Allergan Is A Short-Term Cosmetic Fix For AbbVie: Nisen

ADVY shares down fourteen point six percent, Algan shares surging. Joining us here in our bloombergant to Active broker Studios Max Neeson. As always, we love having you and biotech, pharma and healthcare calumnists with Bloomberg opinion. Is this a bad deal for AV I? I think so. I see why investors are reacting the way that they are. So the kind of motivation of the steel is that A V's biggest product a Humira. It's a blockbusters for inflammatories

these like arthritis. It's already starting to face buy a similar competition in Europe and that's coming in America in three So that's gonna blow just a giant hole in its revenue and you know there there's just not enough and its pipeline to deal with that. So this is a way of kind of getting some replacement for that. The question is whether this is actually going to help

in the long term. You have Alegan with the lead product in Botox, where where you know sales are likely to be pretty durable but are starting to level off and there's some competitive threats. So while you get kind of this big you know, cost cutting opportunity and a big EPs boost upfront, the question is what this does for the company in the long run. Yeah, it's interesting. I'm just looking at the five year charge for Elegant.

It's not pretty. It's been a kind of a steady decline down from you three change down to where we were today. Um, So obviously the market pricing in the slower growth as you mentioned for the both TX business. Dude, does this combined company are they having any discussions about, Gee, now we're bigger, we've got more resources, we can invest more are in R and D and try to drive

our growth that way. Yes, So that this sort of contradictory messaging on this On one hand, you know, in order for this deal to pay off, you're gonna need to have big cost energies, You're gonna have to cut back on R and D. But then at the same time, you know more cash is going to be flowing into R and D. So so the net of that is is a little bit confusing. And you're not buying Allergan for its R and D capability. This is a company

that really deliberately had a different model. We go out and we look for the best science out there, and then we we bring it in. They aren't developing drugs on their own, so kind of the fit and the added capability doesn't really come from that. It just theoretically comes from having more cash to spend on everything apart from what they're you know, they spent on the deal and they're gonna be spending on surfacing their debt. Now.

So let's zoom out a little bit because this deal comes at a sort of interesting time in the political cycle. President Trump coming out with an executive order this week talking about trying to make medical pricing more trade it's parent and thus lowering it. I have to wonder whether a deal like this between two big pharmaceutical companies would be viewed pretty negatively by any Trust officials given where

we are in the election cycle. So I think that this one is is actually going to be all right, even though, as we saw just yesterday, cell Gene is gonna have to sell off a drug in order to get its deal with with our cyper Stal Myers is selling a cell Gene drug to get that deal to go through this one, there's not a tremendous amount of overlap in the things that the two companies work on in the areas that they focus on. On one hand that that kind of brings the strategic fit into question.

It probably does give them an easier time with any Trust officials. And one of the reasons that this does sort of appeal at least a little bit is that Allergan is focused on medical aesthetics, on you know, botox for the face, cool sculpting. Those are things that are are often not really pressured by by you know, drug

costs scrutiny in the same way. I just I'm struggling to understand if this doesn't necessarily lead higher costs and better negotiating power for these two big pharmaceutical companies other than just job efficiency. In otherwords, job cuts, what are what's what's the value proposition here? Then, so the this is pretty clearly a financially driven transaction. They just think that they can um you know, benefits from the cash flow and and you know, by cutting eventually drive some

kind of return and diversify away from from Humira. But the big question is, you know, by the time that they're really going to need that diversification, how much is gonna be there from from Allergan. You know, Botox has to keep delivering and stay durable, as do a number of other products, and uh, you know, there there there has to be maybe something from the pipeline, and it's a pretty weak roster of drugs for the future that

they're getting here. I'm just not sure that you know that the sixteen or so billion in revenue that Allergan has now is going to be there when when Abby really needs it. Yeah, I'm looking at Allergan stock right now, it's about the you thirteen or fourteen percent below the deal price, suggesting that I guess investors don't think, at least in the near term, anybody's going to come in and try to top the bid or anything like that.

So it kind of goes to the issue of maybe not a lot of interest in this company, and I think Max's, as you stated, it kind of looks just you know, there aren't a lot of synergy. So maybe this is, as you mentioned, just a diversification move on on the part of Abby. And if the question is is it worth sixty billion dollars to diversify your redness stream? I mean, the size of the revenue hole is just so enormous, it's it's impressment. You know, Humira did nearly

twenty billion dollars in sales last year. It's the best selling drug in the world. Replacing that takes a big deal. Uh. The question I think was was this the right one or the right use of that that big pilot capital. Yeah, exactly, Max Neson, thanks so much for joining us. Max's Biotech, Pharma and healthcare calmness for Bloomberg Opinion. Facebook jolted the crypto asset world earlier this month, saying that they were

