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Messenger RNAs Could Create a New Class of Drugs

Posted on April 5, 2013 by admin

New partnerships could help bring a novel class of biopharmaceutical to patients.

By Susan Young on April 2, 2013

Messenger RNAs—molecules that carry information between the genome and the protein-building machinery of cells—could become the next big class of biopharmaceutical drug.

These molecules were once thought unusable as drugs because they are notoriously fragile and could rouse an inflammatory immune response. Now, thanks to several recent scientific discoveries, they are attracting the increasing attention of pharmaceutical companies.

Recently, the pharmaceutical heavyweight AstraZeneca announced it would pay Moderna Therapetuics $240 million for rights to the startup’s mRNA technology, which it will use to develop treatments for cardiovascular, metabolic, and cancer patients.

Inside a cell, mRNA serves as an intermediary between DNA-encoding genes and their protein products. As a drug, an mRNA would supply the biological instructions for producing a protein inside cells, perhaps a protein that replaces a missing or broken version inherited as part of a genetic disorder. In some ways, an mRNA would be more efficient than DNA-based gene therapy (which would require the cells to make their own mRNA intermediary before producing a protein) and more effective than recombinant protein therapy. While several companies are developing therapeutic gene-silencing RNAs, which inhibit damaging proteins from being made in the body (see “RNAi Drug for Cholesterol” and “Gene Silencing Technique Targets Scarring”), few have tried adapting mRNAs to bring in beneficial replacement gene products.

One reason is that natural mRNAs stir up trouble in the body. “If you inject regular mRNA into the body, the body thinks it’s a virus, so you get a very strong innate immune response,” says Stephane Bancel, CEO of Moderna, based in Cambridge, Massachusetts. To avoid this reaction, Moderna changes some of the building blocks of its mRNAs, known as nucleotides, so that the immune system no longer recognizes the molecule as dangerous. Of the four possible nucleotide “letters” in an mRNA, the company uses one or two variants or analogs of the standard nucleotides when synthesizing its mRNA. These analogs exist naturally in cells, but the idea that subbing them into mRNA sequences could avoid an immune system response is only a few years old—it was first reported by University of Pennsylvania School of Medicine researchers in 2005.

The substitutions seem to help another hangup with mRNAs—their notorious fragility. “Everybody considers mRNA to be the most unstable molecule you can think of,” says Christian Plank, founder and chief scientific officer of Ethris, a German company also developing modified mRNAs as drugs. “This opinion is still in the minds of most people and is a major reason why only a few people have thought of using it,” says Plank.

The analogs make the mRNAs more stable, and the company has shown that the molecules can last for up to 72 hours in the body, says Bancel. In comparison, some protein therapies can be gone within a few hours, he says.

Once injected, the mRNA is taken up by cells, says Bancel. The cell’s machinery then reads the mRNA and produces whatever protein it encodes. “The beauty is that the patient’s cells produce the drug,” says Carsten Rudolph, CEO of Ethris. That means that the proteins made from an injected mRNA would carry less of an immune response risk than if the proteins were made in bacteria or yeast and then injected, says Rudolph. And more proteins may then be available to patients, because not every protein can be manufactured at large scale.

Finally, mRNAs cannot integrate into the genome and so do not present the same risk of disrupting normal gene that DNA-based gene therapies do. “In general, gene therapy is a good approach, and in recent years there have been good breakthroughs, but for non-life-threatening disease, you want to avoid any potential risk you can think of, and integration into the genome is a known risk,” says Plank.

Ethris also recently partnered with a pharmaceutical company—Shire, based in Massachusetts—to develop treatments for patients with rare diseases based on its technology. Success for either AstraZeneca or Shire will require a venture into still uncharted waters: the first in-patient studies of the new biopharmaceutical.

How to Make a Computer from a Living Cell

Posted on April 5, 2013 by admin

Genetic logic gates will enable biologists to program cells for chemical production and disease detection.

By Katherine Bourzac on March 28, 2013

If biologists could put computational controls inside living cells, they could program them to sense and report on the presence of cancer, create drugs on site as they’re needed, or dynamically adjust their activities in fermentation tanks used to make drugs and other chemicals. Now researchers at Stanford University have developed a way to make genetic parts that can perform the logic calculations that might someday control such activities.

The Stanford researchers’ genetic logic gate can be used to perform the full complement of digital logic tasks, and it can store information, too. It works by making changes to the cell’s genome, creating a kind of transcript of the cell’s activities that can be read out later with a DNA sequencer. The researchers call their invention a “transcriptor” for its resemblance to the transistor in electronics. “We want to make tools to put computers inside any living cell—a little bit of data storage, a way to communicate, and logic,” says Drew Endy, the bioengineering professor at Stanford who led the work.

