How a virus impacts the economy and markets

The outbreak of a new virus in China has sent shivers through world financial markets, with investors drawing comparisons to the 2003 SARS (Severe Acute Respiratory Syndrome) outbreak in order to assess its potential economic impact.

The following factbox collates the estimates of the economic impacts of past such episodes as well as individual company winners and losers from the current outbreak.

1) GLOBAL ECONOMIC & FINANCIAL MARKET IMPACT

A 2017 paper https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5791779 by economists Victoria Fan, Dean Jamison and Lawrence Summers estimated that the expected annual losses from pandemic risk to be about $500 billion – or 0.6% of global income – per year, accounting for both lost income and the intrinsic cost of elevated mortality.

Another 2016 study https://nam.edu/wp-content/uploads/2016/01/Neglected-Dimension-of-Global-Security.pdf by the Commission on a Global Health Risk Framework for the Future estimated that pandemic disease events would cost the global economy over $6 trillion in the 21st century – over $60 billion per year.

Isolating the impact of a single factor on global stock indexes and the global economy is a formidable task: they reflect a multiplicity of simultaneously competing factors ranging from economic data, company performance, and geopolitical shifts. In the middle of the SARS outbreak for instance, the U.S. invasion of Iraq would have exerted an equivalent if not greater impact on price action.

However, price action in markets indicates that the impacts of such outbreaks are limited. After Chinese authorities reported the outbreak of SARS to the World Health Organization (WHO) in 2003, the MSCI China index of shares decoupled from its global peers – but made up the lost ground in only six months.

2) ECONOMIC COST OF SARS OUTBREAK 2003

This https://www.ncbi.nlm.nih.gov/books/NBK92473/#ch2.s8 paper by Jong-Wha Lee and Warwick McKibbin estimates the global economic loss due at SARS at $40 billion in 2003.

A May 2006 economic briefing by the International Air Transport Association (IATA) estimated that world gross domestic product suffered a 0.1% hit due to the outbreak.

3) MARKET WINNERS AND LOSERS

Despite the disruption to the wider economy, virus outbreaks have tended to benefit pharmaceutical stocks, while tourism and travel-related stocks – hotels, airlines and luxury and consumer goods – tend to get punished. During the SARS outbreak, retail sales figures in China showed a marked drop-off as consumer spending took a hit.

On Tuesday, Chinese drugmakers Jiangsu Bioperfectus Technologies Co Ltd, Shandong Lukang Pharmaceutical Co Ltd, and Jiangsu Hengrui Medicine Co Ltd were among those outperforming the wider market. Facemask manufacturers Tianjin Teda Co Ltd and Shanghai Dragon Corp also outperformed.

Shares of long-haul flight operators Air France, Lufthansa and British Airways-owner IAG retreated, as news of the contagion raised concerns over disruptions to travel during a coming Chinese holiday.

China-exposed luxury goods makers including LVMH, Kering, Hermes and Burberry also fell.

4) MORTALITY RATE AND ECONOMIC IMPACT

An IMF paper https://www.imf.org/external/pubs/ft/fandd/2018/06/economic-risks-and-impacts-of-epidemics/bloom.pdf by David Bloom, Daniel Cadarette, and JP Sevilla notes that even when the health impact of an outbreak is relatively limited, economic consequences can be quickly magnified. The authors cite the case of Liberia during the 2014 Ebola outbreak, which saw GDP growth decline even as the country’s overall death rate fell over the same period.

“What scared people about SARS is the mortality rate,” ING Asia Pacific’s chief economist Robert Carnell said in a note to clients.

“People didn’t take public transport, stayed away from work, stayed away from shops, restaurants, cinemas, conferences etc. The impact from the disease was massive on the economy, but almost all of it indirect, due to the precautionary behaviour of the population.”

https://www.marketscreener.com/news/How-a-virus-impacts-the-economy-and-markets–29870085/

FDA OKs Medtronic Micra for AV block

The FDA approves Medtronic’s (MDT +1.1%) Micra AV, what it says is the world’s smallest pacemaker with atrioventricular synchrony, for the treatment of patients with AV block, a condition in which the electrical signals between the heart’s chambers are impaired.

https://seekingalpha.com/news/3533152-fda-oks-medtronic-micra-for-av-block

Infectious disease drug developers rally on coronavirus outbreak in China

Later today, the U.S. Centers for Disease Control and Prevention will brief the media on the coronavirus outbreak in China that has stricken 291 people and killed six, mostly in the city of Wuhan in Hubei province.

