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The Burrill Report submits: By Marie DaghlianThere is never enough of a good thing and certainly this week, several life science companies ranging from Big Pharma to industrial biotech seemed to feel that one deal was not enough. Big pharma players Sanofi-Aventis (SNY) and J&J’s (JNJ) Ortho-McNeil-Janssen Pharmaceuticals, biotech company Metabolex, and renewable fuels and chemicals developer Amyris (AMRS) each struck two or more agreements to strengthen their positions. Sanofi-Aventis entered into a global strategic alliance to discover, develop, and commercialize microRNA therapeutics. The alliance is the largest microRNA partnership to date, worth potentially $750 million to Regulus, including $25 million upfront, $10 million in a future equity investment, and annual research support for three years with the option to extend the partnership for two additional years. The companies will collaborate on up to four microRNA targets, including Regulus’ lead fibrosis program targeting microRNA-21. Sanofi will also have a three-year option for a broader technology alliance which will be worth an additional $50 million to Regulus if exercised. Regulus is equally owned by Alnylam Pharmaceuticals (ALNY) and Isis Pharmaceuticals (ISIS), which formed the company in 2007. [See story.] “MicroRNAs are believed to be extremely important in human development and physiology,” says Marc Cluzel, Executive Vice-President of R&D at Sanofi. “Together with Regulus we will develop therapeutics which could potentially open a new paradigm in the treatment of major diseases and could offer an attractive new therapeutic approach for patients.” Sanofi also inked a global licensing and development deal with privately-held Metabolex potentially worth $375 million to research, develop, and commercialize small molecules that modulate the G-protein coupled receptor 119, a receptor in the gut and pancreas that interacts with bioactive lipids to stimulate glucose-dependent incretin and insulin secretion. Agonists of GPR119 represent a first-in-class oral treatment for type 2 diabetes that function through a unique dual mechanism of action that may offer improved glucose homeostasis over existing diabetes therapies, with the potential for weight loss and improved islet health. They have been the basis of several recent deals including a deal struck a week earlier between Boehringer Ingelheim and Neurocrine Biosciences (NBIX) to discover new GPR119 agonists. The Sanofi-Metabolex agreement includes MBX-2982, a potent selective orally active GPR119 agonist discovered by Metabolex that, along with a candidate from GSK, is at the head of a class of candidates in earlier stage development. MBX-2982 is currently in a multi-national 28-day phase 2 clinical study in patients with type 2 diabetes. As part of their agreement, Metabolex will receive an upfront payment and will be eligible to receive development, regulatory, and specified commercial milestones that total as much as $375 million. Metabolex is also eligible to receive royalties on worldwide sales of marketed products. A few days before striking the deal with Sanofi, Metabolix partnered its pre-clinical type 2 diabetes programs with Ortho-McNeil-Janssen Pharmaceuticals for an upfront payment and up to $330 million in development, regulatory, and commercial milestones. The global development and exclusive license agreement with Ortho-McNeil-Janssen will further develop and discover the compounds for the treatment of type 2 diabetes and other disorders. Metabolex is also eligible to receive royalties on worldwide sales of marketed products. Ortho-McNeil-Janssen Pharmaceuticals also struck a deal with Swedish biotech Diamyd Medical to develop and commercialize its type 1 diabetes therapy for an upfront fee of $45 million and potential milestones of $580 million, as well as tiered royalties on future sales. The companies will equally share costs for the development of Diamyd’s GAD65 antigen-based therapy for the treatment and prevention of type 1 diabetes and associated conditions, until results from the ongoing EU phase 3 study, expected in the first half of 2011. At that time, Ortho-McNeil-Janssen will have the right to fully assume responsibility for the development program upon reviewing the results. Diamyd has kept exclusive rights for commercialization in the Nordic countries and retains the rights to the therapeutic use of the GAD65 gene and derivatives, fragments and variants of the GAD65 protein. Emeryville, California-based Amyris aimed to beef up its position ahead of its IPO with the addition of six agreements. Amyris uses the tools of synthetic biology to engineer microbes, primarily years, to serve as living factories to convert plant-based sugars into renewable fuels and chemicals. The company largest deal is with French oil company Total that included a $133.2 million investment in its series D financing. Their strategic partnership will develop new products and build biological pathways to produce and commercialize renewable fuels and chemicals. Other agreements include a joint venture with Brazilian ethanol producer Cosan (CZZ) to produce and commercialize cane-based renewable chemicals; a multi-year collaboration with Proctor and Gamble (PG) and Amyris to use its renewable chemical Biofene in certain specialty chemical applications within P&G’s products; a deal with Italian chemical company M&G to use Biofene in its plastics production and to explore the combined use of their technologies; a partnering deal with French renewable cosmetic ingredients producer Soliance for its renewable chemicals in cosmetic ingredients; and an undisclosed deal with Shell Western Trading & Supply, a subsidiary of Royal Dutch Shell (RDS.A) that is active in crude oil and products trading in South America. Two large M&A deals also made the headlines. In a deal valued at $3.2 billion, Canadian specialty pharma Biovail (BVF) will reverse merge with Valeant Pharmaceuticals International (VRX), with the new company retaining the Valeant name. Valeant stockholders will receive a one-time special cash dividend of $16.77 per share immediately prior to closing of the merger and 1.7809 shares of Biovail common stock upon closing of the merger in exchange for each share of Valeant common stock they own. The transaction is expected to be completed by the end of the year at which time the combined company is expected to pay shareholders a one-time additional $1-a-share dividend. At that time, Biovail stockholders will own approximately 50.5 percent and Valeant stockholders will own approximately 49.5 percent of the shares of the combined company on a fully diluted basis. The combined company will have a significantly expanded presence in North America and operations in eight other countries, working across four growth platforms: specialty central nervous system therapeutics, dermatology, Canada and emerging markets/branded generics. J. Michael Pearson, currently chairman and CEO of Valeant, will serve as the new Valeant’s CEO, and Bill Wells, currently CEO of Biovail, will be the non-executive Chairman. The new Valeant will retain Biovail’s corporate structure and related financial efficiencies, and expects to generate at least $175 million in annual cost synergies in the second year. It will be headquartered in Mississauga, Ontario and will remain a Canadian domiciled corporation, listed on both the Toronto and New York Stock Exchanges. The location of the combined company’s U.S. headquarters will be determined after the close of the transaction. The deal caps a long campaign by Biovail to beef up its CNS treatments, one of Valeant’s strengths with its drugs for epilepsy, Parkinson’s disease, and migrains. In 2009 Biovail bought the rights to GSK’s antidepressant Wellbutrin, and in February it acquired the rights to commercialize Alexza’s treatment for schizophrenic or bipolar agitation. Finally, German industrial and ag chemicals producer BASF will acquire specialty chemicals company Cognis Holding Luxembourg in a deal valued at $3.8 billion. Cognis is a worldwide supplier of innovative solutions and products based on renewable raw materials for the health and nutrition market, as well as the cosmetics, detergents and cleaners industries. The company is controlled by Permira Funds, GS Capital Partners and SV Life Sciences. The transaction is expected to close in November.Complete Story »

