Jeep rolls out Wagoneer SUVs in challenge to GM and Ford By Reuters


© Reuters. FILE PHOTO: A Fiat Chrysler Automobiles sign at the U.S. headquarters in Auburn Hills, Michigan

By Joseph White

DETROIT (Reuters) – Fiat Chrysler Automobiles NV (MI:) on Thursday unveiled its new family of Jeep Wagoneer and Grand Wagoneer sport utility vehicles, and the head of the Jeep brand told Reuters he wants to match or beat the sales of rival models made by General Motors Co (N:).

From a luxury image standpoint, “we want to beat Range Rover,” global Jeep brand President Christian Meunier said in an interview. “From a business standpoint, we want to beat GMC and Cadillac.”

GM’s GMC Yukon and Cadillac Escalade model lines are leading sellers in the North American large, luxury SUV segment. Last year, GMC sold nearly 75,000 Yukons. Cadillac sold 35,424 Escalades, while Ford’s Lincoln brand sold 18,656 Navigators in 2019.

Luxury sport utilities built on the underpinnings of big pickup trucks represent one of the most profitable segments in the global auto industry. Wagoneer and Grand Wagoneer prices could range from $60,000 to $100,000, Meunier said. That is comparable to the Escalade and Yukon lineups.

Most such vehicles are sold in North America and in certain Middle Eastern markets. Fiat Chrysler’s Jeep brand has not had an entry in this segment for decades. In Jeep’s absence, GM’s Cadillac Escalade and GMC Yukon and Ford’s Expedition and Lincoln Navigator models have dominated the segment in North America.

Jaguar Land Rover’s Range Rover models have defined the premium end of the large luxury SUV market in North America and in other markets.

Vehicles as large as the Grand Wagoneer, which is derived from a Ram pickup truck, are rare in China, the world’s largest market. The Wagoneer and Grand Wagoneer will be built in a factory in suburban Detroit – a handicap for selling in China.

However, Meunier said “there’s an opportunity for China which we will test in the next few weeks.”

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Tech giants back legal challenge to Trump’s foreign worker restrictions By Reuters


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© Reuters. FILE PHOTO: The logos of Amazon Apple Facebook and Google

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By Ted Hesson

WASHINGTON (Reuters) – Top U.S. tech firms including Amazon.com Inc (O:) and Facebook Inc (O:) filed a legal brief on Monday backing a challenge to U.S. President Donald Trump’s temporary ban on the entry of certain foreign workers to preserve jobs for Americans during the coronavirus pandemic.

In the brief, filed in a lawsuit brought in California by major U.S. business associations, the companies argued that the visa restrictions will hurt American businesses, lead employers to hire workers outside the United States, and further damage the already struggling U.S. economy.

Trump issued a presidential proclamation in June that suspended the entry of a range of foreign workers until the end of the year, a move his administration said would free up jobs for unemployed Americans amid the economic fallout of the pandemic.

Among those affected by the temporary ban are skilled foreign workers entering on H-1B visas and managers and specialized workers being transferred within a company on L visas – both visa types used by tech companies. Trump’s ban also blocks seasonal workers entering on H-2B visas, with an exception for workers in food supply chain jobs.

In the brief filed on Monday, the companies argue Trump’s proclamation could do irreparable damage to U.S. businesses, workers and the economy, and was based on a “false assumption” that it would protect U.S. workers.

“Global competitors in Canada, China, and India, among others, are pouncing at the opportunity to attract well-trained, innovative individuals,” the brief reads. “And American businesses are scrambling to adjust, hiring needed talent to work in locations outside our nation’s borders.”

Apple (O:), Microsoft (O:), Netflix (O:) and Twitter (N:) were among 52 companies that signed the brief, which was filed in a lawsuit brought by the National Association of Manufacturers, which represents 14,000 member companies, as well as in a similar lawsuit brought in Washington, D.C.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Moderna loses challenge to Arbutus patent on vaccine technology By Reuters


© Reuters. FILE PHOTO: Moderna Therapeutics seen during COVID-19 in Massachusetts

By Jan Wolfe

(Reuters) – Shares of Moderna (NASDAQ:) Inc fell nearly 10% after it lost a bid to invalidate a U.S. patent owned by Arbutus Biopharma (NASDAQ:) that poses a potential obstacle to Moderna’s efforts to develop next-generation vaccines, including a coronavirus vaccine.

