FT LEx : Novo Nordisk/Ablynx: Ghently does it

Novo Nordisk/Ablynx: Ghently does it
Investors should sit tight for what promises to be an elaborate courtship

Alliances may be struck through marriages or money. Queen Victoria spread British influence and haemophilia genes across Europe via matrimony. Cash is the preferred medium of Novo Nordisk, whose treatment for the disease is in decline. The Danish pharmaceuticals group has offered to spend €2.6bn on Ablynx, a Belgian biotech with a new treatment for a rare bleeding illness.

Novo Nordisk has made its approach public, a so-called bear hug, in the hope shareholders will intercede with coy Ablynx. The danger, as with 19th century matchmaking, is of resentment from the dear intended.

One part of Ablynx’s value is in anti-bleeding drug caplacizumab. This has already passed muster in clinical trials, so unhappy researchers would matter little to its prospects. But another chunk of value rests on medicines still in development. Novo Nordisk does not want to upset the folk in white coats by throwing its €114bn weight around.

The bidder has promised not to close Ablynx’s Ghent site. That will limit cost savings. The trade-off is the thriftiness of an offer at €30.5 per share, little better than Jefferies’ valuation of the business as an independent. This includes a peak sales estimate for caplacizumab of $500m, but ignores technology for spotting new drug opportunities.

The premium is 66 per cent above the volume — weighted price over three months. However, the shares have been rising fast — up 95 per cent over six months. Moreover, historic prices matter less to biotech investors than the amount a big pharma group might pay to fatten a pipeline. Novo Nordisk, which is best known for producing insulin, had around €2.6bn of cash on its balance sheet at the last record date. It can go higher.

The Danish group may not choose to, following a public rejection that denies it access to Ablynx’s books. A rival bidder may step in at a higher price. Shareholders should sit tight. The courtship promises to be as elaborate as any masterminded by Queen Victoria. The outcome should be happier for investors than it was for the monarch’s descendants

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance
:

  • BABY -12.1%, TDOC -3.5%, TEUM -2.8%, PLAY -2.4%, SHOO -2.2%, NUVA -1%, CTSO -0.7%, AXS -0.6%, CPST -0.6%

Other news:

  • AXON -47.3% (announces negative results for Intepirdine in Phase 2b HEADWAY and pilot Phase 2 gaint and balance studies)
  • OAKS -3.8% (lowers montly dividend)

Analyst comments:

  • ESS -0.9% (downgraded to Underperform from Mkt Perform at Raymond James)
  • SNAP -1.4% (downgraded to Hold from Buy at Jefferies)
  • ALDW -1.4% (downgraded to Neutral from Buy at Citigroup)
  • IBKR -1.7% (downgraded to Sell from Neutral at Goldman)
  • CTXS -1.9% (downgraded to Equal Weight from Overweight at Barclays)
  • CRUS -2.2% (downgraded to Sector Weight from Overweight at KeyBanc Capital Mkts)
  • BEDU -2.8% (downgraded to Equal-Weight from Overweight at Morgan Stanley)
  • GPRO -4.5% (downgraded to Neutral from Buy at Longbow)
  • APPN -6% (downgraded to Underweight from Equal Weight at Barclays)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance updates
:

  • NVTR +20.9%, CERS +11.5%, NBY +9.1%, KSS +8.5%, NURO +7.5%, NVRO +7.2%, MZOR +6.3%, VRAY +5.6%, CROX +4.4%, BOOT +3.5%, NBIX +3.4%, CHS +3.2%, PLCE +2.9%, LULU +2.9%, DLA +2.7%, MDXG +1.6%, LIVE +1.1%, RXN +1%, CHEF +1%, .

M&A news:

  • ABLX +84% (receives proposal from Novo Nordisk (NVO) for upto €30.50 per share in cash), GLUU +1.6% (divestiture of Moscow studio along with the sale of several titles developed by that location), MNK +0.9% (signs distribution agreement for Piclidenoson in 3 European countries with Gebro Holdings), . 

