After Hours Summary: SFIX +14.9%, REVG +9%, MRVL +4.7% up big on earnings; COUP -8.5%, HQY -4.7% lower on earnings; SLQT jumps +11% on being added to S&P SmallCap 600After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: SFIX +14.9%, REVG +9%, MRVL +4.7%, NAPA +3%, DADA +2.6% (also announces US$150 mln share repurchase plan), WWW +0.5% (guides Q2 revs above pre-pandemic levels)
Companies trading higher in after hours in reaction to news: SLQT +11% (to join S&P SmallCap 600), ATCX +8% (files for $250 mln mixed securities shelf offering; also files for 29,678,938 offering by selling shareholders), CHS +6.6% (issues statement in response to letter issued by Barington Group), CPG +4.5% (completes disposition of non-core Saskatchewan assets), AFYA +3.1% (notified of stake purchase by Bertelsmann affiliate), HOOK +1.9% (provides Phase 1 HB-200 data), RFL +1.8% (stock offering), INN +1.3% (to acquire 110-guestroom Residence Inn by Marriott), EOG +0.4% (names new CEO), YELL +0.3% (provides update on Q2 results), MRK +0.2% (Animal Health unit to acquire assets of LIC Automation), UBA +0.2% (increases dividend), MRNA +0.2% (New CDC study finds that mRNA COVID-19 vaccines reduce risk of infection by 91% for fully vaccinated people), PFE +0.2% (New CDC study finds that mRNA COVID-19 vaccines reduce risk of infection by 91% for fully vaccinated people), RPM +0.1% (acquires Dudick)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: COUP -8.5% (also names new CFO), HQY -4.7%, MTN -0.7%, UDR -0.1% (raises low end of FY21 FFOA guidance)
Companies trading lower in after hours in reaction to news: TIGR -9.8% (stock offering), PLBY -8.8% (stock offering), LESL -6.5% (stock offering), APR -6.2% (stock offering), JAMF -5.1% (stock offering), LBRT -3.8% (commences 12.3 mln share offering by Riverstone), KDP -2.7% (announces 28 mln share offering by MDLZ), M -1.8% (receives notice of termination of private label credit card deal with Citibank), ETSY -1.7% (convertible notes offering), FBK -1.7% (stock offering by selling shareholder; also files mixed securities shelf offering), WPC -1.5% (stock offering), GDRX -1.1% (Walmart+ platform adds savings on prescriptions), SHAK -0.8% (files mixed securities shelf offering; also files for 4,498,588 share offering by selling shareholders), TSLA -0.7% (discloses departure of Jerome Guillen, President, Tesla Heavy Trucking), ENB -0.1% (to sell 38.9% non-operating minority ownership interest in Noverco to Trencap for $1.14 bln in cash), TPX -0.1% (expands US manufacturing capacity)
Closing Market SummaryThe stock market began the first full week of June on a quiet note. The S&P 500 (-0.1%) finished the day with a slight loss while the Dow (-0.4%) lagged and the Nasdaq (+0.5%) displayed relative strength.
The mixed finish served as a good representation of intraday action, as the Nasdaq stayed ahead throughout the day. Small caps also had a good showing, sending the Russell 2000 higher by 1.4%.
Equities started the day in flat fashion with the broader market slipping away from its opening level through the first couple hours of action. The S&P 500 reached the bottom of today's eleven-point range around noon, inching off its low into the afternoon.
Seven sectors finished the day in negative territory, but the materials sector (-1.2%) was the only group that lost more than 0.7%. Industrials (-0.7%) and financials (-0.6%) weighed on the broader market throughout the day while technology (unch) climbed off its low in the afternoon. Energy (-0.4%) pulled back after jumping nearly 7.0% last week.
The materials sector finished at the bottom of the leaderboard even though the sector was home to some M&A news. Vulcan Materials (VMC 177.96, -1.64, -0.9%) agreed to acquire US Concrete (USCR 73.87, +16.73, +29.3%) for $1.294 bln in cash, but only three smaller components of the materials sector finished the day in positive territory.
The weekend did not bring any notable developments from infrastructure negotiations in Washington. Lawmakers are expected to continue talking over the coming days while a $547 bln surface transportation bill will face a House committee markup on Wednesday.
