TheChek News Flow

Companies announced the preliminary results from the Phase 2 portion of an ongoing Phase 2/3 trial evaluating Kevzara® (sarilumab), an interleukin-6 (IL-6) receptor antibody, in hospitalized patients with “severe” or “critical” respiratory illness caused by COVID-19. Following a review by the Independent Data Monitoring Committee (IDMC) of all available Phase 2 and Phase 3 data, the trial will be immediately amended so that only “critical” patients continue to be enrolled to receive Kevzara 400 mg or placebo. The randomized Phase 2 portion of the trial compared intravenously-administered Kevzara higher dose (400 mg), Kevzara lower dose (200 mg) and placebo. It assessed 457 hospitalized patients, who were categorized at baseline as having either “severe” illness (28% of patients), “critical” illness (49% of patients) or “multi-system organ dysfunction” (MSOD) (23% of patients). Patients were classified as “severe” if they required oxygen supplementation without mechanical or high-flow oxygenation; or “critical” if they required mechanical ventilation or high-flow oxygenation or required treatment in an intensive care unit. Preliminary analysis of the Phase 2 portion of the trial demonstrated that Kevzara rapidly lowered C-reactive protein, a key marker of inflammation, meeting the primary endpoint Baseline levels of IL-6 were elevated across all treatment arms, with higher levels observed in “critical” patients compared to “severe” patients. Additionally, no new safety findings were observed with the use of Kevzara in COVID-19 patients. Analysis of clinical outcomes in the Phase 2 trial were exploratory and pre-specified to focus on the “severe” and “critical” groups. In the preliminary Phase 2 analysis, Kevzara had no notable benefit on clinical outcomes when combining the “severe” and “critical” groups, versus placebo. However, there were negative trends for most outcomes in the “severe” group, while there were positive trends for all outcomes in the “critical” group (see table below). Subsequent to the IDMC review, Regeneron and Sanofi conducted a review of the discontinued “severe” group that revealed the negative trends in the Phase 2 (n=126) were not reproduced in Phase 3 (n=276), and that clinical outcomes were balanced across all treatment arms. Outcomes for the “severe” group were better than expected based on prior reports, regardless of treatment assignment: for example, in the Phase 2 portion, approximately 80% were discharged, 10% of patients died and 10% remain hospitalized.

Finance minister says QIA aims to identify opportunities as asset prices plunge

Qatar’s sovereign wealth fund will remain “very active” through the coronavirus pandemic as the oil-rich Gulf investor searches for deals in the health and technology industries.

Ali Sharif al-Emadi, the country’s finance minister, said the $320bn Qatar Investment Authority’s “main focus” would be on its international investments as it used the market volatility and plunging asset prices to identify buying opportunities.

“The QIA is looking to invest in various sectors, specifically in the health and tech industries,” Mr Emadi, who is on the QIA’s board, told the Financial Times.

“We are looking at businesses that we believe will prove resilient over the long term, despite some negative effects resulting from the Covid-19 pandemic.”

The fund’s strategy mirrors that of other investment vehicles in the region, including Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala Investment Company, which view the economic chaos triggered by the pandemic as a chance to acquire assets at knockdown prices.

The PIF has already bought stakes in Carnival, the beleaguered cruise line operator, and oil majors including Royal Dutch Shell, Total, Repsol, Equinor and Eni. The Saudi fund is also putting up most of the cash for an investor group that has agreed to buy Newcastle United, the English football club, for £300m.

Like other Gulf states, Qatar, the world’s largest exporter of liquefied natural gas, is being hit by the double blow of coronavirus and the collapse in oil prices. But as the planet’s richest nation in per capita terms it has substantial financial firepower to weather the storm.

Doha has announced a $21bn support package for businesses, including pumping $2.75bn into the local stock market. Mr Emadi said the investment in local shares was through other state-affiliated funds, not the QIA.

“QIA’s main focus is on their international activities,” he said. “It will be looking at opportunities and I’m sure with these volatile markets opportunities will rise. The QIA is being very active and they will remain very active.”

The Qatari fund has traditionally been one of the Gulf’s most high-profile investors, snapping up trophy assets such as Harrods and The Shard building in London. During the 2008-09 financial crisis it invested billions of dollars in Barclays, Credit Suisse, Volkswagen and Porsche.

