Wednesday, October 31, 2018
United Therapeutics reports Q3 EPS $3.98, consensus $3.25
https://thefly.com/landingPageNews.php?id=2814095
Acorda Therapeutics raises FY18 revenue view to over $400M from $330M-$350M
https://thefly.com/landingPageNews.php?id=2814107
Jeff Osher Short Trupanion: Sohn San Francisco Conference 2018
We’re posting up notes from the Sohn San Francisco 2018 investment conference. Next up is Jeff Osher of No Street Capital who pitched short Trupanion (TRUP).
Jeff Osher’s Sohn San Francisco Presentation: Short Trupanion (TRUP)
Company
• Short Trupanion (TRUP), a pet health insurance company
• An insurance company that is looking for a SAAS-like multiple by using software nomenclature and getting coverage by software analysts
• An insurance company that is looking for a SAAS-like multiple by using software nomenclature and getting coverage by software analysts
Thesis
• Believes that TRUP is an insurance company masquerading as a subscription software business by using software nomenclature and getting coverage by software analysts
• Gross margins of 17% are nowhere near SAAS companies
• Looks more like standard insurance company with policyholders than a subscription company with subscribers. Company drivers are net premiums earned and losses incurred just like other insurance companies
• Company pays potentially illegal commissions through “rewards program” for veternarians based on referrals/sales and may be under regulatory investigation (although nothing disclosed) – Offering paid trips to vets and money to money to hospitals for policy activations = commissions
• Believe they could have an adverse selection problem as they are distributing/selling primarily through vet hospitals and healthy pets do not visit the vet hospitals
• Believes they are in an Inevitable Rate spiral which will result in a death spiral – Premiums have to be increased to offset higher claims and thus healthier pets unlikely to be signed up
• Valuation: Trades at a 9x P/B – way higher than best in class insurance peers like Progressive which trades at 3.6x P/B; Believes intrinsic value is $7.05-10.60 representing 65% to 77% downside
• Gross margins of 17% are nowhere near SAAS companies
• Looks more like standard insurance company with policyholders than a subscription company with subscribers. Company drivers are net premiums earned and losses incurred just like other insurance companies
• Company pays potentially illegal commissions through “rewards program” for veternarians based on referrals/sales and may be under regulatory investigation (although nothing disclosed) – Offering paid trips to vets and money to money to hospitals for policy activations = commissions
• Believe they could have an adverse selection problem as they are distributing/selling primarily through vet hospitals and healthy pets do not visit the vet hospitals
• Believes they are in an Inevitable Rate spiral which will result in a death spiral – Premiums have to be increased to offset higher claims and thus healthier pets unlikely to be signed up
• Valuation: Trades at a 9x P/B – way higher than best in class insurance peers like Progressive which trades at 3.6x P/B; Believes intrinsic value is $7.05-10.60 representing 65% to 77% downside
Be sure to check out the rest of the Sohn San Francisco 2018 presentations.
Alex Gleser Long Philips: Sohn San Francisco Conference 2018
We’re posting up notes from the Sohn San Francisco 2018 investment conference. Next up is Alex Gleser of TPG Public Equity Partners who pitched a long of Philips (PHG).
Alex Gleser’s Sohn San Francisco Presentation: Long Philips (PHG)
• Portfolio has transformed dramatically with spin off of lower margin lighting business and sale of TV/electronics businesses (Went from a diversified conglomerate to a healthcare and personal care company but market still not viewing the company with the right lens)
• Attractive secular growth ( End markets growth at 7%, have #1 or #2 share in their major categories)
• Significant margin improvement opportunity (Diagnostic imaging is primarily where their margins lag and ability to increase their margin here; See 600 bps of margin improvement potential across the segments of the company; Management contemplating 100bps/year of expansion from 2017-2020)
• Management has delivered hitting organic growth targets of 4-6% and 100 bps margin expansion over the last year
• Attractive valuation: Trading at 9.2x EV/EBITDA – lower than peers
• Some optionality in other part of the business
• Strong balance sheet provides a nice margin of safety
• Attractive secular growth ( End markets growth at 7%, have #1 or #2 share in their major categories)
• Significant margin improvement opportunity (Diagnostic imaging is primarily where their margins lag and ability to increase their margin here; See 600 bps of margin improvement potential across the segments of the company; Management contemplating 100bps/year of expansion from 2017-2020)
• Management has delivered hitting organic growth targets of 4-6% and 100 bps margin expansion over the last year
• Attractive valuation: Trading at 9.2x EV/EBITDA – lower than peers
• Some optionality in other part of the business
• Strong balance sheet provides a nice margin of safety
Be sure to check out the rest of the Sohn San Francisco 2018 presentations.
