>>> Abertis suitor ACS sounds out Hong Kong-based funds for counterbid - report

Abertis suitor ACS sounds out Hong Kong-based funds for counterbid - report (translated)
29 AUG 2017
Abertis [BME:ABE] suitor, the Spanish construction group ACS [BME:ACS], is sounding out Hong Kong-based investors for a bid to counter Atlantia’s offer [BIT:ATL], Expansion reported.
The Spanish-language business paper cited sources from investment and private equity funds, but did not mention any names. Atlantia is offering EUR 16.5 per share or EUR 16.5bn in its cash and paper bid for Abertis.
Among the funds contacted so far by ACS advisers is the UK’s The Children's Investment Fund Management (TCI) and the largest private investor in the Spanish airports operator Aena [BME:AENA]. TCI tried to promote a counterbid for Abertis through Aena, a possibility that was rejected by the state’s holding Enaire.

>>> Asian Update

Asia Mid-Session Market Update: Geopolitical tensions rise to new highs as North Korea launches a missile over Japan

***Asia Summary***
- Asian equity markets opened mixed as early in the morning North Korea launched a mid-range ballistic missile that crossed over Japan’s air space (1st since 2009) before landing in the sea. S&P futures opened sharply lower, gold rose as geopolitical tensions rose to a new level. Crude is higher as hurricane Harvey continues to impact oil refineries and we may soon see impact on retail distribution as trucks are redirected to rescue and relief efforts. South Korea President Moon has ordered military to stage a show of force; 4 F-15K jet fighters conducted bomb-dropping drill. While Japan PM Abe and President Trump agreed to increase pressure on North Korea; want to call on China and Russia to play a role in North Korea. UN Security Council will hold a meeting later today. USD/KRW rose 0.8% to 1,126.70, while the Kospi fell over 1%. Many analysts are attributing the market reaction to risk off sentiment and the continued concern over US debt ceiling and possible government shutdown. Notably in China the PBOC made its first injection of CNY10B after several drains and the yuan strengthened to its highest against the dollar since June 2016.

***Key economic data***
- (KR) South Korea Sept Business Manufacturing Survey: 83 v 78 prior; Non-Manufacturing Survey: 78 v 77 prior
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 113.5 v 109.2 prior
- (JP) JAPAN JUL JOBLESS RATE: 2.8% V 2.8%E
- (JP) JAPAN JUL OVERALL HOUSEHOLD SPENDING M/M: -1.9% V +1.5% PRIOR; Y/Y: -0.2% V +0.7%E
- (AU) Australia Jul HIA New Home Sales m/m: -3.7% v -6.9% prior

***Speakers and Press***
China/Hong Kong
- (CN) Deputy to the 12th National People’s Congress Lai Xiaomin: There are bubble characteristics in the distressed debt market as the growing market attracts many newcomers with little experience are driving up auction prices
- (CN) China Economic Information Daily in a comment piece: Issuance of treasury bonds should be the main method for local governments to raise new funding to curb the need for illegal financing
- (CN) PBOC Official Gongsheng: Aiming to offer more bondproducts - Chinese press
Korea
- (KR) South Korea: Plans KRW429T budget for 2018 (record)
- (KR) North Korea has launched a missile headed toward northern Japan, which landed in Sea of Japan, passing over the country - Japanese press
Other
- (US) US Commerce Sec Ross: Postpones final determination related to Canada softwood lumber to Nov 14th
***Asian Equity Indices/Futures (00:00ET)***
- Nikkei -0.6%, Hang Seng -0.4%; Shanghai Composite +0.1%, ASX200 -1.0%, Kospi -1.1%
- Equity Futures: S&P500 -0.6%; Nasdaq100 -0.7%, Dax -0.6%, FTSE100 -0.5%

