Argentina’s 11-Year War With Hedge Funds

Since it defaulted on its debt more than a decade ago, Argentina’s economy has engaged in a Cold War of sorts with international investors. Buenos Aires stuck bondholders with a take-it-or-leave-it exchange offer of 30¢ on the dollar, the harshest sovereign debt haircut in at least half a century.

Companies delisted. Foreign investors bolted. Argentina, meanwhile, was demoted from the league of “emerging markets” to that of less-developed “frontier” economies, alongside Bangladesh and Kenya—among which the South American nation has been struggling to remain. To inflict injury on these insults, late President Néstor Kirchner and the wife who succeeded him, Cristina Fernández de Kirchner, have nationalized $ 24 billion in private pensions and assumed control of the country’s top energy company, which was majority owned by Spain’s Repsol (REP:SM). The government also instituted bizarre regulations, such as one that requires car importers to match their imports with exports of equal value.

However, a hardy group of “holdout” creditors, including U.S. institutional investors and a handful of elderly Argentinian pensioners, refused to participate in the nation’s 2005 and 2010 debt restructurings, wagering that they could band together to get better terms out of Buenos Aires. Last month’s scorched-earth volley: A court in Ghana, of all places, detained an Argentine frigate at the request of a hedge fund that says Buenos Aires owes it $ 300 million on old debt. Argentina just escalated the affair to the United Nations. All this at a time when the defiant Kirchner has rekindled nationalism over the Falkland Islands, over which Argentina went to war with the U.K. more than 30 years ago.

Now, the battle for the economic soul of the nation of 41 million—amid a raging international debate about the limits of creditor rights (Greece, anyone?)—is taking place in, of all places, New York. In courtrooms there, the aforementioned aggrieved hedgie, Paul Singer, is spearheading a campaign to wrest better payment on the debt he owns. Last week, U.S. District Judge Thomas Griesa ordered Argentina to deposit $ 1.33 billion to pay the Singer-led holdouts. On Wednesday, an appeals court gave Argentina more time to fight the ruling.

The nervously awaited outcome could either sink Argentina’s economy or make it ever more hostile to the global capital markets. Or neither. Or both. Probably some titration therein. Fitch Ratings was sufficiently spooked by the standoff to say an Argentine default is now “probable.” It’s not just a matter of Argentina facing off with its creditors: Bondholders who agreed to the haircut don’t necessarily want to see the renegades made whole, especially if it threatens their own payments. Accordingly, Bush v Gore super lawyer David Boise has entered the crowded fray. It gets better: Theodore Olson, Boies’s Supreme Court opponent in Election 2000, could well end up arguing opposite Boies again. (At least they agree on something.) The boom in Argentina-related billable hours is an international incident unto itself. According to law firm White & Case, since Argentina’s default, jilted bondholders have filed at least 180 civil lawsuits against the country in the Empire State.

Confused? So is everyone else. This explainer, by Ohio State international financial law professor Steven Davidoff, is a must-read.

How, you ask, can Argentina possibly still wield any financial suasion abroad? Well, 1) Look at it on a map. 2) Try its steak. The geographically blessed nation has undeniable breadbasket appeal, with its abundance of soybeans, livestock, and minerals in a China-dominated world that wants ever more of those things.

Witness how very well Brazil, Colombia, and Peru have done during Argentina’s pariah decade. For all its faults, Argentina remains the continent’s No.2 economy. (Columbia is disputing that.) So even as its Merval stock index has been whittled to near-irrelevance by the delistings and falling international interest, it has more than quintupled since the nation’s financial meltdown.

“My view is that Argentina will stand more defiant than ever but at the same time, it will do whatever it can to make sure to keep servicing their debt and show the world community that they are the victims and that the ‘vulture funds’ are the bad guys,” says Santiago Maggi, managing partner with Latmark Asset Management in Miami.

“Without accessing capital markets, we have been punctually paying since 2005 with our own resources and we are going to continue to do so because we are going to honor our obligations as corresponds to a country that has recovered its self-esteem,” Kirchner said in a speech earlier this week.

