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Stock Selling Continues as Biotechs Near Bear-Market (Negative Year-To-Date)
UPDATE: V-shaped recovery in stocks as 103 USDJPY marks line in the sand...
BTFD failed and momentum has broken. Growth stocks and Biotech dreams are lying shattered in a pool of margin calls once again this morning. Nasdaq being dragged by another more-than-1% drop in Biotechs (now negative year-to-date) and nearing the 20% high-to-low drop of a bear market. Bonds are bid as JPY carry unwinds drag broad US equity markets lower... The USD is weaker (led by EUR strength) and precious metals are down modestly (gold at $1300)
Nasdaq and Russell well into the red with the Dow as the S&P is fading fast...
Biotechs in trouble...
And growth in pain (but the ubiquitous reaction bounce is coming)...
As USDJPY leads us lower (testing 103)
Charts: Bloomberg
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For now..
http://signalinea.com/possible-support-on-es-here-at-1852-or-1842/
Just a little froth being removed. BTFD.
must be the weather
http://youtu.be/vAcaeLmybCY
looks like the minimum wage effect to me.
That makes you wonder how strong the American economy is but it's a great way to increase inflation by a few points.
It's all very nice that the "end is nigh," finally. But we've seen trends like this reversed before, so the question is, "what can TPTB do to prop up the market?" If there's anything they can do to keep the ponzi scheme rolling, I expect them to do it.
ZH has spoken. B this D.
NASDAQ just tipped green a minute ago.
Thar she blows!
and yet the 10yr is 2.71%. No growth. Stocks getting punctured left and right. Yet SPY has not been allowed to go red ytd and yields should be pushing well below 2.5% and they are not. Crazy.
Generic Pharma Leverages PTAB
Posted By Scott A. McKeown On 20 March 2014 @ 7:15 In Inter Partes Review, Patent Trial & Appeal Board, Post-Grant Review | Comments Disabled
[1]IPRs and Drug LitigationSince Post Grant Review (PGR) is designed to challenge patents on 112 and 101 grounds not available in Inter Partes Review (IPR), it is often assumed that Bio/Pharma is somewhat unconcerned with the growing trend to challenge patents in IPR at the PTAB [2]. Today, my partner Richard Kelly [3] and I explain that ethical drug companies are in fact very concerned with IPR.
The generic drug industry enjoyed a run of almost 20 years of enormous profits from the 180 day exclusivity period granted to the first ANDA file under the Hatch-Waxman Act — this all changed in 2003. In response to perceived abuses, The Medicare Prescription Drug Improvement and Modernization Act became law in 2003. One unintended consequence of the act was that most exclusivity periods became shared. That is more than one generic company received the right to sell during 180 day exclusivity period.
The impact on the generic industry’s profitability has been marked. First, if there is only one generic, it has been estimated that the generic company will receive about 94% of the ethical company’s wholesale price and will capture 80% or more of the ethical drug company’s market volume. In contrast, with a shared exclusivity between two competitors, only 52% of the ethical company’s price is captured, at 9 competitors only 20%, but still collectively capturing about 80% or more of the ethical company’s volume. In the recent Crestor litigation, 9 companies are eligible for the 180 day shared exclusivity. This changes the economics of drug patent litigation tremendously. No longer can generic companies afford to pay $10 million or more in legal fees to challenge a drug patent listed in the FDA Orange Book. Like many patent challengers the generics are looking to cut litigation costs — enter the PTAB.
Since IPRs became available, a few generic drug companies have begun using IPRs to challenge drug patents. Apotex and Ranbaxy were the first generics to utilize the IPR procedure. At the time of the IPR filings Apotex was involved in litigation while Ranbaxy was not although the patents had been asserted against others, see IPRs 2013-00012 (Apotex v Alcon), 00015 (Apotex v Alcon), and 00024 (Ranbaxy v Vertex). All of the IPRs ended in settlements with Ranbaxy’s avoiding costly litigation.