***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.1986-1.1956; JPY 108.95-108.34; AUD 0.7939-0.7906; NZD 0.7255-0.7221
- Dec Gold +0.5% at $1,321/oz; Oct Crude Oil +-0.5% at $46.80/brl; Sept Copper +0.1% at $3.09/lb
- GLD SPDR Gold Trust ETF daily holdings higher by 9.16 tonnes to 814.36 tonnes
- USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT 6.6293 V 6.6353 PRIOR
- (CN) China PBOC OMO injects CNY50B in 7 day v CNY100B prior in 7 and 14-day reverse repo prior; Net injection CNY10B v drain CNY100B prior
- (KR) South Korea sells 30-yr treasury bonds at 2.365%
- (TH) Thailand Central Bank sells combined THB60B in 3-month and 6-month bonds

***Equities notable movers***
Australia/New Zealand
- SDL.AU Shut in ~75% of Eagle Ford operations due to Harvey; +20%
- ALU.AU Reports FY17 (A$) Net 28.1M v 23.0M; EBIT 29.5M v 24.6M y/y; Rev 110.9M v 93.6M y/y; +10%
- SFH.AU Reports FY17 (A$) Net loss 8.4M v loss 2.2Me; underlying EBITDA 26.7m v 25.0M y/y; Rev 808.9M v 826.2M y/y; -24%
Hong Kong/China
- 285.HK Reports H1 (CNY) Net 1.32B v 0.60B y/y, Rev 17.5B 15.5B y/y; -8%
- 3333.HK Reports H1 (CNY) Net 23.1B v 7.13B y/y, Rev 188.0B v 87.5B y/y; +4.6%

>>> US After Hours Summary: Futures lower, while gold/silver and volat

After Hours Summary: Futures lower, while gold/silver and volatility trackers spike higher on North Korea concerns

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: CTLT +12.7%

Companies trading higher in after hours in reaction to news: ETRM +8.2% (announces that a cost-effectiveness study analyzing vBloc Therapy for the treatment of obesity was published in the American Journal of Managed Care on August 25), BW +7.1% (Vintage Capital Management discloses 9.99% passive stake), COTY +0.5% (higher after several insider buy disclosures)

Gold/silver related names are higher following the launch of North Korea missile over Japan (S&P SPDRs SPY -0.6%): GFI +4.1%, EXK +3.6%, AUY +2.8%, KGC +2.3%, GOLD +1.9%, IAG +1.6%, GDX +1.3%, SLV +1.2%, HMY +1.1%, GG +1.1%, AG +1.1%, GLD +1%, ABX +1%, NG +0.9%, NEM +0.7%... Volatilty related ETFs: UVXY +9%, TVIX +7%, VIIX +6%, VXX +6%

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: FINL -22.3% (releases prelim Q2 results, lowers FY18 guidance), PSEC -3%

Companies trading lower in after hours in reaction to news: KMDA -5.7% (discloses that the FDA issued a letter stating that it continues to have concerns and questions about the safety and efficacy of the Inhaled AAT ), AVXS -3% (initiated with Reduce at Nomura), PAA -0.9% (Moody's downgraded Plains All American Pipeline; S&P affirmed) , AABA -2.4% (Japan/N Korea related weakness)

Athletic retailers/gootwear names lower following FINL guidance: FL -3.1%, UA -1.7%, NKE -1.4%, DKS -0.6%

>>> US Close Dow -0.02% S&P +0.05% Nasdaq +0.28% Russell +0.35%

Limited Moves for the Major Indices

It was a mixed outing on Wall Street to begin the week, as trading volume and conviction were both on the light side.  The Nasdaq Composite (+0.3%) and Russell 2000 (+0.4%) were today's winning standouts among the major indices while the S&P 500 (+0.05%) and Dow Jones Industrial Average (-0.02%) lagged behind.

Today's session wasn't accompanied by any market-moving headlines, so much of the trading interest revolved around specific stocks and/or industry groups.

One stock of note that outperformed was Apple (AAPL 161.47, +1.61, +1.0%).  The market's most heavily-weighted issue gained 1.0% on the back of a report that the company is planning a product event for Tuesday, September 12.  It is widely thought the event will feature the introduction of the iPhone 8, which has been eagerly anticipated by legions of customers and investors.