Timothy Lu, who leads the Synthetic Biology Group at MIT, is working on similar cellular logic tools. “You can’t deliver a silicon chip into cells inside the body, so you have to build circuits out of DNA and proteins,” Lu says. “The goal is not to replace computers, but to open up biological applications that conventional computing simply cannot address.”

Biologists can give cells new functions through traditional genetic engineering, but Endy, Lu, and others working in the field of synthetic biology want to make modular parts that can be combined to build complex systems from the ground up. The cellular logic gates, Endy hopes, will be one key tool to enable this kind of engineering.

Cells genetically programmed with a biological “AND” gate might, for instance, be used to detect and treat cancer, says Endy. If protein A and protein B are present—where those proteins are characteristic of, say, breast cancer—then this could trigger the cell to produce protein C, a drug.

In the cancer example, says Endy, you’d want the cell to respond to low levels of cancer markers (the signal) by producing a large amount of the drug. The case is the same for biological cells designed to detect pollutants in the water supply—ideally, they’d generate a very large signal (for example, quantities of bright fluorescent proteins) when they detect a small amount of a pollutant.

The transcriptor triggers the production of enzymes that cause alterations in the cell’s genome. When the production of those enzymes is triggered by the signal—a protein of interest, for example—these enzymes will delete or invert a particular stretch of DNA in the genome. Researchers can code the transcriptor to respond to one, or multiple, different such signals. The signal can be amplified because one change in the cell’s DNA can lead the cell to produce a large amount of the output protein over time.

Depending on how the transcriptor is designed, it can act as a different kind of logic gate—an “AND” gate that turns on only in the presence of two proteins, an “OR” gate that’s turned on by one signal or another, and so on. Endy says these gates could be combined into more complex circuits by making the output of one the input for the next. This work is described today in the journal Science.

MIT’s Lu says cellular circuits like his and Endy’s, which use enzymes to alter DNA, are admittedly slow. From input to output, it can take a few hours for a cell to respond and change its activity. Other researchers have made faster cellular logic systems that use other kinds of biomolecules—regulatory proteins or RNA, for example. But Lu says these faster systems lack signal amplification and memory. Future cellular circuits are likely to use some combination of different types of gates, Lu says.

Christopher Voigt, a biological engineer at MIT, says the next step is to combine genetic logic gates to make integrated circuits capable of more complex functions. “We want to make cells that can do real computation,” he says.

Obama launches research initiative to study human brain

Posted on April 2, 2013 by admin

By Jeff Mason

WASHINGTON | Tue Apr 2, 2013 12:09pm EDT

(Reuters) – The White House unveiled details on Tuesday of a new initiative to study the human brain with the goal of creating effective treatments for Alzheimer’s disease and other disorders.

Called the Brain Research through Advancing Innovative Neurotechnologies (BRAIN) Initiative, the program aims to help researchers see how brain cells and neural circuits interact through technology that produces “dynamic pictures” of the brain.

It is to be funded with $100 million from President Barack Obama’s fiscal 2014 budget. The White House is slated to release Obama’s budget next week.

The Democratic president, who is in a standoff with Republican lawmakers over how to reduce the U.S. deficit, has maintained that investment in areas such as education and research and development are critical even as spending cuts are necessary to address the country’s fiscal woes.

Obama made that case again when unveiling the initiative at a White House ceremony filled with scientists.

“There is this enormous mystery waiting to be unlocked, and the BRAIN Initiative will change that by giving scientists the tools they need to get a dynamic picture of the brain in action and better understand how we think and how we learn and how we remember,” he said.

“We can’t afford to miss these opportunities while the rest of the world races ahead. We have to seize them. I don’t want the next job-creating discoveries to happen in China or India or Germany. I want them to happen right here,” he said.

The funding requires congressional approval, but agencies have some discretion to start working on the program ahead of time, a White House spokesman said.

The program drew praise from groups advocating for Alzheimer’s and autism research.

“The federal government has realized incredible success when it invests in tackling challenges of this magnitude, and Alzheimer’s will be no different,” said Harry Johns, president and chief executive of the Alzheimer’s Association, in a statement.

“Investments in brain research such as this project are essential for understanding and developing better treatments for autism,” said Liz Feld, president of Autism Speaks, in a statement.

Two reports released last month showed that deaths and the risk of dying from Alzheimer’s disease have risen significantly in the United States during the last decade.

Researchers said in February that the number of U.S. residents aged 65 and older living with the brain-wasting disease would nearly triple to 13.8 million by 2050, drawing attention to the need for further study.

(Additional reporting by Gabriel Debenedetti and Julie Steenhuysen; Editing by Philip Barbara)

Pension plan advisors see top gains in emerging market stocks

Posted on April 2, 2013 by admin

By Sam Forgione

NEW YORK | Tue Apr 2, 2013 11:59am EDT

(Reuters) – Consultants who advise companies on how to manage their employees’ retirement plans expect emerging market stocks to outperform in a lower-return environment over the next several years, a survey by bond giant PIMCO showed on Monday.