However, around the time Sheikh Tamim bin Hamad Al Thani, the emir, succeeded his father in 2013, the QIA tempered its activity as it allocated more money to third-party managers. And in 2017, the fund was forced to repatriate more than $20bn in deposits to stabilise the domestic financial sector after Saudi Arabia, the United Arab Emirates, Egypt and Bahrain cut diplomatic links with Doha and imposed a regional embargo on the country.

However, the QIA, chaired by Sheikh Mohammed bin Abdulrahman al-Thani, who is also the foreign minister and considered a rising star in Doha, has been more active in recent years. It has switched its focus back to direct investments in companies and has been looking to increase its exposure to North America and Asia.

Last year, the QIA’s deals included leading a $500m equity financing for SoFi, a US digital lender. It also teamed up with Crown Acquisitions, the US real estate group, to buy a 24 per cent stake in a portfolio of properties controlled by Vornado Realty Trust, which they estimated to be worth $5.6bn. The portfolio includes some of New York’s most iconic properties in Times Square and along Fifth Avenue, including the St Regis hotel and luxury jeweller Harry Winston.

Mr Emadi added that the government, which raised $10bn through a bond issuance this month, was budgeting for $55 a barrel of oil this year, but planned to reduce its break-even price to less than $40 a barrel after 2022.

Doha had “no limits” in terms of what it would provide to support the domestic economy and was “100 per cent committed” to Qatar Airways. The struggling airline’s chief executive told Reuters last month that the company was at risk of running out of cash and would eventually need government support.

“We will support Qatar Airways 100 per cent and will take whatever measures,” Mr Emadi said. “It’s a very important company for us and plays a very important role.”

He added that work was continuing on infrastructure for the football World Cup, which Qatar will host in 2022, saying there had been no delays.

“Eighty per cent of the 2022-specific sporting infrastructure, stadiums and training sites are complete,” Mr Emadi said. “We are on track and on schedule to be ready ahead of time, with all venues to be completed by 2021. There have been no reductions in scope and no delays.”

Qatar has long been criticised for its treatment of migrant workers involved in the construction of sport stadiums and other infrastructure. Mr Emadi said Doha was “taking all the health measures to ensure the safety of all the workers in terms of safety, but those projects are ongoing”.

Global stocks started the week with gains amid signs of positive developments in the fight against the coronavirus and a boost to stimulus measures from the Bank of Japan. The dollar retreated.

Asian shares climbed, U.S. futures reversed earlier losses to trade higher and European contracts pushed up. Trading volumes remained subdued amid the risk-on move. In currencies, the Australian dollar outperformed, while the yen strengthened. Treasury yields advanced. Coronavirus deaths slowed the most in more than a month in Spain, Italy and France while fatalities reported in the U.K. and New York were the lowest since the end of March.

Macro :

- Goldman Says Equities Likely to Stay Range-Bound in Near Term

- United States Oil Fund Tweaks Portfolio in NYSE, ICE Futures

- Goldman Says Narrow Breadth in S&P 500 a Bad Sign for Stocks

Keep an eye on :

- ADS GY : Adidas First Quarter Revenue EU4.75 Bln, -19% Y/y

- ADM LN : Admiral Suspending Recommendation to Pay Special Div 20.7p/Share

- AIR FP : Airbus CEO Warns Workers It’s Bleeding Cash and Cuts Are Needed

- AIR FP : Boeing, Embraer Scrap Cooperation as Jet Market Shrinks

- AF FP : Air France-KLM to Get 7 Bln Euros in State, Guaranteed Loans

- AF FP : Dutch Government Pledges 2-4 Billion Euros for KLM: AP

- AHT LN : Ashtead Says Performance is in Line With Expectations

- ATE FP : Alten 1H Sales to Fall on Coronavirus Before Possible 2H Rebound

- AMS SM : Amadeus Fire First Quarter Ebita Margin 13.9% Vs. 16.2% Y/y

- ARJOB SS : Arjo First Quarter Adj Ebitda SEK445 Mln, Est. SEK429.8 Mln (1)

- BAMI IM : Cerved Confirms Credit Lines Worth EU695m to Refinance Debt

- BAYN GY : Bayer 1Q Adj. Ebitda Up 10% Y/y to EU4.39b (1)

