News that the Trump administration is considering new tariffs on $11 billion of European goods led to a broad sell-off of stocks Tuesday. The Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) closed near their lows for the session, and declining stocks outnumbered rising ones by about 3 to 1.
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As for individual stocks, Novartis (NYSE:NVS) completed its spin-off of eye care specialist Alcon (NYSE:ALC), and Zogenix (NASDAQ:ZGNX) plummeted after the Food and Drug Administration (FDA) rejected a drug application.
Novartis completes spin-off of Alcon
Swiss pharmaceutical giant Novartis completed the spin-off of its eye care business and shares of Alcon started trading today, closing up 0.2% above the opening price to $58.04. Shares of Novartis dropped 12.1% to $83.41 after shareholders received one share of Alcon for every five shares or American depositary receipts of Novartis.
Alcon is the global leader in eye care, selling surgical instruments and consumables, implants, contact lenses, and products for ocular health. The business had sales of $7.1 billion in 2018, with the surgical unit growing sales 7% to $4 billion and vision care sales up 3% to $3.1 billion. The company thinks it will achieve mid-single-digit sales growth through 2023.
Novartis is spinning off Alcon in order to focus on its core pharmaceutical business. The company has five drugs selling over $1 billion annually in its portfolio, and has 10 more potential blockbusters it expects to launch in the next two years, as well as a closely watched gene therapy program.
Zogenix stumbles with drug application rejection
Shares of Zogenix, a pharmaceutical company specializing in treatments for rare diseases, plunged 22.9% after the FDA rejected its New Drug Application (NDA) for a drug intended to treat a rare form of childhood epilepsy.
The NDA is for Fintepla, a treatment for seizures caused by Dravet Syndrome and a potential competitor to GW Pharmaceutical's cannabinoid-based Epidiolex. The agency cited two reasons for the Refusal to File letter: Certain non-clinical studies needed to assess the chronic administration of the drug were not submitted, and the application contained an incorrect version of a clinical data set, which prevented the review. The company has requested a meeting with the FDA within 30 days.
The good news for Zogenix is that the FDA didn't request any additional clinical studies, which would have set back drug approval for months. The request for additional information and the correction of the data set could be minor setbacks, but investor confidence was shaken by what was clearly a mistake in the company's submittal.