Other news:

  • CANF +17.9% (signs distribution agreement for Piclidenoson in 3 European countries with Gebro Holdings), VUZI +14.4% (continued strength), MTNB +11.6% (NIH have relayed to the Company positive data from a third patient enrolled in the collaborative Phase 2a clinical study of Matinas' lead anti-infective product candidate MAT2203), ALDR +10% (announces Eptinezumab significantly reduces migraine risk meets primary and all key secondary endpoints in pivotal PROMISE 2 Phase 3 trail), ADAP +8.4% (announces data from its studies of SPEAR T-cells targeting MAGE-A10), NVRO +7.2% (receives FDA approval for Senza II spinal cord stimulation system delivering HF10 therapy), TGTX +4.3% (TG Therapeutics and Jiangsu Hengrui Medicine announce global license agreement for development and commercialization of Novel BTK inhibitor program for the treatment of hematologic malignancies), GLPG +3.9% (reports positive topline results with GLPG1972), ACRS +3.5% (announces its two Phase 2 clinical trials (WART-202 and WART-203) of A-101 45% topical solution met all primary and secondary endpoints of each trial), NCTY +3.1% (entered into a definitive agreement with Red Ace Ltd for the issuance and sale of 3,571,429 ordinary shares of the Company), ALNY +3% (Alnylam Pharma and Sanofi (SNY) enter into strategic restructuring of RNAi Therapeutics rare disease alliance), FLXN +3% (announces initial findings from its ongoing Phase 3b), DVAX +2.7% (estimates that cash, cash equivalents and marketable securities were approximately $191.9 million as of December 31, 2017), EMES +2.4% (enters into refinancing transactions), CHRS +1.7% (granted type 2 FDA meeting), TRVN +1.5% (discloses that the FDA indicated on Jan 5 that the Prescription Drug User Fee Act review date for the OLINVO NDA is November 2 2018), BOMN +1.4% (invested $10 mln equity in national homebuilder Dream Finders Holdings), . 

Analyst comments:

  • FLIR +3% (upgraded to Buy from Hold at SunTrust)
  • UTX +1.8% (upgraded to Buy from Neutral at Goldman)
  • BBT +1.4% (upgraded to Equal-Weight from Underweight at Morgan Stanley)
  • CAT +1.4% (upgraded to Overweight from Neutral at JP Morgan)
  • AMAT +1.3% (upgraded to Strong Buy from Buy at Needham)
  • EA +1.3% (upgraded to Outperform from Market Perform at BMO Capital Markets)
  • SPLK +1.1% (upgraded to Overweight from Equal Weight at Barclays)
  • RHP +1% (upgraded to Buy from Underperform at BofA/Merrill)

>>> Ablynx top 10 shareholders consider Novo Nordisk offer as too low

Ablynx top 10 shareholders consider Novo Nordisk offer as too low
08 JAN 2018
  • EUR 32 per share offer seen as more attractive
  • Ablynx has a strong stand-alone strategy

