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Game Changing Step from Twitter Inc (NYSE:TWTR) CEO Jack Dorsey

By
Carol Harper
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Twitter Inc (NYSE:TWTR)

One of the accusations Twitter Inc (NYSE:TWTR) CEO, Jack Dorsey’s, predecessor faced was that he allowed key professionals to leave the company. The exodus is still continuing as four top executive have decided to leave. That included its product chief, Kevin Weil, HRD VP, Skip Schipper, engineering head, Alex Roetter, and media chief, Katie Stanton. That forced the CEO to revamp its top management and hopes the shake-up will be a game changer that will enable him to win back investors confidence.

Additions to the Board

As a first step towards revamping, Twitter Inc (NYSE:TWTR)’s Dorsey would induct two new members to its board this week. One among them is said to be a high-profile media executive. It was reported that the CEO has made this condition a prerequisite for him to take over as CEO. Currently, co-founder, Evan Williams, is also on the board. It remains to be seen whether he would be replaced as well and how the company will fill the gap created by the exits.

The social media firm’s CEO said that technology head, Adam Messinger, would be entrusted with the responsibility of overseeing engineering, app development, user services, design, consumer product, and research in one group. Aside from that, its COO, Adam Bain, would manage the teams of media, HR, and revenue-related product on an interim basis.

Focus To Make It Easier

Twitter Inc (NYSE:TWTR)’s Dorsey has repeatedly said that his focus would be to make the site more user friendly. He was responsible for bringing in Qmid-Kordestani as the Executive Chairman of the firm. Kordestani was a Chief Business Officer in Alphabet Inc (NASDAQ:GOOGL)’s Google. Following the confirmation of CEO position in October, he disclosed the intention to slash the jobs.

Twitter Inc (NYSE:TWTR)’s Dorsey’s task appears to be to keep the top level executives intact as frequent changes has not only shifted the strategy but also paralyzed the company thus dragging down the stock. The exit of four executives may prove to be a blessing in disguise for the CEO as this may create an opportunity for him to bring in a new team that will be better aligned with his vision moving forward.

Shares of Twitter Inc (NYSE:TWTR) have fallen by 37 percent ever since Jack Dorsey took the charge. It will be interesting to watch the stocks performance as the ne w positions are filled. You can bet that Wall St. will be watching very closely as well.

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Movers and Shakers: The Week so Far in Biotech

By
Jennifer Aldershot
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biotech

It’s been a rough start to the week for a number of companies in the biotech space. Here are two of the biggest movers, alongside an analysis of what drove the decline and what it means for the company going forward.

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Novavax, Inc. (NASDAQ:NVAX)

Novavax lost more than 16% of its market capitalization throughout Monday’s US session, and premarket on Tuesday, looks set to fall farther. For those not familiar with the company, it’s a billion-dollar clinical stage biotech, which has developed its own proprietary vaccine technology, which allows it to deliver targeted gene based vaccines. It doesn’t have any products on the market as yet, but it has a promising pipeline that includes oncology candidates and an RSV vaccine (RSV is a respiratory virus that predominantly affects children). The company has backing from a range of big names, including an $89 million commitment from the Bill and Melinda Gates foundation. Yesterday, Novavax released an 8K stating it expects to report $231 million cash on its books in its upcoming earning release – a healthy number for a company in its position. So why the decline?

Well, alongside the release, the company also stated it intends to offer $300 million minimum of convertible notes (up from the initial $200 million report), due in 2023.

The company has priced the notes at a 25% premium to current prices, and has a number of extension offerings that could see the total raised come to circa $321 million (after commissions, etc). The raise should fund its pipeline through to NDA, so why is this a bad thing? One word – dilution. Convertible notes are dilutive (in most cases), meaning the company’s current shareholders will take a hit on the portion of Novavax that their holdings represent.

The company has included some anti-dilutive measures, the most notable of which is a number of privately negotiated capped call transactions. However, the efficacy of these in tackling dilution is not guaranteed, and even if successful, they will only reduce the dilution, not eliminate it. In short, Novavax shareholders lose whatever happens – it’s just a question of how much.

Shareholders in this position are often willing to accept dilution if the capital raised funds an increase in value of their current holding, longer term. As such, don’t expect a drawn out sell off. Short term, however, the market’s negative sentiment and a value driven shift generally causes some downside, and this is what we’re seeing right now.