Frederic Ruffy submits: SentimentStocks suffered another round of losses, but the major averages are well off session lows late Tuesday. The stage was set for a rough day on Wall Street after Asian markets fell on worries about escalating tensions between North and South Korea. European benchmarks also suffered declines amid ongoing weakness in the euro and worries about the European sovereign debt debacle. Events overseas continue to overshadow domestic news and, with less than an hour left to trade, the Dow Jones Industrial Average is down another 105 points. However, today’s decline was orderly and the industrial average has managed to climb more than 180 points off session lows. The CBOE Volatility Index (.VIX) is down .94 to 37.38, but trading in the options market remains defensive. About 7 million calls and 9.1 million puts traded so far.Bullish FlowPfizer (PFE) is down 22 cents to $15 and the top trade in the name so far is a block of 6750 Dec 15 calls on the $1.39 bid. Looks tied to 675K shares at $14.99 and part of a buy-write. Remember that a buy-write is the same as a “covered call” and one of the first strategies many options traders learn. In this trade, the investor simply buys shares and sells calls — selling 1 call for every 100 shares.Complete Story »

David Greene submits:Competitive Technologies (CTT) made a new 52-week high at $3.57 yesterday (May 13) on 5X average daily trading volume before doing an understandable retracement, which is continuing today at $2.90.Why the recent price appreciation coupled with increased liquidity? For one, there is much anticipation for the first comprehensive presentation of CTT's chronic pain management therapy device (named "Calmare"--Italian for "calm, soothe, pacify") to the medical community to be held this Monday, May 17. The inventor of Calmare, Professor Giuseppe Marineo, MD, DSc., Researcher, Founding President of Delta Research and Development, Tor Vergata University of Rome, Italy, is the keynote speaker at the Symposium for physicians. Dr. Marineo will present his "Scrambler Therapy," which interferes with pain signal transmission by ''mixing'' ''non-pain'' information into the nerve fibres. Other speakers include physicians from the Boston Foundation for Sight, the University of Miami, the University of Wisconsin, and Calmar Pain Relief, LLC, to present evidence-based patient case studies developed from the use of the Calmare system to treat various types of chronic pain from cancer and chemotherapy-induced peripheral neuropathy (CIPN), failed back surgery, phantom limb syndrome, sciatica, pain from shingles etc.. These case studies involved patients suffering from intractable pain after trying to get relief from other pain management treatments, such as painkillers. Patients that cannot use painkillers due to negative side effects were also included.Complete Story »

Market Folly submits:David Einhorn's hedge fund Greenlight Capital recently filed amended 13Ds and Form 4s with the SEC regarding two of their positions. Firstly, due to activity on May 1st, 2010, Greenlight shows a 65.2% ownership stake in Einstein Noah Restaurant Group (BAGL) with 10,733,469 shares. There has been no adjustment to their position size since December 31st, 2009, when we detailed Greenlight's portfolio. So while this news is not an exciting 'buy' or 'sell,' it is still informational as they continue to 'hold' BAGL shares. The filings were mainly made to shuffle ownership interests between Einhorn's various investment vehicles. The vast majority of their Einstein Noah position is in their Greenlight Qualified Fund.Secondly, we see that Einhorn's hedge fund completed a similar portfolio shuffle with their Biofuel Energy Corp (BIOF) stake. Due to the disclosures, Greenlight shows a 39.8% ownership stake in BIOF with 11,853,500 shares. This is actually an increase in their position as they previously owned 7,542,104 shares when we previously saw Einhorn's holdings. This marks a 57.16% increase in their position size over the past four months. Keep in mind that they own both Class A and Class B stock.Complete Story »

Market Folly submits:Dealbreaker has flagged David Einhorn and hedge fund Greenlight Capital's first quarter investor letter. In it, we learn that the fund has exited its position in Boston Scientific (BSX). Readers will remember that Einhorn had just started this position and mentioned it in his fourth quarter investor letter. The hedge fund purchased shares of BSX for $8.42 and sold them for $7.57. So, Greenlight has cut its losses quickly on this one and moved on to the next investment.The Greenlight team writes,Complete Story »

Frederic Ruffy submits: SentimentThe slow steady grind continues, with the stock market averages sporting modest gains late Friday. Stock index futures moved up along with European benchmarks in the morning hours after yields fell and fears receded in Greece's troubled debt markets. In the US, the day's news was light. The only economic stat of the day, a report on wholesale inventories at 10:00 a.m., showed an uptick of .6 percent and slightly more than the .4 percent increase that economists had expected.The market showed little reaction to the data and, instead, volatility remains light amid rangebound trading. The Dow Jones Industrial Average has traded in a narrow 59-point span and is up 39 points. With about an hour left to trade, the CBOE Volatility Index (.VIX) was little changed at 16.46. Volume is slowing ahead of the weekend, with 5.8 million calls and 4.5 million puts traded so far.Complete Story »

Research Recap submits:
Boston Scientific (BSX) fell the most in 17 months on Monday after the company’s announcement it had stopped shipment and is retrieving inventory of all of implantable cardioverter defibrillators and cardiac resynchronization therapy defibrillators in the US. The latest bad news is Goldman Sachs’ decision to place BSX on its Conviction Sell list. Goldman previously had the company at Neutral.Complete Story »