The survey, which tracked 51 consulting firms, found that many of them expect emerging market stocks to outperform all other asset classes, but with greater volatility. In addition, 65 percent of the firms expect lower returns and higher volatility in various asset classes over the next two to five years.

The findings come as investment returns from “junk” bonds and government guaranteed mortgage securities to even some battered euro-zone debt have dropped against the backdrop of global central bank policies intended to suppress borrowing costs.

Corporate pension plans are hard-pressed to generate profits amid a low interest-rate environment and rising funding shortfalls. The 100 largest U.S. pension plans had a record funding deficit of $388.8 billion at the end of last year, a $61.1 billion increase from 2011, according to consulting firm Milliman, Inc.

A significant portion of the consulting firms in the PIMCO survey, which advise an average of $48 billion each in 401(K) plan assets, forecast that emerging market stocks will earn a 10 percent return over the next three to five years.

Despite that strong forecast and expectations of lower returns overall, 60 percent of the firms recommended cutting exposure to risk assets, including stocks. Among the firms, 81 percent also suggested adding inflation-protected securities, including Treasury Inflation-Protected Securities, to retirement portfolios.

Among the firms, 78 percent also predict that corporations will add global stocks to their retirement plans.

Newport Beach, California-based Pacific Investment Management Co., or PIMCO, has conducted the Defined Contribution Consulting Support and Trends Survey annually for the past seven years. PIMCO had $2 trillion in assets at the end of last year.

The company, run by founder and co-chief investment officer Bill Gross and chief executive and co-chief investment officer Mohamed El-Erian, runs the PIMCO Total Return Fund, the world’s largest mutual fund with over $288 billion in assets.

PIMCO also managed nearly $174 billion in retirement plan assets as of December 31, 2011. Gross has warned of lower returns on financial assets, particularly high-yield bonds and stocks, in his monthly letters to investors.

Many of the consulting firms surveyed, which included JP Morgan Performance Analytics & Consulting and Morgan Stanley Smith Barney, recommended adding emerging market bonds,commodities, and high-yield “junk” bonds to retirement portfolios in target-date funds.

Among the firms, 61 percent said that emerging market debt would be valuable to add, while 49 percent vouched for commodities and 39 percent vouched for high-yield.

Nearly all of the firms – 98 percent – also suggested that companies offer target-date and target-risk strategies in retirement plans.

Target-date strategies aim for a retirement date and shift asset allocation from riskier assets like stocks to more stable assets like bonds as the retiree ages.

(Reporting by Sam Forgione; Editing by Jennifer Ablan and Jim Marshall)

Why stock picking works when investing overseas

Posted on April 2, 2013 by admin

By David Randall

NEW YORK | Tue Apr 2, 2013 12:00pm EDT

(Reuters) – When it comes to picking funds, most investors would do themselves a favor by ignoring stock picking altogether.

Nearly 70 percent of all actively managed U.S. equity funds lagged their respective benchmarks over the last five years, according to a report by S&P Dow Jones Indices. About 92 percent of small cap growth funds, for instance, underperformed the S&P Small Cap 600 over that time period, while 78 percent of large-cap core funds fell behind the benchmark S&P 500. No wonder, then, that 27 percent of domestic actively managed equity funds merged or shut down over the last five years.

International small-cap equity funds was the lone category in which portfolio managers consistently added value for investors, the report showed. About 79 percent of funds in the category beat their benchmark over the last five years, compared with 26.3 percent for international stock funds as a whole.

The reason appears to be simple. With fewer analysts covering small international companies, individual portfolio managers are more likely to have an informational advantage over the broad market.

“It comes down to efficient markets. When you are looking at a large cap company, there are going to be dozens and dozens of analysts poking around the company,” said Jeff Tjornehoj, head of Lipper Americas Research.

“But with small caps, especially overseas, you tend to have situations where a portfolio manager may have the most informed opinion about what a stock price means in relation to the company’s potential earnings,” he said. Lipper is a unit of Thomson Reuters.

Funds in the international small cap universe also appear more likely to take larger positions in companies that have small weightings in the benchmark index, said Aye Soe, a director at S&P Dow Jones Indices, who authored the report.

HOW TOP FUNDS ARE INVESTING

Portfolio managers of top-performing international small-cap funds say that the large number of potential companies makes it easier to find attractive options.

“It’s difficult for the market to be efficient in such a large asset class,” said Josephine Lewis, a portfolio manager of the $60 million Harding Loevner International Small Company fund. “It’s up to more niche players who are going to be doing fundamental analysis to come in there.”

Lewis’s fund screens about 10,000 companies around the globe, compared with 3,405 companies in the S&P Developed Ex-U.S. Small Cap index, she said, looking for companies with strong balance sheets and consistent profits.

Lewis is significantly overweight in healthcare, industrials and consumer staples companies and underweight financials and energy companies. Her fund has returned an annualized 7 percent over the last five years, which was 4.6 percentage points more than the average fund in the category, according to Lipper data.

