Midday movers: Chesapeake, Delta, Dendreon
Stocks head lower as factory orders fail to boost investor confidence.
Chesapeake Energy (CHK) relented to shareholder pressure and agreed to replace four of its current board members, with Southeastern Asset Management, the company's largest holder, nominating three of the new directors and activist investor Carl Icahn picking the fourth. The company added that Aubrey McClendon will give up the position of chairman but will continue as CEO and as a director on the board. The stock climbed over 5%.
Johnson & Johnson (JNJ) gained a little over 0.5% after reporting that patients in a trial for its Zytiga treatment for prostate cancer showed a trend toward increased overall survival.
Salesforce.com (CRM) and WellPoint (WLP) both broadened their portfolios with acquisitions of privately-owned companies, as Salesforce purchased Buddy Media, a social media marketing platform, for $689 million and WellPoint bought contact-lens and eye wear retailer 1-800 Contacts for a reported $900 million.
Among the notable gainers were MEDTOX Scientific (MTOX), up 35%, on news it will be acquired by LabCorp (LH) for $27 per share, and Auxilium Pharmaceuticals (AUXL), up more than 8%, after announcing data on its potential treatment of Peyronie's disease. Noteworthy losers included Dendreon (DNDN), down over 8%, after a number of analysts said that the positive data on J&J's Zytiga is a material negative development for Dendreon's Provenge drug, and Delta Air Lines (DAL), down 8%, after reporting its passenger unit revenue increased 6% in May from the prior year, which the company said was lower than its recent guidance by one point.
in March, 2012, achieved statistical significant in only one of two primary
endpoints...progression free survival (PFS). The trial was not stat sig for
overall survival (OS), which is the Gold Standard for FDA approval of cancer
drugs. Further, if you look at the data presented by JNJ in Chicago on Saturday,
you see there was no effect on survival noted until month 18 after initiation of
therapy in the treatment arm...4 months after therapy was stopped. By that time,
20% of the patients had died. What kind of treatment is that? ("Sir, we're going
to give you this drug...we're not sure it's going to work...check back in 18
months, if you're still alive, and we might know!") Zytiga costs more than
$5,500 per month, it was given for 14 months in the study, so not including the
prednisone that must be taken daily with it (cheap), the drug tests necessary to
monitor liver functions (moderately expensive), and the costs to address side
effects (possibly high), total cost for a treatment, depending on length, could
push up into Provenge's space. If a person is on Medicare and is pushed into the
'donut hole,' the copay could run $500-$800 per month. Recent data indicate 70%
of patients on Provenge have little or no out-of pocket expenses, and the
remainer incur minimal costs. Finally, the trial was stopped...the data JNJ will
take to the FDA are those that existed at the time it was stopped. A noted
statistician who presented on Saturday at ASCO in Chicago stated that the trial
had failed. Frankly, many were puzzled as to why it was stopped, when another
interim look by the Independent Data (Safety) Monitoring Board would have been
conducted in the June time-frame. By that time, it was conceivable the trial
would have evidenced stat sig OS, making the case for approval stronger. There
was talk at ASCO (and even prior to that) that JNJ faced mounting pressures from
patent expirations and competition, which led them to halt the trial early and
take their chances on approval with the FDA. Given the overall survival is THE
'gold standard' for approval by CDER/ODAC, it will be interesting to see if the
Cancer Czar will compromise his principles and bow to JNJ on this one! Yes,
Provenge's label states that it provides a MEDIAN survival advantage of 4.1
months (half of the men who take it die before 4.1 months, the other half live
longer, some as much as 6-7 years). But recent studies that account for the
crossover of patients in the placebo arm of Dendreon's pivotal Phase 3 study
(that is, patients who left the placebo arm and took a frozen form of Provenge)
indicate the life extension benefit ranges from 7.8 to 12.1 months. Now, I don't
expect the press to know or understand these nuances, but let's at least be a
little more 'fair and balanced' in our approach to these stories. We are not
describing the rescue of a dog from a well. We are talking about cancer drug
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4 analysts downgrade the stock the day after a disappointing quarterly report.
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