WEBVTT - Bloomberg's Koons on Pfizer, Again's Kilduff on Oil  (Audio)

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<v Speaker 1>I'm Charlie Pellett's stocks are advancing as the SMP five

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<v Speaker 1>This is taking stock with Pims Box and Kathleen Hayes

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<v Speaker 1>on Bloomberg Radio. Fiser may have had to walk away

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<v Speaker 1>from its one hundred sixty billion dollar takeover of Allergan

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<v Speaker 1>last month, but that doesn't mean it's sitting back and

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<v Speaker 1>resting on its laurels. Today it agreed by Annacre Pharmaceuticals

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<v Speaker 1>for five point two billion dollars and in this step

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<v Speaker 1>will gain control of an experimental treatment for eczema condition

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<v Speaker 1>that affects about eighteen to twenty five million people in

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<v Speaker 1>the United States. Joining US Now as Cynthia Coons of

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<v Speaker 1>Bloomberg News, she wrote the lead story for the terminal

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<v Speaker 1>today and she joined us now to tell us more

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<v Speaker 1>about the deal and what it means for Freiser. So

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<v Speaker 1>how did this come about? Well, its farther stand this

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<v Speaker 1>deal only took about a month to come together, and

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<v Speaker 1>Fisor can move quickly when they want to. Clearly, they

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<v Speaker 1>had a lot of cash um and they're using cash

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<v Speaker 1>they have within the US UM for this deal. So basically,

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<v Speaker 1>ever since the Allergan deal came apart, they've been saying,

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<v Speaker 1>you know, it's been saying the CEO Fiser that he's

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<v Speaker 1>after going after late stage assets, assets that are going

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<v Speaker 1>to bring revenue quicker instead of early stage, say scientific

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<v Speaker 1>geared companies that are developing drugs, but there still might

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<v Speaker 1>be years to prove whether or not they work. And

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<v Speaker 1>so this is a perfect example of that. This is

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<v Speaker 1>the kind of thing that he would have been eyeing,

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<v Speaker 1>and they moved quickly so that they didn't end up

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<v Speaker 1>in a competitive bidding process, which makes a lot of

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<v Speaker 1>sense for them, Cynthia, this is what are all in

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<v Speaker 1>five point two billion dollar deal, including the debt. What

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<v Speaker 1>does this deal indicate about Fiser's plans for a split

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<v Speaker 1>in their business of new drugs, new medicines, and then

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<v Speaker 1>in another company, perhaps those medicines and drugs that have

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<v Speaker 1>lost protection. If anything, it looks now like they're closer

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<v Speaker 1>than ever to going down the road of a split.

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<v Speaker 1>If they weren't thinking of doing that, there wouldn't be

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<v Speaker 1>an urgency in deals. And it feels as though this deal,

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<v Speaker 1>coming so quickly out of the gate after the Allergan

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<v Speaker 1>deal fell apart, is an indication that they're going to

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<v Speaker 1>move quickly. They're gonna do a lot of deals and

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<v Speaker 1>they're going to get the company ready for a split.

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<v Speaker 1>It would be pretty hard to shareholders aren't going to

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<v Speaker 1>go ahead with a split, considering they spent hundreds of

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<v Speaker 1>millions of dollars assessing this possibility already. But of course

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<v Speaker 1>they're going to take certain things into consideration, and one

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<v Speaker 1>of those is the tax implications of a split. One

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<v Speaker 1>of the arguments that they've made is that their competitors

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<v Speaker 1>in the space of Brandon Pharmaceuticals, a lot of them

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<v Speaker 1>are DOMA filed overseas, and obviously fives I wasn't able

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<v Speaker 1>to go ahead with that plan, So they're going to

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<v Speaker 1>look at things like that when they decide whether or

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<v Speaker 1>not a split is viable. But doing a deal like

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<v Speaker 1>this just indicates that they're trying to bulk up the

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<v Speaker 1>innovative side of the business so that they have the

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<v Speaker 1>pipeline and the approval is coming down the track ticking

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<v Speaker 1>over in the next couple of years, be a competitive

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<v Speaker 1>company on their own as an independent innovative company. Fungus

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<v Speaker 1>how how how important are these to FIS or how

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<v Speaker 1>big are these markets potentially? Well, ex is a very

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<v Speaker 1>large market. This is specifically a treatment for a topic dermatitis,

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<v Speaker 1>and if it's improved, this is a very competitive segment.

