【whiting and davis vintage mesh purses】Heron Gains on Priority Review Designation for Pain Drug
Shares of
Heron Thewhiting and davis vintage mesh pursesrapeutics, Inc.
HRTX rose 9.22% on Dec 31 after the company announced that the FDA has accepted the new drug application (NDA) for experimental candidate, HTX-011, which was submitted to the agency on Oct 30, 2018. The FDA also granted the NDA a Priority Review designation.
Notably, the company’s shares gained 37.2% in 2018, while the industry declined 20.4%.
Priority Review designation is given to drugs, which upon approval would result in significant improvements in the safety or effectiveness of the treatment or prevention of serious medical conditions.
Meanwhile, the FDA had indicated that it is currently not planning to hold an advisory committee meeting to discuss this application and the agency has set a Prescription Drug User Fee Act goal date of Apr 30, 2019.
The candidate, which utilizes Heron's proprietary Biochronomer drug delivery technology, is a long-acting, extended-release formulation of the local anesthetic bupivacaine in a fixed-dose combination with the anti-inflammatory meloxicam. It is being evaluated for the management of postoperative pain. The candidate is designed to address both postoperative pain and inflammation in a single administration at the surgical site.
The NDA is supported by data from five phase II clinical trials and two phase III clinical trials that included more than 1,000 patients undergoing five different surgical procedures.
We remind investors that the FDA had earlier granted Breakthrough Therapy designation to HTX-011, based on the results of phase II studies and two completed phase III studies. These studies showed that HTX-011 produced significant reductions in both pain intensity and the need for opioids through 72 hours post-surgery compared to placebo and bupivacaine solution, which is the standard of care. The candidate was also granted Fast Track designation by the FDA in the fourth quarter of 2017.
The results of various studies showed that HTX-011 was more effective in reducing pain than placebo or bupivacaine alone in five diverse surgical models — hernia repair, abdominoplasty, bunionectomy, total knee arthroplasty and breast augmentation.
A tentative approval will be a significant boost for the company. There is a great need for safe, effective and non-addictive options that can decrease opioid exposure, given the current epidemic of opioid abuse that has put companies like Endo International ENDP and Mallinckrodt MNK, among others, under the scanner.
Zacks Rank & Stock to Consider
Heron currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the healthcare sector is Bristol-Myers Squibb Company BMY, which carries a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
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Bristol-Myers’ earnings per share estimates have increased from $4.03 to $4.14 for 2019 over the past 60 days. The company delivered a positive earnings surprise in all the trailing four quarters, the average being 11.99%.
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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As shown below, the results in the quarter materially changed the trend in two-year stacked comps for each of the banners, along with a significant acceleration for consolidated comps.
The increase in consolidated comps was the primary driver of an 8% increase in revenues to $6.3 billion. The company ended the quarter with 15,370 locations, up less than 1% year-over-year. This reflects a 7% increase in Dollar Tree units, offset by a 4% decline in Family Dollar units.
The top-line results at each banner flowed through to their respective income statements, with Dollar Tree gross margins and operating margins declining year-over-year while Family Dollar gross margins and operating margins expanded year-over-year. On a consolidated basis, gross margins contracted by 120 basis points in the quarter to 28.5%, reflective of a shift to lower-margin consumables, tariff costs and the impact of markdowns from the Easter headwinds at the Dollar Tree banner. The company saw slight operating leverage on SG&A from higher comps, with the net result being an 80 basis point contraction in operating margins to 5.8%, with operating income declining 5% to $366 million. This is not adjusted for $73 million of pandemic-related costs, such as PPE supplies.
In the first quarter, the company opened 85 stores (net of closures) and completed 220 Family Dollar renovations to the H2 format. Importantly, comps at renovated Family Dollar stores continue to outpace the chain average by more than 10%. On the call, management indicated that they plan on reducing both the number of new store openings (from 550 to 500) and the number of H2 renovations (from 1,250 to 750) in 2020.
Personally, given the fact that Family Dollar is seeing material benefits to its business from the pandemic with new or lapsed customers coming into its stores, I think the company should try to get more aggressive with its renovation plans, not less. On the other hand, you could argue that renovations cause short-term disruptions and limit their ability to fully capitalize on the business momentum they are currently experiencing.
As a result of fewer new stores and remodels, management now expects 2020 capital expenditures to total $1.0 billion compared to previous guidance of $1.2 billion. In addition, the company has temporarily suspended share repurchases. At quarter's end, the company had $1.8 billion in cash on its balance sheet compared to $4.3 billion in total debt.
Conclusion
In recent years, Dollar Tree has been a tale of two cities. While its namesake banner has generally delivered impressive financial results, Family Dollar has been a persistent underperformer. This quarter, those results flipped, and given what we've seen in the weeks since quarter's end, there's a decent possibility that we will see something similar in the coming months. As the CEO noted, the second quarter is off to a very good start at Family Dollar.
Here's the important question: how useful is that information is in terms of making future predictions about the business? Will recent success at Family Dollar translate into long-term success for the banner? The optimistic take is that new or lapsed customers, especially those visiting the renovated stores, could become recurring business for the banner. The pessimistic take is that they have experienced short-term success out of necessity as people went to any store that was open to try and find essentials like toilet paper and hand sanitizer that were largely out of stock throughout the retail landscape. From that view, many of these customers could abandon the retailer when life returns to normal. As Philbin noted on the conference call, early on [during the pandemic], folks needed us. Will people still shop as much at Family Dollar when it's no longer a necessity?
Personally, I do not place too much weight on the recent results. I will need to see incremental data points that indicate that Family Dollar has truly won sustained business from these new customers. While I still believe that the Dollar Tree banner is a well-positioned retailer with attractive unit returns, I'm not yet willing to say the same thing for Family Dollar. For that reason, along with the recent run-up in the stock price, I plan on staying on the sidelines for now.
Disclosure: None
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