WSJ : Australia’s Delta Outbreak Data Show Vaccines Protect Against Hospitalizat

Australia’s Delta Outbreak Data Show Vaccines Protect Against Hospitalization
The figures from Australia are in line with evidence from other countries, including the U.K. and Israel

SYDNEY—Early data from Australia’s outbreak of the Covid-19 Delta variant suggest that two vaccine doses offer significant protection against severe illness and hospitalization.

Health authorities in Sydney, Australia’s most populous city that is currently under lockdown because of its Delta outbreak, said Saturday that no one who has received two doses of a vaccine needed to be hospitalized. Of the 47 people now in the hospital, 37 haven’t been vaccinated.

Four people who are in the hospital got one dose of the AstraZeneca PLC vaccine and one person got one dose of the Pfizer Inc. - BioNTech SE vaccine. The other five people received two Pfizer-BioNTech doses—but they are nursing-home residents who were admitted as a precautionary measure.

“Two doses of either the AstraZeneca or the Pfizer vaccine is incredibly effective at preventing hospitalization and death, which is an incredibly positive contribution,” said Kerry Chant, the chief health officer for New South Wales state, which includes Sydney.

The figures from Australia are in line with evidence from other countries, including the U.K. and Israel, showing that vaccines offer a high degree of protection against severe illness from the Delta variant. Recent data from Israel, though, showed the Pfizer vaccine is less effective at protecting against infection from the Delta variant when compared with previous strains, posing a challenge for health authorities as many countries ease coronavirus restrictions as vaccination programs progress.

“Conclusions we can tentatively take from these small NSW numbers is that our experience is likely to be similar to that reported in other countries with larger sample sizes,” said Alex Martiniuk, an epidemiologist and professor at the University of Sydney. That “just underscores the need to vaccinate, quickly, and two doses.”

Despite being small by global standards, Sydney’s outbreak provides a view into how quickly the Delta variant can spread in a lightly vaccinated population despite lockdown measures, mask mandates and social distancing. Nearly 500 people have fallen ill since the outbreak began in mid-June and new cases have climbed in recent days even though the city has been locked down for two weeks. On Saturday, authorities said another 50 people were infected locally, up from 44 a day earlier.

Just 8% of Australia’s population has been fully vaccinated, according to Our World in Data, compared with roughly half in the U.S. and the U.K. and 60% in Israel. Australia has successfully controlled the virus in the past by closing its borders and requiring returning citizens to quarantine in hotels. But its vaccine rollout has been slow in part because the AstraZeneca vaccine—which can be made in Australia—was deemed inadvisable for people under 60 due to fears about rare blood clots.

There have been no deaths tied to the current Delta outbreak in Sydney, but one concern for authorities is the number of relatively young people who have become seriously ill. Eight of the 47 people in the hospital are under 35 and four of the 16 people in intensive care are younger than 50. One person in intensive care is a teenager.

One factor could be that people under 40 are generally not yet eligible to be vaccinated, as Australian authorities focus first on front-line workers and older people, who are considered to be at higher risk of severe illness. Australian officials have said they would like all adults to receive at least their first vaccine dose by the end of the year.

Sydney’s lockdown is supposed to end next week, but officials have said it could be extended. One key metric is whether contact tracers can quickly find close contacts of confirmed cases and have them isolate at home so they don’t spread the virus to others. Officials said Friday that 14,000 people have been considered close contacts and were told to isolate. But on Saturday, they said that 37 of the 50 new cases were out and about for all or part of their infectious period.

“What we are seeing is chains of transmission and we’re having difficulty getting ahead of those chains,” Dr. Chant said Saturday. “We need everyone to stay hunkered down this weekend.”

WSJ : Australia’s Delta Outbreak Data Show Vaccines Protect Against Hospitalizat

Australia’s Delta Outbreak Data Show Vaccines Protect Against Hospitalization
The figures from Australia are in line with evidence from other countries, including the U.K. and Israel

SYDNEY—Early data from Australia’s outbreak of the Covid-19 Delta variant suggest that two vaccine doses offer significant protection against severe illness and hospitalization.

Health authorities in Sydney, Australia’s most populous city that is currently under lockdown because of its Delta outbreak, said Saturday that no one who has received two doses of a vaccine needed to be hospitalized. Of the 47 people now in the hospital, 37 haven’t been vaccinated.

Four people who are in the hospital got one dose of the AstraZeneca PLC vaccine and one person got one dose of the Pfizer Inc. - BioNTech SE vaccine. The other five people received two Pfizer-BioNTech doses—but they are nursing-home residents who were admitted as a precautionary measure.