OncoMed Pharmaceuticals, Inc. (NASDAQ:OMED)

OncoMed shed 43% on Monday, as a direct response to the release of an update regarding its phase II pancreatic cancer candidate, Tarextumab. The drug targets what are called the Notch family of proteins, which play a key role in determining the fate of a cell. Terextumab, according to OncoMed’s hypothesis, inhibits the signaling across these protein’s pathways, and in doing so, can halt the proliferation of cancer cells.

We saw some decent data in phase I trials for the pancreatic cancer indication, and the FDA gave the drug orphan designation at the beginning of last year, injecting some positive sentiment into OncoMed’s pipeline and its prospects for commercialization. The drug also picked up a big name partnership with GlaxoSmithKline (NYSE:GSK), which promised more than $300 million in milestone payments if the drug reached commercialization.

Unfortunately for OncoMed and its shareholders, phase II data failed to mimic the promise of phase I. An independent review board released a statement saying, essentially, that the drug doesn’t work. No statistically significant improvement was recorded between a placebo and a treatment arm in the blinded trial – an endpoint miss that looks to have cost the company $300 million.

Alongside the release OncoMed said it was unblinding the trial in an attempt to salvage the drug from complete development failure, but an endpoint miss is generally terminal – especially in late stage cancer indications.

Looking at the rest of its pipeline, there still remains the potential for a recovery, namely in its other phase II, demcizumab. The company has teamed up with Celgene (NASDAQ:CELG) to develop the drug in two indications, pancreatic cancer and Non-Squamous Non-Small Cell Lung Cancer, and data from both trials is expected this year. If the drug can demonstrate efficacy (we got a hint of efficacy in earlier dosing and safety trials) OncoMed could pick up some of its lost market capitalization. In light of this, and from a potential discount entry perspective, the company might be of interest to the risk tolerant investor at it’s current price.

 

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Hilton Worldwide Holdings Inc (NYSE:HLT) Bets On Its Tru Hotels to Target Millennials

By
Carol Harper
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Hilton Worldwide Holdings Inc (NYSE:HLT)

Hilton Worldwide Holdings Inc (NYSE:HLT) is betting on its new chain of hotels brand, known as Tru Hotels, to become the biggest brand in the midscale hotel category costing less than $100 a night. The company is entering the rapidly growing sector with a fresh brand to attract young and tech-savvy travelers who would like bigger lobbies and digital check-in, as well as, rooms at an affordable cost.

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Franchise Deals Signed

Hilton Worldwide Holdings Inc (NYSE:HLT) indicated that it has already struck franchise deals with 102 property owners. The company is aiming to sign 30 more deals, which are pending now. The cities included Oregon, Portland, Denver, Chicago, Houston, Dallas, and Atlanta. The company plans to launch the first Tru Hotel before the end of 2016. It appears that most of the locations would be outside the pricier markets like San Francisco or New York.

Global Head of Hilton, Phil Cordell, said that the initial focus would be small college towns, major highways and resort getaways. Eventually, it would extend the brand outside the USA. The company indicated that Tru was the 13th brand and might become the biggest as far as the number of rooms was concerned. Currently, The Hampton brand was the biggest with over 200,000 rooms spanned across 2,100 properties.

Filling The Gap In Portfolio

According to Robert W Baird & Co analyst, Michael Bellisario, Tru would fill the gap of Hilton Worldwide Holdings Inc (NYSE:HLT)’s portfolio. He believes that the midscale was one of the largest segments and that no larger global brands have penetrated into that market. The timing of the launch of the midscale brand comes when there was concern of sluggish economic growth. Already, the company’s stock dipped over 30% in the last one-year period thus dragging it below its IPO price of $20.

Hilton Worldwide Holdings Inc (NYSE:HLT) President and CEO, Christopher Nassetta, said that the company has not witnessed any significant change in its operating results in China. He said that though the country’s economy was in chaos, the mix of development helped to shift towards lower-priced hotels. He said that he could see the demand in such a market.

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Zafgen is Preparing to Mount a Beloranib Defense

By
ME Staff
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In March, 2015, development stage biotech Zafgen, Inc. (NASDAQ:ZFGN) traded for more than $50 a share. The company opened 2016 at just shy of $7 – an 86% decline across the period. The drop came as the result of two patient deaths in a phase III for its lead candidate beloranib, a weight loss treatment with a target indication of obesity in patients suffering from Prader-Willi syndrome (PWS).