Selected tickers that investors perceive as bullish on the news: NanoViricides (NNVC +112.4%), Novavax (NVAX +43%), Inovio Pharmaceuticals (INO +10.6%), BioCryst Pharmaceuticals (BCRX +20.9%), ImmuCell (ICCC +17.7%), Aethlon Medical (AEMD +22.3%), Nabriva Therapeutics (NBRV +9.9%)

https://seekingalpha.com/news/3533184-infectious-disease-drug-developers-rally-on-coronavirus-outbreak-in-china

Stocks drop after report of U.S. coronavirus case

Stocks take a leg down after CNN reports that the U.S. Centers for Disease Control and Prevention is expected to announce the first case of Wuhan coronavirus in the U.S., in Washington state.

The Nasdaq, S&P 500 and Dow each slip 0.2%. At midday, the three major U.S. stock averages had nearly erased their declines in the morning.

The 10-year Treasury increases its gain, pushing yield down 5 basis points to 1.772%.

CNN attributes the  news to a federal sources outside to the CDC who was made aware of a  CDC media briefing slated for later today.

The virus, which was first identified in Wuan, China, last month, has so far infected more than 300 people and killed six in an outbreak reported in five countries.

https://seekingalpha.com/news/3533185-stocks-drop-after-report-of-u-s-coronavirus-case

5 biopharmas to watch as the decade’s last earnings kick off

January is always a busy time for biopharma. With the latest J.P. Morgan Healthcare Conference now in the books, companies are shifting gears to report full-year results. Johnson & Johnson will, in typical fashion, lead the pack with its earnings presentation set for Wednesday.

Beyond the sales beats and misses, there’s much uncertainty hanging over the sector. Election years typically make pharmaceutical companies even more sensitive to topics such as new regulations or pricing reform. And while J.P. Morgan usually sets the tone for the months ahead, this most recent iteration didn’t have as clear a narrative as in year’s past.

Still, it’s likely that one of investor’s favorite topics, dealmaking, will be a focal point on several calls. Analysts see an impetus for big biotechs such as Biogen and Gilead to use their cash reserves on M&A. Eli Lilly, meanwhile, recently signaled a desire to do at least three more deals this year.

Smaller companies such as Bluebird Bio and Global Blood Therapeutics shouldn’t have deal expectations, but instead will face questions about the launch strategies for their own products.

Below, BioPharma Dive looks at five upcoming earnings calls that could offer notable updates.

Novartis’ next wave of new drugs

The Swiss pharma won approvals for five new drugs in 2020, adding to its business therapies for spinal muscular atrophy, multiple sclerosis, breast cancer, macular degeneration and sickle cell disease.

Regulatory successes like those support company CEO Vas Narasimhan’s ongoing efforts to shift Novartis from a sprawling conglomerate spanning consumer health and eye care to a more narrowly focused drugs business.

So far, that transition has been made easier by the blockbuster performance of Cosentyx and Entresto, two drugs that combined earned Novartis nearly $4 billion through the first nine months of 2019.

An earnings call on Jan. 29 will put a spotlight on the drugs Novartis hopes can follow. Sales of Zolgensma, in particular, will be closely watched by investors and analysts as the spinal muscular atrophy treatment is important for both Novartis and the broader gene therapy field.

Despite a price tag of $2.1 million, insurers have reimbursed for Zolgensma for all but one of the 100 or so infants who were eligible and received treatment through the end of last year. Investors will be looking for that to continue, particularly as crosstown rival Roche could soon debut a competing drug in the U.S.

Biogen’s shot at an Alzheimer’s first

In October, Biogen announced it would file an experimental Alzheimer’s disease drug for approval sometime in early 2020. If approved, the drug, called aducanumab, would become the first commercially available treatment for what many researchers believe is the underlying cause of Alzheimer’s, a title that would almost surely lead to billions of dollars in sales.

Biogen appears confident such a scenario will play out, detailing last week at the J.P. Morgan Healthcare Conference that it’s already preparing a launch team for the drug and increasing manufacturing power to be ready for the demand. Investors, however, are likely to further press the Boston-area biotech about its discussions with regulators and whether those are compelling enough to counter what some see as very low chances of the drug’s approval.