“Two doses of either the AstraZeneca or the Pfizer vaccine is incredibly effective at preventing hospitalization and death, which is an incredibly positive contribution,” said Kerry Chant, the chief health officer for New South Wales state, which includes Sydney.

The figures from Australia are in line with evidence from other countries, including the U.K. and Israel, showing that vaccines offer a high degree of protection against severe illness from the Delta variant. Recent data from Israel, though, showed the Pfizer vaccine is less effective at protecting against infection from the Delta variant when compared with previous strains, posing a challenge for health authorities as many countries ease coronavirus restrictions as vaccination programs progress.

“Conclusions we can tentatively take from these small NSW numbers is that our experience is likely to be similar to that reported in other countries with larger sample sizes,” said Alex Martiniuk, an epidemiologist and professor at the University of Sydney. That “just underscores the need to vaccinate, quickly, and two doses.”

Despite being small by global standards, Sydney’s outbreak provides a view into how quickly the Delta variant can spread in a lightly vaccinated population despite lockdown measures, mask mandates and social distancing. Nearly 500 people have fallen ill since the outbreak began in mid-June and new cases have climbed in recent days even though the city has been locked down for two weeks. On Saturday, authorities said another 50 people were infected locally, up from 44 a day earlier.

Just 8% of Australia’s population has been fully vaccinated, according to Our World in Data, compared with roughly half in the U.S. and the U.K. and 60% in Israel. Australia has successfully controlled the virus in the past by closing its borders and requiring returning citizens to quarantine in hotels. But its vaccine rollout has been slow in part because the AstraZeneca vaccine—which can be made in Australia—was deemed inadvisable for people under 60 due to fears about rare blood clots.

There have been no deaths tied to the current Delta outbreak in Sydney, but one concern for authorities is the number of relatively young people who have become seriously ill. Eight of the 47 people in the hospital are under 35 and four of the 16 people in intensive care are younger than 50. One person in intensive care is a teenager.

One factor could be that people under 40 are generally not yet eligible to be vaccinated, as Australian authorities focus first on front-line workers and older people, who are considered to be at higher risk of severe illness. Australian officials have said they would like all adults to receive at least their first vaccine dose by the end of the year.

Sydney’s lockdown is supposed to end next week, but officials have said it could be extended. One key metric is whether contact tracers can quickly find close contacts of confirmed cases and have them isolate at home so they don’t spread the virus to others. Officials said Friday that 14,000 people have been considered close contacts and were told to isolate. But on Saturday, they said that 37 of the 50 new cases were out and about for all or part of their infectious period.

“What we are seeing is chains of transmission and we’re having difficulty getting ahead of those chains,” Dr. Chant said Saturday. “We need everyone to stay hunkered down this weekend.”

WSJ : Australia’s Delta Outbreak Data Show Vaccines Protect Against Hospitalizat

Australia’s Delta Outbreak Data Show Vaccines Protect Against Hospitalization
The figures from Australia are in line with evidence from other countries, including the U.K. and Israel

SYDNEY—Early data from Australia’s outbreak of the Covid-19 Delta variant suggest that two vaccine doses offer significant protection against severe illness and hospitalization.

Health authorities in Sydney, Australia’s most populous city that is currently under lockdown because of its Delta outbreak, said Saturday that no one who has received two doses of a vaccine needed to be hospitalized. Of the 47 people now in the hospital, 37 haven’t been vaccinated.

Four people who are in the hospital got one dose of the AstraZeneca PLC vaccine and one person got one dose of the Pfizer Inc. - BioNTech SE vaccine. The other five people received two Pfizer-BioNTech doses—but they are nursing-home residents who were admitted as a precautionary measure.

“Two doses of either the AstraZeneca or the Pfizer vaccine is incredibly effective at preventing hospitalization and death, which is an incredibly positive contribution,” said Kerry Chant, the chief health officer for New South Wales state, which includes Sydney.

The figures from Australia are in line with evidence from other countries, including the U.K. and Israel, showing that vaccines offer a high degree of protection against severe illness from the Delta variant. Recent data from Israel, though, showed the Pfizer vaccine is less effective at protecting against infection from the Delta variant when compared with previous strains, posing a challenge for health authorities as many countries ease coronavirus restrictions as vaccination programs progress.

“Conclusions we can tentatively take from these small NSW numbers is that our experience is likely to be similar to that reported in other countries with larger sample sizes,” said Alex Martiniuk, an epidemiologist and professor at the University of Sydney. That “just underscores the need to vaccinate, quickly, and two doses.”

