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Msg  55644 of 59440  at  1/11/2017 11:57:12 AM  by


Morning News Call

Thomson Reuters


Samsung leader named a suspect in S.Korea political probe
A South Korean special prosecutor's office will question Samsung Group leader Jay Y. Lee as a suspect in a widening influence-peddling scandal that may force President Park Geun-hye from office.
VW shares rise as $4.3 bln emissions deal with U.S. nears
Volkswagen's supervisory board is meeting to approve a draft $4.3 billion settlement with the U.S. Justice Department, a key milestone in its attempts to recover from its emissions test cheating scandal.
Airbus deliveries rose 8 pct, orders outpaced Boeing in 2016
Airbus posted an eight percent rise in deliveries last year, beating its own forecasts by a comfortable margin to set a company record, and pulled off a last-minute surge in orders to beat arch-rival Boeing in the race for new orders.
Corus profit misses estimates for 12th time in a row
Media company Corus Entertainment Inc reported a lower-than-expected quarterly profit for the twelfth straight quarter, hurt by lower revenue at its television business on a pro-forma basis.
Merck steals march on rivals in lung cancer drug combo race
Merck & Co has pulled ahead of rivals in the race to combine immunotherapy with other drugs as a treatment for lung cancer, potentially giving it a major lift in the battle for the largest cancer market.

Stock futures pointed to a higher opening for Canada's main stock index as oil prices rose, lifted by reports of Saudi reducing crude supplies to some of its Asian customers. U.S. stock index futures inched up and the dollar held steady ahead of a news conference by President-elect Donald Trump in which he is expected to give more details about his plans for the world's largest economy. European shares traded higher, supported by luxury stocks. Asian shares closed positive. Political uncertainty pushed gold to a six-week high.


Corus Entertainment Inc (CJRb). The media company reported a lower-than-expected quarterly profit for the twelfth straight quarter, hurt by lower revenue at its television business on a pro-forma basis. Corus said subscriber revenues at the company's television business shot up by 45 percent, or 6 percent on a pro-forma basis. Overall revenue fell 5 percent on a pro-forma basis. Corus reported adjusted earnings of 41 Canadian cents per basic share. Analysts on average had expected 45 Canadian cents. The company reported revenue of about C$468 million, missing the analysts' average estimate of C$478.7 million.

In other news
Bombardier (BBDb). The company and Alstom consortium has won a French train contract estimated to be worth 1.16 billion euros for the consortium, the companies and French authorities said. The contract will see the consortium - in which Alstom owns 70 percent and Bombardier 30 percent - work to supply commuter trains for the Paris region. The part state-funded contract is worth 3.75 billion euros in total.
Brookfield Asset Management Inc (BAMa). The alternative-asset manager said it had submitted alternative proposals regarding its interest in buying bankrupt solar company SunEdison Inc's "yieldco", TerraForm Power Inc. Brookfield said it would purchase all of TerraForm Power's outstanding shares for $11.50 in cash for a total consideration of $1.6 billion. Brookfield said it was open to raising the offer to $12.50 per share in cash if it can also buy SunEdison's other "yieldco", TerraForm Global Inc.

Atlantic Power Corp (ATP). National Bank Financial cuts rating to underperform from sector perform citing the recent move in the shares, limited visibility on growth opportunities, relatively high leverage and no dividend.

Hudson's Bay Co (HBC). CIBC cuts price target to C$12.5 from C$18, saying the company is part of a long list of department store chains that are struggling to deliver sales or earnings growth.
Trican Well Service Ltd (TCW). CIBC raises price target to C$5.75 from C$3.75 on expected price range of Keane IPO.

No economic indicators are scheduled for release.