Ranbaxy’s settlement resolved not only the IPR but also any potential Hatch-Waxman litigation between Ranbaxy and the patent owner Vertex and its licensee ViiV Healthcare. In the meantime the ANDA litigation between Vertex and Myan, the first ANDA filer, filed in August 2012 continues and is in the expert discovery phase.
Apotex has continued to use IPRs as part of its ANDA strategy. Apotex filed an IPR against Pfizer on the drug Tygacil which, at the time of IPR filing, was involved in litigation between Wyeth and Sandoz, a litigation subsequently dismissed by the parties (Sandoz has not launched as of yet a generic equivalent). Subsequent to Apotex’s IPR filing Pfizer brought suit against Fresenius Kabi. In the IPR, Pfizer waived its patent owner statement on February 7, 2014, Paper No. 9. As of today, Pfizer has not initiated district court litigation against Apotex.
Apotex filed three more IPRS, 2014-00428, -00429, and -00430 against three Alcon patents on July 5, 2013, all relating to self-preserved ophthalmic solutions. The IPR petitions were granted on January 2, 2014, on all claims for which review was requested. Alcon has not initiated litigation against Apotex but did initiate litigation against Mylan and Micro Labs after Apotex filed its IPRs.
Thus far it appears that Apotex’s strategy of filing IPRs before the patent holder brought a district court action appears to be working. Since these cases are all ANDAs involving parenteral drugs, it is most likely that Apotex’s only defense is patent invalidity. By preemptively filing IPRs it has avoided costly district court litigation with its 30 month stay of FDA approval of its drug, in favor of much faster and less costly IPRs. In terms of cost, it is most probable that Apotex’s IPR costs will be between 10% and 20% of that of district litigation while at the same time being much faster, 18 months from IPR filing to decision by the PTAB versus 30 months or more before a district court decision. Indeed it’s conceivable that the IPR appeal process to the Federal Circuit could be completed before the district actions have reached decision.
Baxter Health Care (Baxter) has filed 4 IPRs, 2013-00582, -00583, 00590, and -00591 in connection with its dispute with Millenium Biologix (Millenium). Millenium began the dispute by filing suit against Baxter in Illinois involving two patents. It is these two patents which are the subject of the four Baxter IPRs. The IPRs were filed within about 5 months of Millenium filing suit (April 2013) giving Baxter the possibility of filing additional IPRs should the PTAB deny its request for review of any of the claims involved in the litigation within one year of filing the complaint assuming Baxter can present additional evidence to address the PTAB position in denying the petition. Baxter thus far has not requested a stay of the district court litigation presumably waiting for the PTAB decisions on its petitions.
From these IPRs several lessons can be learned:
(1) File the IPR early, before the litigation begins. This is possible because in most drug cases the litigation cannot begin until an ANDA is filed. ANDAs by statute cannot be filed until four years after the drug has been approved, the New Drug Application (NDA) approval date.
(2) IPRs have resulted in successful settlements without the expense of litigation.
Since the NDA approval date of a drug is known and, thus, the first date to filed an ANDA, four years later, generic companies would be well advised to file any IPRs challenging the patentability of any patents listed in the FDA Orange Book, all patents covering the drug, its formulation, or uses must be listed, 6 months or more before filing the ANDA. First, by filing this early, the generic company will have the PTAB opinion of its invalidity position before filing and have an opportunity to address any criticisms in advance of filing the ANDA. Second, it will have the PTAB decision by the fifth anniversary of the NDA approval which is the first date the generic can launch its product. Third, it most likely will have any appeal from the PTAB decision well in advance of the expiration of the 30 month stay of the FDA approval of the ANDA, assuming the patentee files suit timely. This will allow the generic to launch without risk if it was successful in the IPR. Fourth, the generic may be able to obtain a stay of the district court litigation if its only defense is the invalidity of the patent for the reasons in the IPR.
Even though 101 and 112 grounds remain unavailable in IPR, this simply leaves a generic with estoppel-free invalidity defenses should the IPR fail. For patents where strong patents and printed publication prior art exists, IPRs are proving a very valuable tool for generics.
Woah the DJIA just spiked hard, what is happening?
It's the start of the bounce after five waves down since the peak Friday morning.
