Chelsea Therapeutics soars as FDA panel backs key drug

Chelsea Therapeutics soars as FDA panel backs key drug

Stock Market Predictions

(Global Markets) - Shares of Chelsea Therapeutics International Ltd (CHTP.O) rose as much as 76 percent on Friday after a committee of independent experts recommended the approval of its hypotension drug in the United States.

The FDA panel voted 7 to 4 in favor of the drug's approval on Thursday. Its recommendation will now be taken into consideration by the FDA, which is expected to make a decision on the drug by March 28.

Wedbush Securities analyst Liana Moussatos said she sees more than an even chance of the drug being approved by the action date, and the company's stock price at least doubling if the approval comes through.

Last week, the company received briefing documents from the U.S. Food and Drug Administration raising questions related to the short duration of clinical studies and the limited size of the study population given the orphan status that the drug, Northera, has.

Orphan status is granted by the U.S. health regulator to drugs that treat a rare condition affecting less than 200,000 Americans and guarantees a marketing exclusivity of seven years.

But analyst Moussatos cautioned that there was still a risk that the FDA may seek additional trials on the drug.

Northera, which has been in use in Japan since 1989, has shown some post-marketing safety issues, and is being tested in an ongoing trial -- Study 306b. Results from the study are expected in the third quarter of 2012.

Leerink Swann analysts said despite the potential utility of the 306b study, additional trials would be required.

"Nearly all panelists noted the desire for additional clinical trials, preferably in longer durations, to be required in the post-marketing setting," they said.

Northera is being studied to treat neurogenic orthostatic hypotension -- a disorder resulting from the deficient release of a neurotransmitter used by autonomic nerves to send signals to regulate blood pressure.

Needham analyst Alan Carr said approval by the FDA action date would prove a challenge.

"The agency may discount the (advisory panel) advice and insist on additional pre-approval trials anyway."

Even if the FDA follows the panel's recommendation, there is little time to agree on label and post-approval trial requirements ahead of the action date, Carr said.

Shares of Charlotte, North Carolina-based Chelsea, which have fallen 52 percent since the company received the briefing documents last week, were trading up 52 percent at $3.67 on Friday on the Nasdaq.

(Reporting by Kavyanjali Kaushik in Bangalore; Editing by Roshni Menon)

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Celestica shares hit 2-year low as major customer RIM cuts

Celestica shares hit 2-year low as major customer RIM cuts

Stock Market Predictions

(Global Markets) - Shares of Celestica Inc (CLS.TO) fell as much as 9 percent to a two-year low on Friday, a day after its major customer Research In Motion (RIM.TO) (RIMM.O) posted disappointing results and slashed its outlook.

Contract electronics maker Celestica's 21 percent sales in the March quarter came from BlackBerry maker RIM.

"In light of RIM's relatively large contribution to Celestica's overall revenue base, we believe RIM's near-term challenges could remain a headwind for Celestica's valuation," Paradigm Capital analyst Gabriel Leung wrote in a note.

Leung slashed his target price on Celestica shares to $12 from $14.

Citigroup analyst Jim Suva lowered his rating on Celestica to "sell" from "hold" and reduced his target price on the stock to $8 from $12.

Facing intense pressure from Apple (AAPL.O) and Google (GOOG.O) in the smartphone market, RIM on Thursday warned that its latest models would not hit U.S. stores until well into the valuable back-to-school shopping season.

RIM admitted delays in revamping an aging smartphone lineup and slashed what most analysts viewed as an unattainable full-year earnings outlook. It also said it planned to cut an unspecified number of jobs.

Toronto-based Celestica's shares were down 73 Canadian cents at C$7.80 in late-morning trading on the Toronto Stock Exchange. They touched a low of C$7.74 earlier in the day.

(Reporting by Arnika Thakur in Bangalore; Editing by Maju Samuel)

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RIL board approves 1:1 bonus issue

Reliance Industries has informed BSE that the Board of Directors of the Company at its meeting held on October 07, 2009, inter alia, has recommended, subject to the approval of the shareholders, issue of Bonus shares in the ratio of one equity share of Rs 10/- each fully paid up for every one equity share of Rs 10/- each of the company. India's largest private sector refiner has issued bonus shares after 12 years. The last time it issued 1:1 bonus was on September 13, 1997. Further, the Board has declared a dividend of Rs 13 (Rupees thirteen only) per fully paid-up equity share of Rs 10/- each.

Reliance Industries declared its audited FY09 results, including Reliance Petroleum's (RPL) numbers. The company's consolidated net profit was at Rs 15,296 crore versus Rs 19,523 crore. Its consolidated net sales were at Rs 1.51 lakh crore versus Rs 1.37 lakh crore.