Despite being small by global standards, Sydney’s outbreak provides a view into how quickly the Delta variant can spread in a lightly vaccinated population despite lockdown measures, mask mandates and social distancing. Nearly 500 people have fallen ill since the outbreak began in mid-June and new cases have climbed in recent days even though the city has been locked down for two weeks. On Saturday, authorities said another 50 people were infected locally, up from 44 a day earlier.

Just 8% of Australia’s population has been fully vaccinated, according to Our World in Data, compared with roughly half in the U.S. and the U.K. and 60% in Israel. Australia has successfully controlled the virus in the past by closing its borders and requiring returning citizens to quarantine in hotels. But its vaccine rollout has been slow in part because the AstraZeneca vaccine—which can be made in Australia—was deemed inadvisable for people under 60 due to fears about rare blood clots.

There have been no deaths tied to the current Delta outbreak in Sydney, but one concern for authorities is the number of relatively young people who have become seriously ill. Eight of the 47 people in the hospital are under 35 and four of the 16 people in intensive care are younger than 50. One person in intensive care is a teenager.

One factor could be that people under 40 are generally not yet eligible to be vaccinated, as Australian authorities focus first on front-line workers and older people, who are considered to be at higher risk of severe illness. Australian officials have said they would like all adults to receive at least their first vaccine dose by the end of the year.

Sydney’s lockdown is supposed to end next week, but officials have said it could be extended. One key metric is whether contact tracers can quickly find close contacts of confirmed cases and have them isolate at home so they don’t spread the virus to others. Officials said Friday that 14,000 people have been considered close contacts and were told to isolate. But on Saturday, they said that 37 of the 50 new cases were out and about for all or part of their infectious period.

“What we are seeing is chains of transmission and we’re having difficulty getting ahead of those chains,” Dr. Chant said Saturday. “We need everyone to stay hunkered down this weekend.”

FT : Opec rift is a foretaste of things to come

Opec rift is a foretaste of things to come
Cartel to face rising tensions as peak in demand for oil approaches

Disagreements between Opec members have been a feature of the oil cartel since it started just over 60 years ago.

But what has happened in the past week stands out not just because it came against a backdrop of rising prices or because it pitted traditional allies Saudi Arabia and the UAE against each other. It stands out because it is a preview of what is to come.

On the surface, members fell out over how the group calculates an individual country’s production targets. The UAE believes it has been short-changed by the supply deal in place since April last year, when the pandemic was crushing demand.

One layer below that is the UAE’s increasing assertiveness on the global stage. In particular, it senses that its oil alliance with Saudi Arabia has been usurped by Riyadh’s increasingly close relationship with Moscow, since Russia joined the expanded Opec+ group in 2016.

But the heart of the issue is far simpler, and it’s one that’s roiling the entire oil sector: the growing belief that peak in demand for crude is not so far away.

For big oil producers such as the UAE, which believes it still has vast untapped reserves, the incentive is shifting towards getting those barrels out of the ground and monetising them as quickly as possible.

This is the real existential threat to Opec’s strategy in the long run. A group founded to maximise their oil reserves’ value by (at times) restricting output is witnessing a shift in the very definition of what maximising value means for the industry.

If oil demand is going to peak within the next decade or so, as many in the industry increasingly accept, then the old calculations start to change.

Opec itself argues that oil demand will be around for a long time to come. But there’s a huge range of forecasts for just what that means. Some oil watchers predict output will peak but then plateau at levels roughly the same as today. Others expect that when the peak arrives, the subsequent fall in demand will look more like a drop from a cliff edge.

The International Energy Agency has a range of scenarios that suggest oil demand in 2030 could be about 105m b/d, about 5 per cent higher than it was before the pandemic. Or, if governments really do get aggressive in tackling climate change, it could fall as low as 85m b/d.

That 20m b/d swing between the strongest and weakest scenarios is roughly the equivalent of Saudi Arabia and Russia’s combined current output.

The energy consultancy Wood Mackenzie believes that under aggressive climate scenarios — of the type required to meet the targets of the Paris climate agreement — oil prices could fall from about $75 a barrel today to about $40 a barrel by 2030. By 2040 that declines to about $30 a barrel and below $20 a barrel by the 2050s.

So while the timing of the Opec+ fall out might have caught the market unawares, the fact that largely unseen tensions are straining the group should not be seen as a surprise.

For the wider oil industry, it’s another sign of the huge uncertainty that has brought a sense of paralysis to many investors in the sector. But for those oil-producing countries where state-backed operators control the majority of supplies and reserves, paralysis is not an option.

Faced with uncertainty over whether the oil you depend upon will be as valuable in the future, many are concluding that plans to pump as fast as possible may be the best of a bad set of options.