Industrials were pressured by influential components like Union-Pacific (UNP 222.95, -3.22, -1.4%), Caterpillar (CAT 239.76, -4.26, -1.8%), and 3M (MMM 203.73, -2.32, -1.1%) while the Dow Jones Transportation Average (-0.2%) finished a bit ahead of the sector thanks in part to UPS (UPS 212.92, +2.29, +1.1%).
On the upside, real estate (+0.9%) held the lead throughout the day while communication services (+0.5%) and health care (+0.3%) also spent the day in positive territory.
Communication services received a boost from a push to new record highs in Alphabet (GOOG 2466.09, +14.33, +0.6%) and Facebook (FB 336.58, +6.23, +1.9%) even though the companies will be subjected to the new 15% global minimum tax, which received the green light from G-7 finance ministers over the weekend.
Health care was boosted by biotechnology after Biogen's (BIIB 395.85, +109.71, +38.3%) Alzheimer's treatment received FDA approval. Biogen soared nearly 40.0% while the iShares Nasdaq Biotechnology ETF (IBB 158.28, +5.26, +3.4%) jumped to a six-week high.
Treasuries finished with slim losses that lifted the 10-yr yield by a basis point to 1.57%.
Today's economic data was limited to the Consumer Credit report for April, which showed an $18.6 bln increase after increasing a downwardly revised $18.6 bln (from $25.8 bln) in March. The key takeaway from the report is that the expansion in April was driven entirely by nonrevolving credit. Revolving credit decreased, driven in part presumably by consumers' focus on using stimulus money to pay down revolving credit balances.
The NFIB Small Business Optimism Index for May (prior 99.8) will be released tomorrow at 6:00 ET, followed by the April Trade Balance ( consensus -$68.6 bln; prior -$74.4 bln) at 8:30 ET and April job openings (prior 8.123 mln) at 10:00 ET.
- Russell 2000 +17.4% YTD
- Dow Jones Industrial Average +13.2% YTD
- S&P 500 +12.5% YTD
- Nasdaq Composite +7.7% YTD
Amazon Founder Jeff Bezos to Be on Blue Origin’s First Human Space Flight
The New Shepard spacecraft is scheduled for launch from West Texas on July 20
Jeff Bezos plans to travel to space next month as one of the first passengers carried by Blue Origin, the Amazon.com Inc. founder’s space company.
Mr. Bezos said in an Instagram post Monday that he will be one of the inaugural passengers on Blue Origin’s New Shepard spacecraft, during its first crewed flight scheduled for launch from West Texas on July 20. Mr. Bezos said that his brother, Mark Bezos, will also be on board.
“I want to go on this flight because it’s a thing I’ve wanted to do all my life,” Mr. Bezos said in a video posted to Instagram. “It’s an adventure. It’s a big deal for me.”
Mr. Bezos, who is stepping down as Amazon’s chief executive July 5 after leading the company for more than two decades, has invested heavily in Blue Origin, contributing as much as roughly $1 billion a year through sales of Amazon stock. Mr. Bezos, who already serves as Amazon’s chairman, will hold the title executive chairman after his lieutenant Andy Jassy becomes CEO.
The passenger list for Blue Origin’s July flight is also set to include the winner of a charity auction that will conclude this month. The auction has had nearly 6,000 participants and the highest bid is at $2.8 million, Blue Origin said Monday. The company said the winner will be decided in a live auction slated for Saturday.
The New Shepard capsule has room for six people and is fully autonomous. A rocket is designed to propel the craft briefly above the Karman Line—an imaginary boundary about 62 miles above sea level that is considered the beginning of space—before the capsule returns to the ground beneath a parachute 10 minutes after launch.
Mr. Bezos and his brother can expect to travel at three times the speed of sound and experience three times the force of gravity during their planned trip. The New Shepard rocket has made 15 uncrewed test flights so far, and prospective astronauts will have three days of training before flying, Ariane Cornell, Blue Origin’s sales director, said last month.
Blue Origin has said it aims to support widespread commercial activity in space in the future. In addition to its space-tourism efforts, the company is also working on rockets that could launch payloads for the National Aeronautics and Space Administration and the Pentagon.
Blue Origin’s efforts to commercialize space flight parallel those of SpaceX, the rocket company led by Tesla Inc. CEO Elon Musk. Space Exploration Technologies Corp. last year became the first company to launch NASA astronauts into space.