Lewis often looks for companies with strong brand names and other lasting competitive advantages. The fund’s top holding, Super Group Ltd, a maker of instant beverages and snacks, jumped 114 percent over the last year as its sales grew at a rate more than double that of its competitors. The Singapore-based company, whose brands include Cafe Nova, Owl and Coffee King, sells its instant beverages and snacks in over 50 countries, with a significant portion of revenues coming from emerging market countries in Asia. Lewis said she likes the company, which has a $1.7 billion market-cap, because of its brand name and its premium product pricing.

She has also been adding to her position in German apparel retailer Gerry Weber International AG. The company, which Lewis calls “the Chico’s of Germany” because of its focus on upper-middle-class women, is up 17 percent over the last year thanks in part to a 15.7 percent jump in fourth-quarter earnings. The $2 billion market cap company announced plans in January to expand its presence outside of the euro zone in Russia, the Middle East and North America.

For the $847 million Wasatch International Growth fund, it attributes its outperformance to a well-timed bet on Japan and a focus on consumer companies. The fund increased its allocation to Japanese stocks to 11 percent in 2012 from 6 percent in 2011 and has benefited from a 42 percent jump in the Nikkei 225 since October.

The fund, whose annualized return of 8.9 percent over the last five years made it the top-performing fund in the category, is especially interested in companies that use their Web presence to build market share, said Linda Lasater, a senior equity analyst who works on the fund.

One recent addition to the firm, for instance, is Domino’s Pizza Group PLC, Britain’s biggest pizza delivery company. The company’s shares are up 35 percent over the last year, and it plans to expand in Germany, Switzerland, Luxembourg and Liechtenstein. In addition to the company’s strong cash flow, Lasater likes that over 50 percent of the company’s UK sales come from online orders.

“You get better data, you can target the customers better, and costs are lower because you have more accurate orders,” she said.

Another fund holding, CarSales.com LTD, holds a “basic monopoly” in Australia’s online classified ads service, Lasater said. The company, which has a market cap of $2.2 billion and announced plans last month to buy nearly 20 percent of competitor iCar Asia Ltd., is up 66.8 percent over the last year.

“People constantly underestimate how much more migration there is from print to online,” Lasater said.

Along with the Wasatch and Harding Loevner funds, other top-performing funds in the category include the $446 million Westcore International Small-Cap Fund, which gained an annualized 8.7 percent over the last five years, and the $822 million Franklin International Small Cap Growth fund, which gained 7.7 percent a year over the time frame.

(Reporting By David Randall; Editing by Jennifer Merritt and Leslie Adler)

Microsoft co-founder to open investment office in Silicon Valley

Posted on April 2, 2013 by admin

By Bill Rigby

SEATTLE | Mon Apr 1, 2013 7:08pm EDT

(Reuters) – Paul Allen, the billionaire co-founder of Microsoft Corp, is opening an office in Silicon Valley to make new investments in emerging technology and internet companies.

The Palo Alto office, set to open in the next few weeks, will operate under the name of VulcanCapital, the investment arm of Allen’s Seattle-based Vulcan Inc, which manages his personal fortune, valued at about $15 billion.

Allen, 60, co-founded the world’s largest software company with Bill Gates in 1975, but left in 1983 after a bout with cancer. The riches he amassed through his large stake in the company, plus successful investments in sports and real estate, have made him the world’s 53rd richest person, according to Forbes magazine.

A pioneer in the early development of PC software and Microsoft’s technical leader for its first eight years, Allen has been a prolific tech investor since the mid 1980s, starting several companies and founding a tech incubator called Interval Research.

He has put money into hundreds of enterprises in the past 30 years, including large stakes in AOL, Ticketmaster, film studio DreamWorks SKG and cable firm Charter Communications. His record has been checkered, making money on AOL and DreamWorks SKG, but losing billions of dollars on the bankruptcy of Charter.

Newer tech investments include online real-estate agent Redfin, shopping adviser Decide.com and smartphone audio software maker Audience Inc.

The new office in Palo Alto will focus on emerging internet, software and technology companies, including middle and late-stage venture capital and pre-IPO deals, Paul Ghaffari, Vulcan Capital’s chief investment officer, told Reuters.

“We are going to expand our footprint in broad tech investments, we’d like to get more resources, people on the ground there (Silicon Valley),” said Ghaffari. “We have a real appetite to put new ideas in the portfolio.”

The leader of Palo Alto office is expected to be announced in the next few days.

The arrival of Allen’s empire in Silicon Valley may not be immediately popular with the biggest local companies.

The now-defunct Interval Research filed a lawsuit in 2010 against Valley stalwarts Apple Inc, Google Inc, Facebook Inc and others, claiming they stole its inventions, 300 of which are patented. The case is proceeding slowly in the courts.