The Abu Dhabi National Oil Company has already invested billions of dollars — and partnered more closely with international energy majors — to boost its production capacity from about 3.5m b/d in 2018 to 4m b/d today. By 2030 it should be closer to 5m b/d.

But the UAE isn’t pursuing this strategy in isolation. It is simply further along the curve.

Saudi Arabia itself has discussed raising production capacity, from about 12m b/d to 13m b/d or higher in the near future. Russia, too, is trying to attract billions in investment to develop and expand the Vostok oil project in the Arctic.

This does not automatically mean that the taps will all be opened at once, when the additional production is built. Opec’s premature obituary has been written many times before.

A plateau in demand in the 2030s would still give Opec+ a huge market to manage. Even if oil demand falls sharply then Opec members, many of whom have some of the lowest production costs in the world, are likely to outcompete rivals for a larger percentage of what’s left.

But increased inter-group competition is almost inevitable. And those Opec+ members that can boost production capacity will inevitably want their output targets adjusted higher, just like the UAE.

WSJ : Volkswagen Sees Global Chip Shortage Worsening in Second Half

Volkswagen Sees Global Chip Shortage Worsening in Second Half
Mood darkens for auto makers, whose production has already been curtailed by a lack of semiconductors

BERLIN— Volkswagen AG VOW 5.95% warned that the global shortage of semiconductors affecting car production would worsen over the next six months, joining a chorus of auto companies that have dialed down their outlook for the rest of the year.

The warnings mark a shift for the industry after auto CEOs and industry analysts had predicted the chip crisis would bottom out in the second quarter, leading to a gradual improvement over the next six months.

“The impairment from the shortage of semiconductors has shifted and will more likely lead to impairments in the second half of the year,” Volkswagen said in a statement on Friday.

AlixPartners, a global industry consulting firm, predicted in January that the chip shortage would cost global auto makers $61 billion in lost revenue this year. But in May, AlixPartners revised its projection upward to $110 billion.

The firm said that overall auto makers are expected to sell about 80.7 million new cars this year, down from an earlier estimate of 84.6 million—a loss of about 3.9 million unit sales world-wide as a result of the chip shortage.

In China, the world’s biggest car market by sales, the chip shortage broke an 11-month growth streak in new-car sales. The China Passenger Car Association said Thursday that new-car sales in June of 1.58 million vehicles were down 5.1% from a year earlier, largely due to supply shortages.

BMW said last week that it had produced 30,000 fewer vehicles than planned this year due the shortage and told reporters that it would be difficult to maintain its previous outlook for an improvement in the second half.

Renault SA Chief Executive Luca de Meo told Bloomberg News recently that the shortage was a structural problem that would continue through next year. And Daimler AG , maker of Mercedes-Benz cars, said “the shortage is expected to continue to impact the upcoming two quarters in terms of sales.”

Ford Motor Co. reported last week its June sales in the U.S. dropped 27% from a year earlier amid the chip shortage and that it would have to curtail production at more than a half-dozen U.S. factories in July as a result.

Volkswagen issued its warning as it posted operating profit of 11 billion euros, equivalent to $13.03 billion, in the first six months of the year, after a loss of €1.49 billion last year in the throes of the pandemic lockdowns.

The company, whose brands include VW, Seat, Skoda, Audi and Porsche, was able to mitigate much of the impact of the chip shortage by shifting supplies to more profitable models, a spokesman said.

The German auto maker posted strong first-half sales in Europe, where it tends to earn higher margins on new-car sales than in other parts of the world, the spokesman said, adding that the outlook for the second half was weaker because of the worsening chip crisis.

Volkswagen also said on Friday it had extended Chief Executive Herbert Diess’s contract until late 2025 in a move that settles a long-simmering dispute between the executive and his internal critics and throws the full weight of the company’s main shareholders behind his drive to accelerate the shift to electric cars. His current contract was to expire in April 2023.

Volkswagen is currently pursuing a strategy to roll out standardized electric-car technology across its brands to build millions of vehicles each year by the end of the decade. The company has laid out a plan to build at least six battery factories in Europe alone, with additional plants earmarked for China and the U.S.

Industry analysts have praised the strategy, but warn that auto companies like Volkswagen would soon face a severe shortage of battery materials if demand for electric cars accelerates and the companies actually ramp up production to meet that demand.

