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Elanco to acquire Bayer Animal Health; Lilly exec to become Roche medical chief

Top news

* Elanco Animal Health Inc. agreed to acquire Bayer AG's animal health business in a deal valued at $7.6 billion, creating the world's second-largest animal health company. Greenfield, Ind.-based Elanco will fund the transaction through both cash and equity. Leverkusen, Germany-based Bayer will receive $5.32 billion in cash, subject to certain adjustments, and $2.28 billion or about 68 million Elanco Animal Health common shares.

* Roche Holding AG said Sandra Horning will retire Dec. 31 as chief medical officer and head of global product development of the company and its unit Genentech Inc. Horning will be replaced by Levi Garraway, who most recently was Eli Lilly and Co.'s senior vice president, oncology research and development and Lilly Research Laboratories' novel target research.

* The U.S. recorded 21 new measles cases in the week ending Aug. 15, taking the total for 2019 to 1,203 cases across 30 states. This is the most cases reported in the U.S. since 1992 and since measles was declared eliminated in 2000.

U.K. Prime Minister Boris Johnson, after an increase in cases, urged British citizens to get vaccinated against measles and to ignore "superstitious mumbo-jumbo" being spread online about the safety of vaccines, Reuters reported.

* AveXis Inc.'s former chief scientific officer, Brian Kaspar, has denied any wrongdoing and said he is ready to defend his conduct, Stat News reported. Kaspar was replaced after it was revealed that preclinical data for gene therapy Zolgensma was falsified. Swiss drugmaker Novartis AG and its unit AveXis are being investigated by the U.S. Food and Drug Administration and members of Congress for submitting manipulated preclinical data for the $2.1 million gene therapy, used to treat children under 2 years old with spinal muscular atrophy.

Novartis had known about the data manipulation since March — two months before the drug won approval — but waited until late June to tell the FDA. AveXis said Brian Kaspar and brother Allan Kaspar have not been involved with the company since May.

* U.S. biotechnology companies that went public in 2018 paid their CEOs the most in the sector during that year, according to data compiled by S&P Global Market Intelligence. Moderna Inc. paid Stéphane Bancel a total compensation package of $58.6 million, making him the top-paid CEO in the U.S. biotech space — overtaking CEOs from bigger players such as Regeneron Pharmaceuticals Inc., Gilead Sciences Inc., AbbVie Inc. and Amgen Inc.

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On the policy front

* As the Trump administration pushes for price transparency in the hospital industry, executives from hospital operators HCA Healthcare Inc. and Universal Health Services Inc. said a new policy proposal that aims to force them to reveal the cost of certain services will have limited impact on their operations. The Centers for Medicare and Medicaid Services proposed a rule July 29 that, among other requirements, would force hospitals and other healthcare providers to make rates privately negotiated with insurance companies public.

M&A and capital markets

* IGM Biosciences Inc. is planning an IPO on the Nasdaq Global Select Market to raise up to $100 million. The Mountain View, Calif.-based company develops engineered antibodies called immunoglobulin M to treat cancer.

* Life science technology company 10X Genomics Inc. plans to raise up to $100 million via an IPO of its class A common shares on the Nasdaq Global Select Market.

* Mateon Therapeutics Inc. will merge with privately held artificial intelligence company PointR Data Inc. The combined company will use technologies based on artificial intelligence to develop immuno-oncology therapies for late-stage brain cancer, pancreatic cancer and skin cancer.

Drug and product pipeline

* AstraZeneca PLC's medicine Farxiga significantly reduced the risk of cardiovascular death or hospital admission in certain patients with heart failure, including those with and without type 2 diabetes, according to data from a phase 3 trial, dubbed DAPA-HF.

* The U.S. FDA rejected Sarepta Therapeutics Inc.'s medicine golodirsen to treat Duchenne muscular dystrophy, a genetic disorder characterized by progressive muscle degeneration and weakness. The agency cited the risk of infections related to intravenous infusion ports and kidney-related toxicity seen in preclinical models of the drug.

* The FDA approved Nabriva Therapeutics PLC's antibiotic Xenleta to treat community-acquired bacterial pneumonia, an infection in which the tiny air sacs, or alveoli, inside the lungs fill up with fluid. The drug will be available in both intravenous and oral formulations.

* Vanda Pharmaceuticals Inc. application for jet lag disorder drug Hetlioz was rejected by the FDA. The regulator noted that measures demonstrating improved sleep were of unclear clinical significance.

Operational activity

* WuXi Biologics (Cayman) Inc. said adjusted net profit attributable to equity shareholders of the company for the first half of 2019 was 522.1 million Chinese yuan, up 76% from the same period a year ago. The company’s revenue increased by 52.4% to about 1.61 billion yuan over the same period.

* Merck & Co. Inc. and London-based Francis Crick Institute are collaborating under a five-year research partnership to develop therapies for motor neuron disease — a fatal degenerative disease of the brain for which no treatment exists, the Financial Times reported.

The day ahead

Early morning futures indicators pointed to a mixed opening for the U.S. market.

In Asia, Hang Seng dropped 0.23% to 26,231.54, while the Nikkei 225 gained 0.55% to 20,677.22.

In Europe, around midday, the FTSE 100 climbed 0.43% to 7,220.27, and the Euronext 100 rose 0.07% to 1,045.99.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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