21st Century Biotech: Buy the Pipeline (Bloomberg)
With the cost in man hours and research spinning out of control, biotechnology companies are looking for faster, more inexpensive ways to bring new drugs to market. And for the companies with the financial wherewithal, that means simply buying smaller companies with drugs already in clinical testing. The latest company testing the development-through-purchase method is Amgen, Inc., which has agreed to buy Onyx Pharmaceuticals, Inc. at a price of $125 per share, as opposed to the $86.82 level where Onyx traded prior to the talks with Amgen becoming public. By acquiring Onyx, Amgen gains a cancer-fighting drug, Kyprolis, that could add $3 billion in revenue by 2021. For investors, this may signal the end of the windfall, share-price explosion experienced by small- or micro-cap companies upon receiving FDA approval for their new drugs.
70 Years of Oil Pipelines Need to be Reversed (YahooFinance)
With the giant leaps in production of natural gas and petroleum-based energies through fracking and other new technologies, Big Oil is now finding itself pinched by a pipeline-capacity shortage. To offset the backlog, companies are turning to trucks, barges and trains… at least until some of the $40 billion in new pipelines come online. According to Curt Anastasio, chief executive at NuStar Energy, LP, “We are in effect re-plumbing the country.” For the past 70 years, the focus in the United States has been to import oil on the coasts and deliver it to refineries. “All of the pipes are pointed in the wrong direction,” according to Harold York, a researcher at Wood Mackenzie. For investors, the focus should be on those companies leading the pack in construction of new pipelines, or who have access to non-traditional means until the new lines become functional.
Nuclear Industry Takes another Hit in Japan (AP)
Toshimitsu Motegi, Japan’s Nuclear industry minister, addressed the media this morning on the latest developments at the Fukushima nuclear plant by saying, “The urgency of the situation is very high. From here on, the government will take charge.” Dramatic steps are needed to contain the leaks found in at least five of the 1,000 tanks used to store the water used to cool the reactors. Last week, according to the tank’s operator, Tokyo Electric Power Co., 300 tons of “highly contaminated” water had seeped into the ground. With this latest blow to the confidence of an already shaky situation in Japan’s nuclear energy sector, investors can’t be expected to stay in the sector much longer.