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PetroChina Company Limited
China Petroleum & Chemical Corporation
Banco de Chile
DCP Midstream, LP
Qurate Retail Group, Inc.
Qurate Retail Group, Inc.
Sage Therapeutics, Inc.
EnLink Midstream, LLC
AMC Networks Inc.
Sage Therapeutics' (SAGE) phase III study on pipeline candidate SAGE-217 for the treatment of major depressive disorder fails to meet the primary endpoint.
(Bloomberg) -- China will announce the creation of its long-planned national oil and gas pipeline company on Dec. 9, according to people familiar with the matter, as it seals one of its biggest reforms aimed at helping energy supply keep pace with swelling demand.A ceremony to launch the company has been set for 10 a.m. Monday in Beijing, said the people, who asked not to be named as the information isn’t public.The government will merge the networks operated by its three state-owned giants under a single operator, a key step to removing barriers that have hampered domestic production, and which dovetails with efforts to use more gas instead of coal.Click here for a QuickTake Q&A explaining China’s national pipeline planMedia representatives of the new pipeline operator didn’t respond to an email seeking comment. The State-owned Assets Supervision & Administration Commission, which oversees centrally owned enterprises, didn’t respond to a faxed request for comment. Nobody answered calls to the media departments of the three companies involved -- China National Petroleum Corp., Sinopec Group and China National Offshore Oil Corp.The company’s creation has been considered since at least 2014 and is part of President Xi Jinping’s drive to streamline industrial capacity among state-owned enterprises. The government is seeking to spur wider natural gas distribution and upstream exploration by shifting ownership from competing producers into a single operator, which can make decisions based on overall national energy needs.The pipeline reform is also designed to help smaller private or foreign firms, which have found access to infrastructure blocked or prohibitively expensive. With the assets stripped from the hands of the big three state firms, other companies can gain access and move supply to where it’s needed.The plan follows other Chinese reforms aimed at a more level playing field for private and state-owned enterprises. As well, the nation has been accelerating the overhaul of its energy sector in recent years, including changes to its gas pricing policy and merging power giants.Policy makers have also embarked on a campaign targeting pollution, replacing coal with gas for industrial and residential uses. That’s boosted demand for the cleaner-burning fuel faster than pipelines can support it, giving China added urgency to push forward the latest reform.The change will mainly affect PetroChina Co., the listed unit of CNPC, which controls about 70% of the nation’s networks. Its shares in Hong Kong sank to their lowest since 2004 this week amid concern the company’s earnings and cash flow would be diluted as it loses one of its most prized assets.Zhang Wei, general manager of CNPC, will likely be appointed as chairman of the pipeline company, according to local media.(Updates with potential chairman of pipeline company in final paragraph)To contact the reporters on this story: Alfred Cang in Singapore at firstname.lastname@example.org;Jasmine Ng in Singapore at email@example.comTo contact the editors responsible for this story: Ramsey Al-Rikabi at firstname.lastname@example.org, Jason RogersFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Investors in Sage Therapeutics Inc. woke up Thursday to every biotech investor’s nightmare. The company’s closely watched lead medicine, SAGE-217, failed to hit a key mark in a critical trial in patients with major depressive disorder. The stock was down a bruising 55% in early trading, cutting the firm’s market value by more than $4 billion. Investors have a tough decision to make. They could join the many abandoning ship, assuming that the drug isn’t as effective as hoped and that additional continuing studies of the drug may fail. Or they can see this as a buying opportunity of an oversold stock. Sage’s executives spent a call with analysts Thursday outlining several reasons for optimism, and depression trials are notoriously difficult and fickle. Eating a significant loss or betting on recovery will both take a strong stomach.Drugs to treat depression almost always have a tough path to market. Patient improvement is difficult to assess, placebo effects are real and variable, and it’s hard to ensure drug compliance. Plenty of drugs have succeeded in mid-stage trials only to run into difficulty when tested in a larger population. Sage’s drug is both riskier and more promising because it takes a novel approach to treating the condition rapidly. Sage has a few explanations for why the drug failed this study even though it succeeded in a late-stage trial in postpartum depression patients earlier this year. Some patients may not have taken the drug as directed or at all, which could have influenced results. The study also included a higher proportion of patients with less severe symptoms than previous tests. Sage also pointed to the fact that the drug worked better at interim endpoints as