More bearish investors and researchers have pointed to the contrasting results seen across two large, identically designed studies of aducanumab. One study found Alzheimer’s patients who were on a high dose of the drug over enough months showed slower cognitive decline compared to patients given placebo. Yet the other found the opposite, with high-dose aducanumab actually performing worse than placebo.

Peter Bach, a researcher and oncologist at Memorial Sloan Kettering, argued in a recent opinion piece for STAT that regulators should reject aducanumab based on these mixed results, particularly because so many other drugs that work like Biogen’s have failed in the clinic. Using one kind of statistical analysis, Bach wrote that the odds of the successful aducanumab trial being a false positive were around 40%.

While the industry watches for a filing and regulator response, Biogen’s also trying to work through challenges to the rest of its business. A patent dispute is current threatening the biotech’s top-selling drug at the same time its blockbuster Spinraza franchise faces new competition from Novartis and, perhaps soon, Roche.

Eli Lilly eyes some buys

Eli Lilly’s chief financial officer told Reuters last week the company anticipates doing a deal worth $1 billion to $5 billion each quarter in 2020. There’s already an example of what these deals may look like too, as Lilly kicked off the year with a $1 billion acquisition of California-based Dermira and its late-stage eczema drug.

Investors, of course, will want more tidbits about the target companies Lilly would be interested in.

Lilly CEO David Ricks seemed to offer a few hints at the J.P. Morgan conference. He noted, for example, how oncology and immunology have especially large numbers of promising assets.

“While we love diabetes and neuroscience, there are just fewer venture-backed ideas in that space,” Ricks said.

Lilly’s certainly able to do more dealmaking, as evidenced by a recent EY report that listed it among the top pharmaceutical companies with the firepower necessary to do big transactions. The Indianapolis pharma ended the third quarter with $1.56 billion in cash and cash equivalents.

Global Blood’s first launch

Up until late last year, doctors in the U.S. had few treatment options for people suffering from sickle cell disease, an inherited blood disorder that affects about 100,000 Americans.

Approvals for Global Blood’s Oxbryta and Novartis’ Adakveo changed that, doubling the number of drugs cleared to treat sickle cell within the span of two weeks.

Earnings calls with executives from Novartis on Jan. 29 and Global Blood sometime thereafter will offer an early gauge of how sickle cell physicians are responding.

The two drugs might not directly compete with each other, as they work differently and target distinct symptoms of the disease. Oxbryta combats the anemia and blood cell destruction that can lead to organ damage, while Adakveo is designed to reduce the debilitating pain crises that are a hallmark of sickle cell.

For Global Blood, however, launching a new therapy at the same time as global pharmaceutical giant Novartis will put its sales strategy under the microscope.

The California biotech is fielding a team of 75 specialists that will target 5,500 healthcare professionals who work most commonly with sickle cell patients.

While Wall Street analysts forecast eventual billion-dollar sales for Oxbryta, expectations are for a modest launch initially. One uncertainty centers on how widely physicians will use the drug, which is approved for adult and pediatric patients older than 12 years of age. That corresponds to some 86,000 patients, but doctors could choose to focus first on the 22,000 with particularly low hemoglobin levels.

Global Blood priced Oxbryta at roughly $10,000 a month. While the company expects rebates and discounts will result in a net price that’s 25% to 30% lower, insurer reactions to the high cost will be another test.

Bluebird’s gene therapy gets off the ground

For the first time, Bluebird should have sales to discuss on its next corporate earnings call, having announced earlier this month the launch in Germany of its gene therapy Zynteglo for beta-thalassemia.

While Bluebird won approval for the drug — its first ever — last June, the biotech delayed a launch to iron out its manufacturing for the one-time treatment.

Sales aren’t likely to be high, particularly as Zynteglo’s use is limited to qualified treatment centers, the first of which is in southwestern city of Heidelberg. But it’s the first commercial test for Bluebird and an early gauge of how its $1.8 million price will be received in the market.

Bluebird plans to submit Zynteglo for approval in the U.S. this year, and could also file its Lenti-D product for cerebral adrenoleukodystrophy. Partner Bristol-Myers Squibb, meanwhile, expects to soon ask the Food and Drug Administration for approval of the Bluebird-developed CAR-T ide-cel.

https://www.biopharmadive.com/news/5-biopharma-earnings-watch-novartis-biogen-lilly-global-blood-bluebird/570765/

ImmuCell Announces Prelim, Unaudited Product Sales Results for 2019 Year

 ImmuCell Corporation (Nasdaq: ICCC) (“ImmuCell” or the “Company”), a growing animal health company that develops, manufactures and markets scientifically-proven and practical products that improve the health and productivity of dairy and beef cattle, today announced preliminary, unaudited product sales results for the year ended December 31, 2019.