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<v Speaker 1>But if it's approved, it's going to be for the

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<v Speaker 1>mild to moderate category, which is pretty niche, and that's

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<v Speaker 1>where more Fiser could make a mark with it. Of course,

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<v Speaker 1>they're going to have to prove a dermatologist that this

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<v Speaker 1>is the drug they need to use for this. They're

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<v Speaker 1>obviously using other things right now, and so this isn't

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<v Speaker 1>This is kind of going to be carving out a

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<v Speaker 1>new a new category there. And so to some extent

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<v Speaker 1>some analysts have said, look, it's probably more like a

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<v Speaker 1>one to two billion dollars in sales kind of target

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<v Speaker 1>for this drug rather than two plus billion. But by

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<v Speaker 1>there's a really strong company. They have a long history

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<v Speaker 1>of trying out new drugs, and they can do this.

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<v Speaker 1>They can just they just have to convince dermatologists that

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<v Speaker 1>this has got to be the kind of standard of

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<v Speaker 1>care for a new patient population. Thank you very much,

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<v Speaker 1>Cynthia Coon's Bloomberg Healthcare of porter telling us about Fiser

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<v Speaker 1>and their acquisition of Anacor shares A visor up about

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<v Speaker 1>half a percent today. They're up about three percent so far.

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<v Speaker 1>This year and it pays a dividend of three point

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<v Speaker 1>six percent. All let's turn our attention now to the

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<v Speaker 1>energy markets. With energy prices moving higher. Right now, the

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<v Speaker 1>benchmark West Texas and some media contract taking a look

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<v Speaker 1>at this month forward is up more than three and

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<v Speaker 1>a quarter percent. Here to tell us more, John Killed

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<v Speaker 1>a founding partner of Again Capital. John always a pleasure. UM.

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<v Speaker 1>I wonder if you could comment on the report that

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<v Speaker 1>Goldman Sachs has said that the global glut of crude

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<v Speaker 1>has turned into a deficit? Do you buy that? Um,

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<v Speaker 1>they're a little ahead of me on that conclusion. Tim,

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<v Speaker 1>I'm always good to speak with you as well. By

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<v Speaker 1>the way, UM, I don't the numbers don't quite add

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<v Speaker 1>up that much. I think there was a little overshoot

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<v Speaker 1>in terms of how much Nigerian oil production has been

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<v Speaker 1>lost over the past a couple of weeks here now,

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<v Speaker 1>the Nigerian oil Minister was on the wires today saying

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<v Speaker 1>that they they're pumping one point four million and I

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<v Speaker 1>had to say, it's not very precious oil either. This

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<v Speaker 1>oil was sitting on tankers better part of this past

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<v Speaker 1>year looking for a place to sell into. So you

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<v Speaker 1>know it has spite the market, but you have to

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<v Speaker 1>take a hard look as to how valuable this oil

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<v Speaker 1>really is. So you have long been arguing that the

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<v Speaker 1>bottom and oil had not been actually established. You still

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<v Speaker 1>feel that way. You've been traded in the mid forty

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<v Speaker 1>bucks a barrel for some time now in West Texas Intermediate. Yeah,

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<v Speaker 1>I mean, we're obviously, you know, good ways away from

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<v Speaker 1>where we were in terms of the bottom at this point.

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<v Speaker 1>But when you when you look at these we've strung

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<v Speaker 1>together some significant supply distruction events that were outliers are

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<v Speaker 1>the Ka oil workers strike, as Tar Sanspire, this situation

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<v Speaker 1>with Nigeria, and um. You know, I think part of

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<v Speaker 1>what's propping prices of a bit is a strong demand

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<v Speaker 1>out look that I don't see necessarily playing out, particularly

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<v Speaker 1>as it relates to the energy intense Asian economies led

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<v Speaker 1>by China. The data just it's being poor every time

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<v Speaker 1>one of these countries like Japan, South Korea, or the

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<v Speaker 1>Chinese report, So I think the demand side of this

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<v Speaker 1>equation is not going to hold up. And then if

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<v Speaker 1>the supply situation proves to be transitory through some of

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<v Speaker 1>these instances that we're going through, uh, we'll be back

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<v Speaker 1>in the soup again pretty easy. Can you can you

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<v Speaker 1>make any comment on any production outages that may exist

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<v Speaker 1>in places like Canada, but also across the ocean in Libya. Well,

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<v Speaker 1>the Libyan situation is very interesting. It keeps evolving. I

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<v Speaker 1>think the deal that's a secretary carry announced today is

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<v Speaker 1>a big step. And actually there is going to be

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<v Speaker 1>a loading now again to a cargo in East Libya,

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<v Speaker 1>so they that is a switch that's just ready to

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<v Speaker 1>be flipped. Now, the two sides there have been fighting,

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<v Speaker 1>you know, intensely with each other, denying the export export

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<v Speaker 1>of oil there. But if that ramps up, which it

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<v Speaker 1>easily could, Uh, that's gonna be another factor for this