evidence that the drug is active and that the study was “directionally” positive. Optimistic investors may find this convincing. But there are plenty of valid reasons for the stock sell-off, too. The drug’s impact was substantially less pronounced than in previous studies, which may mean that it simply isn’t that potent and raises concerns that its effect may fade over time. Even compelling after-the-fact explanations of failed trials are somewhat unreliable. The company’s positive earlier trial in patients with major depressive disorder looked at a small number of patients; it may have exaggerated the drug’s impact. If the medicine does make it to market, it may treat a narrower group of patients than the company had once anticipated. Sage could mount a comeback in a generally buoyant biotech market if future trials confirm that this failure was an unlucky fluke or if regulators are receptive to its various arguments. That’s a ride for only brave and patient investors; another failure would be received even less kindly than this one, and even good depression drugs are a gamble. To contact the author of this story: Max Nisen at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Max Nisen is a Bloomberg Opinion columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Sage Therapeutics Inc. lost almost two-thirds of its value after an experimental treatment for major depressive disorder failed to reach its primary target in a key study.The late-stage trial, dubbed “Mountain,” showed patients receiving SAGE-217 didn’t get more relief than those taking a placebo for two weeks, regardless of the dose. The results cast doubt on the future of the drug, which had been a key part of investors’ broadly bullish stance on Sage.The shares tumbled a record 62% to the lowest level in more than two years, wiping out more than $4.6 billion in in market value.Given past trial results, Wall Street had hoped the medicine would show a benefit at both day 15 and through longer-term follow-up. That wasn’t the case. Even when looking only at patients with more severe disease who faithfully took the medicine -- the group most likely to respond to treatment -- the drug didn’t significantly ease depression more than placebo after 42 days.The study miss “will surprise the entire community” and force the stock to be range-bound between $50 and $90, according to Jefferies analyst Andrew Tsai. “The next steps are bit murky now and creates some near-term stock volatility,” he said in a note.“It’s clear the study didn’t meet its primary endpoint, but if you look at the rest of the data points, even from the original analysis, it’s pretty clear that the study directionally is very supportive of drug activity,” Sage Chief Executive Officer Jeff Jonas said by phone.A sub-group analysis conducted after the original review suggested that patients with more severe depression and those who actually took a high dose of the medicine, with measurable amounts of it in their bloodstream, responded to treatment, the company said in a statement. Those getting a lower dose of the drug did no better than those on placebo.Two patients developed serious adverse events after getting the high dose, including one who attempted suicide and who who developed a bile duct stone. Both patients had suffered from similar struggles before starting the trial.“Nine percent of the overall population had undetectable drug levels,” Jonas said. “This is a long-acting drug, so low levels like that really indicates they just didn’t take the drug.” The challenge of patients not taking the drug was limited to a small number of sites, he said.A key selling point for SAGE-217 compared to existing medicines has been its rapid activity, which Jonas says was showcased by signs of improvement as early as day three. That, combined with a safety profile that may allow it to try a higher dose, gives the company hope, Jonas said.The drug likely missed its primary target because of some “very simple technical factors,” Jonas said.Stifel analyst Paul Matteis was also reluctant to throw in the towel and recommended that clients buy shares after Thursday’s plunge.“These data will inevitably take the ‘halo effect’ off SAGE-217 in the eyes of investors,” he wrote in a research note. “But, in our minds, we still think the drug has blockbuster potential, even if that may be delayed.”The failure marks Sage’s first setback with the drug after delivering earlier-stage wins and two pivotal studies showing benefit in major depressive disorder and postpartum depression. Three other large trials of the drug are still underway.Jonas said the company intends to continue analyzing the results and discuss the findings with U.S. regulators. Additional data are expected to be presented at an upcoming medical congress.(Updates with share movement in third paragraph, adds analyst commentary starting in the second paragraph)To contact the reporter on this story: Bailey Lipschultz in New York at email@example.comTo contact the editors responsible for this story: Catherine Larkin at firstname.lastname@example.org, Michelle Fay CortezFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
With the 2010s officially drawing to a close, Yahoo Finance took a look at some of the biggest S&P 500 winners and losers of the past decade based on price returns.
