EU HEALTHCARE: Novo Nordisk: Omeros Deal (NOVOB; Aa3/AA/NR)
Potentially a clever move. Little downside and no funding issues.
• Today's deal with Omeros secures Novo with access to zaltenibart for the very low upfront cost of $340m.
• Omeros had paused zaltenibart development in May due to capital constraints. This enabled Novo to buy a fairly cheap option on its Phase III progress.
• Milestone payments of $2.1bn are contingent on success.
• Novo generates around 5.6% of sales from Rare Disease. Diversification away from Obesity may be wise.
• As a comparison, Novartis's Fabhalta, also used to treat paroxysmal nocturnal haemoglobinuria (PNH) is hoped to reach $3bn in Peak Annual sales.
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GOLD: Last Tuesday's ATH Still Intact For Gold; Spot Up 0.35% Today
A fresh extension higher for gold prices has now faded, leaving spot up 0.35% on the session at $3,655/oz after peaking at $3,664 around 30 minutes ago.
- Initial resistance remains Tuesday’s all-time high of $3,674. Clearance of this level would expose round number resistance at $3,700.
- There hasn’t been an obvious headline driver for today’s modest gold rally. Instead, we suggest that positioning ahead of the Fed’s likely 25bp rate cut on Wednesday is factoring into price action, potentially alongside well-established Fed independence concerns following US President Trump’s latest calls for lower rates.
- A reminder that the US Senate will hold a cloture vote on Stephen Miran's Fed Board nomination at around 17:30 ET / 22:30 BST, with a full confirmation vote likely to take place at roughly 20:00 ET / 01:00 BST. Despite some reservations from institutionalist Senate Republicans, there is not expected to be any GOP opposition.
- Separately, we note that considerations around a physical gold trading tax in Thailand (due to domestic FX concerns) has not had a material impact on spot prices today.
SOFR OPTIONS: Call Spread vs Put Spread
SFRV5 96.43/96.62cs vs 96.25/96.12ps, bought the cs for 1 in 4k.
EUROZONE DATA: Soft Imports Take Some Of The Edge Off A Solid June [2/2]
- The modest widening in the surplus came as imports (-0.8% M/M) fell by more than exports (-0.1% M/M).
- It sees imports unwind part of the 3.0% M/M increase in June in what was a rare solid reading compared to recent months.
- An important caveat when it comes to digging into import details for domestic demand implications -- the miscellaneous category again shows a surge but this was revised away last month as these unclassified items are eventually correctly allocated.
- Specifically, the miscellaneous category surged 172% from to E6.8bn in Aug from a typical E2.5bn in July, with the latter initially reported at E7.1bn.
- With that in mind, monthly declines are currently seen as being led by the typically volatile raw materials category (-7.5% M/M) along with manufactured goods (-2.8%) and food, drinks & tobacco (-1.8%).
- We tend to focus on machinery & transport within manufactured goods, and this currently shows a disappointing -2.6% M/M to undo a sizeable part of June’s 4.0% increase. In doing so, it crimped annual growth in this nominal category to just 2.5% Y/Y.