Apple's relative strength lent a measure of support to the broader market along with the biotech stocks, which jumped in the wake of an announcement from Gilead Sciences (GILD 74.69, +0.90, +1.2%) that it is going to acquire Kite Pharmaceuticals (KITE 178.05, +38.95, +28.0%) for approximately $11.9 billion, or $180.00 per share, in cash.

The offer from Gilead was a 29% premium over Kite's closing price on Friday.  The iShares Nasdaq Biotechnology ETF (IBB 316.89, +5.84, +1.9%) advanced 1.9%.

Some other trading activity of note surrounded plays related to Hurricane Harvey.  Property insurance stocks were laggards all day on concerns about rising claim costs associate with the storm, which produced record flooding and forced the closure of the Port of Houston and many oil refineries along the Texas coast.

While gasoline futures traded higher on news of the closures, crude futures settled the day 2.7% lower at $46.57 per barrel on concerns about weaker demand for oil in the short-term due to the refinery shutdowns.

Separately, home improvement retailers Home Depot (HD 151.20, +1.55, +1.0%), Lowe's (LOW 73.80, +0.45, +0.6%), and Lumber Liquidators (LL 38.70, +1.64, +4.4%) moved up on the notion that they will be beneficiaries of remodeling/refurbishment/new construction activity in the affected areas.

The energy sector (-0.5%) was one of the day's biggest laggards, but it did manage to cut its losses in half after oil prices rebounded off their lows of $46.15.  On a related note, there were reports that Saudi Arabia and Russia are seeking a 3-month extension to the oil production cut deal that has been embraced by OPEC and certain non-OPEC nations.

The financial sector (-0.5%) was the other key laggard of the day, yet relative strength in the health care (+0.6%) and information technology (+0.3%) sectors offset the weakness elsewhere and enabled the S&P 500 to eke out a slim gain to begin the week.

Elsewhere, the Treasury market manged some modest gains of its own, bolstered by the strong demand seen at the 2-yr note and 5-yr note auctions, as well as a modicum of safe-haven buying interest in front of next month's budget and debt ceiling debates.  The 10-yr note yield dipped one basis point to 2.16%.

The dollar was on the defensive throughout the day, which pushed the U.S. Dollar Index (92.26, -0.48, -0.5%) to its lowest close since 2015.

Today's lone economic release showed a widening in the goods deficit to $65.1 billion in July (Briefing.com consensus -$64.3 billion) from $64.0 billion in June and a 0.4% increase in Wholesale Inventories (Briefing.com consensus +0.2%) in July versus a 0.6% increase in June.

Neither the stock market nor the Treasury market showed much reaction to that report.  On Tuesday the economic calendar will feature the Case-Shiller Home Price Index for June (Briefing.com consensus 5.7%) at 9:00 a.m. ET and the Consumer Confidence report for August (Briefing.com consensus 120.3) at 10:00 a.m. ET.

  • Nasdaq Composite +16.7% YTD
  • Dow Jones industrial Average +10.4% YTD
  • S&P 500 +9.2% YTD
  • Russell 2000 +1.8% YTD