So expect a green closing today but beyond that, who knows?
Now it seems to be a roller coaster. Buckle up and grab your butt cheeks!
The fed has broken the momo bubble without destroying the entire "market". Pretty damn amazing.
Dr, wait a little. This patient is on life support.
It's been on life support for five years now, and somehow they continue to keep the thing alive. I don't think it will die until it just vaporizes.
This is a sincere question: I see the correlation between the USD/JPY and the S&P, however, what are the underlying mechanics of the correlation? How does the buying or selling of the USD/JPY influence the S&P?
Good question!
The idea behind the "carry trade" is that a certain number of very large traders borrow in Yen and buy in (USD) equities. Yen borrow costs are super-cheap, and US market returns have been very strong, so it's been an extremely profitable trade over the last few years.
There are potential risks to the carry trade - one of them being that a rise in the value of the Yen increases the effective borrowing costs. The other, of course, would be flat or negative returns on USD stocks. In either case, the people running the carry trade face losses, and since they're heavily leveraged, they could potentially be forced to unwind.
The unstated theory of what's happening here is that people involved in the carry trade (and possibly their friends in the central banks) know about this dynamic, and so to protect the carry trades, try and manipulate the market to keep the Yen low. As long as the Yen is low (e.g., above 100 Yen/USD), the carry traders will keep borrowing in Yen and buying up US stocks, and all is well in the markets.
So, what happens to stocks if the Yen increases too quickly in value? Stay tuned and find out, because one of these days that's going to happen.
Many thanks.
As a follow-up...are the trades typically short term positions (out by the end of the day) or greater than a day and simply ride the momentum of the market?
I honestly don't know that. I suspect (but don't know) that these arrangements are effectively margin account arrangements, so the traders can stay in a position as long or as short as they please. The unknown from my perspective is how exactly the Yen financing arrangements work; if they can be unwound at any time, or if they can be forced to unwind at any time, or if they are only unwound during Tokyo market hours.
The one thing I am confident on, however, is that the carry traders can and will unwind U.S. holdings as soon as their position moves against them, whether on the U.S. equity or Japanese Yen side.
Isn't a negative YTD de facto illegal under the "hope and change" regime?
New index lows now at 1030a and you can watch the unfolding Barry-Valerie-Victoria inspired collapse here:
http://www.investing.com/indices/us-30-futures-advanced-chart
And away, way down, we go...
The EE (Evil Empire) has the monkeys out in full force this morning trying to beat paper gold back from breaching 1300 and paper silver from getting over 20.
Will we finish the week above both levels???
Should be interesting to see how things play out. I hear gold is in negative GOFO again which has been a signal of rising gold prices each time that occurs. P.O.S. dollar index is cascading down towards 80.
Edit: Just broke 1300 to 1301. Silver's about to punch through 20. Get ready for some hammer time from the monkeys
Still negative:
http://www.lbma.org.uk/pricing-and-statistics
Hit TABLE TAB
Choose GOFO in drop down menu
EXK has been running up all day, even at the low open for silver. EXK has had a good correlation of where the price of silver will be for quite awhile. It usually goes up or down an hour before the price of silver does the same thing.
Sumboddy nos sumptin'.
ZH once said BTFD
Who could be happy about this,
1. The market would never have gotten to this stage in the first place had it been left alone and investment had been driven by available money from producing something and accounting for costs.
2. The people who cooked up this animal spirits nonsense are mentally ill as is the bearded asshole who thought that by making a handfull of insiders billionaires would somehow make some poor bastard working a $35hr. job better off. They should be executed for what they have done to this nation.
3. Any substantial correction we have at this point is going to break the back of an economy that has been stuck in neutral since January 20, 2009.
And right on queue the monkeys are hammering the paper PM's back down from 1300 and 20. Gee, didn't see that coming. I guess the wicked witch (Blythe Masters) is still in control.
http://www.theaureport.com/pub/na/ted-dixon-what-gold-stock-insider-trading-tells-us
The Gold Report: The price of gold fell more than 6% in March. To what do you attribute this?