Reliance Industries bonus history

Year Ratio
1997 1:1
1983 3:5
1980 3:5

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LSE, TMX Group results top forecasts

LSE, TMX Group results top forecasts

Stock Market Predictions

LONDON/TORONTO (Global Markets) - The London Stock Exchange and Canada's TMX Group reported forecast-beating results on Friday as they applied for regulatory approval of their $3 billion deal to join forces.

Shares of the exchanges, both pressured by competition from alternative trading upstarts, rose after the results.

First-quarter profit at TMX, the operator of the Toronto Stock Exchange, rose 13 percent to C$64.3 million ($66.8 million), while revenue climbed 17 percent to C$174.7 million, on record volume and robust equity financing.

"I, along with maybe one or two others were already on the high end of Street estimates and they exceeded our estimates by a country mile," said National Bank Financial analyst Shubha Kahn.

The LSE exchange reported 2010 profit up 22 percent at 341 million pounds ($555.5 million), well above a forecast of 314 million in a poll of 14 analysts.

Revenue increased 7 percent to 675 million pounds, above analyst expectations of 651.1 million. The total dividend for the period was 26.8 pence, above a forecast 25.9p.

"We have seen strong growth in our fixed-income businesses, exchange-traded funds and derivatives. We are also starting to see positive impact from technology sales," Chief Executive Xavier Rolet told Global Markets Insider TV in an interview.

The exchanges formally applied on Friday to have the deal approved by authorities in Ontario, Quebec, Alberta and British Columbia. The provincial regulators, along with the federal government, have a say in the deal first announced February 9.

The applications initiate a process that could last for months -- the TMX and the LSE are confident it will close sometime in the fourth quarter.

The would-be partners promise to create a transatlantic exchange and powerhouse in mining and resource equity that would do $4 trillion in annual trading.

Canadian critics fret that control of a national institution will fall into foreign hands.

"We have made this investment because we are convinced this merger represents an unparalleled opportunity for our company," Chief Executive Tom Kloet said.

MARKET SHARE EROSION

But the market share of both firms has been eroding. The LSE's share of domestic equities trading -- historically its top earning business -- has slumped in the past three years, hurt by the likes of Chi-X Europe and Bats Europe, whose parent filed for an IPO on Friday.

Last month the LSE's domestic market share fell below 50 percent for the first time in the UK exchange's 210-year history, Thomson Global Markets data showed.

The alternative trading platforms remain a formidable competitive threat to TMX as well.

The TSX and TSX Venture Exchange had a combined market share of about 65 percent by value and 68.8 percent by volume in the last quarter. Overall combined market share was down slightly quarter over quarter, according to data from the Investment Industry Regulatory Organization of Canada.

Both exchanges have tried to diversify business to counter the threat. Rolet has looked to derivatives trading, clearing and technology services for growth, and credited his strategy for the better-than-expected results. His boldest move is the proposed tie-up with TMX, a deal that will enable the UK exchange to tap into TMX's stable of booming mining firms.

TMX is in the process of launching its own alternative trading system, TMX Select. It has reduced fees and introduced rebates for certain services, and it launched services that allow for anonymous trading.

"If those initiatives bear fruit, it should offset some of the market share erosion, or at least stem some of the market share losses," said Khan.

LSE stock closed up 1 percent having risen more than 7 percent earlier in the session. TMX shares closed up 1.83 percent at C$41.75 late afternoon in Toronto, an implied premium relative to LSE's offer of $39.75, according to a CIBC research note.

(Editing by Sophie Walker, David Holmes)

($1 = 0.6140 pound)

($1 = $0.968 Canadian)

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Analysis: Stock-picking makes a comeback as macro tides fade

Analysis: Stock-picking makes a comeback as macro tides fade

Stock Market Predictions

NEW YORK (Global Markets) - Stock-picking once again matters on Wall Street.

After a year in which stocks moved in near-lockstep regardless of individual merit, the herd mentality is crumbling away.

The move away from a frenzied rush in and then back out of the market is a welcome sign for stressed-out fund managers and lay investors alike.

"If I think something looks cheap I'm more prepared to own it because I think that will matter. Before, I would throw up my hands and say, 'So what? If it's perceived as a higher risk asset then it's going to crater with any nasty news out of Europe,'" said Art Steinmetz, chief investment officer at OppenheimerFunds in New York.

The change reaffirms the diversification strategies that underpin trillions of dollars worth of savings meant for college tuition and retirement. When just about everything is moving in the same direction, investors have fewer ways to cushion market swoons.

In 2011, daily activity in individual stocks was less dependent on company reports than on action in European government debt markets, and the equity, currency and commodities markets traded in tandem.

Now that stocks are going their own way, it's been good for so-called active fund managers, those who decide what individual stocks are best to hold rather than follow an index.

In January, about 70 percent of active managers outperformed the S&P 500, compared with just 23 percent in 2011, according to Bank of America/Merrill Lynch data.