An administrative court run by the U.S. Patent and Trademark Office rejected arguments by Moderna that an Arbutus patent known as the ‘069 patent should be revoked because it described obvious concepts.

The ‘069 patent relates to lipid nanoparticle (LNP) technology that allows the human body to make its own therapeutic proteins.

LNP technology is crucial to Moderna’s vaccine development efforts, and the patent ruling could increase pressure on the Cambridge, Massachusetts-based firm to pay for a license to Arbutus’ patent portfolio, said Zachary Silbersher, a patent lawyer in New York not involved the case.

Silbersher said it was unclear if vaccines being developed by Moderna, including its coronavirus vaccine, infringe the ‘069 patent and related ones owned by Arbutus. But Moderna’s effort to invalidate the patent suggests the company sees it as a potential obstacle, he said.

“At the end of the day, Arbutus might be able to claim a royalty in the [coronavirus] vaccine,” Silbersher said.

The ruling was a “disappointing turn” for Moderna but is not likely to have any immediate financial impact on the company, analysts at SVB Leerink said in a note.

Moderna can still appeal the patent office ruling to the U.S. Court of Appeals for the Federal Circuit. That court, however, often upholds the patent office’s determinations.

Moderna has received funding from the U.S. government to develop a coronavirus vaccine.

Arbutus shares more than doubled after the patent board posted its opinion on its electronic docket, to $6.20 on Nasdaq. Moderna shares lost 9.5% to end at $75.33, also on Nasdaq.

Moderna did not immediately respond to a Reuters request for comment.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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India asks court to stymie potential challenge to Chinese app ban By Reuters


© Reuters. FILE PHOTO: Smartphone with Chinese applications is seen in front of a displayed Indian flag and a “Banned app” sign

By Aditya Kalra

NEW DELHI (Reuters) – India’s government has petitioned a state court to stop any of the Chinese companies whose 59 apps it recently banned from obtaining an injunction to block the order, according to two sources and the legal filing.

India last month outlawed dozens of Chinese apps including ByteDance’s popular video-sharing app TikTok, Alibaba ‘s (N:) UC Browser and Tencent’s (HK:) messaging app WeChat, saying they posed a “threat to sovereignty and integrity”.

Chinese firms have faced hostility since a border clash that killed 20 Indian soldiers, with Delhi intensifying scrutiny of Chinese imports and any funding from China.

Two sources with direct knowledge of the filing said the government had presented a so-called caveat in the High Court of the western state of Rajasthan, suggesting it expects one or more of the companies to challenge the Ministry of Electronics and Information Technology’s ban.

Such caveats are typically filed to prevent a ruling in favour of companies without hearing the government, Indian lawyers said. The filing, which one of the sources said was presented on Friday, has not previously been reported.

“Let nothing be done till the applicants (government) are heard in the matter,” said the court filing signed by Additional Solicitor General of India Rajdeepak Rastogi.

GUARDING CYBER SPACE

The order to ban the apps was passed to safeguard “the interests of Indian mobile and Internet users and ensure safety and sovereignty of Indian Cyber Space,” said the filing, which was seen by Reuters.

It was not immediately clear why the government approached the court in Rajasthan and whether there were plans to file similar petitions elsewhere.

India’s IT ministry and the Chinese Embassy in New Delhi did not immediately respond to requests for comment.

Indian courts do not comment on cases.

Previously, China has expressed strong concern about the ban, which could hurt expansion plans and cost jobs, and said it may violate World Trade Organization (WTO) rules.

None of the Chinese companies has yet mounted a legal challenge, with industry sources saying they were waiting for further clarity from the Indian government.

India’s IT ministry recently asked the companies associated with the 59 apps to answer a detailed questionnaire within three weeks on their business structure and data storage practices, the industry sources told Reuters.

The decision to ban the apps has jolted companies like ByteDance, which counted on India as an important growth market for TikTok and had plans to invest $1 billion in the country.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Novartis: Better At Using Digital Technology To Tackle The COVID Challenge (NYSE:NVS)


Boasting revenues of over $48 billion in 2019, Novartis (NVS) is one of the largest biopharma companies in the world. Also, at more than 36%, the R&D share of total expenses is among the highest, thus benefiting the company’s Innovative Medicines segment, which is set to expand considerably.

