Apple iPhone maker Foxconn restarts key China plant with 10% of workers

Apple’s biggest iPhone maker Foxconn got approval to resume production at a key plant in China after being forced to shut it following the coronavirus outbreak, but only 10% of the factory’s workforce has managed to return so far, a source told Reuters.

Taiwan’s Foxconn, the world’s largest contract electronics maker, got the green light to restart production in the eastern central Chinese city of Zhengzhou, said the person with direct knowledge of the matter. The company, however, has not yet been allowed to restart production in Shenzhen, a southern manufacturing hub, the source said.
The two factories together make up the bulk of Foxconn’s assembly lines for Apple’s iPhones, and the delays are likely to impact global shipments.
Market research firm Trendforce on Monday cut its March-quarter forecast for iPhone production by about 10% to 41 million handsets.
Apple itself gave a wider-than-usual revenue outlook range for the March quarter last month to factor in uncertainty due to the virus that has claimed more than 900 lives and infected over 40,000 people.
An Apple spokeswoman in Shanghai was not immediately available for comment.
Apple rival and China’s biggest smartphone maker, Huawei, said last week it had resumed production of consumer devices and carrier equipment, and operations were running normally.
About 16,000 people, or under 10% of Foxconn’s workforce in Zhengzhou have returned to the plant, the source said, adding that company executives were trying very hard to negotiate with authorities to resume production in other parts of China, including Kunshan, in southeastern Jiangsu province.
“Our request to resume production (in Shenzhen) was disapproved. We need to improve our virus control measures for another check,” said the person who declined to be identified because they are not authorised to speak publicly on the matter.
Shenzhen authorities will conduct checks at the plant again later this week, the person said.
Employees in Shenzhen were told not to return to work on Tuesday, according to an internal memo seen by Reuters.
The coronavirus outbreak – declared a global health emergency by the World Health Organization – has disrupted Chinese manufacturing and forced companies such as Hyundai Motor to halt production of cars in some factories.
Some companies including Samsung Electronics limped back to work on Monday but hundreds of factories and stores remain shut across China.
Foxconn, formally Hon Hai Precision Industry Co Ltd, said in a statement that employee safety was top priority and that it was working with authorities to meet requirements to resume production across China “in a staggered and orderly manner”.
Foxconn employees who returned to work on Monday following an extended Lunar New Year holiday have been told to wear masks, undergo temperature checks and adhere to a specified dining system, according to internal memos seen by Reuters.
Most senior Taiwanese officials have been told to refrain from returning to China and those who needed to do so required approval from Chairman Liu Young-Way, the person said.
Foxconn, which makes devices for global electronics firms, has built its own production lines in the southern province of Guangdong to make masks for its hundreds of thousands of employees, targeting two million masks a day by late February, the memos showed.
The company reported an 11.96% drop in its January revenue from a year ago to T$364.6 billion ($12.12 billion), according to a Foxconn filing to the Taiwan stock exchange. It did not give further details.
Foxconn shares fell as much as 2.4% in Monday trade, lagging a 0.3% decline in the broader market. They have fallen more than 11% since the market reopened following the Lunar New Year break.

https://www.marketscreener.com/FIH-MOBILE-LIMITED-1412618/news/Top-Apple-iPhone-maker-Foxconn-restarts-key-China-plant-with-10-of-workers-29968042/?countview=0

Biohaven down 17% premarket on failed troriluzole study

Biohaven Pharmaceutical Holding Company (NYSE:BHVN) announces that a Phase 3 clinical trial evaluating troriluzole as monotherapy in patients with generalized anxiety disorder (GAD) failed to sufficiently separate from placebo on the primary endpoint of total HAM-A score at week 8.

The company will terminate development for monotherapy use in GAD. Several studies in other diseases and with different dosing approaches are in process.

The company says troriluzole is a third-generation prodrug that modulates an excitatory neurotransmitter called glutamate by reducing its levels at nerve synapses.

Shares down 17% premarket on average volume.

https://seekingalpha.com/news/3539972-biohaven-down-17-premarket-on-failed-troriluzole-study

FDA accepts Aquestive’s Libervant NDA; shares up 6% premarket

The FDA accepts for review Aquestive Therapeutics’ (NASDAQ:AQST) marketing application seeking approval of Libervant (diazepam) Buccal Film for the management of seizure clusters.