WSJ : FDA Seeks to Probe Talks Between Staff and Biogen on Alzheimer’s Drug

FDA Seeks to Probe Talks Between Staff and Biogen on Alzheimer’s Drug
The Food and Drug Administration’s chief is taking the highly unusual step of asking for a federal investigation of doctors within her own agency

The Food and Drug Administration’s acting commissioner, Janet Woodcock, is taking the highly unusual step of asking for a federal investigation of doctors within her own agency who met with the makers of an Alzheimer’s drug before the medicine’s recent approval.

Dr. Woodcock, in a letter made public Friday, called for the Office of Inspector General of the Department of Health and Human Services, which oversees the FDA, to review interactions between the drugmaker and FDA staff during the approval process.

The drug’s approval has been highly controversial, partly because of its annual price pegged at $56,000, and partly because evidence of the drug’s effectiveness was inconclusive.

During the time when the agency was considering the drug, called Aduhelm, FDA reviewers met with the company, Biogen Inc., that makes the drug. They collaborated with the company to prepare a joint review document presented to an FDA panel of outside advisers at a public meeting in 2020. The watchdog group Public Citizen called in December for an inspector general investigation “to scrutinize the unprecedented close collaboration.”

Michael A. Carome, director of Public Citizen’s Health Research Group, said the “investigation must be broad and assess when Dr. Woodcock first became aware of this collaboration and whether she ever specifically endorsed or facilitated it in any way,” and examine the FDA culture which allowed collaboration between the agency and the industry it regulates.

Dr. Woodcock didn’t respond to a request for comment.

In an email, a Biogen spokesman said the company “will, of course, cooperate with any inquiry in connection with a possible review of the regulatory process.”

The FDA initially approved the medicine for use in all of the approximately six million Americans who suffer from Alzheimer’s. On Thursday, the agency curtailed the recommended use, limiting it to patients with early-stage symptoms of Alzheimer’s.

That step brought the FDA recommended usage of the drug in line with the patients who were studied in the clinical trials Biogen used to seek approval of the drug, known generically as aducanumab. Biogen has said it would market the drug for use in early-stage patients with deposits of a sticky substance known as amyloid linked to Alzheimer’s.

Analysts project the drug could eventually ring up billions of dollars in yearly sales, largely paid by Medicare, which insures most Alzheimer’s patients in the U.S.

Dr. Woodcock’s letter was addressed to Christi Grimm, principal deputy inspector general of HHS, who is President Biden’s nominee to become inspector general.

Dr. Woodcock wrote that while she has “tremendous confidence in the integrity of the staff and leadership” of the FDA team that reviewed the drug, she is calling for an independent review of their actions.

“There continue to be concerns raised, however, regarding contacts between representatives from Biogen and FDA during the review process, including some that may have occurred outside of the formal correspondence process,” she wrote. “To the extent these concerns could undermine the public’s confidence in FDA’s decision, I believe that it is critical that the events at issue be reviewed by an independent body such as the Office of the Inspector General in order to determine whether any interactions that occurred between Biogen and the FDA review staff were inconsistent with FDA policies and procedures.”

“It would be extremely helpful,” she wrote, “if you could undertake this review as soon as possible.”

Barrons : China’s Overheated Real Estate Bonds Offer High Yields. They Are Only

China’s Overheated Real Estate Bonds Offer High Yields. They Are Only for the Brave.

Tech stocks are not the only Chinese assets that have crashed lately.

Spreads on B-rated corporate bonds, which run inversely to price, have jumped by seven percentage points over the past month or so, says Paul Lukaszewski, head of Asia Pacific corporate debt at Aberdeen Standard Investments.

Three-year paper is paying about 18% interest, higher than during most of last year’s Covid-19 panic. The Kraneshares CCBS China Corporate High Yield Bond USD Index exchange-traded fund (ticker: KCCB) is down 1.5% over the past two weeks, a plunge by fixed-income standards.

“Outside of Asia, credit markets are priced for perfection,” Lukaszewski says. “In China, it’s priced for a meltdown.”

That may spell golden opportunity in a yield-starved world. Or things could get still worse before they get better.

Real estate developers are the heart of China’s corporate bond market, and its problems. About 80 of them have issued hard-currency debt worth $200 billion or so. Maintaining stable prices for housing, which drives almost 30% of the economy, is a perennial concern for Chinese authorities.

This year, they have aggressively tightened credit and laid down “three red lines” for builders’ debt ratios. “They are trying to block the financial channel for developers,” says Tracy Chen, a portfolio manager for global credit at Brandywine Global.

That is spreading fear in a market that’s not the world’s most transparent. “One developer is punished for buying too much land while another for buying too little,” Lukaszewski says. “Investors are making up reasons to sell.”