(Bloomberg) -- Apache Corp. tumbled after the company’s update on a closely watched exploratory oil well off the coast of Suriname offered little indication as to whether it will be commercially viable.Tests were carried out on the Maka-1 well after it reached a depth of about 6,200 meters (20,300 feet), the Houston-based company said Monday. After those tests are completed, the company will resume drilling in mid-December “to evaluate a third play type” at a new target depth of about 6,900 meters.But going for a third zone could indicate that the first two were unsuccessful, said Leo Mariani, an analyst at KeyBanc Capital Markets. “There’s no color,” he said of the update. “Typically we’d have something like, ‘We found oil’ or ‘We found gas.’ It was just incredibly thin.”Apache shares and bonds slumped on the news. The stock was down 13% to $19.42 at 2:38 p.m. in New York, after earlier hitting $18.93, the lowest since 2001. The company’s 2028 bonds fell as much as 4.1% to 98.95 cents on the dollar, the biggest drop on record. Apache’s Suriname exploration is adjacent to an Exxon Mobil Corp. discovery that’s one of the world’s biggest finds in years, but investors have been anxious about the viability of the project ever since the company’s high-profile geologist unexpectedly resigned in October. That sank Apache shares and bonds, though they later recovered after Chief Executive Officer John Christmann said on a conference call that the company hadn’t “seen anything that would be unexpected” from its exploratory well.Still, some analysts have been skeptical. In October, Morgan Stanley’s Devin McDermott put the odds that Maka-1 will show no commercial oil resource or a low gas discovery at 80%.‘A Bit Unusual’“If there had been commercial hydrocarbons -- oil and gas -- detected with the initial well, we would have gotten that update from the company along with this release and there wouldn’t be any need to drill deeper,” McDermott said by phone Monday. “The change of course and change of plan this far into the well drilling process -- it’s a bit unusual.” The next update on the Maka-1 well may not come until January, Mizuho’s Paul Sankey said in a note to clients. “This is hardly the champagne cork moment that was potentially at play here,” he said, “but then again nor is this firmly a dry hole.”What Bloomberg Intelligence says:Disclosure that drilling, which began in September, will continue to a deeper zone is cause for even greater concern, in our view. Suggesting it was confident about its portfolio even without Suriname implies less confidence in the project.Vincent Piazza, senior analyst, U.S. oil and gasClick here to read the researchUnlike most offshore exploration ventures, Apache holds 100% of the working interest on Block 58 offshore Suriname, where the Maka-1 well is being drilled. Hess Corp., for example, has just a 30% interest in the Stabroek Block offshore Guyana. That leaves Apache and its shareholders more exposed to the long-awaited results.Maka-1 is “among the most anticipated wells in the world,” analysts at Tudor, Pickering, Holt & Co. said in a note Monday. “While we appreciate the desire to test multiple play concepts given promotion of the vast potential of this block, releasing the first update without any color on the results of the first two tests will not be taken well by the market.”(Updates with analyst comment in the seventh paragraph.)To contact the reporters on this story: Rachel Adams-Heard in Houston at email@example.com;Simon Casey in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Simon Casey at email@example.com, Carlos Caminada, Reg GaleFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- In a week when oil stocks seem stuck in the familiar (if somewhat erratic) steps of a Viennese waltz, Apache Corp. is dancing to a different tune. And falling over.With OPEC+ meeting this week, Saudi-ology, along with Kremlinology, Iraqi-ology and all the other -ologies, dominate. Rumors the group would agree to deeper production cuts proved more soothing to oil markets than a slice of sachertorte on Monday morning. Except for Apache.The exploration and production company issued an update on an exploratory well it has been drilling off the coast of Suriname. Needless to say, it wasn’t a barnstormer. Apache