History is repeating itself. After facing generic competition in the United States to its second-biggest product in 2006, Sanofi-Aventis is now dealing with a similar threat in Europe. Competition concerns came after Switzerland's Schweizerhall Holding AG announced it would launch a copy of the Plavix blood thinner that could be bought for a lower price. Schweizerhall said it expects German regulators to approve its generic version of Plavix, called clopidogrel.
Sanofi-Aventis's fears about generic competition are justified as the company had to fight against a similar situation less than a year ago. Back in 2006, Bristol-Myers Squibb Co. (NYSE: BMY), which develops the product with Sanofi, saw a big plunge in its sales after Canadian generics company Apotex Inc. launched a cut-price copy of the drug.
Activision (NASDAQ: ATVI) late Thursday reported a fourth-quarter profit that handily beat expectations as video games sales nearly doubled with strong demand for Guitar Hero 3 and Call of Duty 4 games. ATVI shares are up over 4.5% in premarket trading.
Bristol-Myers Squibb (NYSE: BMY) and Sanofi-Aventis (NYSE: SNY) are about to face a generic threat from Swiss drug firm, Schweizerhall Holding, that said it's going to soon launch a generic version in Germany of Plavix blood-thinning drug.
Clear Channel (NYSE: CCU) reported its profit soared to $799.7 million or $1.61 per share in the first quarter while revenues rose 4% to $1.56 billion. The results beat expectation even when taken excluding one-time items that have earnings rising 70% to $161.4 million or 32 cents a share.
The third-largest U.S. drugmaker has cut 8,100 jobs globally since the beginning of its restructuring plan, Plan to Win, in late 2005. But as Cordaptive, which was supposed to offset some of the losses Merck is expecting from generics coming into the market, fell through, the cost cutting side of the plan took on an added urgency.
Cordaptive and generics aren't Merck's only problem. The FDA also recently suggested its other cholesterol pills, Zetia and Vytorin, aren't any better than an older, cheaper treatment. Merck said it expects to lose as much as 61% of sales for these drugs.
So none of this comes as no surprise really; not in light of Merck's problems, and not in light of the industry's. Other drugmakers, including Pfizer Inc. (NYSE: PFE), Bristol-Myers Squibb Co. (NYSE: BMY), Wyeth (NYSE: WYE) and Johnson & Johnson (NYSE: JNJ) have announced job cuts as they face more competition from generic substitutions. Merck is also planning some plant closures.
Merck's shares lost nearly 33% of their value year-to-date, as it was partly down with the overall market and partly due to the string of bad news that seemed to have hit most hard recently. It is trading not far from its 52-week low.
While Merck is saying it will still fight the FDA decision on Cordaptive and try to convince doctors about Vytorin, the actions it is taking seem reactive, not proactive. Without much to offer in its arsenal of upcoming possibilities, Merck, at least for now, seems to have lost the potential for meaningful growth.
ConvaTec, which focuses on wound care, has been a star performer over the years. What's more, the deal will allow Bristol-Myers to devote its resources to its core pharma business, which certainly has some challenges – especially as drugs come off patent.
In addition, the deal has a global flavor as Nordic Capital is in Europe and Avista in the US.
It also looks like Bristol-Myers is not finished with its own dealmaking. For example, the company says it plans to launch a public offering of its Mead Johnson division.
What this really looks like, however, is that all these actions, for the most part, may just be a prelude for Bristol-Myers to sell itself to a mega pharma company.
Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) reported a 64% drop in quarterly profit late Friday. At the company's annual meeting this past weekend, the legendary investor said that while a Berkshire unit has bought portfolios of subprime mortgages (and has frozen resets that were due to send interest rates on those loans higher) he warned investors that housing-market weakness isn't over yet and predicted more losses for banks. At the same time, Buffett said Sunday he will consider investing in the insurance business of U.K. banking giant Royal Bank of Scotland (NYSE: RBS) and is close to buying a medium-sized company in the country.
Hovnanian Enterprises Inc. (NYSE: HOV) estimated on Monday it would take $225 million to $275 million of land-related charges for the that fiscal second-quarter and said that home deliveries dropped 21% to 2,494 homes in the period. The company also turned cash-flow positive faster than it expected and tripled its full-year estimate of cash flow.
After being rejected by Continental Airlines Inc. (NYSE: CAL) last month, United Airlines parent UAL Corp. (NYSE: UAUA) is intensifying merger talks with US Airways Group Inc. (NYSE: LCC), according to The Wall Street Journal. A deal is said could emerge in as soon as 10 days. In light of rising fuel costs, the more than $1.5 billion in potential cost savings and revenue enhancements the companies see from joining forces is no doubt appealing more and more.