One company’s problems are real enough: China Evergrande Group (3333.Hong Kong), No. 2 builder in China and No. 1 in the world in leverage. It has been shedding assets and rapidly selling apartments to raise cash to meet the red-line targets. Ratings agency Fitch downgraded Evergrande anyway, from B+ to B on June 22. Some of its Chinese banks have reportedly cut it off.

A rescue for Evergrande would buoy the rest of the market, predicts Omotunde Lawal, head of emerging markets corporate debt at Barings.

“Evergrande is probably too big to fail,” she says. “I’m in the camp that there’s value at current prices.”

Still, she is concentrating on more solid, BB-rated firms like CIFI Holdings Group (884.Hong Kong) or Shimao Group Holdings (813.Hong Kong), whose short-term bonds pay about 5%, not double digits.

Samy Muaddi, lead manager for emerging markets corporate bonds at T. Rowe Price, thinks that Beijing might let Evergrande and up to a dozen others default. “I was a contrarian buyer of China credit during past cycles,” he says. “This time, they’re determined to squeeze out moral hazard.”

What is too big to fail is the Chinese property sector as a whole. Xi Jinping & Co. want to keep a floor under existing homeowners no less than a ceiling for aspiring ones, and constantly tweak credit accordingly.

The State Council, China’s equivalent of a cabinet, may have signaled the next dovish tilt on July 8. It announced that bank reserve ratios, a key mechanism for controlling credit, may be trimmed “as appropriate to intensify support for the real economy.”

That bears close watching, at least for hungry bond investors.

“We haven’t bet the farm on Chinese developers,” Aberdeen’s Lukaszewski says. “But we are long and adding because risk/reward is so favorable.”

Barrons : Vaccine Maker AstraZeneca’s Strong Drug Pipeline Could Lift the Stock

Vaccine Maker AstraZeneca’s Strong Drug Pipeline Could Lift the Stock Higher for Years

AstraZeneca became a household name last year with its swift rollout of a Covid-19 vaccine, one of only a handful still available globally. It has now made over 500 million doses for more than 165 countries—and did it at cost, for zero profit.

But the publicity hasn’t all been good. The Anglo-Swedish drugmaker got caught in political fights between the United Kingdom and European Union, while rare side effects and production delays have attracted criticism.

Investors should look past this, and remember that AstraZeneca (ticker: AZN), which is listed in London while its American Depositary Receipts trade in the U.S., isn’t just a vaccine company. It’s a specialist in cancer treatments, and it supplies medicine for a host of other diseases. It has a strong pipeline, a growing number of $1 billion blockbuster drugs and, with EU and U.S. approval of its acquisition of Alexion Pharmaceuticals (ALXN), a promising new rare-diseases division.

A handful of its recently approved treatments could lift the company’s bottom line and stock price in the coming years. AstraZeneca’s “impressive” revenue and profit trajectory is compelling relative to its European pharma peers, analysts at Jefferies wrote in a research note.

The pharmaceutical group’s two-shot Covid-19 vaccine, developed with the University of Oxford, raised questions about its safety and efficacy since the trial results that initially won approval for use late last year. But medicines developed at such a breakneck pace for emergency use were bound to run into obstacles. Indeed, the rival vaccine from Johnson & Johnson (JNJ) was briefly suspended for use in the U.S. due to its links to rare blood clotting.

Behind the headlines, hundreds of millions of people globally have been protected from Covid-19 by AstraZeneca’s vaccine. The European Medicines Agency, and its U.K. counterpart the Medicines and Healthcare products Regulatory Agency as well as the World Health Organization, have all stressed that the benefits of the shot outweigh the risks.

There is a long way to go in the fight against Covid, but analysts and investors believe AstraZeneca’s easy to distribute, nonprofit vaccine will burnish its brand longer term.

Mike Fox, a fund manager and head of sustainable investing at Royal London Asset management, and a top-20 shareholder in AstraZeneca, praised the company as “heroic.” He predicts the company’s vaccine will be the dominant one in two years.

For investors focused on the bottom line, there are plenty of positives already. Analysts at research firm Third Bridge say AstraZeneca is the poster child for big pharma turnarounds, making it a good time to buy the stock.

Shares are down more than 10% since a recent peak in July last year, in part because investors haven’t digested its $39 billion takeover of Alexion. AstraZeneca trades at 19 times forward earnings, relatively cheap versus its recent history. It still trades at a premium to Pfizer (PFE) and Merck (MRK), but since the Alexion deal was announced it has traded at a rare discount to Eli Lilly (LLY).

The company’s turnaround has been accomplished by CEO Pascal Soriot since he fended off a $69 billion hostile bid from Pfizer seven years ago.