Its share price is on the low side compared to its competitors after failing to properly bounce back from the COVID-19 sell-off. Consequently, there should be some warming up as we progress through the clinical trials and the company’s strong pipeline generates sales.

Figure 1: Comparing Novartis’ share price evolution with Takeda (TAK), Sanofi (SNY) and GlaxoSmithKline (GSK)

Data by YCharts

In this connection, the fact that Novartis was among the first ones to have prioritized the use of digital technologies in R&D, manufacturing and sales is a strong positive in delivering despite social distancing measures.

Diving into research, clinical trials represent one key aspect of the Swiss giant’s competitive edge.

The drug discovery process

The process of discovering a new drug is tedious, time-consuming and costly.

About 10-15 years are normally needed to develop a new treatment from the discovery of the molecule until its marketing. The problem is that currently, given the human sufferings from COVID-19 and the fact that there are economic downturns impacting economies around the world, we simply cannot wait for years.

To this effect, Novartis is, in my opinion, among the best positioned biopharmas due to the number of clinical trials the company currently has undertaken, as well as its use of digital technologies including AI since 2018 in research.

Figure 2: Number of clinical trials as phase 2 and 3 with the ones involving Hydroxychloroquine in red.

Source: clinicaltrials.org

First, as for Hydroxychloroquine, the Swiss company’s medical teams are evaluating the findings reported in the publication following the WHO’s guidance to observe a temporary pause.

Second, the company is involved in seven trials making use of several drugs in collaboration with universities, hospitals and non-profit organizations. Its two main drug candidates are Canakinumab and Ruxolitinib. In addition, it has supported research proposals from Indian Institute of Technology students for other drugs.

Figure 3: COVID-19 related clinical trials for phase 2 and phase 3.

Source: clinicaltrials.org

The length of study for phase 3 clinical trials is usually 1 to 4 years. To this end, artificial intelligence can speed up the development of new treatments and therefore reduce the time to market.

Exploring this further, AI can be applied to all of the phases of clinical trials right from the cohort composition and patient recruitment through to patient monitoring.

Figure 4: Use of AI in clinical trial design

Source: Sciencedirect.com

Now, one area which is suffering from significant difficulties due to COVID confinement measures is monitoring of patients involved in the trials, which has become a challenge for many companies.

However, in the case of Novartis, the company has an AI system called the SENSE tower using which clinicians analyse where there are issues in clinical trials and intervene accordingly. Moreover, researchers are able to gain real-time and predictive information on clinical studies.

Figure 5: Novartis’ new nerve centre, the SENSE tower

Source: Novartis

In addition, through deployment of digital technologies, the company has been able to monitor trial sites throughout the world.

Going deeper, Novartis is using AI in clinical trials whereby researchers can make use of much more data than before. Also, by joining hands with Massachusetts Institute of Technology and the likes of QuantumBlack, the company has significantly strengthened capacity from 2018.

Figure 6: Application of AI in medical research

Source : Keylogin Analytics

In the past, Novartis has also collaborated with Roche Holding (OTCQX:RHHBY) to develop the blockbuster drug Xolair, which treats allergic asthma and chronic hives. Interestingly, Novartis is Roche’s largest shareholder and holds 6.3% of the shares.

Furthermore, Novartis has other drugs too which are already past phase 4, that is the commercial phase from which it derives significant revenues.

Revenues

There was a 14% progression in Q1 2020 revenues in comparison with the last quarter year and the company benefited from COVID in terms of forward purchasing and stocking by some customers.

Figure 7: Net sales, Net sales from 20 top medicines and revenues from innovative medicines.

Source: Novartis

The company has some blockbuster drugs in the form of Cosentyx (used in dermatology) and Entrestro. More importantly with regards to Q2 2020 revenues, it has received approval to launch five treatment options in Japan, including Tabrecta, Entresto, Mayzent, Enerzair and Atectura. Out of these Entresto has significant sales opportunity due to the fact it can be administered to patients at home and hence can help to save lives by keeping patients away from hospitals.

