Tuesday Morning Reads
- Supply Floodgates to Open
- The Clashing Forces That Will..
- Fed’s Bostic Says Three Hikes
- The Fed’s Vice Chair Resigns
- The I.R.S. Is Warning of A Messy Tax Season
- Economists Pin More Blame on Tech for Rising Inequality
- 50 Company Stocks to Watch in 2022
- Flush With Cash
- Workers Sick With Omicron Add to Manufacturing Woes
- UBS Targets Less-Wealthy Customers
- Take-Two Pays Hefty Premium
- Smart Guns Finally Arriving
- Surged 67 Percent Last Year
In a last-ditch effort to save his life, doctors at the University of Maryland Medical Center have transplanted a genetically modified pig heart into patient David Bennett, a 57-year-old handyman from Maryland. He's doing well three days after the highly experimental surgery, and is being monitored for immune system problems and other complications, but it's still too early to tell if the operation will work. Due to his condition, Bennett had also received a pig heart valve about a decade ago, which (along with pig skin grafts) are routinely used in humans.
Snapshot: "It was either die or do this transplant. I want to live. I know it's a shot in the dark, but it's my last choice," Bennett said a day before the nine-hour surgery. While he knew there was no guarantee the experiment would be effective, Bennett was ineligible for a human heart transplant or pump due to a heart failure condition and an irregular heartbeat. The FDA, which oversees such experiments, allowed the xenotransplantation surgery under "compassionate use" emergency authorization, which is available when a patient with a life-threatening condition has no other options.
"If this works, there will be an endless supply of these organs for patients who are suffering," said Dr. Muhammad Mohiuddin, scientific director of the University of Maryland's animal-to-human transplant program. A total of 106,657 people are currently on the U.S. transplant waiting list, and more than 6,200 patients die each year before getting one. In 2021, more than 40,000 organ transplants were conducted nationwide, including a record 3,800 heart transplants.
Gene editing tools: Several biotech companies are developing pig organs for human transplant, with the heart used in the most recent operation coming from Revivicor, a subsidiary of United Therapeutics (NASDAQ:UTHR). The organ was modified to make it more acceptable to a human, including removing and inserting 10 genes to keep the heart from growing after the transplant. The team at the University of Maryland Medical Center also used a new drug made by Kiniksa Pharmaceuticals (NASDAQ:KNSA) to help prevent the organ from being rejected by the patient's body. Premarket: UTHR +8%; KNSA +5.8%.
A third booster? A fourth booster? An Omicron-specific booster? As the pandemic continues to drag out with the emergence of new variants, vaccine hesitancy is being seen among the population. The latest Omicron wave is even dividing the vaccinated, especially given that the strain appears to be having more mild effects. Add to that some confusing guidance from authorities, such as the CDC, which recommends that all U.S. adults receive a booster despite still classifying fully vaxxed as two shots, as well as a statement from White House chief medical adviser Dr. Anthony Fauci last week, that read "we're using the terminology now 'keeping your vaccinations up to date,' rather than what 'fully vaccinated' means."
By the numbers: Figures from the CDC continue to show declining vaccine uptake in the U.S. as more shots are added to the COVID regimen. 74.4% of the American population is vaccinated with one dose of a COVID vaccine, but that figure drops to 62.6% for the fully vaccinated (included J&J's (JNJ) single dose). Meanwhile, only 36.5% of the nation has taken up advice to receive a vaccine booster, while Pfizer (PFE) and Moderna (MRNA) are already planning an Omicron-specific jab that should be ready this year.
"I don't know if we need it. I don't know how it will be used. But it will be ready [by March]," Pfizer CEO Albert Bourla declared. "The two doses, they're not enough for Omicron. The third dose of the current vaccine is providing quite good protection against deaths, and decent protection against hospitalizations." He also commented on the possibility of a fourth regular dose, saying that is "something that needs to be tested, and I know Israel has already started some of these experiments and we will also conduct some of these experiments to make sure that if needed, we use it."