Product Sales Results:Total product sales increased by approximately $2,700,000, or 25%, to approximately $13,700,000 during the year ended December 31, 2019 versus the year ended December 31, 2018.  Total product sales increased by approximately $695,000, or 24%, to approximately $3,600,000 during the fourth quarter ended December 31, 2019 versus the comparable period during 2018.  These reported figures are preliminary, unaudited estimates and are subject to change.

Management Discussion:“We believe that dairy and beef producers are increasingly coming to understand the value proposition we offer of less needles in cows and less antibiotics in calves,” commented Michael F. Brigham, President and CEO. “We are the only veterinary biologic line offering measured levels of antibody-driven immunity against bacterial and viral scours providing Immediate Immunity™ to newborn dairy and beef calves against the three most prevalent pathogens – E. coli, coronavirus and rotavirus.”

“We are growing and investing in the infrastructure to fuel future growth,” Mr. Brigham added.  “To meet growing demand, construction of our expanded manufacturing facility for the First Defense® product line is well under way, and we expect to substantially complete this work around the end of the upcoming second quarter.”

“During the third quarter of 2019, the FDA conducted a pre-approval inspection of our Drug Substance facility for Re-Tain™, a novel treatment for subclinical mastitis without a milk discard requirement that provides an alternative to traditional antibiotics.  We responded to most of the FDA’s findings before the end of 2019,” Mr. Brigham continued.  “We expect to complete the remaining work, which largely involves some outside laboratory testing, during the first quarter of 2020 without significant cost or any delay to the timeline to product approval.”

The Company expects to file a more detailed press release covering its 2019 financial results after the stock market closes on Tuesday, February 18, 2020 and expects to file its Annual Report on Form 10-K before the end of March.  Interested parties can access a conference call scheduled by the Company to review the 2019 financial results at 9:00 AM ET on Wednesday, February 19, 2020.  Investors are encouraged to review the Company’s updated Corporate Presentation slide deck that provides an overview of the Company’s business and is available under the “Investors” tab of the Company’s website at www.immucell.com or by request to the Company.

https://www.streetinsider.com/Globe+Newswire/ImmuCell+Announces+Preliminary%2C+Unaudited+Product+Sales+Results+for+the+Year+Ended+December+31%2C+2019/16354379.html

H.C. Wainwright Starts CEL-SCI (CVM) at Buy

Analyst Vernon Bernardino initiates coverage on CEL-SCI (NYSE: CVM) with a Buy rating and a price target of $18.00.

The analyst commented, “CEL-SCI is a clinical-stage biotechnology company focused on developing therapies that activate the immune system to fight cancer and infectious diseases. We are bullish on CEL-SCI shares based on: (1) the potential for lead product Multikine, a patented defined mixture of 14 human cytokines, to be the first neoadjuvant cancer drug to improve survival in head and neck (HN) cancer patients by its administration prior to surgery and initiation of conventional treatment; and (2) Independent Data Monitoring Committee (IDMC) recommendation for advancement of the ongoing Phase 3 clinical trial that we believe suggests a favorable outcome in Multikine-treated patients. While IDMC updates generally provide limited insight into the status of an ongoing clinical trial, the Multikine Phase 3 trial was initiated in 2011 and has been ongoing for approximately eight years, with the last patient enrolled in 2016. We believe reviews the IDMC conducted in 2019 point to an overall survival (OS) benefit with Multikine, and thus, we do not look for the next IDMC review, expected in 2Q20, as required for further confirmation. At this point, we believe ethical issues may need to be considering in continuing the Phase 3 trial, and look for CEL-SCI to pursue a discussion with the FDA and EMA for a regulatory decision that results in the Phase 3 trial being unblinded in 2H20. We believe the potential for Multikine to achieve better survival outcomes remains underappreciated. Therefore, we initiate coverage with a Buy rating and $18 price target.”

https://www.streetinsider.com/Analyst+Comments/UPDATE%3A+H.C.+Wainwright+Starts+CEL-SCI+%28CVM%29+at+Buy/16326281.html