RAPT Therapeutics: Stock nearly 9% higher after bullish initiations
- Wells Fargo's Yanan Zhu started coverage of RAPT with an Outperform and $33 tgt (~60% upside compared to Friday's close) given, "Our positive rating and outlook is based on opportunities for the company's CCR4 inhibitor programs, which exploit T cell homing as a novel mechanism for the treatment of a wide range of allergic inflammatory diseases and cancer. Overall, we see the lead immunology product candidate, CCR4 inhibitor RPT193, as having a $1B+ opportunity as an oral competitor to blockbuster injectable drug DUPIXENT as well as a potentially safer alternative to emerging high profile JAK inhibitors. We view additional option value to immuno-oncology drug FLX475 with a differentiated development strategy from other drugs in this category."
- BMO Capital Markets analyst Do Kim launched coverage of RAPT with an Outperform and $35 tgt (~70% upside compared to Friday's close) stating, "We believe Rapt's CCR4 antagonist programs have a sound biological basis for addressing clinically validated disease pathways in immuno-oncology and allergy. We believe a Phase 1b partial responder for lead drug FLX475 provides early proof-of-concept, suggesting broad benefit in charged tumors. We believe second drug RPT193 could have biologic-like efficacy in atopic dermatitis, but with oral convenience and better safety. We expect proof-of-concept data for FLX475 (1H20) and RPT193 (mid-2020) to be near-term catalysts."
- UBS also initiated the stock with a Buy, $26 tgt; specifically, "RAPT is an early clinical-stage biotech with two lead CCR4antagonists for multiple indications: FLX475 (solid tumors) and RPT193 (atopicdermatitis and allergic asthma). We estimate risk-adjusted peak sales of$448M for FLX475 and $283M for RPT193. Both assets prevent thechemokines, CCL17 and CCL22 from interacting with the CCR4 receptorwhich is thought to drive pathologic recruitment of immunosuppressive Tregcells (in cancers) and pro-inflammatory Th2 cells (in allergic diseases). Preclinical data for both assets & data from other molecules with similar mechanisms of action (or in similar pathways) lead us to conclude that CCR4 antagonism is an interesting target for both oncology & immunology."
World trade drops sharply in September
Data dashes hopes that worst of global downturn had passed
World trade contracted sharply in September, dashing hopes that the global downturn that has been weighing on exporters had bottomed out.
The volume of global trade dropped 1.3 per cent in September compared to the previous month, down from a 0.5 per cent expansion in August, according to data from the CPB World Trade Monitor.
The September fall reverses the gains made in the previous two months, which had raised hopes that the worst of the disruption caused by the global trade war has passed.
“While news about the negotiations between the US and China is mixed at best, trade remains subdued,” said Timme Spakman, an economist at ING.
Compared to the same month last year, global trade contracted 1.1 per cent in September, marking the fourth consecutive year-on-year contraction and the longest period of falling trade on this metric since the international crisis in 2009.
The US and China were the largest drag on international trade, largely reflecting the two-year long trade war between the world’s two biggest economies.
US import volumes fell 2.1 per cent in September compared to the previous month. In China, imports were down 6.9 per cent.
The index for global industrial production, also produced by CPB, was marginally more upbeat, with a 0.5 month-on-month expansion in September, up from a 0.1 per cent increase in August. However, the growth was exclusively Asia-driven, with most other industrial regions continuing to contract.
Consolidation in gold industry resumes as Kirkland Lake approaches Detour
The consolidation of the gold sector resumed with Canada’s Kirkland Lake Gold making a $3.7bn all-share offer for rival Detour Gold.
Since Barrick Gold bought Randgold Resources and Newmont Mining swooped to acquire GoldCorp last year, analysts have been waiting for another flurry of dealmaking activity.
However, boardroom intransigence and the fact majors like Barrick and Newmont are looking to sell non-core assets has seen deals almost dry up until now.
Kirkland’s recommended offer for Detour, pitched at a 24 per cent premium to its closing price on Friday, will create a 1.5m ounce a year gold producer that will be big enough to appeal to mainstream fund managers.
Sector specialists say there is an obvious need for consolidation in the gold mining industry because it is more fragmented than in other commodities, such as iron ore, where three large miners dominate the market.
Van Eck Associates, one of the biggest shareholders in Detour, recently called for the consolidation of single asset gold companies to form larger, multi-mine businesses.