essentially said the well had reached its target depth and the company was evaluating two distinct plays and planned on drilling a bit further to assess a third. No mention of hitting a significant deposit of hydrocarbons. On the other hand, no mention of it being a dry hole either. Ambiguity reigns — and, as monarchs go, ambiguity faces some decidedly restless subjects.This is the kind of thing for which people used to own oil stocks. The binary outcome of a well that could make or break an E&P company was what really got the punters going, not debates about whether OPEC could manage to get Brent toward $65 rather than $60 a barrel.Indeed, this is Apache’s problem. Block 58 in Suriname’s waters sits very close to Exxon Mobil Corp.’s wildly successful Stabroek discoveries offshore Guyana. A little geographic extrapolation has offered support to Apache’s stock in recent months; a stock which otherwise isn’t exactly brimming with reasons to own it. The company lost its head of exploration in October, sparking a big sell-off. Its latest big bet, the Alpine High play in Texas, ran into a one-two punch of consistently moribund natural gas prices and the collapse in natural gas liquids pricing over the past year. Beyond this, its portfolio of onshore U.S., Egyptian and North Sea assets is something of an acquired taste in investor circles. Just as its peer Hess Corp. has been given a new lease on life by its non-operated stake in Exxon’s Guyanese success, so Suriname has offered a potential catalyst for Apache.Clearly, Monday’s announcement doesn’t close the door on success there. With the stock hitting its lowest level in more than 17 years — when Brent was trading at $25 — those willing to bet Apache is simply being overly cautious in a sector that usually errs the other way could find the wildcatter bet ultimately pays off. However, even after this latest sell-off, there may yet be a long way further down. Apache’s characteristic discount to the sector had closed as a result of anticipation over Suriname. And while that’s widened out again to about 10% as of Monday morning, the average for the past decade has been 21%.Assuming all else equal, putting Apache on a 21% discount would mean a stock price of about $17 and, thereby, a dividend yield of about 6%. It would need that, though, given the lack of growth embedded in consensus forecasts. Apache is a relatively small yet diversified E&P stock with a history of bold moves and which is exposed to a binary exploration outcome in world where investors now tend to prize either focus or scale and dependable free cash flow rather than big bets. Dancing to a different tune, prized when the crowd is enthusiastic, can be a liability when the mood music has changed this much.To contact the author of this story: Liam Denning at firstname.lastname@example.orgTo contact the editor responsible for this story: Mark Gongloff at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
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Wells Fargo’s recently appointed chief executive Charlie Scharf has taken another step towards reshaping the bank’s senior management team, hiring Scott Powell to be the bank’s chief operating officer. Mr Powell, who had been serving as the chief executive of Santander’s US operations, will start next week. Mr Powell will have responsibility for regulatory affairs at the bank, among other areas.
HSBC and Santander UK will compensate more than 115,000 customers after they failed to keep up with new regulations designed to help them avoid falling into their overdrafts. Since February 2018, banks have been required to text customers when their accounts are close to running out of money, to give them time to avoid being charged high fees for using an unarranged overdraft. HSBC will refund £8m to 115,000 customers who were charged without receiving warning texts.
QVC, Inc. Completes Issuance of $435 Million of New Senior Secured Notes
Shareholder rights law firm Robbins LLP is investigating whether certain officers and directors of Sage Therapeutics, Inc. (NASDAQ: SAGE) breached their fiduciary duties to shareholders. Sage Therapeutics is a clinical-stage biopharmaceutical company that develops and commercializes medicines to treat central nervous system (CNS) disorders.