The Burrill Report submits: Medical device giant Boston Scientific (BSX) said it would eliminate as many as 1,300 jobs or 10 percent of its workforce as part of a series of restructuring initiatives and management changes it says will drive profitable growth for the company. As part of these changes, the Natick, Massachusetts-based company says it will eliminate its international headquarters. The presidents of Japan, Europe (including a consolidated Shared Services team) and the newly formed Emerging Markets Group will report directly to the CEO. Among other changes the company said the Cardiovascular Group and Cardiac Rhythm Management Group (formerly Guidant) will be combined into one. The company says it plans to further rationalize and refocus its business portfolio through both select divestitures and acquisitions in direct support of new strategic priorities. As a result of the restructuring, Boston Scientific expects to take pre-tax charges of approximately $180 million to $200 million. Gross expenses are expected to be reduced by a range of $200 million to $250 million from the 2009 base during the next two years, representing a reduction of 5.5 to 7 percent. Strativa Pharmaceuticals said that the U.S. Food and Drug Administration notified the company it could not yet act on its application to begin marketing Zuplenz (ondansetron) oral soluble film for the prevention of nausea and vomiting associated with chemotherapy, radiotherapy and surgery. The company said that because of an agency-wide restriction on foreign travel in India, the FDA has been unable to perform an inspection of the clinical and analytical sites for a bioequivalence study, and therefore, cannot approve the application at this time. The FDA told the company it would schedule and perform an inspection of the sites as soon as possible.Complete Story »