While their spaceflight projects progress, Mr. Bezos and Mr. Musk have also been trading places this year as the world’s richest person as Amazon and Tesla shares rise and fall. Mr. Musk overtook Mr. Bezos for the top spot in January, according to the Bloomberg Billionaires Index, but Mr. Bezos has since reclaimed the highest ranking.
For their space-tourism efforts, Blue Origin and other companies including Virgin Galactic Holdings Inc. are targeting suborbital commercial space flight, where crew members are weightless for minutes and don’t have to endure the rigors of training for longer periods in space.
Virgin Galactic, founded by billionaire Richard Branson, went public in a 2019 merger with a blank-check company. Its spacecraft, which shoots into the lower portions of space after being dropped by a highflying airplane, has carried professional pilots on test flights. Mr. Branson plans to be one of the first space tourists the company will carry, CEO Michael Colglazier said last month.
As suborbital spaceflight promises to ease passenger requirements, Mr. Bezos’s trip would make him one of a small number of amateurs who have flown in space. As NASA’s space-shuttle missions became more routine in the 1980s, the agency added nonprofessionals to some crews. Congressmen Jake Garn and Bill Nelson were among the participants on shuttle missions. Mr. Nelson was sworn in last month as NASA administrator.
In 1986, NASA planned to open space flight to more amateurs by including a high-school teacher, Christa McAuliffe, as a crew member on a flight of the Challenger space shuttle. The spacecraft exploded seconds after it was launched because of an engineering defect, killing all on board. The tragedy largely ended NASA’s ambitions to take amateurs on its missions.
Other nonprofessionals have visited space on Russia’s Soyuz spacecraft. The first person to fund such a trip himself, Dennis Tito, paid for a multiday flight to the International Space Station in 2001. Space Adventures Inc., the Virginia-based company that organized Mr. Tito’s trip, has since sent six other civilians into space on Soyuz rockets, with another such trip planned for later this year.
Russian space agency Roscosmos said last month that it separately plans to send a film director and an actress to the space station this year to film scenes for a movie.
SpaceX also wants to launch nonprofessionals into space in 2021. The company has already sent experienced astronauts to the space station aboard its Dragon capsule. It intends to send four passengers on a multiday trip into orbit in September using the capsule.
Mr. Musk has previously said he started SpaceX so he could travel to Mars, but hasn’t detailed when he would take his first trip to space.
“I would like to die on Mars—just not on impact,” Mr. Musk said in 2013 at the South by Southwest festival.
Mystery Buyer Pays $157.5 Million for Two Condos on New York’s Billionaires Row
The deal at 220 Central Park South marks one of the city’s most expensive residential trades ever
Two condos at New York’s 220 Central Park South have sold for a combined $157.5 million. It is one of the city’s priciest residential transactions of all time.
Property records show a buyer paid $82.5 million for a unit on the 60th floor and $75 million for the floor above. The purchase was made through a limited-liability company; the identity of the buyer couldn’t immediately be determined.
Both units are resales and the sellers, whose identities were also shielded by limited-liability companies, made significant profits. Last year the lower level traded for $50.9 million, while the upper level sold for $51.4 million, records show.
The mega-tower currently holds the record for the priciest sale in the U.S. In 2019, hedge funder Ken Griffin purchased a penthouse for roughly $238 million, The Wall Street Journal reported.
Designed by Robert A.M. Stern Architects, 220 Central Park South has attracted other high-profile buyers including Daniel Och of Och-Ziff Capital Management and musician Sting and his wife Trudie Styler.
Stablecoins must face ‘difficult questions’, warns Bank of England
BoE says companies offering the cryptocurrency should not enjoy ‘regulatory arbitrage’
The Bank of England said on Monday that so-called stablecoins — cryptocurrencies pegged to other assets — must be subject to tough scrutiny.
The BoE said it had not decided on its detailed regulatory approach to stablecoins yet, but it expected them to have sufficient reserves backing outstanding coins at all times, and to offer one-to-one redemption with a strong legal claim.
“The prospect of stablecoins as a means of payment . . . [has] generated a host of issues,” said BoE governor Andrew Bailey. “It is essential that we ask the difficult and pertinent questions when it comes to the future of these new forms of digital money.”
In a paper also released on Monday on new forms of digital money, the BoE said that companies offering stablecoins should not enjoy “regulatory arbitrage” through looser rules over traditional banks.