- BG AV : Bawag First Quarter Pretax Profit EU81 Mln, Est. EU108.0 Mln

- BAYN SW : Helvetia Gets Capital Authorization at AGM for Caser Financing

- BBVA SM : BBVA, Allianz Could Seal Insurance Deal This Week: Cinco Dias

- BNTX US : BioNTech CEO Says Majority Owners Won’t Sell Company: Welt

- CPR IM : Campari CEO Ready for ‘Bigger Deals Than Before’: Repubblica

- DAI GY : Daimler Says China Car Sales Are Recovering, Bild Reports

- DBK GY : Deutsche Bank Plans to Offer Card Readers to SME Companies: FAZ

- DBK GY : Deutsche Bank Prelim 1Q Common Equity Tier 1 Ratio 12.8%

- DIE BB : D’Ieteren Cuts Gross Dividend Proposal to Last Year’s Level

- EDF FP : Total Takes EDF to Court Over Nuclear Power Contract: Les Echos

- EDF FP : FT Energy: EDF poised to lodge Sizewell C nuclear plant application https://t.co/AjMWgJvJml

- ERICB SS : Ericsson’s Top Holder Cevian Cut Stake to 8.1%

- EUCAR FP : Hertz Could Deplete Cash This Quarter, Moody’s Says in Downgrade

- G IM : Generali to Strengthen EU Business Through Disciplined M&A: Sole

- GALP PL : Galp First Quarter Adjusted Net EU29 Mln, -72% Y/y

- HUBN SW : Huber + Suhner Cut to Add at Baader Helvea (Earlier)

- ICAD FP : ICADE First Quarter Revenue EU271.9 Mln

- IHG LN : Intercontinental Amends Facility to Include Covenant Waiver

- ISP IM : Intesa Sticking With Takeover Bid for UBI, Messina Tells Sole

- KNIN SW : Kuehne + Nagel First Quarter Ebit CHF184 Mln, -24% Y/y

- KVAER NO : Kvaerner First Quarter Order Book NOK7.25 Bln, -29% Y/y

- LHA GY : Pivotal Lufthansa Bailout Snared in Tangle of Governments, SPD Wants Lufthansa Aid Tied to Government Role, Bild Says Austria Seeks Guarantees in Return for Any Aid to AUA: FAZ

- LHA GY : Austria Seeks Guarantees in Return for Any Aid to AUA: FAZ

- NXI FP : Nexity Says Made Adjustments to Main Corporate Loans Facilities

- NXI FP : Nexity Appoints Alain Dinin as CEO With Immediate Effect

- NDX1 GY : Nordex Refinances EU1.21b Guarantee Credit Facility for 3 Years

- PTEC LN : Playtech Names Claire Milne as Interim Chairman

- PRS SM : Prisa, Pluris Sign MoU on Media Capital Stake Acquisition

- RDW LN : Redrow to Start Mobilizing Sites in Week Starting May 11

- RNO FP : France Working on State Loan of About EU5 Bln for Renault

- RNO FP : French Union Urges Renault Workers Not to Return Until May 11

- SANN SW : Santhera, Cold Spring Test Drug Against Covid-Related Syndrome

- SIX2 GY : Sixt Prelim First Quarter Pretax Loss EU5 Mln

- USB US : Berkshire’s US Bancorp Stake Crosses 10% Threshold

- VIS SM : Viscofan First Quarter Net Revenue EU222.1 Mln, Viscofan 1Q Net Rises 20% to EU27.4m, Keeps 2020 Capex Plan

- VOW3 GY : VW Wolfsburg Output to Reach 10%-15% This Week, 40% Next Week

- WDI GY : Deutsche Bank Plans to Offer Card Readers to SME Companies: FAZ

DAX:

MDAX:

SDAX:

n a Stock Market Like This, Anything Could Cause the Next Panic. Here’s What to Watch.

It’s a race against time —and no one knows who is winning.

When the coronavirus crisis first started , it was immediately apparent that it would be like no other. It was one that forced Americans to stay inside and businesses to shut down, and caused the S&P 500 index to fall from an all-time high into a bear market in record time. Policy makers and government leaders seemed to realize just how dire the situation was and responded with trillions in monetary and fiscal stimulus, and that kept the crisis from getting out of hand at the onset.

We all know, though, that everything isn’t all right. The stimulus money has bought us time, but not much else. And the longer the virus prevents all of us from doing what we usually do, the greater the pressure on financial markets is going to grow.