>>> DJ The Promising New Cancer Treatment Behind Gilead's $11 Billion Deal

DJ The Promising New Cancer Treatment Behind Gilead's $11 Billion Deal
By Denise Roland
Gilead Sciences Inc.'s planned acquisition of Kite Pharma Inc. underscores the promise of a new type of cancer therapy that is on the brink of becoming commercially available in the U.S.
Kite's version of the treatment, which uses the body's own immune system to attack cancer, is up for Food and Drug Administration approval, while a rival treatment won a key regulatory nod in the U.S. earlier this year.
While promising, the treatments, generally called CAR-T, won't be like other drugs that win FDA approval, and then quickly wind up on pharmacy shelves and hospitals. The rollout of this new breed will be complicated by still-unresolved questions over pricing and availability.
Kite is one of the leading companies developing CAR-T, which stands for chimeric antigen receptor T-cell, therapy. Such treatments work by extracting a cancer patient's T-cells, a type of immune cell, genetically modifying them outside the body to make them more effective at hunting down and killing tumors, and then re-injecting them into the patient.
After winning unanimous approval from an advisory panel to the FDA, Switzerland's Novartis AG is expected very soon to get the first official green light to start offering the treatment.
Novartis's treatment, called CTL019, has been shown to dramatically raise the chances of survival for children and young people with leukemia and who don't respond to standard treatment, or who suffer a relapse.
So far, CAR-T therapies have been tested only in certain types of blood cancer. Kite Pharma's leading CAR-T effort is aimed at patients with aggressive non-Hodgkin lymphoma, in whom standard therapy has failed.
Kite and Novartis are both investigating several more CAR-T therapies for various forms of blood cancer. Novartis is also conducting early-stage CAR-T trials in certain types of brain and lung tumors.
Despite its limited use now, "for patients with the right disease, the response rates can be astonishing," said Stephan Grupp, who was part of the team that first developed Novartis's CTL019 at the University of Pennsylvania.
Novartis's rollout of its leukemia treatment will be closely watched for signs of how well other CAR-T treatments, including Kite's, will be received.
In the U.S., only certain specialist hospitals are qualified to carry out the Novartis procedure. Receiving CTL019 treatment is a weekslong process involving several steps. But unlike most cancer therapies, patients require just one round of treatment.
First, the patient undergoes a dialysis-like procedure to remove T-cells from their blood, which takes about a day. The T-cells are then frozen and sent by courier to a Novartis facility in New Jersey, where they are genetically modified to equip them with a molecular "warhead" designed to hunt down cancer cells in the blood. The enhanced T-cells are then multiplied in the lab until there are many millions of them. The company has said this process takes around 22 days.
The modified T-cells are sent back to the hospital, and infused into the patient. About a week before the infusion, the patient receives a round of chemotherapy to prepare them for the treatment. The chemo reduces the amount of tumor in the blood and suppresses the patient's immune system to allow the new T-cells to multiply further inside the body.
There are side effects. Most patients develop a condition called cytokine release syndrome, caused by the immune system going into overdrive. This resembles a very severe flu and usually requires hospital care to manage.
Novartis plans a gradual roll out, starting with the 13 hospitals that were involved in its clinical trials and a handful of other specialized centers. A spokeswoman said the company expects 30 to 35 sites to offer CTL019 by the end of the year, adding that the slow ramp up was in the interest of patient safety.
"Novartis has been very careful which centers they selected," said Stephen Gottschalk, who leads the bone-marrow transplant and cellular-therapy department at St. Jude Children's Research Hospital in Memphis, Tenn., which is among the centers preparing to offer CTL019. A broader rollout to nonspecialist hospitals would carry the risk of increased complications or deaths from CAR-T, he said.
Expense could also present a hurdle: A study by England's National Institute for Health and Care Excellence, an official body that analyzes the cost-effectiveness of medical treatment, said CAR-T procedures could command a price of up to GBP528,600 ($680,900) because of their potential to cure patients who are otherwise untreatable.
Novartis hasn't yet disclosed the price it will charge for CTL019. Its spokeswoman said the price would take into consideration "the value that this treatment represents for patients, society and the health-care system, both near-term and long-term." She added that Novartis was exploring payment models that would make the price dependent on patient outcomes.
The cost of manufacturing CAR-T is exponentially higher than typical cancer drugs, according to Bill Milligan, a spokesman for the International Society for Cellular Therapy, a nonprofit that supports the development of CAR-T, stem-cell therapies, and other treatments that use living cells.
Safety concerns have also cast a shadow over some development efforts. Juno Therapeutics Inc., based in Seattle, dropped its most advanced CAR-T candidate earlier this year after several patients died during a clinical trial because of swelling in the brain.
Juno plans to publish a detailed report on the deaths later this year. It continues to develop CAR-T therapies and earlier this year published the results of an early-stage trial for its now-leading product, aimed at non-Hodgkin lymphoma, in which patients experienced relatively low rates of serious side effects.