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Cambrex to be bought by Permira for $2.4B; Lynparza passes prostate cancer trial

Top news

* Life sciences company Cambrex Corp. agreed to be acquired by an affiliate of London-based private equity firm Permira Advisers Ltd. for $60 per share in cash.

Including Cambrex's net debt, the transaction is valued at about $2.4 billion. The offer price represents a 47.1% premium to the company's closing price Aug. 6.

* AstraZeneca PLC and Merck & Co. Inc. said their drug Lynparza succeeded in extending the lives of certain prostate cancer patients without their disease worsening, meeting the primary goal in a late-stage study called PROfound. The phase 3 trial evaluated Lynparza in patients whose castration-resistant prostate cancer had spread to other parts of the body and who had the homologous recombination repair gene mutation and whose conditions worsened even after receiving hormonal anticancer treatments, including Pfizer Inc. and Astellas Pharma Inc.'s Xtandi and Johnson & Johnson's Zytiga.

* The U.S. Food and Drug Administration opened a probe into Novartis AG's Zolgensma after the company's drug manufacturing unit reported a data manipulation issue related to animal testing that was done to support the gene therapy's approval. Zolgensma was approved in May to treat spinal muscular atrophy — a rare genetic childhood disease that impacts the nervous system that controls voluntary movement — and was priced at $2.1 million, making it the most expensive therapy in the world.

The U.S. regulator was informed June 28 by Novartis unit AveXis Inc. about the data manipulation issue that "impacts the accuracy" of data collected from testing the product in animals. Specifically, the data was used to support the development of the production process for Zolgensma.

* Teva Pharmaceutical Industries Ltd. said its second-quarter non-GAAP net income attributable to ordinary shareholders was $653 million, or 60 cents per share, down from $794 million, or 78 cents per share, a year earlier. Net revenues for the quarter were $4.34 billion, down from $4.70 billion in the year-ago period.

On the policy front

* The Institute for Clinical and Economic Review, a U.S. pricing watchdog, proposed changes to its evaluation process to address cell and gene therapies — like Novartis' Zolgensma and bluebird bio Inc.'s Luxturna — that could be one-time "cures" for certain diseases, or "single and short-term transformative therapies." The organization said it would seek to standardize its methods for evaluating the uncertainty arising from lack of evidence on cell and gene therapies, consider "potential other benefits or disadvantages" of the therapies, and look at "shared savings."

* Drug distributors McKesson Corp., Cardinal Health Inc. and AmerisourceBergen Corp. have offered a $10 billion settlement to resolve lawsuits in more than 35 states, alleging that the companies fueled the opioid epidemic, according to a Bloomberg report citing people familiar with negotiations. Drug distributors have been accused by state lawmakers of using deceptive marketing techniques that were catalytic to the opioid epidemic — a national problem that claims as many as 100 lives in the U.S. every day.

The proposed payment is part of ongoing discussions with state attorneys general, Bloomberg said, citing three individuals familiar with the offer. The National Association of Attorneys General countered the offer with $45 billion to cover the public health costs of the epidemic, according to the individuals.

* Canadian health minister Ginette Petitpas Taylor is convening a meeting with pharmacists, patients, industry representatives and experts to discuss moves by the U.S. Department of Health & Human Services and actions to safeguard the country's prescription drug supply, the official said in a tweet. Last week, the HHS released an action plan that could allow states and pharmaceutical companies to import pharmaceutical drugs from Canada and other countries in a bid to lower medicine prices in the U.S.

M&A and capital markets

* Bayer AG and Lanxess AG agreed to sell their 60% and 40% stakes, respectively, in the Currenta GmbH & Co. OHG joint venture to funds managed by infrastructure investor Macquarie Infrastructure & Real Assets Inc. Currenta, which operates infrastructure facilities at German chemical complexes in Leverkusen, Dormagen and Krefeld-Uerdingen, has a total enterprise value of €3.5 billion, including net debt and pension obligations.

Drug and product pipeline

* Leap Therapeutics Inc. said a combination of its experimental drug DKN-01 and Merck & Co.'s blockbuster immunotherapy Keytruda extended the lives of certain patients with advanced gastroesophageal junction and gastric cancer whose tumors expressed high levels of the DKK1 protein in a study evaluating the combination. Leap's DKN-01 works by targeting certain signaling pathways that are often implicated in cancer, while Merck's Keytruda boosts the immune system's ability to kill cancer cells by blocking healthy cells' PD-1 protein from linking up with a partner arm on the surface of cancer cells.

* The U.K.'s National Institute for Health and Care Excellence did not recommend Clovis Oncology Inc.'s Rubraca to treat patients with certain kinds of cancer that have returned, citing cost concerns. NICE evaluated Rubraca, or rucaparib, as a single therapy for epithelial ovarian cancer, fallopian tube cancer and primary peritoneal cancer in patients who have relapsed after receiving chemotherapy.

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Operational activity

* Allergan PLC's sales from the second quarter of 2019 showed growth in some products while lagging in other areas, providing a snapshot of the kind of company AbbVie Inc. is slated to acquire in an $84.2 billion deal by early 2020. While many of Allergan's core products showed an upward trajectory — including 8.4% and 5% sales growth of Botox in cosmetic and therapeutic uses, respectively — net revenue dropped almost 1% from year to year as the company recalled its textured breast implants, notching a loss of about $44 million in the quarter.

* Zoetis Inc.'s second-quarter revenue growth of 9% year over year was driven by the accelerating companion animal market and a return to form in livestock, despite the continuing outbreak of African swine fever in China. Zoetis CEO Juan Ramón Alaix, during an earnings call yesterday, said the company expects a return to normal rates for the company's swine performance in 2020, even if the African swine fever situation in China is not resolved, as other regions like Europe will likely ramp up exports of pork to China.

* Sales of Regeneron Pharmaceuticals Inc.'s eye drug Eylea and skin treatment Dupixent gave the New York company a needed boost to beat analysts' expectations in both profit and revenue in 2019's second quarter. Regeneron CEO Len Schleifer said Eylea's success in the face of competition is ultimately a testament to the drug's clinical effectiveness. "I do think there is plenty of room for growth," Schleifer said.

* The S&P 500 healthcare sector saw a negative total return of 1.6% in July, making it the second-lowest performing sector when compared to the overall S&P 500 Index, which recorded a gain of 1.4% in the market, according to data compiled by S&P Global Market Intelligence. The three weakest stocks of the healthcare sector were also the worst performers on the S&P 500 for July, with Align Technology Inc. having the steepest negative return of 23.6%.

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The day ahead

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

In Asia, the Hang Seng rose 0.08% to 25,997.03, while the Nikkei 225 fell 0.33% to 20,516.56.

In Europe, around midday, the FTSE 100 rose 0.91% to 7,236.71, and the Euronext 100 gained 1.40% to 1,037.19.

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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