We got a hint of that this past week when the price of oil turned negative . We can talk all we want about how it was just one futures contract, that it was caused by technical factors due to that contract’s expiration and the lack of storage for the oil that owners of those contracts would have to take delivery of. But just think about how strange that is: If you owned oil, you had to pay someone to take it from you.

The stock market’s reaction was even stranger. Stocks fell hard for two days—first, ones with the most exposure to oil, then everything else—then started to bounce back. By the end of the week, the energy sector had turned positive for the week, and oil was an almost afterthought. It should be considered a warning. “When assets like oil swing wildly, we pay attention,” writes Lindsey Bell, chief investment strategist at Ally Invest

Some of the possible hot spots are obvious. Senate Majority Leader Mitch McConnell (R., Ky.) highlighted one when he said he is “in favor of allowing states to use the bankruptcy route .” With so much of the economy shut down and fewer tax dollars coming in, state budgets are getting squeezed. And it isn’t just states that are having problems—they stretch to municipalities of all shapes and sizes .

Europe is also a mess. Germany is spending massively to support its own economy, but Italian bond yields continue to rise, as the European Union tries to agree on some sort of fiscal package for its weaker members. At its meeting this past week, the EU bickered about whether the money should come as loans or grants—and left without a solution.

Emerging markets are under obvious pressure. Turkey’s lira has dropped more than 14% in 2020, while the Brazil real has fallen 27%, the Mexican peso tumbled 24%, and the Russian ruble has slumped 17%. Those are massive drops, and normally they would at least have made exports from those countries cheaper. But since there are few exports, all they’re doing is putting a strain on the countries’ budgets.

Bank of America strategist Claudio Irigoyen points to Latin America as among the most problematic regions. “The global and regional impact of Covid-19, combined with a collapse in oil prices, created a perfect storm for LatAm,” he writes.

Dare I go on? We could add junk bonds, the potential for food shortages , small-business bankruptcies, and a slew of other problem areas to our list. The longer the coronavirus keeps a lid on economic activity, the greater the potential that anything could become the next flashpoint. When asked where the next blowup might come from, DeBusschere told Barron’s. “EM is at the top of my list. But other than that, it is about the unknown.”

Against that backdrop, it seems almost ridiculous that the S&P 500 fell just 1.3% to 2836.74 this past week—still up 27% from its March 23 low—while the Dow Jones Industrial Average dropped 467.22 points, or 1.9%, to 23,775.27, and the Nasdaq Composite declined 0.2% to 8634.52.

But then again, maybe not.

On Thursday, the World Health Organization accidentally released what appeared to be disappointing results from a trial of Gilead Sciences ’ (ticker: GILD) remdesivir, a potential treatment for Covid-19, causing the Dow’s 400-point gain to disappear in an instant. The index then rallied to close at its high of the day on Friday following reports that Gilead’s drug trials may yield results by mid-May and that the interpretation of the trial results was perhaps wrong.

It isn’t every day that drug-trial news can move markets like that, suggesting that the market knows that anything that can get economies up and running that much sooner can make a massive difference.

It’s a race we can’t afford to lose.

The luxury firm said it has not changed its conventional payment terms, which are often shorter than legal requirements — 20 days on average.

PARIS — Hermès International is sticking to pre-crisis payment terms for suppliers, the French luxury house said Friday.

Answering written questions from shareholders at the annual general meeting, the company said it has not changed its conventional payment terms, which are often shorter than legal requirements—20 days on average—and ensuring invoices are paid as soon as possible.

The company added it regularly makes advance payments, at the outset of projects.

Payment delays have become widespread amid the economic disruption from the coronavirus.

Hermès has offered a picture of resilience amid the coronavirus, reporting a 6.5 percent drop in first-quarter sales, outperforming larger luxury rivals that have reported declines closer to the 15 percent range. Analysts at Bain &Co. have modeled three scenarios for the luxury sector this year, with their intermediate scenario suggesting a contraction of between 22 percent and 25 percent.

The luxury firm is maintaining its gradual expansion of production sites in France, executives said Friday, noting new workshops are set to open in the Gironde and Seine-et-Marne regions in France this year, and two others in the following years. The company counts 43 production sites in the country, which account for nearly half of the company’s employees.

Shareholders approved the three-year renewal of mandates for supervisory board members Dorothée Altmayer, Monique Cohen, Renaud Momméja and Éric de Seynes.