Soriot, a veterinarian by training, had taken the helm only two years before that. His defense against Pfizer brought a pledge to nearly double the Anglo-Swedish drug maker’s sales to $40 billion by 2023. He sold commercial rights to older brands facing patent expiries, like cholesterol drug Crestor in the EU, and used the cash to reinvigorate AstraZeneca’s research and development pipeline, boosting spending by 10% in 2020.

“We invested massively into R&D to re-energize the company and increase productivity,” Marc Dunoyer, AstraZeneca chief financial officer, tells Barron’s.

Soriot looks on track to meet his sales pledge after AstraZeneca delivered double-digit revenue growth over the past two years, boosted by a surge in sales from newer medicines.

UBS last month lifted its share price target to 92 pounds sterling from £80, or about 6% above a recent value of £86.78.

Soriot has also focused the company on three core therapeutic areas: oncology; cardiovascular, renal, and metabolism (CVRM); and respiratory and immunology diseases.

Oncology is now the drugmaker’s best-performing and fastest-growing division, with total revenue increasing by more than a fifth to $11.5 billion in 2020, boosted by $4.3 billion in sales of its blockbuster lung cancer treatment Tagrisso. Oncology represented 43% of overall year-to-date revenue in 2020, compared with 38% for the same period a year earlier.

In November, AstraZeneca was granted EU approvals for new prostate and ovarian cancer treatments. The company now boasts nearly 10 blockbusters each with annual sales of almost $1 billion or more and has 22 drugs in Phase 3 clinical trials.

A fourth engine of growth was added in December when Soriot struck the biggest deal in the company’s history with the acquisition of Alexion, in a bet on rare-disease and immunology drugs. AstraZeneca predicts the combined company will deliver double-digit average annual revenue growth through 2025 and double-digit core EPS accretion for the first three years.

High-priced medicines for rare diseases generate billions in sales from relatively few patients—the bulk of Alexion’s $6 billion in annual sales comes from Soliris, which treats a rare blood disorder and is one of the world’s most expensive drugs, priced at around $600,000 a year.

Competition for Soliris is unlikely to appear for several years and rare-disease patients are typically reluctant to switch treatments, protecting sales and profits, analysts say. AstraZeneca is betting that a newer version of Soliris, called Ultomiris, which costs an average $458,000 a year and is protected from U.S. competition until at least 2030, has an even larger market potential.

Despite some competitive risks to Alexion’s existing drugs, Sebastian Skeet, an analyst at Third Bridge, said the takeover brings a pipeline that could treat more common diseases and offers growth opportunities in China.

Alexion currently has zero sales in China, which is an increasingly important market for AstraZeneca. The country now accounts for 20% of the company’s group sales. “China could become a very large market for rare diseases and when the market does open up, we are very well positioned to expand there,” CFO Dunoyer says.

In April, Tagrisso was approved in China for the treatment of early lung cancer, becoming the first such drug to receive approval in the country, as well as the only one to have shown efficacy against the disease in a global trial.

AstraZeneca faces some competitive risks to oncology, but Skeet is bullish on its outlook.

“There’s the vaccine saga, which has presented a bit of an overhang on the stock as we have seen some knee-jerk reactions to the vaccine news. On the other hand, it’s important to realize the underlying fundamentals of AstraZeneca are strong,” Skeet says.

AstraZeneca has shown itself to be a good corporate citizen with its decision to sell its Covid vaccine without profit. That should boost its reputation among the public and health officials. Investors can look forward to the benefits of that—and of the growth in its core cancer-treating portfolio.

>>> US Close Dow +1,30% S&P +1,13% Nasdaq +0,98% Russell +2,17%

Closing Stock Market Summary

U.S. stocks and Treasury yields staged a strong reversal on Friday, with the S&P 500 rallying 1.1% to intraday and closing record highs and the 10-yr yield rebounding seven basis points to 1.36%. The Nasdaq Composite (+1.0%) also closed at a record high while the Dow Jones Industrial Average (+1.3%) and Russell 2000 (+2.0%) outperformed.

Today's positive price action was largely a continuation of yesterday's trade that saw the 10-yr yield bottom at 1.25% early in Thursday's session and stocks close off their intraday lows. Today, value/cyclical stocks led the broad-based advance, feeding into the view that growth concerns have been a bit overstated. 

All 11 S&P 500 sectors finished in positive territory, 28 of the 30 Dow components closed higher, and advancing issues outpaced declining issues by a 4:1 margin at the NYSE and a 3:1 margin at the Nasdaq. 