WeWork ditches unlimited beer in New York to keep tabs on startup party culture
When Stephanie, a 26-year-old New York advertising creative, quit drinking in March this year, the last place she expected to face temptation was in the workplace.
But often when she visited WeWork locations in New York City as well as her hometown of Dallas to work for a marketing startup she had launched with a friend, she found the drinking culture there inescapable.
WeWork is an international network of shared workspaces serving 175,000 people in 64 cities worldwide. Starting at $190 per month, the company provides subscription-based shared workspaces for startups, entrepreneurs, small businesses and freelancers. In many locations, that comes with perks, including unlimited free craft beer.
‘As a recent non drinker, the nearly constant presence of alcohol in the workplace does make me uncomfortable at times.’
“I’ve always found it a bit backwards that a free-for-all beer tap has become a must-have statement piece of a cool workspace,” Stephanie — whose last name has been withheld at her request to protect her anonymity — said. “As a recent non drinker, the nearly constant presence of alcohol in the workplace does make me uncomfortable at times.”
On Tuesday, WeWork announced in an email to users in New York City tat it’s experimenting with a pilot program to “help manage the provision of alcohol in our spaces.” Through the program, all taps will be controlled with the same key card used to get into the building. Employees will now be limited to four 12-ounce pours of beer per person, per day. The tap will be locked outside the hours of 12 p.m. to 8 p.m. to prevent early morning and late-night drinking.
“WeWork has been working on piloting an innovative, software-driven mechanism to help manage the provision of alcohol in our spaces for some time,” a spokeswoman told MarketWatch. “In addition to the supervision already provided by our community management team, mechanized tap controls will enhance this amenity we provide to our members.”
After the #MeToo movement put workplace harassment and drinking culture in the spotlight, many companies began to eliminate holiday parties
Silicon Valley startups have been criticized for the “bro culture,” a reputation that includes drinking in excess. Some commentators doubted WeWork has a problemwith on-site drinking, but many companies are still cracking down on alcohol consumption.
After the #MeToo movement put workplace harassment and drinking culture in the spotlight, many companies began to eliminate holiday parties over the past year or crack down on open bars in an attempt to limit bad behavior.
This is not WeWork’s only sweeping policy change this year: In July, it announced it will eliminate meat from all official office events and banned employees from expensing pork, red meat, or poultry when eating out on the company’s budget.
“New research indicates that avoiding meat is one of the biggest things an individual can do to reduce their personal environmental impact, even more than switching to a hybrid car,” the company said in a memo regarding the change. The carbon footprint of a beer is significantly smaller, but the policy could lead to fewer hangovers.
Sanofi reports Q3 business EPS EUR 1.84 vs. EUR 1.70 last year
Reports Q3 revenue EUR 9.39B vs. EUR 9.06B last year.
https://thefly.com/landingPageNews.php?id=2814059
A Look Back at October Life Sciences IPOs
October was a busy month as multiple biopharma companies made their debut as publicly traded entities and even more companies filed their intentions to go public with an initial public offering. BioSpace takes a look back at some of the key IPOs of the month.
Related: Check out BioSpace’s list of October IPO Filings and Proceeds here.
The nine companies that initiated IPOs over the course of October raised more than $1 billion from their combined investors.
Gamida Cell Ltd. – Israel-based Gamida Cell raised $50 million to support the development of cell therapies for cancer and rare diseases. Initially, the company planned to raise $69 million. The stock, sold on the Nasdaq Exchange under the ticker symbol GMDA, made its debut at $8 per share. Since then the stock has climbed and hit a high of $9.72. Gamida Cell’s lead product is NiCord, a Phase III NAM-expanded cord blood cell therapy. The company believes it has the potential to serve as a universal curative stem cell graft for patients who need a hematopoietic stem cell transplant. The Phase III trial is enrolling patients with a number of hematologic malignancies, including high-risk leukemias such as acute myeloid leukemia (AML), acute lymphocytic leukemia (ALL), chronic myeloid leukemia (CML), myelodysplastic syndrome (MDS) and lymphomas.
