U.S. To Invest $1.2 Billion To Secure Potential Coronavirus Vaccine From AstraZeneca

The U.S. government has agreed to hand AstraZeneca PLC up to $1.2 billion to secure the supply of a potential coronavirus vaccine that could be ready as early as October.

Under the deal, the government will bankroll a 30,000-person vaccine trial in the U.S. starting in the summer, plus the ramp-up of manufacturing capacity to make at least 300 million doses. The first doses will be ready in the fall should the vaccine prove effective, it said.



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Alex Azar, the Health and Human Services Secretary, called the deal a “major milestone” in the administration’s effort—code-named “Operation Warp Speed”—to make a safe, effective vaccine widely available to Americans by 2021.

The vaccine in question was developed by the University of Oxford’s Jenner Institute and is one of a small group of candidates already being tested in humans. Others include vaccines from Pfizer Inc. and Moderna Inc. AstraZeneca, under a licensing deal with Oxford, has responsibility for manufacturing the university’s vaccine, and has promised to sell the vaccine without making a profit during the pandemic.

Governments around the world are counting on an effective vaccine against Covid-19 to defeat a virus that has killed hundreds of thousands of people and devastated the global economy. But to guarantee that doses are ready as soon as possible, companies must ramp up manufacturing capacity significantly before clinical trials provide solid proof that the vaccines work—a costly exercise more viable with financial support from governments and other funders.


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The U.S. government has moved fast to secure supply deals with vaccine makers. It has also awarded Moderna $483 million to ramp up production of its candidate and is supporting research into potential vaccines from Johnson & Johnson and France’s Sanofi SA . It is doing those deals through its Biomedical Advanced Research and Development Authority division, or Barda, which was set up in 2006 to prepare for biologic threats such as pandemics and bioterrorism.

Earlier this week, the U.K. government agreed to pay AstraZeneca £65.5 million ($79 million) to secure 100 million doses for its population, with 30 million of those ready as early as September. That deal relates purely to manufacturing, and doesn’t include any clinical trial funding.

AstraZeneca says it is in talks with several other governments, as well as nonprofits like the international vaccine alliance, Gavi, and the Coalition for Epidemic Preparedness Innovations on deals that would further boost production.

Oxford started a 1,100-person study in April and expects to roll the trial out to a further 5,000 participants later this month, should the first phase go well.





Its vaccine has progressed quickly, in part because it uses a technology that has been deployed in earlier vaccines developed by the university. It uses an inactivated chimpanzee virus containing the genetic sequence for the “spike protein” found on the new coronavirus.

In a small animal study, not yet peer-reviewed, it appeared to stop the virus from spreading to the lungs, protecting the inoculated monkeys from developing pneumonia. It was unclear whether the vaccine stopped infection entirely, however, as the vaccinated monkeys tested positive for virus in their noses.



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Stocks Climb, Trying To Extend Winning Streak

U.S. stocks rose sharply Tuesday, buoyed by early indications that the spread of the coronavirus pandemic was slowing in some hot spots around the world.

The Dow Jones Industrial Average rallied 2.8% in midday trading, a day after rising almost 8%. The S&P 500 and the Nasdaq Composite also jumped, climbing 2.3% and 1.5% respectively. All three indexes are attempting to rally for the third time in four sessions, though they remain down about 20% from their mid-February highs.

New York Gov. Andrew Cuomo said Tuesday that the state’s hospitalization rate has showed signs of slowing, and other hard-hit countries in Europe, including Italy and Spain, have reported a slowdown in new infections following strict containment measures.


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“It’s hard to reject the view that things are improving,” said Paul O’Connor, head of multiasset at Janus Henderson. “Markets have been celebrating this in the last couple of days.”

Still, the trends are preliminary and authorities have warned that the coronavirus infections in the U.S. and U.K. are likely to worsen in the coming week. Even as demand for intensive care units has flattened in New York, Mr. Cuomo said Tuesday that deaths related to the virus hit a record Monday. So far, nearly 5,500 people have died from the virus in the state, representing almost half of all U.S. deaths.

Even more, economic indicators have shown that a deep recession may be looming. The Mortgage Bankers Association said Tuesday that mortgage forbearance requests grew 1,896% between the weeks of March 16 to March 30. The spike comes as millions of Americans have sought unemployment benefits after the pandemic shuttered businesses.

Markets have swung sharply in recent weeks as investors have tried to make sense of a fast-spreading pandemic that has warranted unprecedented responses by the Federal Reserve and U.S. government. Monday’s gain marked the 12th consecutive trading day that the Dow moved up or down at least 1%.

All 11 sectors of the S&P 500 marched higher Tuesday. Only two of the 30 stocks in the Dow Jones Industrial Average, Merck and Pfizer, ticked lower.

Travel and leisure stocks were again among the best performers in the U.S. and Europe. United Airlines Holdings jumped 8.3%, American Airlines Group rose 15% and Delta Air Lines added 4.2%. Among cruise stocks, Royal Caribbean Cruises gained 21% and Carnival rose 17%. All five stocks remain down more than 50% for the year.

Meanwhile, in London, EasyJet soared 20% after the carrier tapped a U.K. government-aid program for short-term credit. The company’s ability to access the funding suggests that it could withstand the economic downturn, provided that the spread of the coronavirus continues to slow, according to Michael Hewson, chief market analyst at brokerage CMC Markets.

“Markets are pricing in a return to normality for airlines sooner rather than later,” Mr. Hewson said. That optimism is also driving hotel stocks higher, he added.
The rise in risk appetite led some investors to sell the safest government bonds. The yield on the 10-year U.S. Treasury note rose to 0.749%, from 0.675% Monday. Yields rise as bond prices fall.

Oil prices also ticked higher, with the global benchmark Brent crude advancing 0.3% to $33.15 a barrel.


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In currency markets, the ICE Dollar Index slipped 0.7%. The greenback has been wavering amid renewed risk appetite, according to Jordan Rochester, a currency strategist at Nomura.

“It’s definitely a risk-on day,’’ leading some investors to sell the dollar, he said.





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Precious Metals Enjoy Resurgence in Negative-Yield World


♦ Precious Metals – Stock Market News Today ♦ … – Gold purchases by everyone from central banks to retail buyers have boosted the metal to its highest level in six years, with a coterie of famous investors now touting its role as a haven from market turmoil. Silver and platinum have outpaced all other major asset classes so far in the third quarter, while palladium is up about 30% this year.


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The sudden interest in precious metals follows years of sideways trading as investors bet that steady growth would allow the world’s central banks to raise interest rates and end an era of miserly debt yields.

Instead, a deepening trade war between the U.S. and China has weighed on the outlook of nearly every major economy, adding pressure on many central banks to further cut rates—even those that already stand below zero.

Precious metals fell sharply Thursday as stocks and other risky investments rallied on hopes that coming trade talks will relieve some pressure on the world economy. Gold, silver and platinum each dipped 2% or more, trimming some of their sizable quarter-to-date gains.

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While these nonyield-bearing assets struggle to compete with bonds when the outlook for the world economy is stable, their appeal has risen as negative rates have proliferated in Europe and Japan. It also has boosted interest in stocks that are expected to pay high dividends even when growth slows, such as shares of utilities and makers of consumer products.

“There is so much flight to safety right now and metals is where a lot of that money is going,” said Bob Haberkorn, senior commodities broker with RJO Futures in Chicago.

“Traders that had been out of the metals market are coming back…and there’s been a lot of buying from new accounts,” Mr. Haberkorn said. “It’s been great, great for business.”

Another factor boosting them this summer: falling yields and growth fears have dragged a long list of currencies, from the euro and British pound to the Chinese yuan, to their lowest levels in years. Unlike currencies, gold and other precious metals aren’t under the sway of any global central bank, further heightening their appeal.

Additionally, while stocks remain near records, a recent burst of market volatility has unsettled many investors. So has a steady world-wide decline in bond yields that many believe is a harbinger of weaker growth.

Although they rebounded Thursday, yields on the U.S. 10-year Treasury note dropped near a record low earlier in the week as disappointing manufacturing data and trade tensions pushed investors into government bonds and other safe assets. Yields fall as bond prices rise.

In Europe and Japan, some bond yields have been negative for years, and investors expect they will fall further as the European Central Bank and Bank of Japan unleash more monetary stimulus. More than $15 trillion in government debt around the world now has a negative yield, meaning essentially that savers holding these bonds are paying the government to store their money.

“Gold yields zero, but zero is still much better than negative,” said Bart Melek, head of commodity strategy at TD Securities.

Hedge funds and other speculative investors are wagering on further gains. They have pushed net bullish bets on gold to their highest level since 2006, as far back as Commodity Futures Trading Commission figures go. They also have lifted bullish wagers on platinum and silver, which both are on track for their best quarter in several years, according to Dow Jones Market Data.


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Their advance comes after years of tepid investor interest, particularly in platinum, which is used as a component in auto exhaust filters for diesel engines. Platinum prices had previously tumbled as environmental concerns cut demand for diesel vehicles across the world.

But the precious-metals rally spread to platinum in July, and prices logged their biggest weekly gain in eight years last week, advancing nearly 9%.

The gains have rippled to shares of companies that mine the metals, in part because mining stocks offer individual investors easier exposure to the sector than trading metals futures contracts.

The NYSE Arca Gold Miners Index is up about 40% this year, and shares of some smaller precious-metals producers have risen even more than that. Royal Gold Inc. is up 58% for the year, while First Majestic Silver Corp. has climbed 70%.

After an extended stretch of rangebound trading, the combination of falling rates and sluggish economic activity set up the sector’s rally this quarter, said Rhona O’Connell, head of market analysis for Europe, the Middle East, Africa and Asia at INTL FCStone.


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“It was looking a bit like a pressure cooker,” she said. “It’s a sharp move that becomes self-fulfilling because you get the momentum traders involved.”

Investors Lose Appetite for Shale


BUSINESS & FINANCIAL NEWS – STOCK MARKET NEWS TODAY


… Smaller drillers, which account for sizable part of U.S. oil production, are struggling to pay off hefty debt burdensBankruptcies are rising in the U.S. oil patch as Wall Street’s disaffection with shale companies reverberates through the industry.

Twenty-six U.S. oil-and-gas producers including Sanchez Energy Corp. and Halcón Resources Corp. have filed for bankruptcy this year, according to an August report by the law firm Haynes & Boone LLP. That nearly matches the 28 producer bankruptcies in all of 2018, and the number is expected to rise as companies face mounting debt maturities.


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Energy companies with junk-rated bonds were defaulting at a rate of 5.7% as of August, according to Fitch Ratings, the highest level since 2017. The metric is considered a key indicator of the industry’s financial stress. The pressures are due to companies struggling to service debt and secure new funding, as investors question the shale business model.

Many drillers financed production growth by becoming deeply indebted, betting that higher oil prices would sustain them. But investor interest has faded after years of meager returns, and some companies are struggling to meet their obligations as oil prices hover below $60 a barrel.

Private companies and smaller public drillers have been hit hardest so far. Those producers collectively generate a large portion of U.S. oil, according to consulting firm RS Energy Group, and their distress reflects issues affecting all U.S. shale.

“They were able to hang in there for a while, but now their debt levels are just too high and they’re going to have to take their medicine,” said Patrick Hughes, a partner at Haynes & Boone.

Halcón Resources filed for bankruptcy protection in August, three years after its last trip through bankruptcy court, as it contended with a production slowdown in West Texas and higher-than-expected gas-processing costs.

Halcón’s chief restructuring officer, Albert Conly of FTI Consulting Inc., said in a court filing that those challenges led the company to become more highly leveraged, which violated the loan covenant on its reserve-backed loan. That prompted lenders to cut Halcón’s credit line by $50 million earlier this year, Mr. Conly said.


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Sanchez Energy filed for bankruptcy protection Aug. 11, citing falling energy prices and a dispute with Blackstone Group Inc. over assets they had jointly acquired from Anadarko Petroleum Corp. in Texas’ Eagle Ford drilling region in 2017. Blackstone claimed Sanchez defaulted on a joint deal to develop the assets, and that it was entitled to take them over, which Sanchez disputed.

Other shale drillers have recently missed key debt payments, and could be forced into bankruptcy. EP Energy Corp. missed a $40 million interest payment due Aug. 15 as it struggled under the weight of debt it took on to help private-equity investors including Apollo Global Management LLC buy the company in 2012.

As of the second quarter, the Houston-based driller’s total debt was six times its earnings, excluding interest, taxes and other accounting items, according to S&P Global Market Intelligence, well above the level at which lenders generally consider loans to be troubled.

The company has said in securities filings that it has until mid-September to make its interest payment, and it is considering a range of options that include filing for bankruptcy protection.

Unlike several years ago, the current round of bankruptcies isn’t driven by a collapse in crude prices. The U.S. benchmark oil price has roughly doubled since 2016, when crude bottomed out below $30 a barrel. That year, 70 U.S. and Canadian oil-and-gas companies filed for bankruptcy, according to Haynes & Boone.


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The current financial strain on shale producers is likely to intensify as many companies that took on debt after the 2016 oil slump face large debt maturities in the next four years. As of July, about $9 billion was set to mature throughout the remainder of 2019, but about $137 billion will be due between 2020 and 2022, according to S&P.

The debt of Houston-based Alta Mesa Resources Inc. is among the riskiest U.S. bonds, according to Fitch. Initially handed a $1 billion blank check by investors to invest in shale, the company said earlier this year its future is in question.

“A lot of companies are highly levered and facing maturities on their debt that I like to call a murderer’s row, maturities are coming year after year,” said Paul Harvey, credit analyst at S&P.

That could spur a race to refinance, but many energy bonds are pricing higher. A metric that measures the lowest possible yield an investor can earn on a bond without the issuer defaulting was more than 7% in July for oil and gas bonds, compared to about 4% for the overall corporate market, according to S&P. For oil and gas bonds considered junk, such yields were nearly 13%.

Energy is the largest sector of the high-yield market, but companies have backed away as the cost of capital has increased. As of July, this year’s energy high-yield issuances had fallen 40% from the same period a year earlier, while overall corporate high-yield issuances rose 32%, according to Fitch Ratings.


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“Any available capital structure is going to be more expensive than it was a year ago,” said Tim Polvado, the head of U.S. energy for the Paris-based bank Natixis SA. As is often the case in corporate bankruptcies, many equity holders might be all but wiped out while bondholders emerge as the owners of reorganized shale companies.

Senior bondholders in Houston-based Vanguard Natural Resources LLC traded about $433 million in debt for nearly all of the equity of the reorganized company, now named Grizzly Energy LLC, after the firm filed for bankruptcy earlier this year. The company’s Class C shares trade for a penny each.




Natural-Gas: Prices in Europe and Asia Plummet to Historic Lows




The U.S. Is Overflowing With Natural Gas But The Infrastructure Needed To Move Gas Around The Country Hasn’t Kept Up




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Start Trading in The Stock Market in 5 Steps


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♦ Stock Market News Today ♦ … Want to trade but don’t know where to start?


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Stock markets attract speculative capital like moths to a flame, with most throwing money at securities without understanding why prices move higher or lower. Instead, they chase hot tips, make binary bets and sit at the feet of gurus, letting them make buy and sell decisions that make no sense. A better path is to learn how to trade the markets with skill and authority.


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you can embark on learning trading, starting with these five basic steps


1. Open a Trading Account

( Sorry if it seems we’re stating the obvious. ) Find a good online stock broker and open a stock brokerage account. Even if you already have a personal account, it’s not a bad idea to keep a professional trading account separate. Become familiar with the account interface and take advantage of the free trading tools and research offered exclusively to clients. A number of brokers offer virtual trading (more on that in step five). StockMarketNews.Today has reviews of online brokers to help you find the right broker.


2. Learn to Read: A Market Crash Course

Financial articles. Stock market books. Website tutorials. There’s a wealth of information out there, much of it inexpensive to tap. And don’t focus too narrowly on one single aspect of the trading. Instead, study everything market-wise, including ideas and concepts you don’t feel are particularly relevant at this time. Trading launches a journey that often winds up at a destination not anticipated at the starting line. Your broad and detailed market background will come in handy over and over again, even if you think you know exactly where you’re going right now.

Start to follow the market every day in your spare time. Get up early and read about overnight price action on foreign markets. (U.S. traders didn’t have to monitor global markets a couple of decades ago, but that’s all changed due to the rapid growth of electronic trading and derivative instruments that link equity, forex and bond markets around the world.)… News sites such as Google Finance serve as a great resource for new investors.




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3. Learn to Analyze

Study the basics of technical analysis and look at price charts, thousands of them, in all time frames. You may think fundamental analysis offers a better path to profits because it tracks growth curves and revenue streams, but traders live and die by price action that diverges sharply from underlying fundamentals. Do not stop reading company spreadsheets, because they offer a trading edge over those who ignore them. However, they won’t help you survive your first year as a trader.

Your experience with charts and technical analysis now brings you into the magical realm of price prediction. Theoretically, securities can only go higher or lower, encouraging a long-side trade or a short sale. In reality, prices can do many other things, including chopping sideways for weeks at a time or whipsawing violently in both directions, shaking out buyers and sellers.


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The time horizon becomes extremely important at this juncture. Financial markets grind out trends and trading ranges with fractal properties that generate independent price movements at short-term, intermediate-term and long-term intervals. This means a security or index can carve out a long-term uptrend, intermediate downtrend and a short-term trading range, all at the same time.

Rather than complicate prediction, most trading opportunities will unfold through interactions between these time intervals. Buying the dip offers a classic example, with traders jumping into a strong uptrend when it sells off in a lower period. The best way to examine this three-dimensional playing field is to look at each security in three time frames, starting with 60-minute, daily and weekly charts.


4. Practice Trading

It’s now time to get your feet wet without giving up your trading stake. Virtual trading, offers a perfect solution, allowing the neophyte to follow real-time market actions, making buying and selling decisions that form the outline of a theoretical performance record. It usually involves the use of a stock market simulator that has the look and feel of an actual stock exchange’s performance. Make lots of trades, using different holding periods and strategies, and then analyze the results for obvious flaws.

So, when do you make the switch and start trading with real money? There’s no perfect answer because simulated trading carries a flaw that’s likely to show up whenever you start to trade for real, even if your paper results look perfect.

Traders need to co-exist peacefully with the twin emotions of greed and fear. Virtual trading doesn’t engage these emotions, which can only be experienced by actual profit and loss.


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5. Other Ways to Learn and Practice Trading

While experience is a fine teacher, don’t forget about additional education as you proceed on your trading career. Whether online or in person, classes can be beneficial, and you can find them at levels ranging from novice (with advice on how to analyze the aforementioned analytic charts, for example) to pro. More specialized seminars – often conducted by a professional trader – can provide valuable insight into the overall market and specific investment strategies; most focus on a specific type of asset, a particular aspect of the market, or a trading technique. Some may be academic, and others more like workshops in which you actively take positions, test out entry and exit strategies, and other exercises (often with a simulator).

Manage and Prosper… Once up and running with real money, you need to address position and risk management. Each position carries a holding period and technical parameters that favor profit and loss targets, requiring your timely exit when reached. Now consider the mental and logistical demands when you’re holding three to five positions at a time, with some moving in your favor while others charge in the opposite direction. Fortunately, there’s plenty of time to learn all aspects of trade management, as long as you don’t overwhelm yourself with too much information.

If you haven’t done so already, now is the time to start a daily journal that documents all of your trades, including the reasons for taking risk, as well as the holding periods and final profit or loss numbers. This diary of events and observations sets the foundation for a trading edge that will end your novice status and let you to take money out of the market on a consistent basis.

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Start your trading journey with a deep education on the financial markets, and then read charts and watch price actions, building strategies based on your observations. Test these strategies with FREE Demo Account, while analyzing results and making continuous adjustments. Then complete the first leg of your journey with monetary risk that forces you to address trade management and market psychology issues.


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Pfizer Agreed To Merge Its Off-Patent Drugs Business With Mylan


Pfizer and Mylan are betting that combining Pfizer’s off-patent business, called Upjohn, with Mylan—known for the EpiPen emergency allergy shot—will provide a pathway to reignite sales growth.

Shareholders of Pfizer will own 57% of the new business and the rest of it will be owned by shareholders of Mylan. The new company is expected to have between $19 billion and $20 billion revenue on a pro forma basis.

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The deal brings together two businesses whose sales have slowed since former big sellers lost patent protection and began facing lower-priced competition. For Pfizer, these include Lipitor cholesterol pills and the male-impotence drug Viagra.

Pfizer shares fell 2.9% to $41.82 in morning trading Monday, while Mylan gained 13% to $20.85. Talks of the deal were first reported by The Wall Street Journal on Saturday. The deal could trigger further changes in the generic-drug industry, shaken by competition from Indian makers and under pricing pressure from the groups in the U.S. that buy and distribute the drugs and have been getting bigger.

The squeeze has hurt the sales—and shares—of Mylan and other leading generic drugmakers, notably Teva Pharmaceutical Industries Ltd. Mylan stock has dropped by about 75% from its high in the spring of 2015.

The new company, which will be renamed and rebranded, will be based in the U.S. Mylan is incorporated in the Netherlands but run from Pittsburgh. Pfizer’s Upjohn off-patent drugs business is based in Shanghai.

The deal would further Pfizer Chief Executive Albert Bourla’s efforts to focus on patent-protected prescription drugs and vaccines. Pfizer is in the later stages of developing a number of new products, each of which could surpass $1 billion in yearly sales if approved, accelerating growth.

Michael Goettler, who runs Pfizer’s off-patent drugs business, will become chief executive of the combined company, and Mylan Chairman Robert Coury would be executive chairman. Rajiv Malik, current Mylan President, who will serve as president.

Mylan Chief Executive Heather Bresch will retire after the deal closes, which is expected to happen in the middle of 2020, the companies said Monday. Ms. Bresch, who has been with Mylan since 1992, became the pharmaceutical company’s chief executive in 2012. Ms. Bresch appeared before Congress in 2016 when Mylan drew criticism from patients, doctors and lawmakers for raising the price on EpiPen nearly 550% between 2007 and 2016.

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In May, Mr. Bourla broached the idea of a combination with Mr. Coury, a person familiar with the deal said. Earlier, Pfizer had explored spinning out its off-patent drugs business, which it calls Upjohn and is based in Shanghai, and listing it on the Hong Kong stock exchange.

The deal announced Monday is expected to be tax free to Pfizer and Pfizer shareholders, and taxable to Mylan shareholders. The new company intends to initiate a dividend of approximately 25% of free cash flow beginning the first full quarter after close.

Pfizer also reported its second-quarter results Monday. The company’s profit rose 30% to $5.05 billion on revenue that slipped 1.5% to $13.26 billion. Of that revenue, $2.81 billion came from the Upjohn business, which was down 11%.

Upjohn’s products, which besides Lipitor and Viagra include painkiller Lyrica, were once household names and generated billions of dollars in yearly revenue for Pfizer, helping make it one of the world’s biggest drugmakers by sale.

Currently the New York-based Pfizer is combining its consumer-health business with GlaxoSmithKline PLC’s in a joint venture that will eventually be spun off. Last month it agreed to buy cancer drugmaker Array BioPharma Inc. for $10.6 billion. Mylan’s board, meanwhile, has been conducting a strategic review as the company tries to revive sales by moving into more complex and higher-price generics and copies of biotech drugs.

Mylan management has touted the company’s pipeline of new products. Yet Wall Street has cooled on the company in recent years in large part because of the competition that has emerged for its top-selling product, the EpiPen.

Mylan reported $2.5 billion in first-quarter sales, down 7% from a year earlier. Mylan also is burdened by roughly $14 billion in debt, much of it accumulated from deals for other drugmakers like Sweden’s Meda.

The new company will have about $24.5 billion in outstanding debt when the deal closes. Mylan is also among several generic drugmakers under investigation by federal prosecutors and state attorneys general probing potential collusion to fix the prices on some medicines. Mylan has said it knows of no evidence of wrongdoing.

Pfizer and Mylan already work together. Pfizer makes EpiPen injectors for Mylan. And the two companies jointly make and sell generic drugs in Japan.

Artificial-Intelligence: Microsoft Corp. To Invest $1 Billion In AI Startup OpenAI


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Microsoft Corp. said Monday that it would invest $1 billion in artificial-intelligence startup OpenAI, as the software giant seeks to enhance its Azure cloud-computing platform. The companies said they would jointly develop supercomputing technologies for Azure, a fast-growing system that has helped propel Microsoft’s growth as the world’s most valuable public company.

Microsoft and OpenAI plan to work on artificial general intelligence, they said. That area represents a more futuristic version of AI that aims to work across different fields, rather than being more narrowly focused on specific tasks such as writing or translation.

Microsoft has been adding features to Azure to drive growth. Azure is second in size to Amazon.com Inc. ’s AWS cloud-computing product. Microsoft said last week that Azure sales rose 64% in the most recent quarter, compared with a year earlier.

“The quintessential characteristic for any application being built in 2019 and beyond will be AI,” Chief Executive Satya Nadella said on an earnings call Thursday.

“This is a big investment for Microsoft, even at their size,” said Stifel analyst Brad Reback. “They’ll do scores of acquisitions annually but most of them tend to be smaller technology tuck-ins.”


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OpenAI was launched in 2015 as a nonprofit with a goal of leading efforts to develop artificial general intelligence. It competes with Alphabet Inc. ’s DeepMind Technologies and others. OpenAI is led by CEO Sam Altman, a former president of startup accelerator Y Combinator.

The Microsoft investment signals a vote of confidence in OpenAI’s recent transformation into a private company from a nonprofit. In March, OpenAI revamped its legal structure to raise more money and gain scale, which enabled it to accept the investment from Microsoft.

Greg Brockman, OpenAI’s co-founder and chairman, said the company planned to spend the Microsoft investment in no more than five years. As part of the deal, OpenAI will run its services on Azure and use Microsoft as its preferred partner to commercialize its AI technologies.


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Microsoft in recent years has focused on expanding into AI, Wedbush analyst Dan Ives said. With the OpenAI deal, he said, “Microsoft is trying to find ways to commercialize and monetize their AI investments.”

Mr. Ives estimates that sales from AI-related products and services could represent a $75 billion to $100 billion market over the next decade.


Microsoft Corporation Company Profile:

Microsoft Corporation is a technology company. The Company develops, licenses, and supports a range of software products, services and devices. The Company’s segments include Productivity and Business Processes, Intelligent Cloud and More Personal Computing.

The Company’s products include operating systems; cross-device productivity applications; server applications; business solution applications; desktop and server management tools; software development tools; video games, and training and certification of computer system integrators and developers.

It also designs, manufactures, and sells devices, including personal computers (PCs), tablets, gaming and entertainment consoles, phones, other intelligent devices, and related accessories, that integrate with its cloud-based offerings.

It offers an array of services, including cloud-based solutions that provide customers with software, services, platforms, and content, and it provides solution support and consulting services.


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