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<v Speaker 1>market now that the one supportive outage him is down

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<v Speaker 1>in Venezuela because they are on the precipice of an

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<v Speaker 1>economic implosion, their chumber's days pulling out, so we could

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<v Speaker 1>in fact lose their oil and that that could be

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<v Speaker 1>a bit of a game changer for the market. More

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<v Speaker 1>than anything else. Has China's economy, the slowdown there have

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<v Speaker 1>been completely priced into the market now, the oil market, No,

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<v Speaker 1>I don't believe it has actually as a matter of fact,

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<v Speaker 1>you know, we know that they're they're scrambling to try

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<v Speaker 1>to prop up as much growth as they can right now,

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<v Speaker 1>and they haven't even started, um, you know, rationalizing their

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<v Speaker 1>steel industry. The other thing, too, is that a lot

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<v Speaker 1>of the quote unquote demand growth be seen out of

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<v Speaker 1>China has really gone into stockpiling and be to supply.

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<v Speaker 1>Uh these teapot refiners they're actually making a hundred and

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<v Speaker 1>fifty of the refined product capacity. They have been exporting

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<v Speaker 1>record amounts of diesel fuel, which is contributed to a

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<v Speaker 1>glut there. So I think that there's a lot of

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<v Speaker 1>dynamics there that I don't think had been priced into

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<v Speaker 1>the market on the bare side of the equation. John,

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<v Speaker 1>of course, you've taken note of Sandridge Energy and it's

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<v Speaker 1>filing for bankruptcy protection. Are we're going to see more

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<v Speaker 1>of these bankruptcies in the United States? We've had quite

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<v Speaker 1>a few now, and a Sandwich is obviously pretty notable,

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<v Speaker 1>But yes, I do. I think that there's still more

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<v Speaker 1>to come. And um, I'm still waiting for some deals

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<v Speaker 1>to be struck here because I know that the rich,

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<v Speaker 1>I keep saying, throwing this whole thing, the rich are

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<v Speaker 1>gonna get richer. Penn um, and then there's some good values.

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<v Speaker 1>The one thing we can take hard in as Americans

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<v Speaker 1>and consumers is that these assets are obviously through the

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<v Speaker 1>bankruptcy process will be repriced. So it's not like they're

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<v Speaker 1>going to vanish into pin air to be lost forever.

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<v Speaker 1>The infrastructure and all that's still there. It's just that

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<v Speaker 1>now hopefully they build these new companies that emerge will

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<v Speaker 1>be able to produce oil at new lower prices, which

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<v Speaker 1>should be good for everybody. Are you surprised that Goldman

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<v Speaker 1>Sacks was surprised to buy the sudden oil market turn

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<v Speaker 1>and the glut vanishing? Um? I guess you know these

0:09:57.800 --> 0:10:00.280
<v Speaker 1>are in the energy market cap. You know, you know,

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<v Speaker 1>I've talked about this space for over the years now.

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<v Speaker 1>There's always something UM and always had to be kind

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<v Speaker 1>of be on the lookout for stringing together these events

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<v Speaker 1>when they start to occur there like celebrity debts, they

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<v Speaker 1>seem to come in threes, if not more, and UM,

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<v Speaker 1>you know, you gotta deal with it. So but I

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<v Speaker 1>think that there may be an overreaction on their part

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<v Speaker 1>at this point, and I would be careful because it's

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<v Speaker 1>interesting that a lot of the they had record length

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<v Speaker 1>in the market coming into this run up that's been

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<v Speaker 1>shed with the deal of it, and we've also seen

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<v Speaker 1>the build up now of shorts in this market. We

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<v Speaker 1>get to see all that data thanks to the CFCC

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<v Speaker 1>every week, as you know, and that's been building up,

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<v Speaker 1>so they they might have been a little late here

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<v Speaker 1>if you asked me. All right, well, John Kilda, thank

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<v Speaker 1>you so very much, right on time for us. He's

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<v Speaker 1>founding partner at Again Capital. He's not entirely convinced at

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<v Speaker 1>the bottom and oil prices has been set. The market

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<v Speaker 1>has not priced in the slowdown in China, for example,

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<v Speaker 1>John killed up joining us today to talk about the

0:10:58.320 --> 0:11:01.600
<v Speaker 1>move up in oil. I'm Kathleen Hayes along with Pim

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<v Speaker 1>Fox taking stock on Bloomberg Radio. Dave Wilson will be

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<v Speaker 1>coming up with his chart of the day and the

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<v Speaker 1>economics Brief with carl Rick Odonna from Bloomberg Intelligence. Keep

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<v Speaker 1>it right here on Bloomberg Radio.