• Fed's exit strategy. Heavy snowfall prompted the cancellation of a congressional hearing yesterday, but Bernanke released the testimony he'd prepared on how the Federal Reserve plans to tighten credit once the economy has sufficiently recovered. Bernanke said the interest rate on excess reserves might replace the federal-funds rate as the main policy tool for a time, and suggested the Fed might begin raising its discount rate soon. However, Bernanke stressed that changes in the discount rate should not be taken as a sign of an imminent rate hike.
• Fed looks to money market funds. Sources say the Federal Reserve is in talks with money-market mutual funds to help drain up to $1T from the financial system as officials prepare for the first interest-rate hike since June 2006. The Fed is also said to be considering reverse repurchase agreements with Fannie Mae (FNM) and Freddie Mac (FRE).
• Air Products launches hostile bid. Air Products and Chemicals (APD) launched a hostile tender offer for Airgas (ARG) after its bid was rejected earlier this week. The offer is for all outstanding common shares for $60/share in cash. Separately, the SEC is reportedly investigating unusual activity in Airgas call options that occurred before Air Products and Chemicals announced a $5.1B bid for the company. Air Products made its unsolicited bid on Feb. 5, causing Airgas shares to jump as much as 44%. A burst of activity in select Airgas call options before the bid was announced has regulators concerned that the takeover news was leaked early and used to profit on the Airgas stock spike.
• EU discusses Greek aid. European Union leaders meet today and may create a framework for a Greek rescue package. One possibility is to provide Greece with loan guarantees as long as Prime Minister George Papandreou quiets street protests and further cuts the country's budget deficit. A Spanish official said countries were being spurred to action because "it's about the credibility of the euro," but German citizens, with a longstanding commitment to fiscal responsibility, are loathe to see their country involved in a bailout and "will wish they had their Deutsche Mark back" if a rescue goes through.
• AIG: Mind your grades, get a bonus. AIG (AIG) is rolling out a new compensation system that will rate employees relative to their peers on a scale of 1 to 4, and will dole out bonuses according to employees' rankings. The approach, called a "forced distribution" system, has been used by large companies such as GE (GE) to help reward top employees and weed out underperforming ones over time. Only 10% of employees will get the top "1" ranking, 20% will be ranked as "2," 50% will be ranked as "3," and the remaining 20% will be ranked as "4."
• CME to buy Dow Jones stake. CME Group (CME) reached a deal to take a 90% stake in Dow Jones Indexes (NWS). CME will pay Dow Jones $607.5M for the stake, and Dow Jones will retain a management role in the Dow Jones Industrial Average.
• TARP losses, gains. The Treasury officially recognized the loss of its $2.3B investment in CIT Group (CIT) yesterday. Despite the loss, the Treasury expects the cost of TARP to continue to fall and expects to turn a profit on aid provided directly to the banking sector. To that end, PNC (PNC) announced yesterday that it had completed its TARP payment by redeeming $7.6B of preferred government shares, and Fifth Third Bancorp (FITB) will "most likely" repay its $3.4B of TARP funds in the second half of the year.
• Treasury considers partial Citi sale. The Treasury is said to be considering the sale of a $2.2B investment in Citigroup's (C) junior debt in order to lock in a profit from the firm's bailout. Officials are debating whether it's best to sell the securities, known as trust preferreds, before or after the government sells its 27% equity stake.