At the end of last week, however, Zafgen gained 77% to top out at $10, and now trades at a 57% premium to 2016 lows. The gains come off the back of a positive topline readout for the seemingly doomed trial – topline that suggests there may still be hope for an FDA nod in the PWS indication after all. Ahead of a potential NDA submission, then, let’s take a deeper look at the drug in question in an attempt to weigh up the risk/benefit associated with administration and, in turn, figure out whether Zafgen is an opportunity for a discount allocation.

Beloranib is what’s called a METAP2 inhibitor. METAP2 is an enzyme that plays a role in a host of different processes in our bodies, and is primarily known in the biotech space as the enzyme responsible for tissue repair and for breaking down proteins. Aside from these primary functions, however, it also plays a part in lipid processing. High METAP2 activity is associated with low fat metabolism. By inhibiting the enzyme, beloranib increases lipid metabolism, converting fat to energy. In doing so, it effectively targets the obesity associated with genetic PWS.

What did the latest trial data show? The phase III had two concurrent endpoints – a statistically significant weight reduction and the improving of hyperphagia (excessive desire for food) related behavior. Two patient arms received 2.4 mg and 1.8 mg doses of beloranib, while a third arm received placebo. The dosed arms recorded average weight loss of 9.45% and 8.20% and reductions of hyperphagia-related behaviors of 7.0 units and 6.3 units respectively. Both endpoints hit in what is, essentially, a great result.

So why is this important now? Well, in December, and in the wake of the second patient death, the FDA placed an indefinite halt on the development of beloranib. At the time, all we knew was that beloranib was a high risk treatment (or so the deaths would suggest) and Zafgen didn’t have any large scale, public data to form a defense as to the benefit side of te drug. With this latest topline, Zafgen is able to mount a case for the continued development of beloranib – a case which it intends to put forward to the FDA this quarter. Whether the case will be sufficient to sway the agency’s opinion remains to be seen, but it is, at least, a shot.

We will get a little more insight before the end of the month, as the company plans to report a more detailed analysis of the trial some time in the next couple of weeks. We know the detailed analysis will include information of the drug’s impact on body composition, cardiovascular disease risk markers, metabolic endpoints, and quality of life measures. We don’t know whether any of this information will relate directly to the deaths, though we can assume that it will.

What are we looking for going forward? First, we’ll take a look at the detailed data to try and ascertain why the patients died. If the deaths came about as a direct result of treatment and there are no other mitigating circumstances, things don’t look good for beloranib. If, however, the patients in question suffered from another condition concurrently, or suffered from a particularly severe form of PWS, Zafgen may be able to persuade the FDA that a box warning, or a tightened patient population (i.e. one targeting the portion of PWS sufferers not at risk of severe AEs post-administration) justifies further development.

One thing is certain – we’re not going to get a quick turnaround. The FDA will likely want more data, which will mean more trials, cost and time. For an investor with a willingness to held on to an exposure for a few years, however, Zafgen could be a nice speculative position at its current price. Look out for the upcoming insight to shore up any bias.

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Rally Continues in Asia, Fizzles in Europe

By
Andy Parker
-

The sharp recovery in oil prices has helped spur a broad market rally across Asia that continued today as the week began. Asia may have also been responding to dovish monetary policy statements coming out of the European Central Bank.

The slew of positive events prompted a rally in Asian stocks, where Taiwan’s TSEC 50 index surged the most by 1.78% to 7,894. China’s Shanghai SE Composite Index finished the day 0.75% higher at 2,938.51 while Hong Kong’s Hang Seng added up 259.63 points or 1.36% to settle at 19,340.14.

The recovery in the Asian markets came after stocks took a harsh beating last week following a deep slide in oil prices, which hit 12-year lows. However, the strong snowstorm that hit the U.S. over the weekend fueled expectations of an increase in oil demand in the coming days, which relieved anxiety over an oil glut somewhat. Oil, however, is sliding back down 3% as the trading week opens.

Troubled Euro Zone

Unlike Asian markets, European markets failed to reflect the same excitement as oil was quick to pare its early-day gains. Oil prices came under pressure as Iraq turned the oil oversupply fears into reality by pumping oil at record-high levels. Brent Crude fell by $0.94 to $31.24. U.S. crude is trading at $31.20.

Iraq is sparing no efforts to claim its share in the global oil market as its central and southern region posted a record output of 4.13 million barrels a day. The oil output has dimmed hopes of an oil price revival anytime soon. European indexes are trading mostly flat today.