(Reporting by Bill Rigby; Editing by David Gregorio)

Developing Nations Put Nuclear on Fast-Forward

Posted on March 22, 2013 by admin

Fast reactors can shrink nuclear-waste stockpiles, but can designers tame the inherent hazards?

By Peter Fairley on March 13, 2013

Fast reactors, whose high-speed neutrons can break down nuclear waste, are on the road to commercialization. That message has been advanced forcefully by Russia, China, and India.

At a global conference sponsored by the International Atomic Energy Agency last week in Paris, Russia and India described large demonstration plants that will start operating next year and further deployments that are still in the design phase. China, meanwhile, described a broad R&D effort to make fast reactors comprise at least one-fifth of its nuclear capacity by 2030.

By breaking down the longest-lasting and hottest components of spent fuel from light-water reactors, fast reactors would need only 2 percent of the space required by a conventional reactor to store spent fuel. Fast reactors would also reduce the time that the waste must remain in storage from roughly 300,000 years to just 300. “Are they going to eliminate the need for geological repositories? No. But it will reduce the burden,” says Thierry Dujardin, acting deputy director general for the Organization for Economic Cooperation and Development’s Paris-based Nuclear Energy Agency.

Despite that enticing promise, however, the inherent hazards of today’s state-of-the-art fast reactors also loomed large at the Paris confab, which concluded a few days before Monday’s two-year anniversary of the Fukushima accident in Japan. At the conference, Dujardin said that fuel safety and prevention of severe accidents need to be “high priorities” for fast reactor research.

The problem with most fast reactors in construction or development is the molten sodium that cools their cores. Molten sodium is highly corrosive and explodes on contact with water and oxygen. Most dangerous, however, is that the sodium-cooled fast reactor, or SFR, exhibits what physicists call positive reactivity. Unlike conventional reactors, which experience their fastest possible chain reaction when operating at full power, the SFR’s chain reaction is capable of further acceleration than its equipment is designed to handle. This puts such reactors at greater risk of a runaway reaction that could cause a core meltdown or breach its steel containment vessel.

Many technical presentations at last week’s meeting focused on improved materials and designs intended to protect SFRs from the most extreme accidents imaginable. But alternative core designs were also well represented, and some countries are hedging their bets by testing the alternatives. A U.S. company, Transatomic Power, recently revealed designs for a new kind of molten salt reactor, which has different safety characteristics than a reactor cooled by molten sodium metal and should be compact and cheap to manufacture (see “Safer Nuclear Power at Half the Price”).

This dual approach is visible within the fast reactor program of Rosatom, Russia’s state nuclear corporation. Valery Rachkov, scientific director of the Leipunski Institute of Physics and Power Engineering within Rosatom, says Russia needs fast reactors to sustain its nuclear power program. Light-water reactors under construction in Russia will give the country an additional 10 gigawatts of nuclear power capacity by 2020—a 42 percent jump—but further growth will become difficult unless Russia can manage its spent fuel, Rachkov says.

Hence Rosatom’s 2.5-billion-euro ($3.25-billion) investment directed not only at fast reactor technology but also facilities to recycle spent fuel into fuel for fast reactors. Rosatom has operated its BN-600, a 600-megawatt fast reactor, since 1980 at the Beloyarsk nuclear power plant. Rosatom expects to start operating an upgraded 880-megawatt version at Beloyarsk next year. That would be close to the 1,000-megawatt size of some commercial nuclear reactors.

Ivanovitch Zagorulko, a fast reactor specialist at Rosatom’s Leipunski Institute, says the BN-600 experienced serious sodium leaks only during its first four years of operation. And he says a 1987 incident—in which particle contaminants building up in the sodium coolant caused an acceleration of its chain reaction—was solved with an improved purification system and tighter airflow control during maintenance to keep contaminants out. He adds that the BN-800 provides further safety enhancements.

But Zagorulko says there is still a “big gap” between the BN-800’s design and the international safety criteria that Rosatom intends to meet with a 1,200-megawatt commercial-scale fast reactor, the BN-1200, now in the design phase. Sergey Shepelev, a representative of Afrikantov OKBM, a subsidiary of Rosatom, refused to discuss the BN-600’s 1987 incident during an open-panel session. When questioned after the session, Shepelev said there were “many versions” of the incident and that it was not known “which is right,” but that he was certain the BN-1200 was “absolutely a safe” design.

Rosatom is also developing another fast reactor cooled with molten lead. Lead coolant is less corrosive than sodium and chemically inert to water and air. It has never been used in a power plant, but the reactors in Russia’s nuclear submarines have long been cooled with a lead alloy. Rosatom’s plan calls for a 300-megawatt lead-cooled demonstration plant to be operating at Beloyarsk by 2020.