Danish pharmaceutical company Novo Nordisk [CPH:NOVO-B]’s EUR 2.6bn proposed takeover offer for Ablynx [EBR: ABLX] is not a high enough premium for the Belgian biotechnology company, according to two Ablynx top-10 investors.
There is definitely scope for a higher offer price, the first shareholder said, adding that the current offer was not too far off. He pointed at a EUR 32 per share as more attractive valuation. The second shareholder did not have a specific valuation in mind but said that the current price is not high enough and certainly does not reflect the value of the company fairly.
The main asset Novo Nordisk is likely to mainly be interested in is Ablynx’s caplacizumab, but the drug would be more profitable to Novo Nordisk than it is to Ablynx, the first shareholder explained. It is a strong asset, and this is the reason why from a long-term point of view, the current offer price does not reflect its real value, he added. Caplacizumab is an experimental drug to treat the rare bleeding disorder acquired thrombotic thrombocytopenic purpura, which would complement Novo’s line-up of blood products focused on haemophilia.
Ablynx could easily survive as a stand-alone company and does not need this transaction, the two shareholders agreed. The company has a strong profile, is financially strong and has the capability to run the business and develop its product portfolio by itself, the first shareholder explained.
So far, Ablynx management has not yet reached out to its shareholders to discuss the matter, the investors said, adding that they were confident management will do what is in their best interest. Novo Nordisk has not formally or informally approached Ablynx’s shareholders, they said.
Novo Nordisk confirmed today (8 Monday) that it has made a proposal on 22 December to acquire Ablynx at EUR 28 per share in cash and one Contingent Value Right ('CVR') with total potential cash payments over time of up to EUR 2.50 per share. This implies a total equity valuation of EUR 2.6bn. The offer represents a 43.9% premium over Ablynx’s EUR 21.2 share price as of 5 January. The Danish company said that the board of Ablynx has declined to engage in talks.
Ablynx has rejected Novo Nordisk’s proposal saying that the unsolicited bid fundamentally undervalues the company and its future prospects.
Ablynx and Novo Nordisk did not reply to request for comment.

>>> US Early premarket gappers

Early premarket gappers
Gapping up:
  • MYSZ +35.5%, ALQA +18.7%, VUZI +13.1%, XSPA +9.9%, NBY +9.1%, DELT +8.8%, OHRP +8.8%, KSS +8.4%, NURO +7.5%, MZOR +7.2%, NCTY +4.5%, GLPG +3.7%, BOOT +3.5%, XNET +3.3%, PLCE +2.6%, DVAX +2.4%, NVDA +2.4%, DLA +2.3%, RWLK +2.2%, LULU +2.2%, PPC +1.9%, ROKU +1.8%, CELG +1.8%, DRI +1.7%, AMAT +1.6%, MDXG +1.6%, OSTK +1.5%, AMD +1.3%, SPLK +1.3%, EA +1.3%, FLIR +1.1%, RXN +1%, LOGI +0.9%, CROX +0.8%
Gapping down:
  • CCIH -13.6%, BABY -12.1%, CNIT -11.6%, CYTX -11.2%, CNET -7.9%, EDIT -7.7%, APPN -5.7%, GPRO -3.1%, HDP -3%, KTOV -2%, IBKR -1.7%, SHOO -1.3%, HMNY -0.7%, AXS -0.6%

>>> Energous announces first WattUp-enabled consumer products available via pre

Energous announces first WattUp-enabled consumer products available via pre-sales at CES 2018 (21.97)
Co announced that consumers can now pre-order WattUp-enabled products with Myant SKIIN smart everyday apparel, the first truly digital second skin, that allows users to measure and track their health vitals. In addition, Energous is demonstrating WattUp technology usage in hearing aids from Delight and SK Telesys.

Wired : Wanna Master the Crafty Aerodynamics of a Humongous Telescope? Call Boei

Wanna Master the Crafty Aerodynamics of a Humongous Telescope? Call Boeing.
When it's finished in 2022, the Giant Magellan Telescope will be the largest optical telescope on Earth. And at that size, a desert wind becomes an issue.

Chile's Atacama Desert makes for great stargazing. The dry air and sparse settlement are a major draw for astronomical observatories—the European Southern Observatory, the Carnegie Institution for Science, and the Llano de Chajnantor Observatory all operate multiple telescope sites on the region's mountaintops.
The desert wind, however, is a problem. The air rushes around and through the enclosures that hold these massive but sensitive, precise instruments. Typically, observatories have responded with heavy mounts and robust structures that keep the mirrors steady amid the turbulence. But brute-force engineering has its limits.
The engineers behind the Giant Magellan Telescope realized as much when they started planning what will be the planet’s largest optical telescope. When it opens at Carnegie’s Las Campanas Observatory in 2022, its seven mirrors will yield a total diameter of 83 feet. That’s enough acreage to provide 10 times the resolving power of the Hubble Space Telescope—and more than enough to catch a passing breeze.
“The building is unprecedentedly large, 22 stories from the ground to the top of the building,” said Patrick McCarthy, the head of operations at the Giant Magellan Telescope Organization. “There’s more volume and thus more air inside. But as a large telescope we have higher and higher expectations for the image quality, and the things that affect it scale as the building gets larger.”
This includes vibration from the wind, but also the thermal properties inside the dome, like the temperature of the mirrors and heat dissipating from sun-warmed steel that’s been in the sun all day—both of which are affected by moving air. “Factoring those into the equation required reaching out to people with specialized skills,” McCarthy says.