After hitting a one-year high of $32.35 in July, the stock hit a one-year low of $20.05 in March. BMY opened this morning at $11.66. So far today the stock has hit a low of $11.10 and a high of $11.97. As of 12:30, BMY is trading at $11.27, up 57 cents(5.3%). The chart for BMY looks neutral and improving, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $20 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 12.1% return in just two months as long as BMY is above $20 at June expiration. Bristol-Myers would have to fall by more than 8% before we would start to lose money. Learn more about this type of trade here.
BMY hasn't been below $20 at all in the past year and has shown support around $21.60 recently. This trade could be risky if one of the company's drugs runs into problems with the FDA, but even if that happens, this position could be protected by the support the stock might find around $20, where it bounced in March.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in BMY.
There are a variety of problems with conventional chemical reactions in the manufacturing process – such as high energy use, hazards, high temperatures, expensive equipment, and so on.
But there is an alternative: biocatalysts. These can operate at or near room temperature, which provides significant energy savings.
One of the top players in the space is: Codexis. And, the company has recently filed to go public.
PDUFA date for Bristol-Myers Squibb Co. (NYSE: BMY)'s supplemental Biologics License Application for Orencia for the treatment of Juvenile Rheumatoid Arthritis.
Alcoa Inc. (NYSE: AA) to report Q1 earnings; conference call at 5pm.
Tuesday, April 8
Chattem Inc. (NASDAQ: CHTT) to report Q1 earnings; conference call at 9:00am.
FOMC to release minutes of the March 18th meeting at 2:00pm.
Once thought to be extremely safe, action rate securities have proved difficult to sell in this credit crisis. Tech companies are big holders of them and are taking charges left and right, including MetroPCS Communications Inc (NYSE: PCS), Palm Inc (NASDAQ: PALM) and Earthlink Inc (NASDAQ: ELNK), according to the Wall Street Journal.
NYSE Euronext Inc (NYSE: NYX) will look to increase its stakes in India's National Stock Exchange and the country's Multi Commodity Exchange, the Business Standard reported, once foreign ownership rules are eased. NYSE Euronext also intends to partner with the two Indian exchanges in order to help them develop their business.
WEB SITES:
Business Week reported that Brian Marckx of Zacks Investment Research said Bristol Myers Squibb Company (NYSE: BMY) may be an attractive takeover candidate for a larger pharma such as Pfizer Inc (NYSE: PFE) or France's Sanofi-Aventis SA (NYSE: SNY), both of which have been partners with Bristol on some of its products.
TheStreet.com's Jim Cramer says the Weyerhaeuser and Bristol-Myers stories slipped under the radar yesterday.
Did anyone even see that Weyerhaeuser (NYSE: WY) (Cramer's Take) made this great trade with International Paper (NYSE: IP) (Cramer's Take), getting out of the commodity container board business and pulling in $6 billion to reduce debt? To me, anytime you get out of a commodity business you lift your multiple, even if the rest is constrained by the housing-related lumber business.
Or how about the story that Bristol-Myers (NYSE: BMY) (Cramer's Take) might sell its baby-food business for a big chunk of change, another $6 billion.
Hmm, $12 billion in shuffles, both good for the shufflers, and no one really cares.
That's the problem with the endless focus on the financials, something I know I am falling prey to, too. Because of the focus, for example, I also missed that Caterpillar (NYSE: CAT) (Cramer's Take) traded back to $68 and change after trading up to $75, a terrific opportunity.
The Wall Street Journal reported that Siemens AG (NYSE: SI) estimated that its earnings this quarter would be dragged down by about $1.4B on weaker-than-expected performance in major business prospects.
According to the Financial Times, Bristol-Myers Squibb Company (NYSE: BMY) has reportedly made informal approaches to several potential bidders for its baby formula business, Mead Johnson, which is believed to be worth between $7B and $9B.
OTHER PAPERS:
The Telegraph reported that The Goldman Sachs Group Inc (NYSE: GS) is expected to announce a $3B writedown this week, part of which is attributable to their stake in Industrial & Commercial Bank of China. Goldman will also have writedowns of about $1.6B in its leveraged loan business.
Several union leaders are accusing General Motors Corporation (NYSE: GM) of trying to lower the wages of more positions than the company and union had agreed to under their labor contract, the Detroit News reported.