Given the pressure, it is likely that U.S. markets will reflect negative sentiment, too. On Friday last week, the Dow Jones Industrial Average rallied by 1.33% or 210.83 points to 16,093.51. S&P 500 Index too surged by 2.03% to 1,906.90. US stock futures are slightly down in premarket trading.

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Denbury (NYSE:DNR) Cancels Notes Exchange Offer

By
Andy Parker
-

Denbury Resources Inc. (NYSE:DNR), an oil and gas exploration company, has pulled the Notes Exchange Offer that it had previously announced to its creditors, citing certain terms and conditions that went with the offer that were not fulfilled. Following the termination of the exchange offer, the company is returning notes that may have already been tendered to their owners. The notes exchange program would have seen holders of certain old notes maturing between 2021 and 2023 swap a portion of them for notes maturing on May 15, 2022.

Denbury targeted three groups of bond holders with the notes exchange offer. The deal would have benefited holders of certain bonds due 2021, holders of certain bonds due 2022 and 2023, which it collectively calls the Old Notes.

Had the deal gone through, the holders of the Old Notes would have exchanged them for newly-issued notes that would have matured earlier on the average. Denbury intended to issue the Old Notes holders with notes that are due in mid-May 2022.

However, the exchange offer will not proceed. Denbury pointed to terms and conditions on the initially signed documents to explain the termination of the deal.

As a result, Old Notes holders who may have started tendering their notes in exchange for the newer notes will have to get them back.

Pressure in the oil market

Denbury is pulling the plug on the exchange at a time when its industry is being battered from all directions. Soft Chinese economic data and a global oil oversupply are pulling down oil stocks and Denbury has not been spared. The stock is down more than 33% year to date.

Because OPEC refused to cut back oil production and new producers like Iran are now bringing their oil to the global market, the supply and demand imbalance is expected to stretch further, pulling down oil prices in the process. It is feared that the oil surplus could rise from the present 1 million barrels per day to 1.5 million barrels per day in by the middle of 2016.

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Preferred Bank (NASDAQ:PFBC) Beats Expectations for Q4

By
Andy Parker
-

Preferred Bank (NASDAQ:PFBC) had a fairly strong 4Q2015 and fiscal 2015 in which both earnings per share and overall revenue impressed. The acquisition of United International Bank (UIB) that was concluded late in 2015 also added to top-line growth in the quarter and the year.

4Q results

Preferred Bank generated net income of $7.5 million or $0.54 per share for the quarter. Post adjustment, Preferred’s Q4 EPS jumped to $0.57. The Street was looking for EPS of $0.54 for the quarter. Preferred posted EPS of $0.57 in the previous quarter and $0.50 in the same period a year ago.

Revenue of $23.3 million for the latest quarter not only exceeded the consensus estimate of $23.2 million, but also surpassed $21.6 million in the previous quarter and $19.4 million a year ago quarter.

The acquisition of UIB resulted in a $658,000 hit on 4Q earnings, although the acquisition did boost deposits.

Annual results

For the full year, Preferred Bank reported net income of $29.7 million or $2.13 per share. The company generated EPS of $1.78 in the same quarter a year earlier. Revenue for the year was $83.8 million, up from $71 million in the previous year. Top-line gains in the latest quarter were supported by a strong loan book.

The bank finished 2015 with deposits of $2.29 billion, up from $1.78 billion in the previous year. The spike in total deposits was partly driven by the acquisition of UIB, which contributed $158 million of additional deposits.

In terms of assets, Preferred had $2.6 billion at the end of 2015, up nearly 26.6% from assets of $2.05 billion at the end of 2014.

Bank management reported that nonperforming assets in 2015 declined to just $6.4 million. The decline was primarily as a result of shifting nonperforming loans to what is called OREO status, or Other Real Estate Owned.

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U.S. Dollar Gains Against Euro, New Zealand and Australian Dollars

By
Andy Parker
-

The US Dollar was seen trading higher against the Euro this morning, continuing a trend that began in the late Asian trading hours. The EUR/USD pair traded up by 0.2% to 1.082 as market participants showed some optimism following the European Central Bank chief’s dovish statements on monetary policy last week. It is widely anticipated that the ECB will announce fresh easing measures during its upcoming meeting in March.

Disappointing data in Australia

Meanwhile, the New Zealand dollar pared early day gains after strengthening against the greenback. Currency traders are now awaiting signals on another rate hike from the Federal Reserve. NZD/USD shed 0.25% and was trading near 0.6476 today. The pair has support at 0.6409 and resistance at 0.6563.

