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Regeneron Arthritis Pain Drug Scores In Mid-Stage Trial

Regeneron Pharmaceuticals ( REGN ) said Monday that its experimental antibody for arthritis pain succeeded in a mid-stage trial, but shares were flat in early trading as the results were expected. The study enrolled 421 sufferers of moderate-to-severe hip and knee pain who’d been unsuccessful with standard painkillers. After 16 weeks of treatment, the group taking Regeneron’s fasinumab had improved by more than 3 points on a 10-point pain scale, significantly better than the placebo group. About 17% of the group taking fasinumab experienced adverse events, Regeneron said, including non-inflammatory joint pain, prickling and burning sensations in the skin, numbness and swelling. The investigators also did extensive imaging of the subjects, because the class of medicines to which fasinumab belongs — nerve growth factor (NGF) antibodies — has been associated with joint damage. They wound up excluding 2% of subjects due to imaging results, and five patients among the remainder suffered subchondral insufficiency fractures, or stress fractures on abnormal bones. Regeneron stock was near 377 in early trading on the stock market today . Shares touched an 18-month below 349 in late March, and Regeneron stock has a weak IBD Composite Rating of 47, putting it among the lower half of all stocks on the basis of key metrics such as earnings and sales growth. Regeneron had already signaled that the trial was going well earlier this year by starting a large phase-three trial of the drug, so the results weren’t especially surprising to analysts. It also lost a potential competitor in late March, when Johnson & Johnson ( JNJ ) stopped development of its own NGF antibody fulranumab, which was in late-stage trials for arthritis pain. RBC Capital Markets analyst Adnan Butt wrote at the time that J&J’s decision was based on pipeline prioritization, not on any problems with the drug itself. On Monday, Butt praised the effectiveness of fasinumab in the trial but wrote that the safety “bears watching.” “Overall, should this program succeed, it could be another blockbuster candidate, which unlike others could be an upside driver since it comes with regulatory and mechanistic safety concerns, hence is not a major focus for investors at this time, aside from a development cost and timeline standpoint,” Butt wrote in his research note.

Facebook, Microsoft Capital Spending Good For Data Center REITs

In their Q1 earnings reports, Apple ( AAPL ), Microsoft ( MSFT ) and other big Internet companies have signaled continued strong spending on cloud infrastructure — and that bodes well for data center operators, says Pacific Crest. “The five largest cloud companies ( Amazon.com ( AMZN ), Microsoft, Alphabet ‘s ( GOOGL ) Google, Facebook ( FB ) and Apple), which account for 80% of the capital investments by top-20 cloud companies, showed an acceleration in capital investments during Q1,” Brent Bracelin, a Pacific Crest analyst, said in a research report. Data center operators have been among the best-performing real estate investment trusts in 2016. REITs are essentially portfolios of income-producing properties. They bypass the standard corporate income tax obligations by distributing at least 90% of their income to shareholders in the form of dividends. Among the top data center companies, Equinix ( EQIX ) reports Q1 earnings on Wednesday after the close, while CyrusOne ( CONE ) reports on Thursday. Equinix stock, which has a so-so IBD Composite Rating of 64, is up 9% in 2016. But CoreSite Realty ( COR ) stock has shot up 32% and leads its group with a highest-possible CR of 99. DuPont Fabros ( DFT ) is up 25%, while Cyrus One has jumped 17%. Digital Realty ( DLR ), meanwhile, has climbed 16%. Still, IBD’s 50-company Finance-Property REIT group overall is up just 3% this year and ranks No. 53 out of 197 groups tracked. Bracelin said Facebook’s capital spending jumped 125% to $1.1 billion. Microsoft’s capital spending rose 66% to $2.3 billion, while Amazon.com’s increased 35% to $1.2 billion. “Because many of these cloud operators use custom software and white-box infrastructure, there are few direct beneficiaries across the traditional technology landscape beyond some of the data center REITs,” said Bracelin.

Tesla Sales Seen Revving 70% in Q1, But Model X Could Hit Margins

Electric-car maker Tesla Motors ( TSLA ) took a hit ahead of its Q1 earnings report set for release after the close Wednesday, as Baird lowered its profit-margin estimates for the quarter. Current analyst consensus calls for Q1 sales of $1.6 billion, up 70% from the year-earlier quarter, according to Thomson Reuters. That would be its sharpest increase since Q3 2014. Wall Street expects Tesla to report a loss of 58 cents a share, deepening from 36 cents in Q1 2015. On Friday, Baird analyst Ben Kallo wrote in a research note that the slow ramp of the new Model X SUV will hit Q1 profit margins. He lowered his margin estimate on the Model X to minus 10% from minus 5%. His overall gross margin estimate is 19.3% vs. the 21% consensus. He added that a refreshed Model S sedan should help Tesla still reach its year-end delivery goal of 80,000 to 90,000 vehicles. Tesla stock slid 2.8% Friday, to 240.76. Tesla stock has been hovering in the mid-200s and hit an eight-month high of 269 on April 7, when the company reported 325,000 preorders of its new Model 3 sedan and cleared a cup-with-handle base . By April 21, that number had risen to 400,000 . The company hopes to begin production of its lower-cost Model 3 — the base price is about $35,000 — by the end of 2017.