TheChek News Flow

Swiss pharma giant had been expected to clinch a deal for the heart-drug developer as soon as this week

Novartis NOVN -0.25%decrease; red down pointing triangle has backed away from its pursuit of Cytokinetics CYTK -22.31%decrease; red down pointing triangle, putting a damper on the prospects of a deal for the promising heart-drug developer.

The Swiss drug giant had been closing in on a purchase of South San Francisco-based Cytokinetics, with an agreement expected as soon as this week, The Wall Street Journal reported Monday. But Novartis, which had been pursuing the biotech for several months, backed away sometime in the past day or two, according to the people.

After jumping on the Journal report, Cytokinetics shares have been falling as the days ticked by without an announcement, on fears there wouldn’t be a deal. Its market value now stands at just above $8 billion.

Cytokinetics has been running a sale process, and it is possible Novartis or another suitor could re-emerge or the company could pursue another type of deal like a capital raise.

Cytokinetics is focused on so-called muscle activators and inhibitors as potential treatments for people with debilitating diseases in which muscle performance is compromised, according to its website.

The company’s shares soared last month on the back of successful data for its experimental heart drug that treats hypertrophic cardiomyopathy, the most common genetic heart disease, which can lead to blood clots, strokes and, in rare cases, death.

Cytokinetics reported that the drug worked safely shortly before the new year, sending its stock up more than 60% that day.

Truist analysts forecast the Cytokinetics drug would generate up to $3.6 billion in sales by 2032.

Cytokinetics shares had been buoyed in recent weeks by reports of a possible sale of the company.

Novartis, one of the world’s biggest pharmaceutical companies by sales, faces declining revenue later this decade after several products lose patent protection, including heart drug Entresto, which accounted for $4.6 billion of Novartis’s $50.5 billion global sales in 2022.

Its shares have been rising lately, thanks in part to positive study results for drugs including Kisqali for breast cancer and the rollout of cancer radiotherapy Pluvicto.

Cytokinetics’ cardiomyopathy therapy could complement drugs like the cholesterol treatment called Leqvio that Novartis acquired as part of a nearly $10 billion deal for the Medicines Company in 2020.

But Novartis Chief Executive Vasant Narasimhan said in an interview on CNBC on Tuesday that “Our overall M&A strategy…is really to focus on sub-$5 billion assets.”

Vincent Clerc says container ship attacks by Houthis could have ‘significant consequences’ for global growth

The boss of shipping giant AP Møller-Maersk has warned it could take months to reopen the crucial Red Sea trading route, risking an economic and inflationary hit to the global economy, companies and consumers.

Vincent Clerc, Maersk’s chief executive, told the Financial Times on Thursday that the closure of the Red Sea to most shipping after a series of attacks from Yemen’s Houthi militants was “brutal and dramatic”. He added there were “no winners” as a result of the situation, which has forced vessels to take long and costly detours around South Africa.

“It’s unclear to us if we are talking about re-establishing safe passage into the Red Sea in a matter of days, weeks or months . . . It could potentially have quite significant consequences on global growth,” he said.

Maersk is a bellwether of global trade, carrying about a fifth of ocean freight. Clerc urged the international community — led by the US — to do more to allow the Red Sea to reopen for ships following a recent escalation of attacks in the region.

A Maersk vessel was attacked in mid-December, causing the Danish group to suspend journeys through the Red Sea, a crucial link between Asia and Europe. The group restarted trips a few days later after a US-led military coalition tried to create safe passage, but it suffered a further attack at the end of December. Last week, Maersk said it would divert ships from the Red Sea around Africa “for the foreseeable future”.

Diverting container ships via the Cape of Good Hope adds about 13,000km in distance and hundreds of dollars per container, Clerc said.

“At this time when inflation is a big issue, it’s putting inflationary pressure on our costs, on our customers, and ultimately on consumers in Europe and the US,” he added. “In the short run, it could cause significant disruptions at the end of January, February and into March.”

Maersk’s fuel bill will be 50 per cent higher as a result of ships taking the longer route. If unresolved, ships will soon be out of position, threatening logistics and global supply chains, Clerc said.

“We are urging the international community to mobilise and do what it needs to do to reopen the [Bab-el-Mandeb] strait. It is one of the main arteries of the global economy, and it is clogged right now.

“It could have wider ranging consequences not only for the industry but for end consumers, product availability, the global economy as a whole,” he added.

Maersk’s share price has risen by a quarter in the past month as container freight rates have shot up.

Asked how it felt to be making more money from a situation that was hurting his customers and the global economy, Clerc replied: “Let me be completely unambiguous: our goal is to establish safe passage and go back to a normal trading pattern. That is what we are deploying all our assets in doing. While we are doing this, we have to sail around the Cape of Good Hope and there are consequences of this.”

He added that Maersk had little visibility over the security situation around the Red Sea as it was “morphing” all the time as well as being linked to the Israeli-Palestinian conflict.

“The modus operandi evolves. The type of weapon evolves. The geographical range expands. There are a lot of things for us that make the risk levels hard to assess. So we need to be prudent,” Clerc said.