Like the New Zealand dollar, the Australian dollar also shed its gains and was trading weaker against the dollar. The pressure on the Australian dollar built after data showed muted business confidence in the region, firming up demand for the world’s reserve currency. AUD/USD was down by as much as 0.36% to 0.6977. The pair’s support and resistance levels are at 0.6945 and 0.7088 respectively. In the early morning today, the Australia’s National Bank reported that the business confidence index slipped to 3 from 5 in December.

On the look out for the Federal Reserve’s statement

Divergent monetary policies between the Federal Reserve and other central banks are giving the US dollar some strength. Investors are now closely awaiting the Federal Reserve’s update on policy direction, which is expected to be released on Wednesday. Investors will look for any signal from the Fed on the pace of interest rate hikes this year, if any.

The U.S. dollar traded higher against the British Pound as well. GBP/USD was seen trading marginally down by 0.04% to 1.4259. The U.S. Dollar index is now at 99.39, reflecting a loss of 0.2% from Friday’s close.

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Cerberus Comments Helps Boost Avon (NYSE:AVP) Shares

By
Andy Parker
-

Avon Products Inc (NYSE:AVP) surged as as high as $2.79 off lows of $2.21 last week after comments from Cerberus Capital Management helped the beauty product company recover from earlier declines. Avon’s biggest institutional investor said that the cosmetics company was not having any liquidity concerns, as its shares were significantly undervalued.

Cerberus bought a 17% stake in the cosmetics company back in December in the form of convertible shares at a $5 strike. On the eve of its investor day conference, a Cerberus spokesperson said its management would be working hand in hand with Avon officials to ensure an effective turnaround for the company.

How rewarding is the deal?

Both Cerberus and Avon have defended the decision to enter into the financial agreement. According to Sheri McCoy, Chief Executive of Avon, the decision was taken after taking an exhaustive review of the options available, which included making alterations in the way the products of the company are sold and going private altogether.

Avon sells skin creams, makeup, home accessories and is known globally for its beauty products and door to door sales business model in over 100 countries. Over the past few years, the cosmetic company has lost some of its hold on the market and has been struggling to bounce back.

Ms. McCoy said that the involvement of Cerberus in Avon has opened doors for her company, but it was not the right time to take Avon private since its stock is trading so low.

Cerberus pumped as much as $435 million into Avon through its 17% stake and will be acquiring 80% of the North American business of the company, which will separate the unprofitable section from the international business division of Avon.

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Will Oil Now Hold Above $30?

By
Carol Harper
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oil

Global oil prices staged an impressive recovery gaining more than 9% in Friday’s trade above $32 per barrel. The oil price has bounced by 21% since hitting 12-year lows. Now, the question in trader’s minds is whether the worldwide oil price can stay above $30 per barrel, seen as a line in the sand, or whether the bounce will be short-lived.

Upcoming Snowstorm

There is now renewed optimism that the oil price might stay above $30 per barrel mark for two reasons. One is the upcoming snowstorm in the US and the possibility of central banks announcing more stimulus. Both factors are expected to drive fuel demand.

Diesel futures were able to record the largest single day percentage gains in over a decade. Also, the cold weather covering the Northeast, Mid-Atlantic, and Southeast swaths is likely to boost heating costs.

After being on the losing streak for three straight weeks, oil prices snapped the trend to post a 5.9% increase last week on the NYMEX. Similarly, Brent crude witnessed a 10% increase to $32.18 per barrel on ICE Futures in Europe. As a result, the week as a whole saw 11% gains in Brent. On Thursday, ECB President Mario Draghi, indicated the possibility of easing measures as the region came under inflation pressure due to the oil drop.

Expectations Remain High On Stimulus

Traders appear to be betting on stimulus. There was speculation that Japan’s Central Bank might also follow suit in boosting its asset-buying program. Their contention was that such measures could ignite economic activity, which, in turn, might boost demand for fuel.

Standard Chartered Bank’s Commodities Research Head, Paul Horsnell, said that oil has been long due for a significant short-covering rally. He also said that it was too early to predict that the oil price has bottomed out. Goldman Sachs Group Inc. (NYSE:GS) predicts that the oil price would trade between $20 and $40 a barrel. Some traders believe that the recent recovery will not last long as worldwide inventories continued to grow. Weather may hold some respite for the near-term.

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