LogicBio Therapeutics – When Cambridge, Mass.-based LogicBio announced the closing of its IPO on Oct. 23, the company said it snagged $80.5 million, about $10 million more than initially reported when it began selling on the Nasdaq on Oct. 19. LogicBio’s core platform includes its proprietary GeneRide technology and synthetic gene-therapy vectors derived from naturally occurring human adeno-associated viruses. Shares were initially offered at $10 and climbed to $11.50, but have since fallen back to a low of $7.88 on Oct. 24.
PhaseBio Pharmaceuticals – Malvern, Penn.-based PhaseBio Pharmaceuticals raised $46 million in an IPO to support the development of novel therapies for orphan diseases, with an initial focus on cardiopulmonary. PhaseBio initially filed a prospectus for a $86 million IPO. The stock was initially priced at $5. Since its IPO, the stock has hit a high of $5.25, but has since fallen back. The company’s lead product is PB2452, a potentially first-in-class reversal agent for the antiplatelet drug ticagrelor that is being developed for the treatment of patients on ticagrelor who are experiencing a major bleeding event.
Osmotica Pharmaceuticals – Based in Wilmington, N.C., Osmotica Pharmaceuticals raised $46.6 million in an IPO. Since its debut on the Nasdaq, Osmotica, which trades under the symbol OSMT, hit a high of $9.20 on Oct. 22, but has since fallen back some to a low of $8 on Oct. 24. Earlier this year, the U.S. Food and Drug Administration (FDA) approved the company’s Osmolex ER for the treatment of Parkinson’s disease and for the treatment of drug-induced extrapyramidal reactions in adult patients.
SI-Bone, Inc. – Medtech company SI-Bone raised $108 million in its Oct. 17 IPO. The Santa Clara, Calif.-based company developed the iFuse Implant System, a minimally invasive surgical system for fusion of the sacroiliac joint to treat sacroiliac joint dysfunction. SI-Bone, sold on the Nasdaq under the symbol SIBN, was initially priced at $15. The stock hit a high of $21, but has slipped back some.
Equillium, Inc. – Biotech startup Equillium, Inc. raised $65.4 million in its IPO. The funds will be used to support the development of therapeutics for immune system disorders. Equillium’s initial product candidate, EQ001 (itolizumab), is a first-in-class monoclonal antibody that selectively targets the novel immune checkpoint receptor CD6. EQ001 is designed to modulate T cells that drive immuno-inflammation. La Jolla, Calif.-based Equillium’s stock, sold under the symbol EQ, was initially priced at $14. It hit a high of $14.97 on Oct. 25.
Allogene Therapeutics – Six months after launching, Allogene Therapeutics roared out of the gate with $372.6 million in its initial public offering – significantly above the $288 million the company initially anticipated from its IPO. South San Francisco-based Allogene announcedits intentions to file for an IPO last month. The company trades on the Nasdaq under the symbol ALLO. Founded by former Kite Pharma executives Arie Belldegrun, and David Chang, Allogene develops off-the-shelf CAR-T therapy products. Shares of Allogene were initially priced at $25 and hit a high of $29.96 on Oct. 15. Since then though, shares have dropped back and hit a low of $22.50 on Oct. 24.
Guardant Health – Bay Area biotech Guardant Health raised $237.5 million in its Oct. 4 IPO. The company develops blood tests for early and recurrent cancer detection. The liquid biopsies help physicians to match the most appropriate treatment to the patients. The company’s stock spiked nearly 70 percent on its first day of trading on the Nasdaq under the ticker symbol GH. The stock was first available at $19 per share and by the end of the first day of trading, it had climbed to $32.20 per share. One of its primary products is Guardant360 for advanced solid tumor cancers. Since that first day of trading, the stock has hit a high of $40.73 on Oct. 17. Shares have fallen back slightly since then, but have not slipped below the mark set on that first day of trading.
Kodiak Sciences – Another Bay Area company, Kodiak Sciences, secured $90 million in its Oct. 4 IPO. Kodiak went public weeks after it announced enrollment had been completed for its Phase I trial of KSI-301 to treat retinal vascular diseases, including neovascular age-related macular degeneration and diabetic eye disease. Kodiak, which trades on the Nasdaq under the symbol KOD, was initially available at a price of $10 per share. Since its launch, the stock has struggled to stay above its initial list price. On. Oct. 24 it hit a low of $9.27.
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