On the other hand, Beovu, which is a treatment for improving vision and reducing retinal fluid in wet AMD patients, has suffered because of safety concerns. On further investigation, I found that the company has been working with retina experts to perform a root cause analysis with the aim to mitigate the safety concerns. This has now been done as shown by the FDA approval after Novartis updated the label to include additional safety information.

However, ophthalmology has been impacted adversely by COVID. Like other medical diagnostic and devices companies operating in the non-life saving sector like dentistry, the ophthalmology franchise has seen a drop in clinic visits, resulting in a fall in the number of prescriptions. There was some optimism voiced out by executives during the first-quarter earnings call, which I find to be realistic as people need eye care. Also, there is the need of the health care community not to defer care for patients.

The executives have also made clear their intentions to actively monitor whether health care systems return to normal prescription and consumption dynamics during the second quarter and across all markets.

For my part, I monitor the company for additional risks in this turbulent period.

Risks and mitigation

First, concerning clinical trials, more than one-third of all phase 3 compounds fail to advance to approval in normal circumstances. Also, with the costs per failed trial being in the range of $0.8–1.4 billion, it is important for the sponsor to have solid legs in order to support these in case a longer time period is needed.

Figure 8: Novartis R&D expenses plus operating margins

Source: Table built by adding individual company’s income statement figures obtained from Seeking Alpha

Here, one matter of critical importance is that despite spending higher (in relative terms) than peers on research, Novartis is still managing to extract a 23% operating margin. This means that it has a higher financial capability to maintain research.

Secondly, there are risks of another company developing a vaccine before Novartis and the investment the company has made in clinical trials is wasted. Gilead (NASDAQ:GILD) is already marketing the antiviral remdesivir, which is currently the only drug approved by the FDA for emergency use in COVID-19.

However, it must be mentioned that this drug only improves the conditions of patients suffering from COVID-induced pneumonia to some extent (65% more likely to experience clinical improvement at day 11) compared to cases where usual drugs are used. Moreover, these results are as per the clinical trial done in June after a prior trial in April.

Therefore, given the fact that no COVID vaccine has been developed together with the significant market which has been created as a result of the light-speed infection rate of the coronavirus, big pharmas should be able to more than recoup investments.

Of predominant importance in this case, two days back the FDA instructed companies to clearly mention on their websites that currently there are no drugs approved to prevent or cure COVID-19 in people.

Finally, COVID-19 has not impacted Novartis’ clinical trials. The fact that the company leverages digital tools has limited the disruption caused by the pandemic. Some slowdowns have been witnessed in new enrollments in ongoing clinical studies, but the SENSE system has been successfully used to track clinical trials (500+) in more than 70 countries.

Valuations and Takeaway

First, Novartis’ share price has not recovered following end of March lows (figure 1), a period which also witnessed significant downsides in other big pharma stock prices.

According to me, the main reason for not being able to recover was safety concerns for the Beovu drug. However, the market seems not to have priced in the fact that the company has already addressed the issue through a work-around as evidenced by the FDA travel approval.

Hence, taking into consideration a 10-13% upside, I obtain a target stock price of $97 to 100. This is below yahoo finance’s stock price of $104.

To support my bullish instance, I strongly believe that despite facing some headwinds in existing treatments like ophthalmology as well as competition from other drug companies, Novartis is still seeing strong sales for its products as it is being able to leverage on digital technologies for patient interaction and delivery.

As a matter of fact, the company has used social media to reach 900,000 health care providers in China, and in the US, it has seen a 1,500% increase in the use of telemedicine. Also, the company has been quick to capitalize on home delivery, in the case of its Xolair drug, thereby reducing the need for people to visit drugstores and thereby helping in saving lives.

Therefore, Novartis is facing some COVID-19 pressure, but it is on track to use technology to transform these challenges into opportunities.

Finally, as for the COVID-19 vaccine, things appear to be getting simpler for biopharmas like Novartis as the FDA has just released guidelines with seem to lower the bar compared to other infectious diseases.

The company has a debt to equity ratio of 0.72 with debt well covered by operating cash flow (58%). At the current price of $87 and dividend yield of 3%, Novartis is a strong buy.

Disclosure: I am/we are long NVS, SNY, GSK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This is an investment thesis and is intended for informational purposes. Investors are kindly requested to do additional research before investing.





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