Some countries are more devoted to existing fast reactor technology. Indian researchers argued vehemently for the safety of sodium-cooled reactors at the Paris meeting. India’s 500-megawatt SFR demonstration plant is nearing completion at Kalpakkam, and the state-owned Indian Nuclear Power Corporation has a green light to build two more 500-megawatt SFRs at the site.

Redundant passive safety systems are one answer, according to Narayanasamy Mahendran, an engineer with Indian Nuclear Power. Backup cooling loops, for example, use convection alone to draw heat from the reactor and dump it into the air above the reactor building. Their plant has four such loops of two distinct designs. Any two should be capable of keeping a reactor cool in the event of a station blackout like the one that upended Fukushima. Similarly, he says, the core control rods are suspended by electromagnets and can thus passively drop by gravity to instantaneously scram the reactor during a station blackout.

European, Japanese, and U.S. researchers at Paris had research advances to note but no funding to support large demonstration projects. For the U.S., the focus is on finding repositories for interim and long-term waste storage. “The U.S. will be focused on geologic disposal for at least a few decades,” says Peter Lyons, the U.S. assistant secretary of energy for nuclear energy.

Absent funding in Japan and Europe is largely due to the corrosive impact of Fukushima. France is going it alone on Europe’s only well-funded fast-reactor program: a 650-million-euro design called Astrid that incorporates some bold next-generation components. For example, solid-state electromagnetic pumps move sodium coolant. They are expected to be more efficient and reliable than pumps with moving parts.

However, Astrid’s future hangs on a French energy policy review that got underway last month that could yet see the country turn away from nuclear power (see “Will France Give Up Its Role as a Nuclear Powerhouse?”). Pierre Le Coz, the project’s manager at France’s Atomic Energy Commission, says that if France has begun pulling away from nuclear energy in five years, when Astrid’s design is mature, they probably won’t get the green light to build.

Japan’s fast reactor program once led the world, but it’s now frozen—along with all but two of Japan’s nuclear reactors. Successive Japanese prime ministers seek to redefine Japan’s energy policy in the wake of the Fukushima accident. Each of the Japanese speakers last week began their talks with a reminder of the over 100,000 people who are still displaced from their homes—some of whom will never return—and of the fisheries and large forests that are still contaminated.

They were just as mindful of the accident’s impact on their colleagues’ efforts to advance nuclear energy. As Shunsuke Kondo, chairman of the Japanese Atomic Energy Commission, put it in his address: “The fact that this accident has raised concerns around the world about the safety of nuclear power generation is something Japan takes with great seriousness.”

Biogen wins EU backing for big new MS drug hope

Posted on March 22, 2013 by admin

By Ben Hirschler

LONDON | Fri Mar 22, 2013 12:02pm EDT

(Reuters) – European regulators have recommended approval of two new multiple sclerosis pills from Biogen Idec and Sanofi, both of which are expected to become major sellers.

Friday’s decision by the European Medicines Agency (EMA) was particularly significant for Biogen, since the U.S. biotech company is still awaiting a verdict on Tecfidera, or BG-12, in the United States.

Shares in Biogen, which have more than trebled in the last three years on rising hopes for Tecfidera, hit a new all-time high of $178.66 on Friday and stood 1 percent up on the day by 11.40 a.m. ET.

Tecfidera is one of the most highly anticipated new drug approvals for the pharmaceuticals industry in 2013, with analysts predicting billions of dollars a year in sales.

It will compete in the oral MS drug market against Novartis’s existing Gilenya and Aubagio, but many investors already see it as best in class.

“We believe Tecfidera will raise expectations for what people living with MS can achieve with their therapy,” Biogen CEO George Scangos said in a statement welcoming the news.

Oral drugs are changing the MS market dramatically, by offering patients a highly effective alternative to traditional injections, which can be painful and may cause flu-like symptoms.

Tecfidera and Sanofi’s Aubagio were both endorsed for treating relapsing remitting multiple sclerosis (MS), though the EMA decision still needs to be finalized before the drugs can be launched.

Aubagio was approved by the U.S. Food and Drug Administration (FDA) for the same use in September, while an FDA decision on the Biogen product is due by March 28.

Mark Schoenebaum, an analyst with ISI Group, said the European decision on Tecfidera was reassuring since the EMA only flagged up two safety issues.

The agency’s press release merely highlighted as side effects flushing, or redness of the skin, and gastrointestinal events, such as diarrhea and nausea.

FOUR-IN-ONE HIV TABLET

The London-based agency also gave a green light to Gilead Sciences’s four-drug combination pill to treat HIV/AIDS, called Stribild. Gilead shares rose 2 percent.

The flurry of positive recommendations for new medicines, each of which analysts believe will become multibillion-dollar-a-year sellers, underscores a recent pick-up in research productivity by the pharmaceutical industry.

Sales of the Biogen MS drug are expected to reach $3.0 billion a year by 2017, outstripping revenues by the same time of $2.5 billion for Gilenya and $1.1 billion for Aubagio, according to consensus forecasts compiled by Thomson Reuters Pharma.