planning to unrule Libra. This was going to be a way to serve underbanked or non banked customers and create some sort of alternative method of payment on its platform. The question is how much is this a game changer for the cryptocurrency world. How much is this giving a boost to bitcoin valuations? Here to answer all of those questions, I'm so pleased to say, Danny Masters joining us in

our Bluebrigoda Active Brokers Studios. Danny Masters is chairman of coin Shares Group, which overseas about fifty million dollars in the platform and is based in London. He also you may know him as the former global head of Energy and Trading at Morgan Guarantee Trust now JP Morgan. Danny, thank you so much for being here. So let's start there. Do people understand what libra is if they look at

it as a cryptocurrency? I think cryptocurrency comes with certain mystique around it, but I don't think Libra and the calibra will it associated with it really represents a cryptocurrency. I believe it is a representation of fiat value, primarily dollars, but probably also currencies were not quite sure yet but

transported on cryptocurrency rails. What do you think Facebook strategy is for getting into the crypto business that kind of came out of no words but an advertising platform effectively, Well, I think if you look at Facebook as a company most of its revenue comes from US advertising, but most of its active users live overseas, and Facebook hasn't come up to date with an effective way monetizing those overseas users.

So having what the French would describe as a shadow banking system with with Libra not not a compliment, by the way, is a way to start to monetize their overseas and users. So you said that it was another form of payment using the cryptocurrency rails, in other words, the infrastructure the technology behind cryptocurrencies. Is this why bitcoin has rallied that basically Facebook would be paving the way

for people to easily make payments using bitcoin. Well, I think the bitcoin rally itself is rooted in a perception of a week of dollar environment, which is also the catalyst for gold. Currently, it has been rooted in some green shoots post the cryptowinter from early in some coins which represent equity and some crypt winter come into a

theater near you, dot um. But but now I think I think as far as bitcoin itself is concerned, our conclusion is that if Libra and it's two and a half billion users can easily switch from fiat money into bitcoin and actually represents the biggest onboard ramp to bit coin as as yet come into existence. So give us a sense of what the regulatory environment has been historically over cryptocurrencies. I don't think it's much, but I may be mistaken, but my senses if an entity like a

Facebook gets involved, that could change things very quickly. Yes. Well, Bitcoin as a very new kind of asset has really stretched regulators in terms of their treatment. And the regulatory perimeter as it's called, which by the way, is usually a national perimeter, is challenged by a global currency like bitcoin, and the reaction from regulators around the world has been

very mixed, some very positive, some very negative, some somewhat confused. Um, the libra concept, because it is so closely tied to the legacy banking system, is almost a combination of difficult crypto legislation and regulation with difficult banking regulation. So I think, and we have some experience in this. We know ourselves produce some asset backs coins that rail on cryptocuncy infrastructure. We've spent many years trying to solve that regulatory puzzle,

and Facebook have that ahead of them. So you also lead the launch of the world's first regulated bitcoin and fund. I believe I'm wondering, as you look at this incredible rally that we've seen in a bitcoin, just absolutely surging, I have to wonder whether there's still is value here or if this is just sort of a knee jerk reaction to the end of the crypto winter that will

be reversed. Yeah. I think in the very short term here we have to recognize that it's been a spectacular rally, you know, off of a low, low, low level in terms of the historical range um. And going forward, you know, I think one has to keep in mind the scale of bitcoin, and indeed this has brought into light. When you look at the scale of Facebook, there may be a hundred and fifty million wall it's for bitcoin in existence in the world today, there are two and a

half billion Facebook uses. It took Facebook ten years to get from a million users to a billion users. And when you look at those numbers and that timescale, I think you can clearly see there's a long run way at a bitcoin. I have to look at Bitcoin prices have risen from more a little bit more than four thousand dollars April one to eleven thousand, three hundred and sixty three dollars today exactly. It's an interesting chart. You put that chart up there for the last several years,

and that's a picture of violatility. So Danny, I know that coin Shares is the largest crypto asset manager in Europe. So I want to ask you, given your perspective, step back a little bit just for our listeners to get a sense of how do you think crypto coins are, cryptocurrencies will develop and what some of the applications might

be over the next several years. I think there's you know, one of the one of the really fascinating things about bitcoin is it can be viewed in so many different lights, um and and it is so international. Some people consider it to be a proxy for early state technology, some people consider it to be a currency summer commodity, and and that's what you know. People can find reasons to

get to have appeal from bitcoin in many, many different ways. Um. I think underlying that is the concept of some sort of a little bit of financial freedom and this concept of appeer to peer transactions of originally Bitcoin, now Libra and potentially other assets in the future. And I think that's in response to a banking system which is and an asset transfer system which is actually quite dated. Now. So where are we just quickly, Danny, in the evolution

of institutions adapting or adapting cryptocurrencies. Well, again, it's a slow it's a slow development. Um. It was interesting to see Fidelity actually did get over the line here in the United States and produced their institutional custody solution which is slowly growing out coin based. Also who in the US are making a big push on the institutional custody