The agency’s action date is September 27.

Shares up 6% premarket on modest volume.

https://seekingalpha.com/news/3539984-fda-accepts-aquestives-libervant-nda-shares-up-6-premarket

Analyst action, Feb. 10

Abeona Therapeutics (NASDAQ:ABEO) initiated with Outperform rating and $6 (139% upside) price target at SVB Leerink. Shares up 8% premarket.

Akero Therapeutics (NASDAQ:AKRO) initiated with Buy rating and $36 (38% upside) price target at Canaccord Genuity.

Ardelyx (NASDAQ:ARDX) initiated with Outperform rating at Cowen and Company.

Well Health Technologies (WELL CN) initiated with Hold rating and C$1.80 (5% downside risk) price target at Canaccord. U.S. ticker: (OTCPK:WLYYF).

Adverum Biotechnologies (NASDAQ:ADVM) upgraded to Overweight with a $21 (105% upside) price target at Cantor Fitzgerald. Shares up 20% premarket on positive gene therapy data.

https://seekingalpha.com/news/3539998-cantor-upgrades-adverum-on-positive-advmminus-022-data

Bayer’s CEO Fights to Fix a Problem of His Own Making

In April last year, Bayer AG Chief Executive Werner Baumann was on defense. The architect of one of the most disastrous acquisitions in German corporate history, he had become the country’s first chief executive to lose a vote of confidence by shareholders.
Almost a year later, with the German chemicals and pharmaceuticals company closer to settling more than 42,000 lawsuits inherited from its acquisition of U.S. agriculture giant Monsanto Co., and with a group-wide restructuring under way, investors say Mr. Baumann might just manage to fix the mess he made.
Bayer and plaintiff lawyers are approaching a deal in which Bayer would pay a total of roughly $10 billion for current and future plaintiffs who allege the company’s Roundup herbicide causes cancer, according to people familiar with the negotiations. Many analysts say a settlement in that range would be positive for Bayer.
Bayer declined to comment on the amount or time frame for a settlement. The company argues that Roundup is safe when used as instructed and has appealed the first three verdicts.
Expectations that the company could soon find a reasonable way out of its legal morass have helped pull Bayer’s shares up roughly 50% since they hit a seven-year low of roughly EUR52 last June.
But even Mr. Baumann’s supporters say his window for fixing Bayer might not stay open much longer. On April 28, the company holds its next regularly scheduled shareholder meeting and many investors expect Bayer to share at least a partial solution or progress on how to resolve the legal battle before then.
Absent any progress, Mr. Baumann could face another no-confidence vote, with another no being harder to survive, investors say.
Mr. Baumann’s $63 billion Monsanto acquisition in June 2018, which he had been working on since well before becoming CEO that same year, backfired after Bayer lost the first Roundup cases before California juries, raising alarm in the market about liabilities the company could face. Last spring, with Bayer’s market capitalization down more than a third since the first trial loss, investors rejected a vote of confidence in the executive board, a postwar first for a Dax-listed company.
Strong support from the company’s nonexecutive directors helped Mr. Baumann survive the vote. But investors also say he heard their message.
The company last June boosted oversight of its legal defense, including by creating a special board committee to monitor Roundup lawsuits and naming a lawyer with expertise in mass torts to advise the board. In October, it added an agriculture expert to its board. All those measures were demanded by investors, including activist investor Elliott Management Corp.
Another U-turn was Mr. Baumann’s agreement to engage in settlement talks with Roundup plaintiffs after he had previously insisted that Bayer was willing to fight a yearslong court battle.
Ingo Speich, head of sustainability and corporate governance at Bayer investor Deka Investment, said the CEO also addressed operational concerns by selling Bayer’s animal health unit and consumer-care brands on time and at good prices.
“Is he responsible for the legal issues? Yes. But he also showed that he can keep the business together,” said Mr. Speich, nine months after blaming Mr. Baumann for “infecting a healthy Bayer with the Monsanto virus.”