Tecfidera will add an important new leg to Biogen’s multiple sclerosis business, which already includes the injectable drugs Avonex and Tysabri.

Ariad Pharmaceuticals also won a recommendation for its drug Iclusig for chronic myeloid leukemia, while Baxter International and Halozyme Therapeutics secured EMA backing for HyQvia as a treatment for immunodeficiencies, lifting their stock 1 percent and 15 percent respectively.

EMA XARELTO VIEW AT ODDS WITH FDA

Bayer and Johnson & Johnson, which together sell the anti-clotting drug Xarelto, had something to cheer about as well, with the EMA recommending the medicine for treating acute coronary syndrome (ACS).

That decision was in contrast to the position adopted by the FDA, which denied approval to expand use of Xarelto to reduce the risk of heart attacks and strokes in ACS patients earlier this month.

Deutsche Bank analysts said the EU stance was “an incremental positive” that would provide a modest uplift to peak sales forecasts.

Patients with ACS have suffered blood clots blocking blood supply to the heart.

Recommendations for marketing approval by the European Medicines Agency’s Committee for Medicinal Products for Human Use, or CHMP, are normally endorsed by the European Commission within a couple of months.

(Editing by Elaine Hardcastle)

Buyout firms face squeeze as investors go direct for deals

Posted on March 22, 2013 by admin

By Tommy Wilkes and Anjuli Davies

LONDON | Fri Mar 22, 2013 9:28am EDT

(Reuters) – Tired of the hefty fees charged by private equity firms and wanting more say over what they buy, big investors like pension funds and insurers are taking matters into their own hands.

Some are buying stakes in companies directly or teaming up to invest alongside private equity firms rather than locking money away in those firms’ funds.

That is posing a challenge to the $3 trillion private equity industry, where companies like KKR and Apax spearheaded the model of raising money from investors to put to work on their behalf in exchange for management and performance fees.

For the first time in their history, buyout firms are raising less money from investors, and there are signs that trend could continue.

According to industry tracker Preqin, 43 percent of investors in a survey this year said they planned to increase the money they put into co-investments, in which investors do deals alongside buyout firms but pay no fees.

The proportion of investors that currently co-invest had also risen to 36 percent by the first quarter of this year, up from 33 percent a year earlier, the surveys showed, indicating rising interest in investing outside traditional funds.

“Co-investment is an effective mechanism to get your fee down and it gives you more control over your exposure,” said Simon Moss, Head of Europe at Hermes GPE, an investor with 20 percent of its 6 billion pounds ($9.1 billion) in assets in co-investments.

In a private and opaque market, estimating how much capital bypasses private equity funds is difficult, but there are signs more investors are publicizing an alternative approach.

British insurer Legal & General said on Monday it was taking a 46.5 percent stake in UK housebuilder CALA Group alongside Patron Capital, part of a plan to do more direct investments in education, housing, transport and energy.

It follows big investors like The Canada Pension Plan Investment Board (CPPIB), which last year bought a stake in motorcycle grand prix organizer Dorna, and the Ontario Teachers’ Pension Plan Board in doing more deals outside of funds.

The $173 billion-strong CPPIB has now bypassed funds for more than $11 billion of private equity investments, according to its website, against $42 billion committed to funds since 2001. Past direct deals include stakes in jet engine component maker Avio and health and beauty group Alliance Boots.

In expanding co- and direct investing, pension funds and insurers are, in part, mimicking sovereign wealth funds which have long taken it on themselves to scour the world for assets.

FEES

The question of fees often looms largest in choosing how to put money to work. Backers of buyout funds typically face annual management fees of 2 percent and performance fees of 20 percent.

But the apparent cost-saving of avoiding fees can be misleading, as investors need in-house expertise and time on the road to examine possible deals. More concentrated exposure also means returns – or losses – are amplified.

Andre Bourbonnais, who leads private equity investments at CPPIB, told delegates at a recent conference in Berlin his fund has a team of 45 people in Hong Kong, London and Toronto “dedicated exclusively to executing on direct transactions.”

These staffing costs make going direct prohibitive for smaller investors, though by teaming up for direct stakes they can glean knowledge to help them decide on future deals.

“Sometimes private equity firms become so focused on securing an investment at the expense of thorough research … With a co-investment model, there is greater scope to objectively evaluate an opportunity,” Hermes GPE’s Moss said.

Heavy writedowns of their private equity fund holdings during the financial crisis has added to investors’ desire for more control over which companies they back.

But unlike the activist private equity manager, pension funds often prefer a hands off approach with the companies they own, and do not put their own staff on to boards.

This reluctance to commit extra resources to an investment means a lot will limit themselves to co-investing, where they can piggyback – but are also reliant – on the restructuring changes their buyout partners make to portfolio companies.

