Stocks powered higher on news of a trade agreement between the U.S. and Mexico. The Dow Jones Industrial Average (^DJI 0.16%) broke 26,000 for the first time since February, and the S&P 500 (^GSPC 0.03%) closed at a record high.
Today's stock market
As for individual stocks, Tesla (TSLA -2.76%) investors largely shrugged off the announcement that it will remain a public company, and Pfizer (PFE 0.76%) presented details of a drug trial that had big implications for smaller competitors.
Tesla's go-private plans are off
Shares of Tesla slipped 1.1% to $319.27 following founder and CEO Elon Musk's late-night announcement on Friday that plans to take the company private are being dropped. Musk said in a blog post that according to feedback he has received, most shareholders would prefer the company to stay public. Tesla's independent directors also released a statement saying that the special committee set up to pursue the transaction has been dissolved.
Seventeen days after unexpectedly tweeting that funding was secured and that "[i]nvestor support is confirmed" for a deal to take Tesla private at $420 a share, Musk admitted that there were significant roadblocks to his plan. Some institutional shareholders have limitations on how much they can invest in private companies, and there is "no proven path" for most retail investors to continue to own Tesla shares if it were private. The mercurial CEO also said that the process of going private would be time-consuming and a distraction at a critical point in the company's history.
In other words, the reasons for canceling the deal are not very different from the questions observers have been raising since the original announcement, which had the stock price careening between $387 and $288. The muted reaction to the doomed idea today was probably more of a sigh of relief than anything.
Pfizer releases drug trial details
Drug giant Pfizer released details of a successful trial of a drug for heart damage from a rare disease, and although that company's stock had little reaction, falling 1.9%, shares of companies with potentially competing drugs reacted sharply. Alnylam Pharmaceuticals (ALNY -3.17%) soared 16.2%, Ionis Pharmaceuticals (IONS 3.14%) jumped 7.8%, and Eidos Therapeutics (EIDX) plunged 31.1%.
The trial was for tafamidis, a drug for transthyretin amyloid cardiomyopathy, a rare and fatal disease where destabilized amyloid proteins accumulate in the heart and cause damage. Tafamidis stabilizes the proteins, slowing the progression of the disease, and the test results showed that it reduces hospitalization by 32% and mortality by 30%.
TTR amyloidosis (ATTR), the disease that leads to the heart damage, comes in two forms: a hereditary form caused by a gene mutation, and an age-rated version called "wild type" ATTR. The Pfizer drug is meant to stabilize the disease in both forms, while the drugs from Ionis and Alnylam are based on a new approach designed to silence the production of the abnormal proteins at the source, and are aimed at addressing nerve damage caused by the hereditary form only. In today's presentation, Pfizer revealed that the test results that showed benefits for subjects with the hereditary form did not have statistical significance, suggesting that the immediate threat to Ionis and Alnylam may be smaller than investors had feared.
On the other hand, Eidos, a small biotech that had its initial public offering in June, is working on a drug that targets both types of ATTR with a stabilization approach, putting it in head-to-head competition with Pfizer. It's not all over for Eidos by any means, but Pfizer is further along, and that had investors worried about its stock today.