“The addition of Detour Lake provides an opportunity to add a third cornerstone asset that is located in our back yard in Northern Ontario,” said Tony Makuch, chief executive officer of Kirkland.
“Detour Lake will provide the pro forma company with a 20-plus year mine life which provides unparalleled optionality and excellent growth potential for the benefit of all shareholders.”
Under the deal, Detour shareholders will receive 0.4323 Kirkland shares, giving them a 27 per cent stake in the merged company. The combination of the two companies will generate pre-tax synergies of $75m to $100m, they said.
Kirkland is taking advantage of its soaring share price — it has climbed by almost 240 per cent over the past two years — to acquire Detour, which owns Detour Lake, a 600,000 ounce a year gold mine.
Aided by a higher gold price, shares in Detour have also performed strongly this year.
The company hit the headlines back in 2018 after a bitter war of words with hedge fund Paulson & Co, ironically over a takeover approach. This eventually saw the board of Detour overthrown and new management installed.
Analysts say other single asset companies that could be vulnerable to a bid include Pretium Resources and Pretium Resources and Sabina Gold & Silver.
“We believe it is time for single-asset gold companies and their shareholders to reconsider the M&A landscape and adapt new strategies that will build the mid-tiers and majors of the future,” Van Eck said in its October letter to investors.
Car Makers Wager on Bigger Screens to Lure Buyers
The larger displays spark questions about whether they help or hinder efforts to curb distracted driving
When it comes to the media display in your car, auto makers are betting size does matter.
Car companies are introducing bigger screens—and more of them—in their newest models. Executives say the larger displays are needed as the systems that show navigational tools, music options and the like become more sophisticated, and consumers—especially younger ones—want to bring more of their digital lives into the car.
The increased size and functionality, however, have raised questions about whether outsize displays help or hinder efforts to curb distracted driving.
Last week, at the Los Angeles Auto Show, Ford Motor Co. was the latest auto maker to debut a mammoth display: a 15.5-inch touch screen that will be in the company’s new all-electric Mustang Mach-E SUV when it goes on sale late next year. At that size, it will be the industry’s second largest in-car display screen behind the 17-inch panel that Tesla Inc. introduced in 2012 on the Model S sedan.
“The experience that our customers are familiar with on their laptop or cellphone—that rich experience—has really moved into the vehicle,” said Gary Jablonski, chief engineer of connected car technology at Ford.
Others such as Fiat Chrysler Automobiles NV, Toyota Motor Corp. ’s Lexus division and BMW AG have rolled out models recently with display screens measuring 12 inches diagonally or more, larger than the screen on the most popular iPad, which measures 10.2 inches.
The newest Ram trucks from Fiat Chrysler, for example, have a 12-inch touch screen display. Subaru Corp. recently introduced a new Outback wagon and Impreza sedan with 11.6-inch displays, a size available on all but the base models.
The number of vehicles built in North America with display screens measuring 7 inches or more has grown by nearly 75% in the past five years, to 10.9 million from 6.3 million, according to data and analytics firm IHS Markit. The average size of the screen also has increased, to 7.3 inches from 6.4 inches, during that period, the firm’s data shows.
“The trend we see in the industry is bigger is better,” said Georges Massing, an executive at Daimler AG ’s Mercedes-Benz division who leads its digital vehicle technologies efforts.
Mercedes’s newest multimedia system, the MBUX, combines a large touch screen, measuring up to 12.3 inches on some models, with a similar-sized display for gauges that spans roughly half the dashboard. Drivers can call up features by tapping and swiping items on the touch screen or using the system’s voice-activated digital assistant.
Byton, a Chinese electric vehicle startup, is taking screen size to the extreme when it rolls out its first new vehicle, the M-Byte, next year in China with a 48-inch display that stretches across the entire span of the dashboard. The company said it plans to bring the car to the U.S. in 2021.
Jeff Chung, Byton’s vice president for digital engineering, said its research has shown that drivers divert their gaze less from the road with a supersize display, compared with one located in the center console.
“Distraction comes when you can’t find the information you want,” Mr. Chung said. He added, “It’s not about the size of the display but about the content and where that content is located.”
Already, drivers are struggling to stay focused with an influx of new technology coming into the car and large displays only add to the cognitive load, said David Strayer, a University of Utah professor who studies in-car technology.
