The Zacks Analyst Blog Highlights: Johnson & Johnson, Celgene, Sunoco, Carlyle Group and Energy Transfer Partners
For Immediate Release
Chicago, IL – July 5, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Johnson & Johnson (JNJ), Celgene Corp. (CELG), Sunoco Inc. (:SUN), The Carlyle Group L.P. (CG) and Energy Transfer Partners L.P. (ETP).
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Here are highlights from Tuesday’s Analyst Blog:
Pipeline Progresses at J&J
Janssen-Cilag GmbH, a part of Johnson & Johnson’s (JNJ) Janssen Pharmaceutical Companies, recently acquired privately held German drug development company Corimmun GmbH. Besides making an upfront payment, Janssen will a payment on the achievement of a development-based milestone. Other financial details were not disclosed.
With this acquisition, Janssen has gained access to early-stage heart failure treatment candidate COR-1. Preclinical data indicates that COR-1 can improve heart function by reducing autoimmune, beta 1 receptor-simulating antibody effects.
Meanwhile, Janssen-Cilag International NV provided an update on the status of its type II diabetes candidate, canagliflozin. The company said that it has submitted a Marketing Authorisation Application (MAA) to the European Medicines Agency (:EMA) for the candidate. We note that a new drug application for canagliflozin was submitted to the US Food and Drug Administration (:FDA) in May 2012.
Janssen-Cilag also reported that its application for the subcutaneous use of Velcade for the treatment of multiple myeloma gained a positive opinion from the Committee for Medical Products for Human Use (CHMP) of the European Medicines Agency (:EMA). A final response from the EMA should be out shortly.
The company is looking to gain approval for the subcutaneous use of Velcade as it is more convenient to use and has fewer side effects. The occurrence of peripheral neuropathy, pain and tingling in the extremities, common side effects of Velcade, is significantly lower when Velcade is administered subcutaneously.
We note that Velcade is already approved for subcutaneous use in the US and Canada. Another player in the multiple myeloma market is Celgene Corp.'s (CELG) Revlimid.
We are encouraged by Johnson & Johnson’s progress with its pipeline. A few weeks back, the company's Janssen Research & Development, LLC had submitted a supplemental New Drug Application (sNDA) seeking FDA approval for Zytiga (abiraterone acetate). A marketing application was submitted in the EU as well.
Johnson & Johnson is looking to get Zytiga’s label expanded for use in chemotherapy-naïve patients with metastatic castration-resistant prostate cancer (mCRPC) who are asymptomatic or mildly symptomatic after failure of androgen deprivation therapy.
Zytiga is one of the most important and successful new product launches at Johnson & Johnson. Approval for the chemotherapy-naïve patient population would increase Zytiga’s sales potential significantly. If approved for the chemotherapy-naive indication, Zytiga will be used in patients at an earlier stage of their disease.
We currently have a Neutral recommendation on Johnson & Johnson. The company carries a Zacks #2 Rank (short-term Buy rating). We are positive on the recently completed Synthes acquisition which is expected to boost 2012 adjusted earnings by 3-5 cents per share and 2013 earnings by 10-15 cents per share.
Sunoco, Carlyle Ink Refinery Deal
Oil refiner and marketer Sunoco Inc. (:SUN) entered into a partnership with Washington-based The Carlyle Group L.P. (CG) in an attempt to save the Philadelphia refinery from closing. The deal, pending customary approvals and regulations, is expected to be closed in the third quarter of 2012.
The oldest and largest East Coast refinery, which was struggling to generate profits amidst the rising crude oil price scenario, was slated for closure in August. Three months back, in April, Sunoco announced its decision to enter into talks with the Carlyle Group regarding the refinery.
Per the terms of the newly signed joint venture – Philadelphia Energy Solutions – Carlyle will put in an undisclosed amount of money in the refinery that has a processing capacity of 330,000 barrels of oil per day. Carlyle will control the majority stake of the partnership and will take care of the daily operations of the refinery. On the other hand, Sunoco will hold a non-operating minority interest by contributing its Philadelphia refinery assets to the partnership.
This joint venture will not only retain the current 850 jobs, but will also open doors to almost 100–200 new, permanent employment opportunities. The partnership will also work toward capturing other major projects capitalizing on the ample supply of natural gas in the Marcellus Shale.
To tap the high-quality, low-sulfur crude oil of the Bakken formation in North Dakota, Carlyle plans to set up a train-unloading terminal at the refinery that could process 140,000 barrels of oil per day.
This partnership comes as a positive move for Sunoco, which was facing heavy losses from the Philadelphia refinery along with the other minor and now-shuttered Marcus Hook facility.
The Philadelphia refinery plays an important role for the energy center in the Northeast and is expected to serve the adjoining regional markets via its new developed business infrastructure and renovated crude oil sourcing network.
Of late, Sunoco has undertaken a number of strategic initiatives to improve its profitability, including its decision to exit its refining business and the impending merger with Energy Transfer Partners L.P. (ETP).
We believe that apart from providing a hefty premium to Sunoco’s shareholders, the merger will also broaden the scale and geographic reach of the company’s logistics and retail businesses.
Sunoco currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
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Read the analyst report on JNJ
Read the analyst report on CELG
Read the analyst report on SUN
Read the analyst report on ETP
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