side as well. And so, you know, I think we can say that this whole episode with Bitcoin to date has happened in isolation of institutions, and institutions will not arrive until we can say with certainty your assets are not going to disappear or be hacked. That doesn't happen in any other institutional asset class. But that seems to be you know, in the in the immediate future, and I think that's going to be a positive Danny Masters,

thank you so much for joining us. Well. The U S consumer confidence fell in June to the lowest level since twenty September. The indext came in at one pot five That was lower than any of the estimates in the Blueberg survey consensus was one, so a big miss there. Help us dig into the numbers a little bit. We welcome back Lynn Franco, Lynna's director of Economic Indicators at the Conference Board. She joins us here in our Bloomberg eleven three oh studios. Lynn, thanks so much for joining us.

Surprising miss here for the June period. What was driving it? Well, I think the number one concern was the trade and tariff discussions, and I think heated up quite a bit in early June, both with Mexico and China. Seems to have rattled consumers confidence both in the present term and and the outlook. So it remains to be seen. I mean a little bit of it dissipated in regards with Mexico. We have to see what happens at the G twenty summit um. But hopefully we can recoup some of this

lost next month and it doesn't derail spending. So at what point do we care about this? Because basically consumer more than two thirds of the economy in the United States, has been the driver of the recovery. This is the area that Michael McKie of Bloomberg News in television radio has said this morning is what to watch to determine when the cycle will turn. What is it concerning to you. I think if we get you know, sort of back

to back declines going forward. Now, if we have another decline in July, another decline in August, um, i'd be I think I'd take volatility as positive news that we can say, well, you know, it was a few events that sort of rattled them for one particular month, and we're back on track. It's still a strong reading. But if we continue on a downward trend, then I would become a little bit concerned. So this index has historically been highly correlated with payrolls and with employment, and still

the pictures still generally good. There there any cracks in the employment from from your data. Well, we did see the number of consumers who said jobs are hard to get shot up um and that's at the highest level now since you know, November of and I think that could be related to the employment data that we saw in May, where there seemed to be you know, we're not hiring, but we're not firing either, and there was

a pause there. So I think we need to keep an eye on what happens in terms of jobs in the months to come as well, And can you just give us a sense of the read through of the consumer confidence data with potential increase or slow down in the U S economy in other words, with the lag effect here well, generally the we we take a look at the expectations index, so that can have like a six month lead, but again we need to see sort of a persistent downturn that then manifests itself in the

present situation as well. So it's it's interesting to, you know, take a look at the two components and see if they're moving in sync, and if they're both heading south, then we could begin to see a weakening and consumer

confidence and spending and the economy as a whole. One of the things at least, and I've been hearing more and more over the less several weeks when we talk to economists and fund managers, is that the potential and maybe even likelihood for some type of for a recession, and maybe MIDI or anything in your data suggesting that that is reasonable expectation. As of right now, we're not

expecting a recession at least this year. Obviously, you know, the probability could increase if we begin to face you know, encounter more tail winds, so to speak. But for right now, you know, we're more a little bit concerned. I think with a divergence between you know, business confidence and consumer confidence and to see whether or not those two then sort of we can close the gap there, um, because we've got business leaders who are significantly less confident than consumers.

I'm just wondering if there is something in particular that we can pinpoint as an issue that's the key one that consumers are watching to get resolved to feel more confident again. Well, we did see a tremendous spike in the mentions of trade and tariff discussions this month. Um, you know, it's maybe three, four or five times the number of mentions that we've seen over the last month. So whatever happened in early June obviously resonated very negatively

with consumers. Now, you know, things have dissipated a little bit. I think the situation is probably a little bit more favorable than it was at the beginning of the month. So we'll see if we get a bounce back in early July or not, or if we continue sort of in this you know push and pull with trades and tariffs. It could have a lasting impact on confidence. I don't think that issue is likely going away. We'll see what happens in the G twenty this weekend, but I mean,

I think we certainly China. It seems like it might be at best case what we've been here from people's kick the can down the road a little bit. Yeah, but this to me is a fascinating point. And Lynn Franco, this is such a great day for you to be here because the idea that the uncertainty around trade is bleeding into the real economy and consumers willingness to spend, not just big corporation saying oh, it's going to cost us more. This is a very interesting fact and it

raises some serious questions. If we don't get some sort of resolution, how regardless of the stock market and their response, the actual economic impact could be significant. That, to me, is is a fascinating point looking at the consumer confidence data. Linn Franco, thank you so much for being with us. As geopolitical risk abounds in a number of corners around the world, this being reported overnight by Bloomberg News that President Trump evidently mused to confidence about withdrawing from a