The financials (+2.9%), materials (+2.0%), energy (+2.0%), and industrials (+1.6%) sectors advanced the most after entering the session as weekly laggards. Bank stocks and energy stocks received additional support from a wider 2s10s spread in the Treasury market and higher oil prices ($74.56/bbl, +1.58, +2.2%).  

Apple (AAPL 145.11, +1.87, +1.3%) was arguably one of the most influential stocks today given its 1.3% gain and $2.42 trillion market capitalization. The stock opened little changed like the Nasdaq but steadily crept higher throughout the day and set its first all-time high since January.

Supportive news included Pfizer (PFE 39.63, +0.38, +1.0%) announcing that it's working on a booster COVID-19 shot to target the Delta variant, and San Francisco Fed President Daly (FOMC voter) suggesting the Fed should be cautious about withdrawing its policy support due to the risks posed by the Delta variant.

The bullish tone was further corroborated by softness in the U.S. dollar (91.10, -0.32, -0.4%) and Japanese yen (-0.3%), which are typically viewed as safe-haven currencies, and separately by a weaker CBOE Volatility Index (16.18, -2.82, -14.8%). The latter represented a decline in the hedging premium. 

The 2-yr yield increased three basis points to 0.22%.

Friday's economic data was limited to Wholesale Inventories for May, which increased 1.3% m/m in May (consensus 1.1%) following a revised 1.1% increase (from +0.8%) in April. Investors will not receive any notable economic data on Monday.

  • S&P 500 +16.3% YTD
  • Russell 2000 +15.5% YTD
  • Nasdaq Composite +14.1% YTD
  • Dow Jones Industrial Average +13.9% YTD

FT : Thiel-backed crypto group Bullish Global plans Wall Street debut

Thiel-backed crypto group Bullish Global plans Wall Street debut
Exchanges operator plans to list in New York through a deal with a blank cheque company

Bullish Global, the crypto group backed by billionaires Peter Thiel, Louis Bacon and Alan Howard, has announced plans to list in New York through a Spac deal in a further sign of the industry’s willingness to tap equity markets.

The digital asset group, which is managed by blockchain software company Block.one, said on Friday it would merge with Far Peak Acquisition Corp, a blank cheque company led by former New York Stock Exchange president Tom Farley.

The deal values Bullish at around $9bn, a number that largely comprises the $692m of cash held at Far Peak and the assets and investment supplied by Thiel, Bacon, Block.one and others to capitalise Bullish Global in May.

Hong Kong businessman Richard Li, German financier Christian Angermayer, Michael Novogratz’s Galaxy Digital and Nomura, the Japanese investment bank, have also backed Bullish.

The move by Bullish, which plans to launch a digital asset exchange but has yet to begin trading, underscores a push by crypto investors to list their nascent projects in the US, the world’s biggest equity market.

Circle, the US financial technology company behind the USD Coin stablecoin, announced plans on Thursday to merge with a special purpose acquisition vehicle and list on the New York Stock Exchange.

Bakkt, a cryptocurrency platform majority owned by conventional exchanges behemoth Intercontinental Exchange, is also due to list following a combination with the Victory Park Capital acquisition vehicle in January. Coinbase, the exchange, also debuted on Wall Street in April.

Bullish and its backers are betting on the growth of decentralised finance, or DeFi, a market that has grown from about $15bn at the start of the year to $65bn, according to an estimate by analysts at JPMorgan in May.

The group will run a decentralised trading network, which allows users to buy and sell digital assets directly with each other and bypass intermediaries that impose fees, such as an exchange or clearing house.

It will encourage trading using automated market makers, which do not trade through an exchange’s central order book. Instead they deposit their assets into a computed-coded contract, and algorithms search out buyers and handle buying and selling.

Owners of assets are incentivised by sharing in the pool of fees generated by trading activity. Bullish plans to run a pilot of its exchange for potential users to test in coming weeks.

Decentralised trading remains in its infancy and the biggest networks are built on the ethereum blockchain, a rival to Block.one’s EOS.IO.

Experts have described the defi market as the world’s most difficult to trade in because it is anonymous, there are hundreds of coins and they all have different trading characteristics. Hackings are also common, according to blockchain analytics group CipherTrace. Users have also complained about the high fees that are charged to compensate for the computing energy needed to execute trades on ethereum.

Farley will become chief executive of Bullish and Block.one chief executive Brendan Blumer will be appointed chair of Bullish. “We’re only in the first or second inning of the cryptocurrency market and I’m thrilled to be joining the Bullish team as we revolutionise the future of digital assets through cutting edge financial technologies,” said Farley.

The deal is expected to close by the end of the year.