• Small banks struggle with soured loans. Soured commercial real-estate loans are still tripping up the economy, according to a report by the Congressional Oversight Panel. Specifically, there are nearly 3,000 small banks that may have to dramatically cut their lending as losses on those loans may reach as high as $200B-300B. Concern about banks' exposure to commercial real estate has been building for months, and Elizabeth Warren, head of the oversight panel, warns that those banks "are about to get hit by a tidal wave of commercial-loan failures."
• Google goes optic for zippy internet. Google (GOOG) says it will start offering ultrafast internet service to a select number of consumers, building its own fiber-optic networks with the aim of serving 50,000 to 500,000 people. For Google, it's a major step into supplying internet connections rather than the services that run on them, though Google says developing the former will help grow the latter. However, the move is risky and doesn't have the necessary scale to compete with industry giants, leading some to say it's as much about politics as it is about technology.
• New antitrust hurdle for Live Nation Entertainment. Live Nation Entertainment (LYV) will be subject to a second antitrust review in the U.K. after a court ruling said regulators had failed to fully consider the input of a competitor in the market for ticket sales. If antitrust officials reverse their earlier approval of the $889M merger, Live Nation Entertainment may be required to make changes to its U.K. operations.
• U.K.'s Brown sees progress on global bank tax. U.K. Prime Minister Gordon Brown said the world's leading economies are close to agreeing on a global bank tax, noting that public opinion has shifted in favor of the tax since Obama's decision last month to raise $90B from a U.S. bank fee. The U.K. hopes to lock in global agreement on the bank tax at the G-20 summit in June.
• Rio employees face Chinese trial. After being detained for seven months, four Rio Tinto (RTP) employees will now stand trial in China on accusations of stealing commercial secrets and taking bribes. Nearly all criminal cases that go to trial in China end in conviction. Australia urged the Chinese to deal with the trials quickly and transparently, but a lawyer involved in the cases said the proceedings won't be made public because they involve commercial secrets.
• Lending, property prices surge in China. China's lending jumped to 1.4T yuan ($203B) in January, more than in the three previous months combined, as banks extended more credit ahead of an expected tightening in monetary policy. Property prices climbed the most in 21 months, rising 9.5% from the year before.
• Motorola may roll out new plan for units. Motorola (MOT) is said to be reconsidering its strategy of selling off its largest unit, which makes set-top boxes and wireless-networking gear. Instead, the company may try to separate out the various businesses, by auctioning the network unit and spinning off the set-top box business with its handset business into a new public company. That would leave Motorola at one-third of its current size.
• Travelport IPO isn't going anywhere. U.S. travel group Travelport delayed its planned £1.2B IPO in London, blaming market volatility for its difficulties in winning investor support. The decision is a blow to majority-owner Blackstone (BX) and its plans to list several other companies this year. It also bodes poorly for the IPO market generally, since news of Travelport's flotation was taken as a sign of a possible IPO revival.
• MySpace CEO steps down. After less than a year at the helm, News Corp. (NWS) announced that Owen Van Natta is stepping down as CEO of MySpace. The social networking site has struggled to keep up with rival Facebook.
• Trade balance. December's trade balance was -$40.2B vs. -$36.8B expected and -$36.4B prior. Exports rose 3.3% to $142.7B. Imports rose 4.8% to $182.9B.

Earnings: Thursday Before Open

• EnCana (ECA): Q4 EPS of $0.50 beats by $0.08. Revenue of $2.7B (-44.2%) vs. $3B. (PR)
• Macerich (MAC): Q4 EPS of $0.90 misses by $0.01. Revenue of $201M (-17.2%) vs. $200M. (PR)
• Marriott International (MAR): Q4 EPS of $0.32 beats by $0.06. Revenue of $3.3B (-12.1%) vs. $3.2B. (PR)
• Teradata (TDC): Q4 EPS of $0.45 beats by $0.08. Revenue of $496M (+0.6%) vs. $478M. (PR)