Ted Dixon: Gold took a one-two punch in late March. The first was the widening of the renminbi trading ban in China by 2%, which added extra costs to buying and hedging gold. The second was the surprisingly hawkish tilt of the U.S. Federal Reserve, pointing to interest rates rising a little bit sooner. Tighter monetary conditions do not usually benefit gold.
TGR: Increased import duties in India haven't reduced gold buying there. Why would China be different?
TD: I think the flows are different. In China, there is a lot of financial activity related to gold, whereas in India gold buying is cultural and driven by consumer consumption.
TGR: We've heard about greatly increased governmental buying in China, have we not?
TD: There have been rumors of that, and the Chinese media has called for the government to boost its gold reserves. That could provide a longer-term counterbalance to the shorter-term renminbi pressure.
TGR: DataQuick's latest U.S. national homes sales snapshot shows that "prices are flatlining or drifting lower while sales are sinking like a stone." Meanwhile, "The big private equity firms [are] exiting the [housing] market." These data don't suggest a U.S. economic recovery, do they?
TD: Basically, insiders are telling us that stock prices now have priced in a lot of good news, so it would be interesting to see how they react to whips to the downside. One has to be cognizant that much of the U.S. equities rally has been driven by the Fed and, arguably, has little to do with GDP growth one way or the other.
TGR: With regard to this hawkish tilt, it has been assumed for several years that we'd see higher interest rates and an end to quantitative easing (QE) only after an economic recovery. Given how weak the U.S. economy remains, can we assume that the Fed believes it is close to exhausting the utility of zero interest rates and quantitative easing?
TD: The Fed has a big ticking time bomb on its balance sheet. It is still piling up reserves, and I'd love to be a fly on the wall in staff meetings that don't get reported. I have to assume there is much concern about what happens to those reserves, particularly if the economy does surprise on the upside. In this sense, the low-altitude economy has been a blessing for the Fed.
We may have a little game of bluff going on here. The Fed is taking a hawkish stance now, saying it has to move rates up earlier, but, of course, if the economy remains weak, and the Fed has to backtrack, that opens up risks on the other side. The Fed has been running a big monetary policy laboratory over the past few years, and sometimes in laboratories accidents happen. At this point, however, the stock market seems to have assigned a very little risk premium to something bad happening.
TGR: It has been argued that if you remove the Fed's monthly stimulus from the monthly GDP report, GDP is actually shrinking, not growing.
TD: The Fed has certainly manipulated the economy. It has picked its favorite sectors, housing and autos. I believe that Operation Twist and QE have hurt the commodities base because they have favored interest-sensitive industries. Now, however, these industries will have to stand on their own two feet, and we'll see how this experiment in industrial policy works out. Usually, planned economies have a day of reckoning when stimulative measures run out of steam.
Ted Dixon is co-founder of INK Research (Insider News and Knowledge), Canada's first online financial news and research service dedicated to providing data on public company insider trading. (Free services are found on CanadianInsider.com and InsiderTracking.com.) He worked previously for Connor, Clark & Lunn Financial Group in portfolio strategy and product development, the Fraser Institute as an analyst, TD Bank as a treasury specialist and the Vancouver Stock Exchange as a floor trader. He has lectured in corporate finance at the BC Institute of Technology and is a Chartered Financial Analyst and member of CFA Vancouver. He holds a Master of Business Administration in financial management from the University of Chicago.
http://truthfrequencyradio.com/how-far-will-stocks-fall-this-time-when-the-fed-decides-to-slow-down-quantitative-easing/
From the time that QE1 was announced to the time that it ended, the S&P 500 rose from about 900 to about 1,200.
When QE1 ended, the S&P 500 fell back below 1,100.
In a panic, the Federal Reserve first hinted at QE2 and then finally formally announced it. That round of QE drove the S&P 500 up to a bit above the 1,300 mark.
Once QE2 ended, there was another market correction. The S&P 500 fell all the way down to 1,123 at one point.
In another panic, the Federal Reserve first announced“Operation Twist” and then later added QE3. Since that time, the S&P 500 has been on an unprecedented tear. At this point, the S&P is sitting at about 1,800.