"Our traders have had their best month since 2009 because of the fall-off in correlation," said Don Bright, a director and trader at Bright Trading in Chicago. "We're doing a lot of homework on earnings since fundamentals are driving individual stocks again."

BREAKING AWAY

Correlations, a measure of how tight a relationship individual securities or entire markets have with each other, have fallen sharply since the volatile trading days of last summer, according to Marko Kolanovic, head of equity derivatives at JPMorgan Chase & Co.

"We are currently witnessing the largest drop in realized correlation in the recent history of the U.S. stock market," he wrote in a recent note to clients. The rolling 10-day correlation of S&P 500 stocks had reached 80 percent in the fourth quarter of 2011, and fell to around 10 percent in early January, according to the bank.

Rob McIver, co-portfolio manager for the $3.8 billion Jensen Quality Growth fund (JENSX), said he grew increasingly frustrated over the second half of last year as he watched the companies in his portfolio increase earnings and yet suffer with the broad stock market.

McIver finished the year with a loss of 1 percent after dividends, compared with a 2 percent gain for the S&P 500.

One of his holdings was Emerson Electric (EMR.N), which sagged throughout the spring and summer as the euro zone crisis worsened. Strong second-quarter results didn't interrupt the trend.

"Emerson was almost like the canary in the coal mine," he said. The stock lost 18 percent in 2011; it is up more than 12 percent so far this year.

ALL IN VS. ALL OUT

For their part, individual investors aren't yet convinced. Despite a 4.3 percent increase in the S&P 500 in January - the second-best month since the end of 2010 - trading volume is down 15 percent from a year ago.

Volatile, correlated trading amplifies the post-flash crash suspicions of many retail investors who see markets as the playthings of big money with the resources to hire legions of PhDs and use expensive technology to keep up with high-speed trading.

Cliff Downing, 53, a small business owner in Wilburton, Oklahoma and a stock picker since the age of 10, has sold most of his stocks and closed out his brokerage accounts since 2008.

"On top of working in the major markets I used to like the (over-the-counter) Pink Sheets but I don't do any of it anymore. I've liquidated everything and moved things to other places," he said.

Since the financial crisis began to get a grip at the start of 2008, investors have pulled more than $400 billion from U.S. equity funds, and the figure keeps growing, with $7 billion withdrawn so far this year, according to the Investment Company Institute.

"Prior to the financial crisis, it was easy to have the view that you could focus more on the micro and individual companies and be fine," said John Roth, the manager of the $6.5 billion Fidelity Mid-Cap Stock fund (FMCSX) and the $1.8 billion Fidelity New Millennium Fund (FMILX). "But the last four years have shook the system."

For now, those worries have abated, and stockpickers are in a position to thrive if Europe's debt talks proceed and U.S. economic figures continue to improve.

"The market is starting to trade stocks based on underlying fundamentals," said Sudhir Nanda, portfolio manager of the $189 million T. Rowe Price Diversified Small Cap Growth fund (PRDSX).

"Autos and the auto sector were improving all the time last year, but the stocks were getting punished because people were so worried about risk," said Nanda. His fund has positions in auto suppliers TRW Automotive (TRW.N) and Tenneco (TEN.N), which were both hit hard in 2011 on global economic concerns.

So far, 2012 has been better for them. TRW and Tenneco are both up 24 percent after losing 38 percent and 27 percent in 2011.

STILL UNRESOLVED

Some analysts caution that the return to profitable stock-picking could be short-lived.

"The sense of real panic about some kind of meltdown in Europe has abated," said Jonathan Golub, chief U.S. equity strategist at UBS. "But I think at the end of the day that this is going to be another year where the macro is going to matter."

Fund managers looking to distinguish themselves from others now have to contend with this quarter's earnings trends, which show a lot of companies suffering declining revenue and a reduced number of companies beating earnings forecasts.

Derivatives strategists at JPMorgan Chase note that implied correlation - expectations for how tight the relationships between stocks will be in coming months - has only declined modestly.

That suggests investors are still hedging against a flare-up of troubles, likely from Europe.

"The European crisis, which is by no means resolved, is a pot that is at least not boiling at this point. It's a pot that's simmering," said OppenheimerFunds' Steinmetz. "That fear of transmission through the banks was what was keeping risky markets highly correlated. Now we can get back to fundamentals."

(Reporting By David Randall, Edward Krudy and Ryan Vlastelica; Additional reporting by Doris Frankel in Chicago; Editing by Martin Howell)

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McGraw-Hill, CME Group to form index JV

McGraw-Hill, CME Group to form index JV

Stock Market Predictions

(Global Markets) - McGraw-Hill Cos Inc (MHP.N) and CME Group (CME.O) will form a joint-venture to combine some of Wall Street's most well-known indicators, including the Dow Jones industrial average and the S&P 500.

