BLU - Wall Street Breakfast Podcast: Bellus Surges After GSK Reaches Deal

2023-04-18 07:16:38 ET

Listen on the go! Subscribe to Wall Street Breakfast on Apple Podcasts and Spotify Bellus ( BLU ) surges ~100% after GSK ( GSK ) reaches deal to acquire cough drugmaker for ~$2B. Apple ( AAPL ) opens its first store in India , building out consumer base. Meet the only electric vehicles that will qualify for the full U.S. tax credit. Learn more about these stocks with Seeking Alpha Premium .

This is an abridged transcript of the podcast.

• Bellus surges premarket…this happening after GSK reaches a deal to acquire the company for $2B

• Apple is opening it’s first store today in India…with the second store to follow later this week.

• The DeSantis versus Disney fight continues. Florida’s Governor says the state legislature is taking steps to nullify any late hour agreement between the special taxing district and the company.

OUR TOP STORY

GSK (NYSE: GSK ) is acquiring Canadian biotech Bellus Health (NASDAQ: BLU ) for ~$2B (~£1.6B) in cash.

The British pharma giant will acquire outstanding shares of Bellus for US$14.75 per share in cash. The per-share price represents a premium of about 103% to Bellus' closing stock price on April 17.

The acquisition strengthens GSK's specialty medicines and respiratory pipeline as it will get access to Bellus' investigational drug for chronic cough.

GSK's Chief Commercial Officer says the drug has the potential to be a best-in-class treatment with significant sales potential. He went on to say that the proposed acquisition complements their portfolio of specialty medicines and builds on their expertise in respiratory therapies.”

The transaction is subject to approval by at least 66.67% of the votes cast at a meeting of Bellus' shareholders and a majority of the votes cast by non-interested shareholders.

The deal, which is also subject to regulatory approvals, among other things, is expected to close in Q3 2023 or earlier.

Premarket Bellus Health, ticker symbol BLU, is up nearly 100%.

The last analyst to cover Bellus Health was Zach Bristow. He wrote an article in December entitled, Bellus Health: Building Momentum Around CALM, SOOTHE Studies. By the way, those studies are for the cough drug we mentioned earlier.

In the article Zach rates the BLU stock a hold and says he’s constructive on the name but from the sidelines.

I’ll leave a link to that article in show notes.

NOW MORE ON THE MARKET

A choppy session ended on Monday with the major U.S. equity averages posting modest gains.

The Nasdaq ( COMP.IND ) closed +0.3%, the S&P 500 ( SP500 ) ended +0.3% and the Dow ( DJI ) finished +0.3%.

Eight of the 11 S&P sectors finished higher. Real Estate and Financials led the charge, rising 2.2% and 1.1%, respectively. On the other side of the spectrum, Communication Services and Energy both dropped about 1.3%.

Ahan Vashi is a Seeking Alpha Contributor. He said, "Considering the macroeconomic environment, equities could have a hard time justifying the trading multiple expansion of early 2023.” He went on to say that, “the volatility index ( VIX ) looks primed for a rebound out of a falling wedge pattern.” And that overall he thinks “investors would be prudent to remain cautious on equity markets at current levels."

Looking at the fixed-income market, Treasury yields pushed higher. The 10-year yield ( US10Y ) rose 8 basis points to 3.59%, while the 2-year yield ( US2Y ) climbed 9 basis points to 4.19%.

MORE OF OUR TOP STORIES

Apple's (NASDAQ: AAPL ) CEO Tim Cook is set to open up India’s first Apple Store in Mumbai today, Tuesday, followed by a second one in Delhi on Thursday.

This comes after Cook said he was "very bullish on India" on last quarter's earnings call .

Only about 4% of the nation's nearly 700M smartphone users have iPhones, but the company is hoping to build the brand and consumer loyalty.

Cook is also reportedly set to pay a visit to India’s Prime Minister Narendra Modi (Wedbush Securities calls it a " strategic poker move .")

According to Bloomberg , Apple's ( AAPL ) revenue in India grew by nearly 50% to a record $6B over the past year.