Can she hang on long enough to be kept to her word? On top of legal and frigate-forfeiture problems, Argentina is mired in a deep recession marked by growing labor unrest, high inflation, and declining infrastructure.

Which, depending on Kirchner’s read, could call for more sticking it to los capitalistas.

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Myanmar cracks down on mine protest; dozens hurt

MONYWA, Myanmar (AP) — Security forces used water cannons and other riot gear Thursday to clear protesters from a copper mine in in northwestern Myanmar, wounding villagers and Buddhist monks just hours before opposition leader Aung San Suu Kyi was to visit the area to hear their grievances.

The crackdown at the Letpadaung mine near the town of Monywa risks becoming a public relations and political fiasco for the reformist government of President Thein Sein, which has been touting its transition to democracy after almost five decades of repressive military rule.

The environmental and social damage allegedly produced by the mine has become a popular cause in activist circles, but was not yet a matter of broad public concern. However, hurting monks — as admired for their social activism as they are revered for their spiritual beliefs — is sure to antagonize many ordinary people, especially as Suu Kyi’s visit highlights the events.

“This is unacceptable,” said Ottama Thara, a 25-year-old monk who was at the protest. “This kind of violence should not happen under a government that says it is committed to democratic reforms.”

According to a nurse at a Monywa hospital, 27 monks and one other person were admitted with burns caused by some sort of projectile that released sparks or embers. Two of the monks with serious injuries were sent for treatment in Mandalay, Myanmar’s second biggest city, a 2 ½ hour drive away. Other evicted protesters gathered at a Buddhist temple about 5 kilometers (3 miles) from the mine’s gates.

Lending further sympathy to the protesters’ cause is whom they are fighting against. The mining operation is a joint venture between a Chinese company and a holding company controlled by Myanmar’s military. Most people remain suspicious of the military, while China is widely seen as having propped up army rule for years, in addition to being an aggressive investor exploiting the country’s many natural resources.

Government officials had publicly stated that the protest risked scaring off foreign investment that is key to building the economy after decades of neglect.

State television had broadcast an announcement Tuesday night that ordered protesters to cease their occupation of the mine by midnight or face legal action. It said operations at the mine had been halted since Nov. 18, after protesters occupied the area.

Some villagers among a claimed 1,000 protesters left the six encampments they had at the mine after the order was issued. But others stayed through Wednesday, including about 100 monks.

Police moved in to disperse them early Thursday.

“Around 2:30 a.m. police announced they would give us five minutes to leave,” said protester Aung Myint Htway, a peanut farmer whose face and body were covered with black patches of burned skin. He said police fired water cannons first and then shot what he and others called flare guns.

“They fired black balls that exploded into fire sparks. They shot about six times. People ran away and they followed us,” he said, still writhing hours later from pain. “It’s very hot.”

Photos of the wounded monks showed they had sustained serious burns on parts of their bodies. It was unclear what sort of weapon caused them.

The protest is the latest major example of increased activism by citizens since the elected government took over last year. Political and economic liberalization under Thein Sein has won praise from Western governments, which have eased sanctions imposed on the previous military government because of its poor record on human and civil rights. However, the military still retains major influence over the government, and some critics fear that democratic gains could easily be rolled back.

In Myanmar’s main city of Yangon, six anti-mine activists who staged a small protest were detained Monday and Tuesday, said one of their colleagues, who asked not to be identified because he did not want to attract attention from the authorities.

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Facebook exec says company is reducing spam despite clogging your feed with brands you don’t like

Recent changes to Facebook’s (FB) Edgerank, the algorithm that’s responsible for displaying items on a user’s Newsfeed, have angered privacy groups who say the new policy will actually produce more spam than reducing it. According to Forbes’ Jeff Bercovici, Facebook’s VP of global marketing solutions Carol Everson said on Tuesday that the social network is reducing spam by using “Suggests Posts” – “non-connected page posts” that show a brand’s ads even if a user and their friends don’t “like” or support them. Bercovici argues that Facebook’s new approach to targeting brands at users contradicts its claims of reducing spam by doling out spam that users don’t connect with. 