McGraw-Hill, owner of the S&P Indices, said it will hold a 73 percent stake in the venture and expects the agreement to immediately add "a couple of cents" to its annual earnings.

The deal is the latest step in McGraw-Hill's restructuring of its portfolio of businesses, which also include Standard & Poor's credit ratings, other financial and market information, and textbooks for children and college students. Dissident shareholders have been pushing the company to move faster with the overhaul, charging that the mini-conglomerate has fallen short of its potential.

In September McGraw-Hill outlined plans to split into two separate publicly traded companies, one for its education business and one for its financial and markets businesses.

At the heart of the CME deal is a change in the 30-year relationship between the two companies in which McGraw-Hill has licensed its indexes to the Chicago-based operator of markets in return for per-trade fees. In the joint-venture, McGraw-Hill will take a share of profits from all of CME's stock-related products instead of collecting licensing fees.

CME Group will control 24.4 percent of the joint-venture, while Dow Jones will hold the remaining 2.6 percent stake. CME owns 90 percent of a CME Group/Dow Jones joint venture and News Corp, (NWSA.O) owner of the Dow Jones name, holds the rest.

"It is a big announcement," said Douglas Arthur, an analyst at Evercore Partners. "The index business is very lucrative, big and growing. You are taking two big players and combining them to develop more products and secure long-term relationships."

The companies said the S&P 500 stock index and the Dow Jones industrial average will continue to be maintained separately.

S&P/Dow Jones Indices will have annual revenue of more than $400 million and begin operations in the first half of 2012, the companies said in a statement.

Operating profit margins will be more than 50 percent and annual revenue will rise to more than $435 million in the first year, Terry McGraw, chief executive of McGraw-Hill, said in a conference call with analysts.

McGraw-Hill will report results from the venture as part of its consolidated financials. CME will report its stake as an equity interest. CME said that the deal will not change its 2012 earnings because the revenue it gives up to McGraw-Hill will be offset by not having to pay licensing fees.

The joint-venture will be headed by Alexander Matturri, executive managing director of S&P Indices.

For McGraw-Hill, the new venture should bring more attention from investors to its index business, which is now overshadowed by S&P credit ratings, Arthur said.

Shares of McGraw-Hill and CME were down less than 1 percent in Friday morning trading after the announcement.

McGraw-Hill was advised by BofA Merrill Lynch, Goldman Sachs and Deutsche Bank. Barclays Capital acted as exclusive financial adviser to CME Group.

(Reporting by David Henry in New York and A. Ananthalakshmi in Bangalore; Editing by Joyjeet Das, Viraj Nair and Steve Orlofsky)

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Hynix shares tumble on new share sale concerns

Hynix shares tumble on new share sale concerns

Stock Market Predictions

SEOUL (Global Markets) - Shares in South Korea's Hynix Semiconductor (000660.KS) tumbled more than 8 percent on Friday to five-month lows amid concerns of a substantive new share sale by the creditors-turned-shareholders of the chipmaker.

Top shareholders of the company plan to launch the sale of their $2.9 billion stake on June 21 and a source with direct knowledge of the auction told Global Markets that they would seek to offer 20 percent of the firm including new share issues.

The shareholders had yet to decide how to break down the portion of existing shares and new share sales, said the source, who declined to be named as a final decision is yet to be made.

Hynix told the stock exchange on Friday it has no plans to issue new shares, but one of its top shareholders reiterated that they were keeping the option open to give potential buyers more choices.

"Our principle is selling a 15 percent stake (held by creditors-turned-shareholders) but we'll consider offering new Hynix shares as well," Ryu Jae-han, chief executive of Korea Finance Corp, a major Hynix shareholder, told reporters.

Selling new shares would give Hynix much-needed cash to upgrade its production facilities and better compete with sector leader Samsung Electronics Co (005930.KS) in a notoriously cyclical industry that requires massive capital investment, but some investors are concerned about diluted earnings.

"Some institutional investors are dumping Hynix shares, fearing new share issue will dilute its earnings per share," said Kim Sung-in, an analyst at Kiwoom Securities.

Ryu said creditors were seeking to launch the Hynix sale on June 21 to take preliminary bids in early July, with the deal likely to close between October and November.

Creditors will consider extending the schedule or relaunching the auction should the deal lure only one bidder.

The latest sales attempt is the third auction in as many years. Previous bids failed to attract strong interest as many fear exposure to the cyclical computer memory chip industry.

So far, Hyundai Heavy Industries (009540.KS), the world's top shipbuilder, is the sole potential bidder interested in the auction.

Hynix shares closed down 7 percent on Friday, after falling as much as 8.2 percent, versus the wider market's .KS11 1.2 percent fall.

(Reporting by Ju-min Park and Miyoung Kim; Editing by Jonathan Hopfner and Vinu Pilakkott)

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