“As the screens get bigger, they also tend to inherit more functions and features,” Mr. Strayer said.
The wider use of touch screens is also worrisome because they tend to replace the more familiar buttons and knobs, and can be distracting for drivers, who often have to navigate functions by tapping through different menus, said Jake Nelson, a traffic safety and advocacy director at AAA.
Some car shoppers aren’t impressed with the larger screens. Gino Sferra, who is in the market for an SUV, said he hopes vehicle safety systems are also improving.
“I don’t think of my car as a place to be entertained,” said Mr. Sferra, a 32-year-old technology consultant in San Antonio.
Federal regulators have placed few limits on in-car displays and what they can do.
The National Highway Traffic Safety Administration in 2013 issued a set of voluntary guidelines to cut down on distractions from in-car displays, including recommendations on preventing drivers from inputting text while the car is moving and against displaying unnecessary images. The guidelines don’t include recommendations on size.
A NHTSA spokesman said the agency is testing how companies comply with the guidance and will update it as needed, he said.
Industry designers say they are attentive to safety concerns. Bigger displays allow for larger text and icons, they say, making it easier for drivers to process information or quickly accomplish their tasks. Whether a screen is distracting or helpful is less a question of size than of how intuitive it is to use, Ford’s Mr. Jablonski said.
“You can do a big screen well or you can do a big screen poorly,” Mr. Jablonski said. “And we obviously think we’re doing it well.”
Gapping down
In reaction to disappointing earnings/guidance:
- OGI -8.3%
M&A news:
- SCHW -0.8% (confirming acquistion of AMTD for $26 bln in all-stock transaction)
Other news:
- CTSO -10.3% (says temporarily pausing enrollment of REFRESH 2-AKI study at the recommendation of its Data Monitoring Committee as the Company transitions to a new contract research organization for the trial)
- UBER -4.4% (denied new private hire operator's licence in London)
- TXG -1.5% (discloses update in Bio-Rad Laboratories (BIO) suit -- Court ruled that the Company's GEM microfluidic chips, as well as certain Chromium instruments and accessories used with GEM microfluidic chips, infringed the German Utility Model)
Analyst comments:
- AEO -1.6% (downgraded to Hold from Buy at Loop Capital)
- PRU -0.9% (downgraded to Sell from Neutral at Citigroup)
- NFLX -0.7% (downgraded to Underperform from Market Perform at Wells Fargo)
- OMP -0.7% (downgraded to Neutral from Outperform at Credit Suisse)
Gapping up
In reaction to strong earnings/guidance:
- JEC +3%
M&A news:
- MDCO +22.8% (to be acquired by Novartis (NVS) for $85.00/share in cash)
- TIF +5.7% (confirms agreement to be acquired by LVMH (LVMUY) for $135/share in cash, or approximately $16.2 bln)
Other news:
- SRNE +18.1% (says rejects cash acquisition proposal for between $3.00-5.00/share)
- ZIOP +7.8% (presents clinical data for controlled IL-12; reinforced favorable safety profile and initial data)
- OYST +7.7% (reports positive top-line results from the Phase 1 ZEN Study)
- AGIO +5.9% (presents new phamacodynamic and response data from both cohorts of perioperative study of vorasidenib and TIBSOVO)
- TSLA +4.2% (CEO Elon Musk tweets "187K Cybertruck orders so far, with 42% choosing dual, 41% tri & 17% single motor")
- AMTD +2.7% (to be acquired by Charles Schwab (SCHW) for approximately $26 bln in all-stock transaction) .
Analyst comments:
- RAPT +6.7% (initiated with an Outperform at Wells Fargo)
- ARWR +5.7% (upgraded to Outperform from Neutral at Robert W. Baird)
- ZS +3.9% (upgraded to Buy from Neutral at BofA/Merrill)
- OPK +3.7% (initiated with an Overweight at Piper Jaffray)
- NVDA +2.6% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
- DECK +1.9% (upgraded to Outperform from Market Perform at Wells Fargo)
- DKS +1.9% (upgraded to Buy from Neutral at BofA/Merrill)
- WEN +1.5% (upgraded to Buy from Hold at Stifel)
- WING +1.5% (upgraded to Outperform from Neutral at Robert W. Baird)
- HAS +1.3% (upgraded to Buy from Neutral at UBS)
- ENR +1.1% (upgraded to Neutral from Underweight at JP Morgan)