Entrada Therapeutics Inc Shares Open at $26.50 in Nasdaq Debut Versus Ipo Price of $20.00/share.
Friday, October 29, 2021
Delta variant, shortages severely restrict U.S. economic growth in third quarter
The U.S. economy grew at its slowest pace in more than a year in the third quarter as a resurgence in COVID-19 cases further stretched global supply chains, leading to shortages of goods like automobiles that slammed the brakes on consumer spending.
The weaker-than-expected growth reported by the Commerce Department on Thursday also reflected decreasing pandemic relief money from the government to businesses, state and local governments as well as households. Hurricane Ida, which devastated U.S. offshore energy production at the end of August also restrained economic growth.
But there are signs that economic activity is already regaining momentum amid declining coronavirus cases driven by the Delta variant. The number of Americans filing new claims for unemployment benefits dropped to a fresh 19-month low last week. Even with the third-quarter setback, the level of gross domestic product hit a record high and the economy is now 1.4% bigger than before the pandemic.
"The growth speed bump in the third quarter is an unwelcome surprise certainly, but it will not send the economy off into the ditch because it is partly based on supply disruptions in the auto industry that has cratered sales with inventories near record lows on dealer lots," said Christopher Rupkey, chief economist at FWDBONDS in New York.
Gross domestic product increased at a 2.0% annualized rate last quarter, the government said in its advance GDP estimate. That was the slowest since the second quarter of 2020, when the economy suffered a historic contraction in the wake of stringent mandatory measures to contain the first wave of coronavirus cases. The economy grew at a 6.7% rate in the second quarter.
Economists polled by Reuters had forecast GDP rising at a 2.7% rate last quarter. The meager growth came mostly from a moderate pace of inventory drawdown. Business inventories decreased at a $77.7 billion pace compared to a $168.5 billion rate in the second quarter. As result, inventories contributed 2.07 percentage points to third-quarter GDP growth.
Inventory accumulation remains weak owing to shortages, especially of motor vehicles. Motor vehicle production fell at a 41.6% rate after declining at a 14.1% pace in the second quarter because of a global shortage of semiconductors.
Excluding inventories, the economy contracted at a 0.1% rate last quarter. The scarcity of motor vehicles hammered consumer spending, which grew at only a 1.6% rate after a robust 12% pace in the April-June quarter. Consumer spending accounts for more than two-thirds of U.S. economic activity.
Spending on long-lasting manufactured goods dropped at a 26.2% rate. Motor vehicles cut 2.39 percentage points from GDP growth, the biggest drag from autos since the second quarter of 1980. Excluding motor vehicle output, the economy grew at a 3.5% rate last quarter, a slowdown from the 7.4% pace in the prior quarter.
Spending on services was surprisingly strong, notching a 7.9% growth pace amid demand for air travel and car rentals. Demand for services at hospitals and restaurants rose, as did bookings for hotel, motel and university campus accommodation. Services spending accelerated at an 11.5% pace in the April-June quarter.
The government estimated that Hurricane Ida cost about $62 billion. Inflation remained hot, eroding spending power. The Federal Reserve's preferred inflation gauge, the personal consumption expenditures (PCE) price index excluding food and energy, rose at a 4.5% rate. The core PCE price index increased at a 6.1% pace in the second quarter.
The combination of high inflation and slow growth could fan fears of stagflation, something that most economists do not believe is imminent as output is seen picking up through 2022.
"Stagflation will be the talk of the town, but we should not fall for this misleading narrative," said Gregory Daco, chief U.S. economist at Oxford Economics in New York. "Inflation dynamics are definitely moderating expansion with sticky supply-driven inflation, but the economy isn't stagnating."
Stocks on Wall Street were trading higher on upbeat earnings from Caterpillar, Merck and Ford.
The dollar fell against a basket of currencies after the European Central Bank pushed back against market bets that high inflation would trigger an interest rate hike as soon as next year. U.S. Treasury yields rose.
REGAINING SPEED
Slower growth will have no impact on the Fed's plans to start reducing as early as next month the amount of money it is pumping into the economy through monthly bond purchases.