US shale producers are cutting spending for the second year in a row as companies are caving in to investor demand to maintain a strict capital expenditure discipline
(Bloomberg Opinion) -- When a stock goes into free fall, one hope is that some acquirer out there will catch it. Sometimes, though, suitors come with their own complications. That brings us to EnLink Midstream LLC.EnLink operates gathering and processing pipelines and other oil and gas infrastructure across several onshore U.S. basins. In the summer of 2018, Devon Energy Corp., an exploration and production company, sold its stakes in various EnLink entities to Global Infrastructure Partners for just over $3.1 billion. After a subsequent simplification of EnLink, GIP owns 46% of the common units, now worth $1.2 billion.EnLink has been undone by weaker commodity prices. Earlier this month, Devon announced it had dropped the number of rigs operating in one of Oklahoma’s shale basins to precisely zero (how’s that for a coda to last year’s deal?). This confirmed a trend evident already in permitting and drilling data for the Anadarko basin, where just four companies account for the majority of activity; and, crucially, they have operations in other basins that are more competitive in terms of breakeven costs.The distribution yield on EnLink’s stock now scrapes 20% — on a par with the current yield on long-dated bonds of Chesapeake Energy Corp., which just issued a going-concern notice. There’s being paid to wait, as they say, and then there’s being paid to wait in that trash compactor from Star Wars.EnLink’s cash flow math is tight. Consensus forecasts — which have now had time to digest cost savings pledged on the latest earnings call — put Ebitda at $1.1 billion in 2020. Take off around $500-$550 million for cash interest and (much-reduced) capital expenditure, and that leaves about $550-$600 million versus current distributions of about $550 million. With Ebitda forecast to grow at just 1% a year through 2022, that tight squeeze won’t ease up. Wells Fargo & Co.’s analysts estimated in a recent report that, absent a change in distribution policy, current leverage of 4.2 times adjusted Ebitda could reach almost 6 times by 2025. By any rational measure, the distribution should be cut.The complicating issue is that EnLink’s leverage is compounded by more leverage at the GIP level in the form of a $1 billion term loan. Technically, it is separate from EnLink’s own finances. But as the company acknowledges in its own 10K filing, debt owed by an entity owning almost half the company plus its managing partner, and which is serviced by EnLink’s own distributions, is very much a risk factor. By my calculations, the loan requires roughly $80 million a year of EnLink distributions (GIP didn’t respond to requests for comment)(1). As of now, distributions amount to about $255 million. So, in theory, EnLink could slash its payout by about two-thirds and GIP could still service the loan.In practice, that would be a bitter pill to swallow. As it is, GIP’s common units in EnLink are now worth not much more than the value of the loan and way below the original investment. Cutting distributions would certainly help EnLink’s balance sheet; all else equal, a 67% cut would save enough cash to take leverage below 4 times adjusted Ebitda, in line with long-term targets. But this would almost certainly push the value of GIP’s stake even lower, at least in the near term. As Ethan Bellamy, analyst at Robert W. Baird & Co. Inc., put it to me:Does GIP leverage prevent EnLink from cutting the distribution and right sizing the ship? It wouldn’t be the first time we’ve seen parental leverage from a private equity sponsor lead to sub-optimal outcomes for the subsidiary public entity.On the other hand, if EnLink cuts and its price falls further, then GIP might be tempted to make an offer for the rest of the company in an effort to salvage things out of the public eye. Needless to say, a takeover premium on an even lower EnLink price would do very little to make up for the losses suffered to date. We are seeing this play out with Blackstone Group Inc.’s offer for another midstream company, Tallgrass Energy LP, although the pain there is compounded by an agreement between the buyer and Tallgrass’s executives that effectively shields the latter from losses (see this).EnLink captures so much of what has gone wrong in America’s pipelines business. There’s the misalignment of interest between ordinary investors and the sponsors steering the company’s destiny. There’s the exposure to commodity markets from which, in theory, midstream companies were supposed to be insulated. Above all, there’s the overcapitalization of this sector, with obligations piled onto assets (largely to fund outsize payouts to controlling sponsors) that ultimately couldn’t generate the profits to service them (largely because too much stuff got built).Almost exactly four years ago, Kinder Morgan Inc. presaged the midstream reckoning to come by slashing its dividend. The stock has been listless for much of the period since then; even with the cut, chipping away at debts in a post-boom environment is a laborious process. As this decade of nominal success for America’s shale boom draws to a close, EnLink’s predicament shows the hangover remains very much a work in progress.(1) This assumes the full $1 billion remains outstanding. Interest is charged at Libor plus 4.25%, equating to 6.15%, or about $62 million. A debt-service covenant ratio of 1.1 times takes this to $68 million. Mandatory annual amortization of 1% of the loan plus assumed G&A costs results in an estimated minimum requirement of about $80 million to service the debt. Details derived from Moody's Corp.'s initial rating report from July 2018.To contact the author of this story: Liam Denning at firstname.lastname@example.orgTo contact the editor responsible for this story: Mark Gongloff at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.