On the way up: Moderna was the best performer in the S&P 500 on Monday, closing the session 9% higher, as investors propelled the beaten-down biotech. CEO Stephane Bancel announced $18.5B worth of advance purchase agreements for the mRNA-based jab in 2022, up from $17B in November, and said the company plans to unveil an Omicron-specific booster vaccine in the fall of 2022. A short while ago, Bloomberg quoted him as saying that the Omicron booster would enter the clinical trials in weeks, adding to the upbeat outlook for its blockbuster COVID-19 vaccine.
Get ready for the latest appearance by Fed Chair Jerome Powell, who will visit Capitol Hill today for his confirmation before the Senate Banking Committee. Back in November, he was nominated by President Biden to serve a second term in leading the central bank, along with Lael Brainard, who was nominated as Vice Chair of the Fed (her hearing will take place on Thursday). Expect questions and commentary on inflation, rate hikes, the labor market and the speed of the economic recovery.
Prepared remarks: "We know that high inflation exacts a toll, particularly for those less able to meet the higher costs of essentials like food, housing, and transportation. Both the initial shutdown and the subsequent reopening of the economy were without precedent and have led to persistent supply and demand imbalances and bottlenecks and thus to elevated inflation. We will use our tools to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched."
Inflationary risks and tighter monetary policy have already led to increased volatility for risk assets. Following a big selloff last week, stocks whipsawed on Monday, starting the day deep in the red, only to see a strong intraday rebound of highly-valued growth stocks. Expectations of the Fed hiking cycle are causing some convulsions, and it remains to be seen how committed traders will be to the recent reflation rotation.
Analyst commentary: "It's that delicate tightrope that he [Powell] has to walk," said Kathy Bostjancic, Director of U.S. Macro Investors Services at Oxford Economics. "He really doesn't want to leave an impression that they're massively behind the curve."
In one of the largest acquisitions to hit the videogame industry, Take-Two Interactive (TTWO) said it would acquire Zynga (ZNGA) in a cash-and-stock deal that would be valued at $12.7B. The key to the acquisition is mobile gaming, which has been Zynga's focus for years. The company is known for such titles as FarmVille, CSR Racing, Empires & Puzzles, and probably most of all, Words with Friends, while Take-Two is best-known for its console franchises, such as Grand Theft Auto, NBA 2K, BioShock and others.
Market movement: The news led to Zynga's best day ever, with the stock closing the day up 40% to $8.44, basically near even with its price from last August. That was before it got hit hard in an earnings report reflecting the harsh effects of Apple's (AAPL) iOS 14 privacy changes (which makes it harder to sell targeted advertising), and suggests Zynga may realize that its own Apple situation may not be improving anytime soon. Take-Two went in the opposite direction, ending the day down 13%, though CEO Strauss Zelnick wasn't swayed by the investor reaction, noting "the math is the math."
Speaking to CNBC, Zelnick reported that the deal would mean 50% of Take-Two's net bookings will come from mobile and free-play offerings, the fastest-growing segments of the gaming industry. He also noted that Zynga will bring with it additional intellectual property, including what it terms as "forever franchises." "We think it's extraordinarily exciting," Zelnick declared, calling the deal a "transformative" opportunity to drive further into mobile gaming.
Go deeper: The transaction raised some eyebrows because it came without a competitive sale process, however, it does include a provision that allows Zynga to seek other potential suitors over a 45-day period. Asked whether another bidder will arise during the process, Zelnick answered "it is very hard for me to say," but added that the company is protected by a breakup fee if another suitor should step in. "We wanted to be as friendly as possible and we believe that this deal will come to fruition because we think this deal makes the most sense for shareholders."
In Asia, Japan -0.9%. Hong Kong flat. China -0.7%. India +0.4%.
In Europe, at midday, London +0.6%. Paris +1.2%. Frankfurt +1%.
Futures at 6:20, Dow +0.3%. S&P +0.5%. Nasdaq +0.7%. Crude +1.4% at $79.36. Gold +0.4% at $1805.50. Bitcoin +0.3% to $41753.
Ten-year Treasury Yield -2 bps to 1.72%
Today's Economic Calendar
6:00 NFIB Small Business Optimism Index
8:55 Redbook Chain Store Sales
9:30 Fed's George: U.S. Economic and Monetary Policy
10:00 Powell testifies before Senate Banking Committee
1:00 PM Results of $52B, 3-Year Note Auction
What else is happening...
Clarida to step down from Federal Reserve Board two weeks early.