With the summer wave of COVID-19 infections behind, cases declining significantly in recent weeks and vaccinations picking up economic activity is regaining steam. Consumer confidence rebounded this month and orders for capital goods excluding aircraft raced to a record high in September.
The labor market is tightening, though pandemic-related worker shortages could keep employment growth moderate this month. A separate report from the Labor Department on Thursday showed initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 281,000 last week, the lowest level since mid-March 2020. It was the third straight week that claims remained below the 300,000 threshold.
The number of people continuing to receive benefits after an initial week of aid dropped 237,000 to 2.243 million in the week ended Oct. 16. That was also the lowest level in 19 months.
"Given the massive number of job openings, look for claims to continue declining for some time and look for the labor market to remain drum tight," said Joel Naroff, chief economist at Naroff Economics in Holland, Pennsylvania.
Though wages are rising, inflation is reducing consumers' purchasing power. Income at the disposal of households after adjusting for inflation decreased at a 5.6% rate last quarter. The saving rate fell to 8.9% from 10.5% in the second quarter.
High prices and lack of trucks as well as communication equipment cut into business spending on equipment, which fell at a 3.2% rate after three straight quarters of double-digit growth. Trade was a drag on GDP growth for a fifth straight quarter following a drop in exports.
Shortages and expensive building materials weighed on home building and remodeling, leading to residential investment contracting for a second straight quarter. Government spending rebounded on state and local government investment.
Thursday, October 28, 2021
DeSantis sues Biden over federal contractor vaccine mandate
Florida Gov. Ron DeSantis (R) on Thursday sued the Biden administration over its COVID-19 vaccine mandates for federal contractors, the latest in a series of GOP attacks on President Biden's pandemic response efforts.
The complaint, filed in federal district court in Tampa, calls the policy a "radical intrusion on the personal autonomy of American workers," and seeks a preliminary nationwide injunction to block it from taking effect.
It names as defendants President Biden and a handful of federal agencies, including NASA, the General Services Administration and the Office of Management and Budget.
The policy is scheduled to take effect Dec. 8, and will require all federal workers and contractors to be vaccinated against COVID-19, without a testing option.
“It’s important for us to take a stand,” DeSantis said at a press conference. “Tossing people aside is just not something we can tolerate here in the state of Florida, so we are going to do everything we can.”
The lawsuit does not address a separate administration rule, yet to be released, which will require companies of more than 100 employees to implement a vaccine-or-test mandate.
DeSantis, who is seen as a likely presidential contender in 2024, has framed vaccination as a personal choice. While he has encouraged Floridians to speak with a physician or trusted doctor about the vaccines, DeSantis has said residents should only be vaccinated if they want to be.
Last month, a press conference to announce penalties for any county that imposed a vaccine mandate included two anti-vaccine workers, one employee of the city of Gainesville who falsely claimed he wouldn’t get a shot because it “changes your RNA.”
DeSantis has fought with the Biden administration on numerous COVID-19 policies. He's banned local governments from enacting a vaccine mandate or requiring any kind of proof of vaccination. He has also prohibited schools from requiring masks, and stripped funding from schools that have persisted.
DeSantis said vaccine mandates will force people out of work and threaten the livelihoods of contractors throughout the state.
"If you don't comply, you either have to fire people, or ... they'll just cancel the contract entirely, even if this is something you bid for and you won fair and square. We don't think they have the authority to do that," DeSantis said.
The lawsuit in Florida is far from the only attempt to block implementation of vaccine requirements. In other cases, judges have largely sided with the private businesses that require vaccination.
Earlier this week, a Texas judge dismissed a request for an injunction by a union representing pilots who work for Southwest Airlines, which imposed a requirement ahead of the contractor mandate taking effect.
Health experts have praised mandates as an effective way to get people vaccinated, and the White House has fully leaned into them as a way to turn the tide of the pandemic, after initially steering clear of federal intervention.
In speeches, Biden has argued that government officials exhausted various other options to nudge Americans toward vaccination.
On Wednesday, White House coronavirus response coordinator Jeff Zients said the purpose of the mandates isn't to punish people, and noted the deadlines for federal employees and contractors "are not cliffs."