While we’re on the topic of Apple.

The company rolled out an Apple Card with a high-yield savings account from Goldman Sachs.

The account, which has no fees, no minimum deposits and no minimum balance requirements, offers an annual percentage yield of 4.15%, compared with the average U.S. savings deposit rate of just 0.37% as of March 20.

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Florida Gov. Ron DeSantis is threatening more retaliation against Walt Disney World (NYSE: DIS ).

DeSantis announced that a Republican-controlled state legislature would take steps to " nullify " Disney's attempts to maintain control of the special taxing district around Walt Disney World.

The governor said they would "make sure that people understand that you don’t get to put your own company over the will of the people of Florida.”

He also spoke about the possibilities of what could be done with the land next to Disney World. He said the land could be used for a rival park, a state park or even a state prison.

Action on Disney's special taxing district has been long in the works ever since a rift grew between the company and the governor over the state's so-called "Don't Say Gay" law that Disney publicly opposed.

In February, DeSantis signed a bill giving Florida control over Reedy Creek, which was Disney’s special taxing district before the name was changed.

However, the state was not aware that Disney had reached a deal with the outgoing board, stripping it of power. DeSantis believes that deal was "defective.” However, the deal was done in the Sunshine which basically means it followed the rules for publicly posting the agenda, voting on the agenda item and allowing public comment.

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The 9th U.S. Circuit Court of Appeals in San Francisco ruled Monday that Berkeley, California, cannot ban natural gas hookups in new buildings , siding with a challenge made by the state's restaurant industry.

The court said the city's 2019 ban on new gas hookups effectively barred appliances that use the fuel, and that the U.S. Energy Policy Conservation Act preempts such a move.

New York City, San Francisco, San Jose and Seattle are among dozens of U.S. municipalities that have enacted similar restrictions since Berkeley adopted its rule, citing environmental and health concerns.

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Chevron (NYSE: CVX ) said Monday it started a road trip across the U.S. Gulf Coast to showcase what it says is an innovative new gasoline blend with more than 50% renewable content that eventually will offer emissions savings similar to electric vehicles .

The company said team members will drive Toyota's Tundra, RAV4 and Camry on the road trip with the objective of demonstrating the fuel, which it says is more than 40% less carbon intensive than traditional gasoline on a lifecycle basis.

In the ratings summary for chevron on Seeking Alpha, SA Analysts and the Quant rating say Chevron is a hold. Wall Street says it's a buy.

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Michigan and Nebraska, have joined other states against Alphabet's Google (NASDAQ: GOOG ) ( GOOGL ) alleging that the company broke antitrust law while running its digital advertising business.

The ad tech lawsuit along with Arizona, Illinois, Michigan, Minnesota, Nebraska, New Hampshire, North Carolina, Washington and West Virginia argues that Google ( GOOG ) should be forced to sell its ad manager suite because it illegally abused its online advertising dominance.

Google has denied any wrongdoing and has asked for dismissal of the lawsuit.

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Treasury Department rules take effect today, April 18, that will reduce the number of electric vehicles that qualify for the full federal EV tax credit of $7,500.

The new rules stipulate that electric and plug-in-hybrid vehicles can only get the full tax credit if the vehicles are made in the United States and most of their batteries and critical minerals are sourced domestically or from the closest trading partners.

Seeking Alpha has a list of those vehicles that qualify for the full tax credit, half the tax credit as well as those brands that will lose access to the credit. I’ll leave a link to that article in show notes.

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Now let’s take a look at the markets as of 6:20 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are pointing higher. The Dow is up 0.3%. The S&P 500 is up 0.4% and the Nasdaq is up 0.7%. Crude oil is down 0.2% at more than $80 a barrel. Bitcoin is up 0.1% at $29,935.

In the world markets, the FTSE 100 is up 0.3% and the Dax is up 0.7%.

On today’s economic calendar, at 1pm the Fed’s Michelle Bowman will speak at Georgetown University. The conversation will focus on Central Bank Digital Currencies, possibilities for a digital dollar and the U.S. economy.

For further details see: