A roundup of some of the North American equities making moves in both directions today
On the rise
Pfizer Inc. (PFE-N) soared after it said on Monday its experimental COVID-19 vaccine was more than 90 per cent effective, a major victory in the fight against a pandemic that has killed more than a million people, battered the world’s economy and upended daily life.
Pfizer and German partner BioNTech SE (BNTX-Q) are the first drugmakers to release successful data from a large-scale clinical trial of a coronavirus vaccine. The companies said they have so far found no serious safety concerns and expect to seek U.S. authorization this month for emergency use of the vaccine.
Health experts said Pfizer’s results were positive for all COVID-19 vaccines currently in development since they show the shots are going after the right target and are a proof of concept that the disease can be halted with vaccination.
“Today is a great day for science and humanity,” Albert Bourla, Pfizer’s chairman and chief executive, said.
“We are reaching this critical milestone in our vaccine development program at a time when the world needs it most with infection rates setting new records, hospitals nearing over-capacity and economies struggling to reopen.”
If Pfizer’s vaccine is authorized, the number of doses will initially be limited and many questions remain, including how long the vaccine will provide protection.
Novavax Inc. (NVAX-Q) soared after it said on Monday its experimental coronavirus vaccine had gained the U.S. Food and Drug Administration’s “fast-track” status.
The U.S. drug developer, which is testing the drug in a late-stage trial in the UK, said a U.S. and Mexico-based late-stage trial was on track to begin by the end of November, and data from that trial could support U.S. authorization.
The company last month delayed the start of the trial of the vaccine, NVX-CoV2373, by roughly a month due to delays in scaling up the manufacturing process.
The fast-track status makes companies eligible to submit sections of a marketing application on a “rolling” basis as soon as some data becomes available, rather than wait for all the data before submitting the application.
Air Canada (AC-T) followed other North American airline companies higher on Monday after Pfizer’s announcement brought hope for a revival in the struggling global tourism industry.
Before the bell, it announced it lost $685-million in the third quarter as Canada’s largest airline saw passenger revenue fall by 88 per cent.
Air Canada said due to lack of travel demand and flight restrictions in the COVID-19 pandemic it has cancelled orders for 10 Boeing 737-8s and 12 Canadian-made Airbus A220s, accelerated the retirement of 79 planes, and deferred the delivery of new ones.
Air Canada flew 1.7 million people in the three months ending Sept. 30, compared with 14.6 million in the same quarter of 2019.
“Today’s results reflect COVID-19′s unprecedented impact on our industry globally and on Air Canada in what has historically been our most productive and profitable quarter,” Air Canada said in a statement accompanying the results.
Air Canada has pulled out of eight regional airports and suspended 30 domestic routes to save money. It said on Monday it is set to cancel another 95 domestic, U.S. and international routes and close nine Canadian airport operations, but will wait for the results of taxpayer aid talks scheduled to begin this week with the federal government.
Marc Garneau, Transport Minister, said on Sunday negotiations with the airlines on aid packages are set to begin, but airlines must reimburse customers for cancelled flights in order to benefit.
Air Canada, in results released before markets opened on Monday, said its planes flew at 43 per cent capacity, down from the 86 per cent a year ago. That’s after cancelling thousands of flights, grounding much of its fleet and laying off 20,000 people – half its workforce.
The carrier burned through $9-million a day, or $818-million for the quarter, less than the $16-million-per-day management had forecast. The reduction is due to deferred capital expenditures and supplier payments and government wage subsidies.
Air Canada’s loss of $685-million, or $2.31 a share, compares with a profit of $636-million ($2.35) in the period a year earlier.
Walter Spracklin, a Royal Bank of Canada stock analyst, said Air Canada’s results missed his expectations on several measures, including the outlook for the final quarter of 2020. He said cash burn was lower than expected, however. “We continue to view [Air Canada] as sufficiently funded to weather the pandemic under our existing vaccine timeline assumptions,” Mr. Spracklin said in a note to clients.
- Eric Atkins
The Montreal-based company expects the active pilot population is expected to return to 2019 levels in 2022.
In a research note, Desjardins Securities analyst Benoit Poirier said: “Overall, CAE’s new outlook supports our view that the business aviation industry will be much more resilient than the civil aviation industry. Additionally, the short-term pilot requirement of 27,000 supports our view that pandemic-related capacity-reduction initiatives, furloughs and early retirements, as well as the eventual recovery, should create further demand for CAE’s services in the mid-term.”
Its shares jumped, after the world’s largest pot producer also said it was taking steps to cut as much as $200-million in costs, without giving details on how and when will it achieve the target. The stock gained over 25 per cent last week on U.S. election enthusiasm.
Canopy and its rivals shuttered plants, laid off hundreds of employees, and took other steps this year to cut expenses as the cannabis sector faces strong pressure from investors disappointed by a lack of profitability.
Smith Falls, Ontario-based Canopy’s total selling, general and administrative expenses fell 18.9 per cent to $147.3-million in the three months ended Sept. 30.
On an adjusted basis, the company posted a loss before interest, taxation, depreciation and amortization of $85.7-million, compared with a loss of $150.4-million a year earlier.
Revenue rose nearly 77 per cent to $135.3-million, beating analysts' average estimate of $116.5-million, according to IBES data from Refinitiv, as more people turned to weed for both recreational and medical usage.
On Monday, other producers, including Aphria Inc. (APHA-T), Aurora Cannabis Inc. (ACB-T) and Tilray Inc. (TLRY-Q), gained on the news and the possibilities seen from the U.S. election victory of Joe Biden.
The deal comes days after Cenovus agreed to buy rival Husky Energy to create Canada’s No. 3 oil and gas producer, as a pandemic-driven collapse in demand forces the industry to cut costs and seek consolidation to weather the downturn.
Total consideration paid to Cenovus includes $35-million in cash, 50 million common shares of Headwater and 15 million share purchase warrants.
Cenovus will own about 26 per cent of Headwater shares, upon closing of the deal, which is expected to happen around Dec. 22.
Vermilion Energy Inc. (VET-T) jumped in the wake of saying it lost $69.9-million in its third quarter compared with a loss of $10.2 million in the same quarter last year as its sales fell.
The oil and gas producer says the loss amounted to 44 cents per share for the quarter ended Sept. 30 compared with a loss of seven cents per share a year earlier.
Petroleum and natural gas sales totalled $282.0-million for the quarter, down from $391.9-million in the same quarter last year, but up from $193.0-million in the second quarter of this year.
Production in the quarter averaged 95,471 barrels of oil equivalent per day, down from 97,239 in the same quarter last year and 100,366 in the second quarter of this year.
Vermilion says the decrease was primarily due to natural declines, plant turnarounds and limited capital investment during the quarter, partially offset by increased production in France following the restart of the Grandpuits refinery in mid-June.
In its outlook, Vermilion tightened its 2020 annual production guidance to a range of 94,000 to 96,000 boepd compared with earlier guidance of 94,000 to 98,000 boepd.
In a research note, ATB Capital Markets analyst Patrick O’Rourke said: “While we do not expect VET to materially veer from the current strategy in the near-term, we believe investors are waiting to see what finger prints the ‘old is new again’ management team puts on the near and medium term outlook for the business, which in our view is most likely to focus on balance sheet improvement in the near-term.”
On the decline
Biogen Inc.’s (BIIB-Q) shares plummeted on Monday as the drugmaker’s chances of getting a regulatory approval for its experiment Alzheimer’s treatment suffered a blow after a panel of experts to the U.S. Food and Drug Administration voted against the medicine.
Wall Street analysts largely believe the panel’s near-unanimous votes against the drug, aducanumab, make it difficult for the FDA to go against the panel.
“Approving aducanumab, in the face of such an overwhelmingly negative vote and commentary, is virtually impossible and would destroy the agency’s reputation at a very tenuous time for the regulator, ahead of potential actions on COVID vaccines,” Baird analyst Brian Skorney said.
The panel on Friday voted “no” to three questions related to whether a single successful large trial of the drug was enough evidence of its effectiveness, given the failure of a second large study.
McDonald’s Corp. (MCD-N) was down after it said it would debut its own plant-based meat alternatives called “McPlant” in 2021, ending speculations over who the world’s biggest restaurant chain would partner with in a new frontier for the fast food industry.
The decision hit shares of plant-based meat maker Beyond Meat Inc. (BYND-Q), which was seen as the front runner for a contract as it had conducted tests of a so-called “P.L.T.” burger at nearly 100 McDonald’s locations in Ontario earlier this year.
Beyond Meat was not immediately available for comment. Its stock was down on Monday, ahead of its quarterly results after market close.
McDonald’s, which reported market-beating profit and revenue estimates for the third quarter on Monday, did not comment on why it did not continue with Beyond Meat’s offerings in the United States.
“Plant-based products are an ongoing consumer trend. It’s not a matter of if McDonald’s will get into plant-based, it’s a matter of when,” McDonald’s Chief Executive Officer Chris Kempczinski said on a call with analysts.
Analysts, rival fast food companies and plant-based protein producers have been closely watching McDonald’s plans as it is one of the few national chains yet to sell plant-based meat burgers on a permanent basis.
While other chains have started offering plant-based meat options, including Restaurant Brands International Inc’s Burger King, White Castle and Dunkin' Brands Group Inc , a McDonald’s contract could be the biggest and would put the plant-based meat movement front and center in mainstream America.
With files from staff and wires