Zients said federal employers and contractors will be expected to educate, counsel and accommodate their unvaccinated workers to persuade them to receive the shot before terminating them.
Spero Therapeutics Shares Rise 7% After NDA Submittal
Spero Therapeutics Inc. shares were up 7% at $17.42 after the company said it submitted a new drug application to the U.S. Food and Drug Administration seeking approval for tebipenem HBr tablets for the treatment of complicated urinary tract infections, including pyelonephritis, caused by susceptible microorganisms.
The biopharmaceutical company said that if approved, tebipenem HBr would be the only oral carbapenem antibiotic available for use in cUTI.
Spero said it will work with the FDA during the NDA review process as it prepares for tebipenem HBr's anticipated launch in the second half of 2022.
The NDA submission includes previously communicated positive data from its Phase 3 trial. The data showed that the trial met its primary endpoint by demonstrating that oral tebipenem HBr was statistically non-inferior to IV ertapenem in the treatment of patients with cUTI and patients with acute pyelonephritis.
Gilead Raises Fiscal Year Guidance; Remdesivir Added $1.9 Billion in 3Q Sales
Gilead Sciences Inc.'s third-quarter results beat Wall Street targets, helped by $1.9 billion in sales of its antiviral drug remdesivir that is used to treat hospitalized Covid-19 patients. Here's what you need to know:
PROFIT: Third-quarter profit rose to $2.59 billion from $360 million a year earlier. On a per-share basis, profit was $2.05, or $2.62 as adjusted. Analysts surveyed by FactSet expected $1.24 a share, or $1.76 a share as adjusted.
REVENUE: Revenue rose to $7.42 billion from $6.58 billion a year earlier. Analysts expected about $6.29 billion.
PRODUCT SALES: Product sales, which account for the bulk of Gilead's topline, rose 13% to $7.4 billion. Excluding remdesivir, which sells under the brand name Veklury and has been widely used to treat hospitalized Covid-19 patients, sales rose 3%. Remdesivir brought in $1.9 billion in sales in the latest quarter, well ahead of analysts' projected $647 million.
The World Health Organization issued a conditional recommendation against using remdesivir after concluding that there wasn't enough evidence to support its use.
HIV product sales fell 8%, reflecting the loss of exclusivity of Truvada and Atripla in the U.S. Truvada sales fell 87% and Atripla 76%, but sales of Gilead's flagship HIV therapy, Biktarvy, rose 20% in the third quarter.
GUIDANCE: Gilead now expects remdesivir sales to reach $4.5 billion to $4.8 billion this year, and $26 billion to $26.3 billion in annual total product sales. It earlier projected $2.7 billion to $3.1 billion in remdesivir sales and $24.4 billion to $25 billion in total product sales. It now expects $5.50 to $5.70 a share in profit, or $7.90 to $8.10 on an adjusted basis, compared with its earlier view of $4.70 to $5.05 a share, or $6.90 to $7.25 a share as adjusted.
Stryker Lowers Adjusted EPS Forecast
Stryker Corp. lowered its adjusted earnings outlook for the year, citing uncertainty over the Covid-19 pandemic and challenges with labor and staffing in the healthcare industry "hindering an accelerated recovery."
The medical technology company now expects adjusted earnings between $9.08 and $9.15 a share, compared with its previous forecast of $9.25 to $9.40 a share. This includes any expenses associated with its Wright Medical Group NV acquisition.
The company expects net sales to increase organically by about 7% to 8% for the year compared with 2019, before the onset of the pandemic. It had previously forecast sales growth in the range of 9% to 10% versus 2019.
Health Care Ticks Higher As Budget Proposal Lacks Health Measures
Health-care companies rose, but not by as much as the broad market, after President Biden unveiled a version of proposed budget-reconciliation legislation with less subsidies for health care than in previous drafts.
It was unclear whether the bill would now include a provision allowing the government to negotiate drug prices.
Shares of Merck rallied after the drug giant said it would increase production of a Covid 19 treatment, a pill that could generate $7 billion in sales in 2022.
Shares of Alnylam Pharmaceuticals fell sharply after the drug developer posted a quarterly loss, updated clinical-trial progress and said its chief executive was stepping aside.
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