Within Bayer, employees say, Mr. Baumann has also worked to restore confidence and team spirit following what some describe as a meltdown in morale a year ago. Last spring, he held video town halls to reassure staff each time the company faced a new legal setback in the U.S., according to one midlevel executive.
“Last year people talked about the lawsuits all the time, now it’s mostly business as usual,” the person said. A lull in trials has helped, according to people familiar with the company: Bayer and plaintiff lawyers have agreed to postpone dozens of cases since they started settlement talks last fall.
Among the company’s many deeply anchored traditions is its ownership of Bundesliga soccer club Bayer 04 Leverkusen, whose home matches are must-attend occasions for top executives. At a recent soccer match with fellow senior managers, Mr. Baumann seemed optimistic about the future of the company and how it is growing, according to a person present at the meeting.
“There is a feeling there is light at the end of the tunnel,” the person said.
Mr. Baumann, the son of a baker, spent over 30 years working his way up from Bayer’s finance department to CEO. People who know him say he is cerebral, detail-oriented and rational. The CEO often brings a small notebook to meetings where he writes down questions he needs to follow up on, according to people who have worked with him. Others say he can summon minute details, such as the number of participants in a continuing clinical drugs trial, off the top of his head.
With the exception of Mr. Baumann’s predecessor, the Dutch-American Marijn Dekkers, Bayer CEOs have always been Bayer lifers. Many, like Mr.Baumann and current Chairman Werner Wenning, even hail from the Rhineland region, where Bayer is based.
Several of the group’s top leaders, Messrs. Baumann and Wenning included, lived through a similar crisis at Bayer in the early 2000s, when the company faced thousands of U.S. lawsuits over its cholesterol-lowering drug Baycol. Bayer had to pull the drug after it was linked to serious injuries and even death, and the company’s share price fell to an all-time low of EUR10.
During his time as CEO, Mr. Wenning improved Bayer’s position by spinning off assets, cutting jobs and eventually settling the claims for much less than investors had feared.
When Bayer set out to grow again, Mr. Baumann, described by many as Mr. Wenning’s protégé, proved himself a talented number cruncher during the integration of German pharmaceuticals company Schering AG, according to people present at the time.
The fact that Mr. Wenning did pull Bayer out of trouble made him something of a legend within the company. People familiar with Bayer said Mr. Baumann would need to deliver much more than a settlement to achieve a similar status.
Besides striking a settlement at the low end of expectations, investors say the CEO still needs to demonstrate how Monsanto will make Bayer thrive.
The lawsuits aside, Roundup is facing competition from a determined rival. Seed and pesticide maker Corteva Inc., is making moves to woo farmers away from Bayer products.
For Deka’s Mr. Speich, a full judgment on the Monsanto purchase — and thus on Mr. Baumann — will only be possible some two years from now, once the agriculture business is fully integrated.
Mr. Baumann has said repeatedly that buying Monsanto was the right move, saying it will position Bayer as leader in a market with enormous growth potential given the world’s fast-growing population.
Meanwhile, once the legal fight is resolved, some analysts say investors could push Bayer to consider the merits of splitting its pharmaceuticals and crop-science businesses. People familiar with Bayer’s thinking said the company would likely fight any push for a split, arguing that its existing plan to boost sales and profit through 2022 will create more value for shareholders.
“A settlement would of course be positive but I think it will grant Mr. Baumann only a short respite,” said Markus Mayer, analyst from Baader Bank.

https://www.marketscreener.com/BAYER-AG-436063/news/From-Toxic-to-Turnaround-Bayer-s-CEO-Fights-to-Fix-a-Problem-of-His-Own-Making-29969414/