Earnings: Wednesday After Close

• Activision (ATVI): Q4 EPS of $0.49 beats by $0.05. Revenue of $2.5B vs. $2.2B. Sees Q1 EPS of $0.02 vs. $0.08, on sales of $525M vs. $741M (Company plans one release in last week of March). Sees 2010 EPS of $0.70 vs. $0.73, on sales of $4.4B vs. $4.8B. Shares +3.3% AH. (PR, earnings call transcript)
• Allstate (ALL): Q4 EPS of $1.09 beats by $0.08. Revenue of $8.1B (+23%) in-line. “We successfully executed our first priority of keeping Allstate financially strong by achieving excellent underwriting margins and improving our capital position." Shares +0.2% AH. (PR)
• Amkor Technology (AMKR)Q4 EPS of $0.21 beats by $0.12. Revenue of $668M (+21.7%) vs. $549M. Shares -3.7% AH. (PR, earnings call transcript)
• Arris Group (ARRS)Q4 EPS of $0.32 beats by $0.05. Revenue of $300M (+2.6%) vs. $276M. (PR, earnings call transcript)
• Biomed Realty Trust (BMR): Q4 FFO of $0.31 in-line. Revenue of $88M (+6%) vs. $89M. (PR)
• Boston Scientific (BSX)Q4 EPS of $0.13, in-line. Revenue of $2.08B (+3.8%) vs. $2.07B. Guidance for Q1 and FY10 revenues in-line. Shares -3.1% AH. (PR)
• DENTSPLY International (XRAY): Q4 EPS of $0.48 misses by $0.01. Revenue of $569M (+12%) vs. $556M. (PR)
• Highwoods Properties (HIW): Q4 FFO of $0.60 beats by $0.01. Revenue of $114M (-1%) in-line. (PR)
• Masco (MAS)Q4 EPS of $0.02 beats by $0.05. Revenue of $1.9B (-3.0%) vs. $1.96B. Shares -0.6% AH. (PR)
• Prudential Financial (PRU): Q4 EPS of $1.07 misses by $0.04. Revenue of $6.8B (+16%) vs. $6.86B. Sale of Wachovia Securities JV brought $4.5B in cash vs. initial 2003 book value of $1B. Shares -2.6% AH. (PR)
• Realty Income (O): Q4 FFO of $0.47 beats by $0.01. Revenue of $82M (-1%) in-line. (PR)

Today's Markets

• In Asia, Nikkei +0.3% to 9964. Hang Seng +1.9% to 20291. Shanghai +0.1% to 2986. BSE +1.4% to 16153.
• In Europe at midday, London +0.8% to 5175. Paris +0.4% to 3650. Frankfurt +0.1% to 5542.
• Futures: Dow +0.44% to 10029. S&P +0.52% to 1069. Nasdaq +0.44%.

Thursday's Economic Calendar

• 8:30 Initial Jobless Claims 10:00 Business Inventories 10:30 EIA Natural Gas Inventory 1:00 PM 30-Yr Note Auction 4:30 PM Money Supply 4:30 PM Fed Balance Sheet
• Notable earnings before Thursday's open: ALU, AN, BWA, ECA, ECL, EXPE, FLIR, LH, MAC, MAR, NRG, OHI, PEP, PGN, PLD, PM, PTEN, TDC, VIA.B
• Notable earnings after Thursday's close: ACL, BGC, CAKE, CEPH, DCT, MFE, RSG

Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.Complete Story »

Ockham Research submits: A patent dispute regarding Boston Scientific (BSX) cardiac stents dating back to 2003 has finally come to a close with Boston Scientific to pay Johnson & Johnson (JNJ) $1.725 billion in two tranches. This major settlement is in addition to a separate patent settlement last September in which BSX must pay $716 million to JNJ. The infringement cases are not all one-way, as back in July 2005 Johnson & Johnson infringed on some of BSX’s stent technology. The settlement will certainly not be cheap for BSX which only had about $1.38 billion in cash and equivalents on hand as of its last quarterly reporting, but the company did not want to risk a jury trial. Boston Scientific says that the payout will not affect debt covenants, and will continue with its plan to refinance 2011 maturities later this year. The uncertainty of damages awarded at a jury trial was enough to make them want to settle this out of court even though Reuters reported on January 20th that BSX believed the court would find the patents invalid.Complete Story »