So the astronomers called Boeing. In 2015, the Giant Magellan Telescope Organization partnered with the aircraft manufacturer that has just the right experience and technology to manage the airflow around the unconventional building.
Crossing Cultures
Skills and technologies have long criss-crossed between military, scientific, and civilian applications, and the payoff exists not just for the beneficiary clients, but the companies themselves, who see the trend as an opportunity to hone their techniques.
“When we take our toolset and apply it in different ways, we tend to exercise our muscles differently, like with cross-training,” said Bill Norby, a senior manager of aerosciences at Boeing Research & Technology, the division that helped out the astronomers. “Using our strategies in a way that’s not typical, we learn more and build strength and versatility.” In the future, he says, that analytical work could influence how Boeing orients rockets on a launch pad, or influence ground-based optical system designs for the Department of Defense.
Technological crossovers aren't unique to Boeing—rival defense contractor Lockheed developed an underwater turbine for power generation based on the propellers of its C-130J military cargo airplane.
Lockheed Martin
Boeing’s rival defense contractors have their own cross-pollination programs. Lockheed Martin engineers used a thermally resistant plastic they developed for the F-35 fighter jet in a communications satellite. They developed an underwater turbine for power generation based on the propellers of the C-130J military cargo airplane. They collaborated with rocket and satellite company SpaceDev to adapt more fighter jet technology in the new Dream Chaser spaceplane being developed to transport astronauts and cargo into low-Earth orbit or to the International Space Station. “Ultimately we want to use our scale to transfer ideas across products and create something new.,” says Keoki Jackson, Lockheed’s chief technology officer. “Take GPS—it began for us a military program but now it touches literally billions of people every day. ”

Know-how doesn’t always go from military to civilian. In one recent project, Lockheed adapted algorithms it created to read hand-printed text for the US Postal Service into a system helicopters use to detect submarine periscopes in the water. Other tech crossovers are more broadly applicable, and imbued with a sense of urgency that makes them seeming no-brainers.
Raytheon, whose work extends from military hardware to the large-scale computer systems that link combat networks, recently began transferring its cyber security skills to the private sector. “The fact that we’ve hardened a lot of military systems is a natural fit for securing car-to-car communication for autonomous cars,” says CEO Tom Kennedy. “How do you protect that kind of network? We’re adapting artificial intelligence to analyze the network and if it sees one bad apple, isolate it so it can be resolved. Our next steps in that category can significantly help the folks in the automobile industry.”
Wind on the Mountain
Boeing’s effort to help explore the Universe started with the basics. “The very first thing that Boeing said to us was ‘Are you sure you’re putting it in right place?’” McCarthy says. Given that the telescope was to be positioned at the top of a mountain, you may not think that its specific positioning would matter all that much, but it did. Turns out, “on top of a mountain” doesn’t quite account for all the subtleties of aerodynamics. “From an aerodynamic perspective, one area had better properties in terms of the airflow, and they ultimately made a change in where to place the enclosure,” Boeing’s Norby says.
The thrust of the work centered on using computational fluid dynamics to ensure that the telescope’s enclosure is optimized for both the thermal and vibration impacts circulating warm or cool air can generate. The team tested its work in water tunnels, (think of a submerged wind tunnel), injecting colored dyes into the stream and watching how they flowed around a 3D-printed replica of the site. Then they tweaked their predictive models until they were happy with the results.
All that work will also contribute to long-term operational decisions. “Boeing has given us the data that will help us find the best of both worlds in terms of thermal and vibrational issues,” McCarthy says. “It tells us how to fine-tune the enclosure for these factors, but also how to control the venting during actual use as the conditions change. The venting may be optimized in one condition but not when the wind or the angle or the telescope changes. We’ll then have a database to help the operations folks at the telescope. This is a billion-dollar project. We don’t want our own best guess—we want a methodical approach.”
It’s no surprise defense-oriented companies shop their wares to as many markets as possible. Indeed, some integrate this brand of expansive thinking into their core strategies. Lockheed has created councils and collaborations that encourage brainstorming and talent-sharing across its businesses, with an eye toward encouraging innovation for the widest possible variety of clients.
Even the military technologies that you might think would have restrictions are sought out. (It’s usually the application that’s sensitive, not the core technology itself.) Lockheed has adapted sensors for weapon targeting systems for use in cubesats (the micro-satellites launched in large numbers for scientific research). After Hurricane Sandy devastated the East Coast in 2012, Lockheed’s engineers repurposed military sensing technology to develop the Automated Rapid Infrastructure Evaluation System, which uses lidar and visual imagery to assess infrastructure damage after major disasters.
Sometimes the benefits do go beyond the bottom line. While these crossovers expose companies to new fields and new potential, it does the same for their personnel. Abdi Khodadoust, an engineer with Boeing Research & Technology who worked on the Magellan telescope project, picked up a new hobby. “In 2015, I visited the site in Chile,” he says. “It was a joy to be up on the mountain, and since then I’ve developed more than a small interest in astronomy.”

