glycolate oxidase for the treatment of primary hyperoxaluria type 1. The company also announced the initiation of ILLUMINATE-A, a global Phase 3 pivotal trial of lumasiran in children and adults with PH1. The study will enroll approximately 30 patients and is designed in alignment with FDA with a primary endpoint based on reduction of urinary oxalate at six months. Alnylam expects to report topline results from ILLUMINATE-A in late 2019 and, if positive, submit filings for regulatory approval starting in early 2020. New results from the Phase 1/2 study were as of a data cut-off date of August 15, 2018. Lumasiran demonstrated a mean maximal reduction in urinary oxalate of 75 percent relative to baseline across cohorts dosed at 1 mg/kg monthly or 3 mg/kg monthly or quarterly. The mean reduction relative to baseline was 66 percent when measured 28 days post last dose. All patients achieved oxalate lowering to less than 1.5 times the upper limit of normal. Among patients receiving 3 mg/kg monthly or quarterly doses of lumasiran, 83 percent achieved urinary oxalate levels within the normal range. Furthermore, lumasiran-treated patients in all cohorts experienced a mean maximal decrease of 76 percent in the ratio of urinary oxalate to creatinine – a corroborative measure of oxalate reduction that addresses the variability that is inherent to 24 hour urine collections. The Phase 1/2 safety results in patients with PH1 were based on a median study duration of seven months since first dose. As of the data cut-off date, there were no discontinuations from study treatment. Serious adverse events were reported for one patient receiving placebo and five patients receiving lumasiran; none were related to study drug. The placebo patient experienced acute pyelonephritis and kidney stones. The lumasiran patients with SAEs included one patient with vomiting, one patient with abdominal pain, fever and vomiting, one patient with gastroenteritis, and two patients with kidney stones. Adverse events were reported in three patients during placebo dosing and 19 patients after lumasiran dosing. The majority of AEs were mild or moderate in severity and were assessed as unrelated to study drug. Injection site reactions were reported in three patients receiving lumasiran. ISRs were mild or moderate in severity and were self-limiting. Lumasiran was not associated with any clinically significant adverse laboratory findings. In patients receiving lumasiran, plasma glycolate levels increased consistent with the pharmacology of lumasiran and results from healthy volunteers in Part A of the Phase 1/2 study. This increase was not associated with any safety findings.

https://thefly.com/landingPageNews.php?id=2799573

Zafgen to present data from studies at rare disease confab

Zafgen announced results from three nonclinical, investigational new drug, or IND, -enabling studies of ZGN-1258 to be presented at the Foundation for Prader-Willi Research, or FPWR. ZGN-1258 is Zafgen’s second-generation, novel investigational MetAP2 inhibitor for the treatment of rare metabolic disorders, including Prader-Willi syndrome, or PWS, designed to decrease hyperphagia, change the way the body metabolizes fat, and reduce fat mass. Together, these studies demonstrate nonclinical efficacy and safety for ZGN-1258 and support further development. In one poster, the effects of ZGN-1258 are characterized in mouse models of hyperphagia and obesity. In a second poster, in three mouse models that share features with PWS, ZGN-1258 demonstrates improvement in behavioral manifestations commonly observed in PWS, including low physical activity, anxiety and obsessive-compulsive behaviors. A third poster shows a comparison of the effects of ZGN-1258 and Zafgen’s first generation MetAP2 inhibitor on safety measures, including measures of thrombotic risk, demonstrating a highly differentiated profile for ZGN-1258 on endothelial cell effects.

https://thefly.com/landingPageNews.php?id=2799577