Coronavirus Helps Drive China Consumer Prices to Highest in Over 8 Years

China’s consumer inflation rose to its highest level in more than eight years in January as hundreds of millions of Chinese struggled to cope with a deadly coronavirus outbreak that has raised anxiety levels and pushed up the prices of many household goods.
China’s consumer-price index climbed 5.4% in January from a year earlier, the highest reading since October 2011, the National Bureau of Statistics said Monday. The key inflation reading was higher than December’s 4.5% rise and topped economists’ expectations.
January’s pickup in inflation was driven by the Lunar New Year, which normally boosts demand for consumer goods, and by the coronavirus outbreak, said Dong Lijuan, an analyst with the statistics bureau, in a statement.
In Hubei province, which has been hit hardest by the outbreak, consumer inflation slightly outpaced the national average at 5.5% in January — a number that points to relatively steady price levels, Ms. Dong said.
Local residents, however, have been feeling more sticker shock from the outbreak than the official data from January suggest. Locals say panic buying began in Wuhan, the capital of Hubei and the epicenter of the outbreak, following authorities’ decision to lock down the city of 11 million people on Jan. 23.
The death toll from the outbreak began climbing in mid-January, and now surpasses that of severe acute respiratory syndrome, or SARS, nearly two decades ago, having killed more than 900 people, most of them in Hubei.
It’s unclear how fully the newly released data capture the economic effects of the epidemic, said Liu Xuezhi, an economist at China’s Bank of Communications, who said the coronavirus’s impact on demand for consumer products is likely greater than the January inflation data showed.
People are shopping less and eating out less for fear of contracting the virus, which should outweigh the impact from supply disruptions, said Mr. Liu, who expects consumer inflation to ease slightly in February, given softer demand and an expected recovery in supplies.
Like many in the epicenter, Wang Xuan, 36, a teacher at a Wuhan university, has since the lockdown began rarely stepped outside her apartment, which isn’t far from the wet market — believed by many as the source of the new virus.
“Things are definitely more expensive but we are just happy there is food to buy,” Ms. Wang said. She said her family members were initially living off food that they had prepared for the Lunar New Year holiday, at least until local officials began ensuring a supply of fresh groceries in February.
Other Wuhan residents, who fear contracting the virus at local supermarkets, have tried to buy supplies from smaller street vendors. Some said some fresh vegetables were going for as much as 140 yuan ($20) a kilogram, compared with roughly 20 yuan before the outbreak.
Across the country, food prices in January rose 20.6% from a year earlier, accelerating from a 17.4% increase in December.
Pork prices, which surged for most of the latter half of 2019 due to an outbreak of African swine fever, resumed their acceleration in January after easing somewhat in December. Pork prices surged 116% in January from a year earlier, versus a 97% increase in December. Pork prices alone boosted headline overall consumer inflation by 2.76 percentage points in January. Nonfood prices, such as services and other living costs, also accelerated in January.
Strong inflation, however, is unlikely to hinder Beijing’s efforts to spur economic growth after the coronavirus hit, economists say. Beijing has stepped up its support for the virus-hit economy, which is reeling from plummeting consumer spending during a traditional boom season and factory production that has been suspended for a prolonged period. Authorities have signaled that they are prioritizing growth over other policy goals, such as reining in debt and inflation.
Despite weaker demand that could curb inflation, a second case of avian flu in China, reported over the weekend in Sichuan province, is raising concerns over rising poultry prices. China’s agricultural ministry had reported another case in Hunan province earlier this month.
Amid the gloom, there was some good news on the inflation front. Monday’s data showed China’s industrial prices climbed out of deflationary territory in January, rising for the first time in seven months.
The producer-price index, a gauge of factory-gate prices, edged up 0.1% in January from a year earlier, compared with a 0.5% year-over-year decline in December. Economists had expected the index to stay flat in January from a year earlier.
That said, any further increase in industrial prices is likely to be curbed in coming months amid soft demand for industrial products, said Yang Weixiao, an economist at Founder Securities
https://www.marketscreener.com/news/Coronavirus-Helps-Drive-China-s-Consumer-Prices-to-Highest-Level-in-Over-Eight-Years–29969680/

Mereo BioPharma ADSs Up 28% on Equity Financing From Novartis

Mereo BioPharma Group Plc American depositary shares rose 28% to $2 premarket after the company said it has entered into a $5 million convertible equity financing with Novartis Pharma AG (NVS).
The biopharmaceutical company said it also entered into a securities purchase agreement to issue up to $28 million of its ordinary shares exchangeable for ADSs, including a $3 million initial purchase, with Aspire Capital Fund LLC, a Chicago-based institutional investor.
Mereo said proceeds from these transactions will likely be used for general corporate purposes, including clinical trial activity and working capital.

https://www.marketscreener.com/MEREO-BIOPHARMA-GROUP-PLC-56171672/news/Mereo-BioPharma-ADSs-Up-28-on-Equity-Financing-From-Novartis-29969906/