The Wall Street Journal points out that a number of start-ups hold illiquid auction-rate securities. Edward Wes, a partner with the law firm Perkins Coie told the paper, "The private companies need liquidity more, because they're burning cash faster than public companies."
While these new companies face a huge problem, many of them are backed by large VC firms who could loan them money against the securities in anticipation that the market will become liquid again.
Small public companies have a worse problem. They do not have one or two firms who can step in. If their balance sheets have a lot of this paper, what do they do? Several large companies like Bristol-Myers (NYSE:BMY) have said they may have to take writes-offs because of their auction-rate holdings. But companies that size have the balance sheets and borrowing power to weather the storm.
For shareholders in small-cap and mid-cap public companies, the end of the first quarter of this year may be unpleasant as firms write-down the value of auction-rate paper and take P&L hits. It could bring a lot of small company share prices down.
Douglas A. McIntyre is an editor at 247wallst.com.
Hasn't the words 'bond insurance' been the magic ones to spark a selloff lately? Such has been the case last week; such has been the case yesterday and it seem like it might be the case again today after MBIA reported a $2.3 billion loss. Stock futures were lower, indicating a similar start for stocks a day after the Federal Reserve has cut rates yet again by half a point. Today, investors can expect to digest much earnings and economic data.
On Wednesday, stocks moved without much of a direction until the Fed announced the rate cut. Wall Street jumped with glee in response with the Dow industrials gaining over 100 points. But then concerns about the bond insurance industry resumed. These companies insured securities backed by mortgages and other loans made to borrowers with weak credit and were hence hit hard by the subprime meltdown. Yesterday, investors feared a possible credit ratings fall, which could trigger further write-downs from companies that hold the insurers' securities. The Dow industrials ended 37 points lower, or 0.30%, the S&P 500 dropped 6.5 points, or 0.48%, and the Nasdaq Composite lost 9 points, or 0.38%.
Not alleviating much these concerns, bond insurer MBIA (NYSE: MBI) reported its fourth-quarter results, posting a net loss of $2.3 billion, or $18.61 per share, that was far worse than forecasts of a loss of $2.97 per share for the quarter. The loss was due primarily to a $3.5 billion writedown on its portfolio of insured credit derivatives. The company raised $1 billion through the offering of surplus notes and another $500 million through a direct investment by private equity firm Warburg Pincus. MBI shares, which already closed down 12.64% Wednesday, are trading down 4.3% in premarket action.
"The stock that I think may put up the best performance in 2008 is Bristol-Myers Squibb (NYSE: BMY)," says Chuck Carlson, the industry's leading authority on dividend reinvestment plans and editor of The DRIP Investor.
Here, the advisor looks at the stock's role in the defensive pharmaceutical sector, its increasing dividend yield, and its takeover potential.
"I know this may strike some of you as an odd choice, especially given the fairly mediocre performance these shares have turned in over the last several years. However, some of the uncertainty hanging over these shares has been lifted.
"The firm has won its patent suit with Apotex over its important Plavix medication. Also, Bristol-Myers has finalized a civil settlement agreement with the U.S. Department of Justice.
"I like that the firm is cutting costs as well restructuring its operations. The company plans to reduce total headcount by approximately 10% by the end of 2010. Bristol-Myers recently announced the sale of its medical-imaging business.
"And Wall Street anticipates additional asset sales, possibly the company's woundcare supplies company, ConvaTec, and its Mead Johnson nutritional business. These moves would be consistent with the company's plan to become more of a player in the BioPharma sector.
"Two additional reasons Bristol- Myers may get some play in 2008 is that 1) health-care stocks traditionally perform well during rocky market periods; and 2) high dividend yielders usually provide a buffer during tough markets.
Shares of French drug maker Sanofi-Aventis (NYSE: SNY) have been tumbling more than 5% in morning trading on news that a Swiss drug maker said it expects to receive approval to sell a generic version of Sanofi's anti-clotting agent Plavix.
It's been slow, but the private equity folks are starting to warm up to dealmaking. In fact, a key deal came last week as 
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Here are some highlights from this past week's 
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TheStreet.com's Jim Cramer says the Weyerhaeuser and Bristol-Myers stories slipped under the radar yesterday.
Before the bell: Futures higher as oil retreats, dollar strengthens
The Wal-Mart Weekly: Examining shareholder resolutions, Part 2
Earnings expectations for JC Penney, Nordstrom, Macy's, Abercrombie and others