As expected, Everson’s response to clogging the Newsfeed with brand ads that users don’t support was: “You may not be a fan of a brand, but maybe everyone in your network is talking about it, so we think you might be interested in it,” and she said there are “literally more than a thousand signals” that go into displaying “relevant” brand ads.

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‘The Inbetweeners’ Canceled by MTV

LOS ANGELES (TheWrap.com) – “The Inbetweeners” now falls solidly in the “canceled” camp.

MTV has decided not to go forward with a second season of the scripted series, which premiered in August and was an adaptation of a British sitcom of the same name.

“While we won’t be moving forward with another season of ‘The Inbetweeners,’ we enjoyed working with the show’s creators and such a talented, funny cast,” an MTV spokesperson told TheWrap in a statement.

The series starred Joey Pollari, Bubba Lewis, Zack Pearlman, Mark L. Young and Alex Frnka as a group of “inbetweeners” – that is, kids who fall somewhere between nerds and jocks on the spectrum of teenage cliques.

The “Inbetweeners” cancelation follows the dropping of the MTV scripted effort “I Just Want My Pants Back” in May after one season.

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FDA advisory panel backs J&J TB drug

(Reuters) – An advisory panel to the U.S. Food and Drug Administration on Wednesday voted that an experimental Johnson & Johnson drug for multidrug-resistant tuberculosis appears to be safe and effective, but highlighted potential heart and liver-safety issues.

The medicine, called bedaquiline, targets adenosine triphosphate synthase, an enzyme the tuberculosis bacterium needs to generate its energy. If approved, J&J said it would be the first drug in 40 years with a new mechanism of action against tuberculosis.

J&J said the panel of outside medical experts, in a vote of 18 to 0, found that trial data provide “substantial evidence” of efficacy and safety for bedaquiline in adults, taken in combination with standard treatments. It backed the drug’s safety, by a vote of 11 to 7.

The FDA usually follows the advice of its advisory panels when deciding whether to approve new medicines.

In September, the FDA granted priority review of the drug, based on data from two mid-stage trials that tested it among patients with tuberculosis that is resistant to standard drugs.

J&J’s Janssen drug subsidiary is hoping the agency will grant accelerated approval of its drug, on the basis of favorable data from mid-stage trials. The company plans to begin a larger Phase 3 study early next year.

In a pair of completed Phase 2 trials, two doses of the medicine were tested for 24 weeks, in combination with standard treatments, followed by continuation of standard therapy for a year to 18 months.

In one of the trials, 10 deaths were seen among 79 people taking bedaquiline and standard drugs, compared with only 2 deaths among 81 patients taking only standard drugs.

Some members of the FDA advisory panel expressed concern about that “mortality imbalance,” as well as elevated liver enzymes — a potential sign of liver toxicity — among patients taking the J&J drug.

Patients taking bedaquiline also had increases in the so-called QT interval — suggesting a possible electrical irregularity in the heart — than those not taking the medicine.

But Wim Parys, Janssen’s head of development for infectious disease medicines, said in an interview that the drug’s superiority to standard medicines in the mid-stage trials held sway with the advisory panel.

He said 21 percent fewer patients taking the J&J drug still had signs of the TB bacterium in their sputum after one of the mid-stage studies, than those taking just standard drugs.

“This is a new mechanism of action to treat TB, particularly (bacteria) that have become resistant to first-line treatments,” Parys said.

Cowen and Co has forecast peak annual sales of $ 300 million for bedaquiline, which would make it a fairly modest product for the diversified healthcare company.

Parys acknowledged the drug’s limited sales potential, given that it would be used mainly in poorer developing countries. But he said J&J approved development of the medicine due to a compelling medical need.

The planned larger trial will involve nine months of treatment with bedaquiline, in combination with standard drugs, compared with standard drugs alone for the same period. The total nine-month treatment period would be far shorter than the current 18- to 24-month treatment period for multidrug-resistant tuberculosis drugs recommended by the World Health Organization, J&J said.

Multidrug-resistant tuberculosis is caused by strains of the bacterium that have become resistant to at least isoniazid and rifampin, the two most potent drugs for TB.