>>> Cellnex EUR 500m 2026 CB book covered around 09:20 GMT

Cellnex EUR 500m 2026 CB book covered around 09:20 GMT

Cellnex Telecom’s [BME:CLNX] EUR 500m offering of senior unsecured convertible bonds (CBs) has been covered, a source close to the deal told this news service.

A message was sent out to the market at 09:20 GMT, the source said, adding that the book is still open, and that further price guidance will follow.

The 8-year maturity bonds are offered with a coupon range of 1.25% to 2.00% and a conversion premium of 70%. The offering is the first equity-linked paper from the Spanish telecoms group, which is 34% owned by Abertis [BME:ABE]. Cellnex, which will use the proceeds for general corporate purposes, is tapping the CB market thanks to favourable market conditions and to diversify its funding sources, it said in the offer announcement.

Abertis is itself subject to a takeover tussle between Italian group Atlantia [BIT:ATL] and German Hochtief [FRA:HOT] (in turn owned by Spain’s ACS [BME:ACS]). Under Spanish law, a change of control of Abertis’ 34% stake in Cellnex would require a mandatory waterfall bid. But both Atlantia and Hochtief have said they would sell Cellnex shares below the 30% threshold rather than launch a bid.

The CB offer looks “a bit heavy” given the high premium, but the fat coupon and the issuer’s near-investment grade rating still give a nice polish, a buysider said. Overall, the offer looks more attractive than Michelin’s [EPA:ML] issue last week, he said, noting that the Cellnex paper was trading around issue price + 0.5 in the grey this morning.

Cellnex is rated BB+ stable by Standard & Poor’s and BBB- stable by Fitch.

Terms of the offer look fair overall, though the long-dated structure with a high coupon and exchange premium is unusual and might not appeal to all investor types, a convertibles analyst argued. Outrights could form the backbone of demand, especially as the benchmark-sized deal should enter main indexes, he suggested.

BNP Paribas, Goldman Sachs and Morgan Stanley are the bookrunners.

Leads are going with 195 basis points credit and implied volatility of 21%, Monis convertible bond specialist Will Weichhart noted. Based on the leads’ implied vol assumption, the valuation from worst-to-best coupon would be 96.4-101.5/8, he said. The bond floor would be 90-95.5 and delta 34-35, he added.

A Cellnex spokesperson was not available for comment.