Where they do own stakes directly, pension funds often keep assets for longer than buyout houses, reducing the need for quick exits – a problem for private equity funds during the financial market crisis when deals dried up. Walgreen’s purchase of a stake in KKR and CPPIB-owned Alliance Boots last year shows it can be done, however.

TIMING

Desperate for cash as clients cut back, private equity firms have shown themselves willing to team up with investors outside of their funds, even offering prospective clients the chance.

Hermes’ past deals include a stake in law firm Parabis alongside Duke Street, and a stake in Brit Insurance with London-based private equity giant CVC.

Some private equity executives say the rise of co-investment does not threaten their business model – rather, it aids it because investors are more likely to back their funds in future.

Private equity firms that successfully offer co-investments will be the “winners” of the future, Head of Infrastructure at AXA Private Equity Mathias Burghardt said.

“The ability to offer co-investments is very important,” he told Reuters. “The investor wants to shape his own portfolio.”

Other executives caution about the rush to team up outside the fund, and say a balance must be struck.

While investors want to learn about prospective deals as early as possible, buyout houses say bringing them in at initial stages is a non-starter because they do not want to reveal their hand until they are sure about price, financing and structure.

This leaves pension funds and insurers with a short window to decide whether or not to back a deal.

“We tell them you’ve got three weeks. In three weeks you either say yes or no. Sometimes that’s too tight for them,” one industry executive said at a conference in London last week.

(Editing by Alexander Smith and Mark Potter)

Data points to growing economic momentum

Posted on March 22, 2013 by admin

By Jason Lange

WASHINGTON | Thu Mar 21, 2013 1:05pm EDT

(Reuters) – A clutch of data pointed to growing momentum in the economy during the first quarter, with jobless claims trending lower and factory activity and homes sales both on the rise.

The reports on Thursday built on recent upbeat data on hiring and consumer spending that have led many economists to see a sharp rebound in economic growth despite the onset of increased fiscal austerity. In particular, the claims data suggested March could be another month of solid job gains.

“There is enough strength in the economy to generate jobs on a sustained basis,” said Sam Bullard, an economist at Wells Fargo in Charlotte, North Carolina.

Forecasting firm Macroeconomic Advisers said the data backed its view that gross domestic product would expand at close to a 3 percent annual rate in the first three months of the year. The economy eked out a growth rate of just 0.1 percent in the fourth quarter.

However, Bullard and others noted that government belt tightening and the growing risk of a flare-up in Europe’s debt crisis are creating headwinds for the economy that could still cause trouble ahead. On Wednesday, the Federal Reserve also indicated it was concerned about these issues when it pressed forward with its aggressive policy stimulus.

The federal government raised taxes on most Americans in January and a gaggle of budget cuts began this month, with the economic bite from reduced government spending expected to be concentrated in the next few months.

“The first quarter of 2013 is shaping up to be pretty good,” said Joshua Dennerlein, an economist at Bank of America Merrill Lynch in New York. “(But) as the Fed noted yesterday, we are worried about the second and third quarter with the fiscal tightening.”

While the number of Americans filing new claims for jobless benefits edged higher last week to 336,000, a trend reading dropped to its lowest level in five years.

That bodes well for job creation in March because the data covered the survey period for the government’s monthly tally of nonfarm jobs. The four-week average of new claims fell last week to 339,750, down 6 percent relative to the survey week in February, when nonfarm payrolls increased by 236,000.

Gennadiy Goldberg, a strategist at TD Securities in New York, said the four-week average, which is seen as a measure of labor market trends, was consistent with a March payroll reading above 200,000.

BUILDING STEAM

Separately, two surveys of industry showed an increase in activity at American factories despite weakness in overseas markets like Europe.

The Philadelphia Federal Reserve Bank said manufacturing activity in the mid-Atlantic region grew in March after contracting for two months in a row.

Also, financial data firm Markit said its preliminary Manufacturing Purchasing Managers Index, which gauges activity nationwide, increased to 54.9 this month from 54.3 in February.

Data on the housing sector, which was blighted by the 2007-09 recession, was also upbeat.

Home resales hit a three-year high in February and prices jumped, adding to signs of an acceleration in the housing market recovery.

The National Association of Realtors said existing home sales increased 0.8 percent to an annual rate of 4.98 million units last month, the highest level since November 2009. The January sales pace was revised up a 4.94 million units from the previously reported 4.92 million units.

Another measure of home prices by the Federal Housing Finance Agency showed a 0.6 percent gain in January.

Also pointing to momentum in the economy, a gauge of future economic activity rose for a third straight month in February.

The positive signs on the economy were overshadowed in financial markets by a decline in tech sector shares and by worries that a banking crisis in Cyprus could enflame the European crisis. Stocks fell, as did yields on government debt.

(Additional reporting by Lucia Mutikani in Washington, Steven C. Johnson, Leah Schnurr and Richard Leong in New York; Editing by Neil Stempleman)