Stablecoins offer a popular way to transfer funds between everyday currencies such as sterling, and cryptocurrencies such as bitcoin. Unlike bitcoin, which was trading at $57,000 a month ago but has dropped to around $36,000, stablecoins aim to offer less volatility. Analysts at JPMorgan said the majority of turnover in popular tokens such as bitcoin and ethereum involved stablecoins.
Tether, the largest stablecoin, has more than 60bn coins in circulation, up from about 20m at the start of the year. USD Coin, its largest rival, has increased its supply from about 4bn to more than 23bn in the same period.
But regulators are increasingly concerned about the limited consumer protection they offer, their potential role as a less traceable form of money, the suitability of their reserves, and the ambiguous regulatory space in which they operate.
“For stablecoins to be used alongside commercial bank money, the Bank must be satisfied that they are safe . . . and they must not rely on making promises that they cannot guarantee to keep over time,” the BoE said. It has called for consultation on the topic, with feedback expected by early September.
Cryptocurrency advocates continue to push for digital assets to be adopted by mainstream institutions. On Sunday, El Salvador’s president Nayib Bukele announced that he would propose legislation to make bitcoin legal tender in the country.
The BoE said it was yet to make a decision on whether to introduce a central bank digital currency — an official digital payment system separate from cryptocurrencies. Central banks in countries including China and the US are exploring similar options.
In April, the Treasury and the BoE announced a joint task force to study a CBDC to improve the payments system. Chancellor Rishi Sunak said the UK “need[ed] to go further” to keep at the head of financial innovation. The BoE noted that a CBDC could play an important role in expanding retail access to central bank money, as well as potentially boosting monetary policy controls.
The bank outlined key principles for future exploration of the issue including financial inclusion, privacy protection and a lack of harm to the BoE’s ability to foster monetary and financial stability. It said the potential value of private sector alternatives should also be considered.
Without proper regulation, a CBDC could undermine faith in the BoE and sterling, said Sarah Coles, personal finance analyst at Hargreaves Lansdown. “The digital currency . . . would need to be effectively regulated as fully as banks, so they could be completely relied on.”
First Alzheimer’s Drug to Slow Disease Is Approved by FDA
Biogen drug approved after facing doubts over whether it slows progression of memory-robbing disease
The first drug promising to slow the memory-robbing march of Alzheimer’s disease was approved by U.S. health regulators, a watershed after years of research and billions of dollars in investment.
Its sale offers hope to millions of people dealing with Alzheimer’s and their caregivers, given the lack of good options for treatment. Yet the impact of the drug, which has the molecular name aducanumab, may be limited. Doctors who say they will prescribe the drug caution it won’t help all patients, particularly those with more advanced disease. Some patients eligible for treatment may face $10,000 or more in annual out-of-pocket costs, health insurer Cigna Corp. estimates.
In addition, some doctors say the evidence supporting the drug’s efficacy is limited and recommended against its approval.
The drug is a potential blockbuster for its maker Biogen Inc. BIIB 0.10% Its approval comes at a critical time for the biotech, which is coping with declining sales and the loss of patent protection for its biggest-selling drug, Tecfidera, a pill for multiple sclerosis.
Biogen has said it expects aducanumab sales to be modest this year as it launches the drug, and to start growing thereafter. Analysts polled by FactSet project sales of $62.7 million in 2021, $603.2 million in 2022 and $1.6 billion in 2023.
The drug’s list price wasn’t immediately available.
A preliminary analysis conducted by the Institute for Clinical and Economic Review, a nonprofit research and advisory group, said the drug could be cost-effective at a per-patient price of $2,500 to $8,300 a year.
Alzheimer’s is a progressive degenerative disease that slowly robs people of their memory and the ability to care for themselves.
About six million people suffer from Alzheimer’s in the U.S. Of those, as many as 1.4 million could be eligible to take aducanumab, according to estimates by Cigna.
There were 121,499 deaths from Alzheimer’s in the U.S. in 2019, up 54% from a decade earlier, according to the U.S. Centers for Disease Control and Prevention. After accounting for age and population growth, per capita deaths grew 23% over the period.
Despite considerable effort and investment, researchers have struggled to find drugs that prove to treat Alzheimer’s. One drug after another aiming to slow the progression of the disease has failed in testing.
The FDA last approved a new Alzheimer’s drug in 2003. Approved treatments, including the drugs Namenda and Aricept, can help reduce symptoms temporarily, but don’t change the underlying course of disease, according to regulators.