U.S.’s sole rare-earths mine must rely on China to process extracted minerals

WASHINGTON—A remote mountain mine in the California desert is poised to get a boost from the Pentagon, which sees the metals it extracts there as vital for national defense—but vulnerable to Chinese dominance over the supply chain.

The Mountain Pass mine is the only domestic source for rare-earth minerals, which are needed for electronics, lasers, magnets and other applications used in weapons systems. The minerals require special processing after extraction, which is now done in China because the U.S. doesn’t have any facilities to do so.

To eliminate that dependence, the Defense Department is helping to pay for developing a processing facility at the Mountain Pass mine, which is controlled by the Chicago hedge fund JHL Capital Group.

The fund’s head, James Litinsky, first invested in Mountain Pass as a bet that growing rivalry between the world’s two largest economies would make its rare earths increasingly valuable. He said the Pentagon’s grant and growing U.S. government interest in his business validates that investment.

“These supply-chain issues are now front and center,” Mr. Litinsky said. While the U.S. is now grappling with the coronavirus pandemic, “the industrial policy is just as much of a long-term crisis,” he said.

The Pentagon is also providing grant funding to Australia’s Lynas Corp. and its partner, the U.S. chemical company Blue Line Corp., which want to build a plant in Texas. Both projects will be eligible for more grants to help with commercialization.

“The department continues to work closely with the president, Congress and the industrial base to mitigate U.S. reliance on China for rare-earth minerals,” said Lt. Col. Mike Andrews, Defense Department spokesman.

Mountain Pass, located about 15 miles west of the Nevada border, restarted production two years ago after the new owners started the company MP Materials to buy the site out of bankruptcy.

MP Materials had planned to start a larger processing business there this spring, but that is now delayed until 2021 because of the coronavirus pandemic and the retaliatory tariffs eating into company revenue, Mr. Litinsky said, although engineering work continues.

The Pentagon grant provides funding for feasibility and engineering studies of the processing plant, and to develop ways to extract and refine more of the mine’s most valuable, but toughest-to-separate minerals.

The companies and the Pentagon haven't disclosed the awards’ value. Some of the Defense Department contract materials published online say grants through these programs usually offer between $5 million and $20 million.

In materials for a related set of grants, the Pentagon says it is likely to award up to $40 million, but leaves it unclear whether that applies to only that program or its entire package of rare-earths projects.

The grants represent the Trump administration’s first step to put money behind an effort to break China’s control of the supply chain for these minerals, widely used in weapons systems, jet fighters, wind turbines and electric vehicles. Many regard them as potentially essential to the future of the military and a clean-tech economy, but there is very little capacity to process and build parts from these minerals outside China, according to industry analysts.

The administration may need Congress, too, because creating a lasting, rare-earths processing business effectively from scratch is likely to take years and a lot more money, analysts said. Processing facilities alone typically cost hundreds of millions of dollars each, and new U.S. plants will face stiff competition from state-backed Chinese companies, analysts said.

“Symbolically I think it’s huge,” Ryan Castilloux, who leads the rare-earths research firm Adamas Intelligence. “But at this point it’s yet to be seen that it will turn into anything tangible.” He called the new grants the government putting its “toes in the water.”

While the Trump administration did reach a partial detente in its trade war with Beijing, it remains concerned over the way China has grown to dominate some heavy industries and supply chains, often with backing from state coffers.

Chinese leaders haven't been shy about highlighting rare earths as a major advantage. During last year’s trade war with the U.S., Chinese President Xi Jinping and his top trade negotiator toured a region of China that calls itself a rare-earths kingdom. The trip was widely interpreted as a message to the U.S. that his government has leverage over high-technology industries critical to America’s economy.

But that message also galvanized bipartisan support in Washington to take action on rare earths, said Jane Nakano, a senior fellow at the Center for Strategic & International Studies.

The Defense Department put out two requests for information—an early step in the grant process—the following week, and Mr. Trump issued a series of executive orders later that summer authorizing use of the Defense Production Act to invest in rare-earth processing. Ms. Nakano called the first wave of grants a step in the right direction.

“The Chinese government sees value in pumping in money because they think that’s the frontier of economic competition, or economic competitiveness with Western countries,” she added. “If that’s the context in which this game is played, then it’s been about time for us to revisit how to push back and what are the tools in our toolbox.”