Jan 11:
Cogeco Communications Inc (CCA). Expected Q1 earnings of C$1.36 per share
COGECO Inc (CGO). Expected Q1 earnings of C$1.15 per share
Corus Entertainment Inc (CJRb). Expected Q1 earnings of 46 Canadian cents per share
DragonWave Inc (DWI). Expected Q3 loss of 51 cents per share
Sirius XM Canada Holdings Inc (XSR). Expected Q1 earnings of 27 Canadian cents per share

Jan 12:
Neptune Technologies & Bioressources Inc (NTB). Expected Q3 earnings of 2 Canadian cents per share
Sandvine Corp (SVC). Expected Q4 earnings of 2 cents per share
Shaw Communications Inc (SJRb). Expected Q1 earnings of 32 Canadian cents per share
theScore Inc (SCR). Expected Q1 loss of 1 Canadian cent per share

Corus Entertainment Inc (CJRb). Q1 earnings conference call
09:00 EXFO Inc (EXF). Annual Shareholders Meeting
15:00 Currency Exchange International Corp (CXI). Q4 earnings conference call
16:00 Corus Entertainment Inc (CJRb). Annual Shareholders Meeting

Asian Television Network International Ltd
(SAT). Amount C$0.02
Caledonia Mining Corporation Plc (CAL). Amount $0.01
Empire Company Ltd (EMPa). Amount C$0.10
International Parkside Products Inc (IPD). Amount C$0.01
Shaw Communications Inc (SJRb). Amount C$0.10

(All analysts' estimates are according to Thomson Reuters I/B/E/S)


Valeant's failed idea had a grain of truth

Valeant Pharmaceuticals International's failed strategy has a grain of truth at its center. Drugmakers spend over $50 billion a year on research and development, but the payoff keeps declining. Valeant attempted to address the problem by acquiring companies, slashing R&D outlays and jacking up prices to keep the top line growing. But its aggressive approach backfired.
The projected return for the dozen biggest-spending companies - a group that includes Merck, Sanofi and GlaxoSmithKline - has declined to less than 4 percent last year from 10 percent in 2010, according to a report this month by Deloitte. The consultancy compared estimated future cashflows from new drugs with total expenditure on developing and licensing late-stage medicines.
Both numbers are going the wrong way for the industry. The projected peak annual revenue for a typical new drug has declined to under $400 million - less than half what it was in 2010. And the associated development cost has risen by about 30 percent over the same period to $1.5 billion, according to Deloitte.
Rich veins like treatments for cardiovascular and respiratory diseases have largely been worked over. Remaining goldmines are harder to tap, perhaps because many involve less well understood science in areas such as neurology. Eli Lilly's recent failure with an Alzheimer's treatment it spent about $1 billion developing shows the risk. Niche diseases offer easier pickings, but these markets are smaller. Big pharma's growth in earnings per share has slipped to less than 3 percent per annum over the past five years, according to Thomson Reuters Eikon.
Valeant's solution made a certain sense, but it carried the idea to excess. It ended up paying too much for companies with mediocre drugs and its merger conveyor ground to a halt, leaving it teetering under a massive debt load - that's why it's offloading assets, including two roughly $1 billion sales this week.
The company's steep price increases also fueled a backlash. That led to political scrutiny of practices elsewhere, for example Mylan's pricing of its anti-allergic shock EpiPen. The biggest U.S. drug distributer, McKesson, said in October that fewer companies were raising prices and by smaller-than-expected amounts.
That means big drugmakers are losing control of a lever that, used more judiciously, could keep their sales growing. Maybe they need to accept their own shortcomings discovering new drugs and either shrink or build partnerships with smaller firms with more productive labs.
Valeant Pharmaceuticals International said on Jan. 9 that its affiliate has agreed to sell Dendreon Pharmaceuticals to Chinese Sanpower for $820 million in cash. On Jan. 10, Valeant announced the sale of its CeraVe, AcneFree and Ambi skincare brands to L'Oréal for $1.3 billion in cash.
Projected returns on research and development by the 12 pharmaceutical companies that spend most heavily on developing drugs declined from 10.1 percent in 2010 to 3.7 percent in 2016, according to a report from Deloitte's Center for Health Solutions. The reason for the decline, according to the consultancy, is that average peak sales for a new drug have declined by more than 50 percent over this period, to $394 million annually, while the cost of bringing a therapy to market has risen by about 30 percent to $1.5 billion.

-- By Robert Cyran
-- The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

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