The FDA approved aducanumab to treat people with mild cases of cognitive impairment or dementia whose brains have accumulated beta amyloid, a sticky substance that many researchers believe plays a significant role in Alzheimer’s disease for many patients.
Aducanumab works by clearing amyloid from the brain.
Doctors said they expect strong demand for the medicine.
“I will no doubt field dozens, if not hundreds, of phone calls within the first day or week,” said Richard Isaacson, director of the Alzheimer’s Prevention Clinic at Weill Cornell Medicine and New York-Presbyterian hospital.
Biogen faces hurdles getting the drug to all the patients interested in taking it, says Dr. Isaacson, who is also a paid consultant to the company.
Before prescribing it, doctors will want to first make sure their patient’s brain has amyloid buildup, which typically requires an imaging scan or spinal tap that usually aren’t covered by medical insurance, Dr. Isaacson said.
Unlike other Alzheimer’s drugs delivered in pills that can be picked up at a pharmacy, aducanumab requires monthly infusions at a clinic. Patients will require monitoring with magnetic resonance imaging, or an MRI, to guard against small brain bleeds, a potential side effect of the drug, Dr. Isaacson said.
“There’s going to be a lot of education required, and a lot of logistical roadblocks,” he said.
The drug also faces skepticism from some doctors over its unusual and controversial path to approval.
In 2019, Biogen halted two studies of the drug after determining that they were unlikely to be successful, only to reverse course several months later after reviewing additional data.
The company said it would seek approval based on the discontinued studies after discussing the matter with the FDA.
In one of the two studies, patients taking aducanumab had a 22% reduction in cognitive decline compared with patients taking placebos. The drug failed to show a benefit in the second study, but a detailed breakdown of the results indicated the drug was effective when given at the highest dose for extended periods, Biogen said.
Some FDA officials appeared to agree with Biogen’s analysis, giving a positive medical review of the drug during a meeting of independent experts convened by the agency to discuss whether the agency should approve the drug. The agency’s statistical expert gave a more downbeat review, citing conflicting trial data.
The outside panel of experts rejected supporting the drug. They said Biogen should conduct another large study to prove the drug’s benefit before it was approved.
“There is no persuasive evidence to support approval of aducanumab at this time,” wrote three of the FDA’s independent experts in the Journal of the American Medical Association in March.
Jason Karlawish, an Alzheimer’s specialist at the University of Pennsylvania, said he thinks the FDA shouldn’t have approved the drug because of the lack of convincing evidence.
Yet he said he would still prescribe the drug to patients who want it after discussing with them its risks and benefits.
“I’ve chatted already with some of my patients, and some are interested and others say it doesn’t sound like something I’d want to do,” said Dr. Karlawish, co-director of the Penn Memory Center.
Cigna will likely cover the drug for people who match the patients studied in Biogen’s clinical trials—those with early-stage Alzheimer’s and amyloid buildup in their brains—said Steve Miller, Cigna’s chief clinical officer.
Most Alzheimer’s patients are covered by Medicare, and their out-of-pocket costs could be significant, depending on their coverage, because of so-called coinsurance payments that require patients to cover a percentage of certain health costs, Dr. Miller said.
“The out-of-pocket testing costs could be a real barrier for those patients who lack the financial means,” said Dr. Miller.
Cigna estimates that patients with traditional Medicare insurance could be on the hook for more than $10,000 a year in coinsurance and copayments for the drug and amyloid testing, Dr. Miller said. Additional costs for people with supplemental Medigap insurance or commercial coverage through Medicare Advantage could reach up to $4,000 annually.
Dr. Miller said patients may be eligible for financial assistance to cover the extra costs through nonprofit foundations, which are often funded by drugmakers.
Biogen’s first-quarter revenue was $2.7 billion, down 24% from $3.5 billion in the same quarter a year earlier, driven largely by a 56% decline in Tecfidera sales. Net income was $404.6 million, down 71% from $1.4 billion a year earlier.
Biogen has been laying the groundwork to launch the drug immediately upon approval by helping clinics set themselves up to treat patients. In April, Chief Executive Michel Vounatsos said the company expected there to be 600 U.S. sites ready to treat patients, with many more to come.
“We anticipate that there will be, if approved, a very large influx of patients,” Mr. Vounatsos told analysts on the company’s first-quarter earnings call in April. “We know that the availability of specialists and diagnosis capabilities are a bottleneck, so we had to prepare the sites of care.”