longstanding defense treaty with Japan. This according to people who spoke with Bloomberg who didn't want to be identified. Joining us now to discuss how brands. Henry A. Kissinger, Distinguished Professor at Johns Hopkins University's School of Advanced International Studies, also a Bloomberg opinion. Calumness joining us from Baltimore, Maryland, How, thank you so much for being with us. So let's just start there with this concept of upending this defense

treaty with Japan. What would this mean for the U. S And its relationship with that nation. It would mean a pretty significant alteration of U. S relations, not just with Japan, but with the entire Asia Pacific in the sense that the US alliance with Japan has been the cornerstone of America's strategic posture in that part of the world UH for over sixty years at this point. It's been the cornerstone of peace and security in an incredibly

dynamic region. And so if the United States were to pull back, if they were to withdraw from that alliance UH, it would fundamentally up end both geopolitical and geoeconomic arrangements of the region. So, professor, would you if if the US were to pull out of this long standing arrangement would have materially weakened the US in that region of

the world in your opinion. Certainly, you know, the United States derives an enormous amount of influence because it has security alliances with key countries throughout the region, Japan being the most important, and so if the United States were no longer so closely allied to Japan, or if it went so far as to terminate the alliance, there would be far less reason for Japanese leaders to listen to

American leaders on a whole variety of issues. So I guess there's a question of how much President Trump was taking this seriously, how much this was just musing on the heels of some report by President Trump, And we don't have the details on that point. But there is a question how much com President from do unilaterally, both with this as well as some of his other threats with Iran. How much can he do without congressional approval.

You would probably get differing opinions on that, in the sense that I would imagine the President would argue that he has the authority to withdraw unilaterally from various treaties that the United States has signed, but I imagine the Congress would have a different opinion, and so that there would be a degree of conflict within the U S system over that question. But but pivoting to the point you raised about whether the president is serious, I think

there are a couple of things to keep in mind. One, this is a recurring theme with this president. He's openly or privately mused about withdrawing from a number of American alliances, including NATO and the U S to Panelliance, since becoming president and even before. And I think that the general perception is that this is probably more blowing off steam than anything else. But these reports still have a oncrete effects because they certainly can't do much for the self

confidence of US allies in tense parts of the world. So, Professor, one of the backbones of some of these discussions from President Trump about pulling out of some of these alliances is that other countries don't shoulder their fair share economically. So I'm presumably here as it relates to Japan, it's costs the US a lot of money to have our

presence in Japan? Is that type of thinking, I e. That we shoulder too much of the economic burden of patrolling the world, is that shared widely within d C. Within d C, I think the answer is probably no, for a variety of reasons. And one reason is that the costs of stationing American forces in Japan and other countries are often exaggerated because Japan, like South Korea, like Germany, provides significant amounts of what's called host nation support for

American troops. In other words, of the Japanese government de phrase a significant portion of what it cost the United States to station forces in Japan. The other thing that's worth remembering is that we don't pledge to defend countries like Japan because we think it's in their interest to do so. We do that because we think it's an

our interest to do so. We think that it will make for more peaceful and stable Northeast Asia, and that in turn will benefit the United States geopolitically and economically. Now that said, there has been a degree of discomfort stretching back over a number of administrations about whether Japan is bearing as much of the burden as it ought to in terms of providing stability in that region and beyond.

And I think that's a fair debate to have. But going a step further and thinking about withdrawing from the alliance would be going too far. Meanwhile, President Trump tweeting this morning about Iran, saying that Iran only understands strength and power, h that Iran put out a quote very ignorant and insulting statement, and talking about how overwhelming force, which would be his response to any attack by Iran, will be meant with obliteration potentially. I'm just wondering, how

seriously do people take this. I'm looking again, We've been looking at the price of oil. It's not responding that much. I think people are starting to perceive that there are contradictory tendencies in the President's policy toward Irans. On the one hand, he's very serious about getting tough with Iran and trying to put additional pressure on the regime and forcing the regime to accept some deal that would be more stringent than the one that the Obama administration negotiated.

On the other hand, the President made quite clear last week that he really has no interest in taking on another military conflict, particularly in the Middle East. This has been a theme of his campaign rater going back to and there's no reason to think that he has changed his mind, and so I think what what people may be doing is assuming that while the President will talk tough, he will ultimately decide not to pull the trigger on a major military operation visa Iran unless the United States

is significantly provoked. Haw Brands, thank you so much. Haw Brands is the Henry A. Kissinger Distinguished Professor, JOHNS. Hopkins University's School of Advanced International Studies. It's also Bloomberg Opinion columnists Sharlenn sharing his views on the US UH Japan Defense pack. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney,

I'm on Twitter at pt Sweeney. I'm Lisa abram Woits. I'm on Twitter at Lisa A. Bram Woits. One. Before the podcast, you can always catch us worldwide. I'm Bloomberg Radio