Resistance to anti-TB drugs can occur when they are misused or mismanaged, for instance when patients don’t complete their full course of treatment or when doctors prescribe the wrong treatment, wrong dose or length of time taking the drugs.

An estimated 8.7 million people in 2011 fell ill with tuberculosis – which is spread by coughing and sneezing — while 1.4 million died from the disease, according to the World Health Organization. About 310,000 cases of multidrug-resistant TB were reported the same year, the organization said, with almost 60 percent in India, China and Russia.

(Reporting by Ransdell Pierson; Editing by Jan Paschal and Carol Bishopric)

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Is SAC Capital’s Steve Cohen Worth Catching?

Preet Bharara started work as the U.S. Attorney for the Southern District of New York on Aug. 13, 2009, less than a year after the most harrowing days of the financial crisis. Bharara’s office is known for prosecuting crime on Wall Street; his predecessors include Elihu Root, Henry Stimson, and Rudy Giuliani. In three and a half years on the job, Bharara has won convictions against Times Square bomber Faisal Shahzad, accused arms trafficker Victor Bout, and multiple corrupt New York politicians. But his claim to fame—the one that earned him the cover of Time last February—is his single-minded devotion to eliminating an insider-trading epidemic that seems to be rampant at certain hedge funds in and around New York City.

Two days before Thanksgiving, Bharara, who has already won some 70 convictions for insider trading, collected another pelt. At his direction, the Federal Bureau of Investigation arrested Mathew Martoma, a 38-year-old former hedge fund manager at SAC Capital Advisors, at Martoma’s 8,000-square-foot Boca Raton (Fla.) mansion. In a statement, Bharara described Martoma’s alleged crime as “cheating coming and going—specifically, insider trading first on the long side, and then on the short side, on a scale that has no historical precedent.” Conspicuously absent from Bharara’s statement was any mention of Martoma’s former boss, Steven Cohen, the founder of SAC Capital. But Wall Street is rife with speculation that Cohen is Bharara’s ultimate target.

The possibility that Cohen might share the fate of fellow hedge fund billionaire Raj Rajaratnam, who was found guilty of conspiracy and securities fraud in May 2011 and sentenced to 11 years in prison, has caused a frisson of anticipation in the financial world. On Nov. 28, the president of SAC Capital, Tom Conheeney, told investors that the Securities and Exchange Commission is considering filing a civil suit against the firm.

Yet Cohen may prove to be an elusive prey. And it’s worth asking whether relentlessly hunting insider-trading suspects like Cohen is a wise use of the government’s resources—especially considering that the people responsible for the worst financial crisis since the Great Depression continue to get off scot-free.

Cohen himself is no small fish. He grew up in Great Neck, Long Island, the third of eight children. His father owned a clothing manufacturer in the Bronx; his mother was a piano teacher. After graduating from the University of Pennsylvania in 1978, Cohen took a job at Gruntal & Co., a small Wall Street brokerage. An amazingly successful if restless trader, he made millions for himself and for Gruntal. In 1992, hungry for a bigger platform, he set up a hedge fund with a $ 25 million grubstake—half of which was his own money. In the first year, the fund was up 17 percent; the next year it was up 51 percent. The rest is the stuff of Wall Street legend, as are his $ 1 billion art collection and his 36,000-square-foot mansion in Greenwich, Conn. SAC Capital now has some $ 14 billion under management.

Bharara has been circling Cohen for years, pursuing a slew of additional insider-trading charges against seven former SAC traders. But he hasn’t snared Cohen. And the Martoma gambit may fall short as well.

The gist of Bharara’s complaint against Martoma is that between 2006 and 2008, Martoma obtained material, nonpublic information from Dr. Sid Gilman, now 80, a neurologist at the University of Michigan, who was a paid consultant to two health-care companies, Elan (ELN) and Wyeth Pharmaceuticals (now part of Pfizer (PFE)), working together to develop a new Alzheimer’s drug. At first, Gilman shared with Martoma the good news that the drug trial was going well. As a result, Martoma and SAC amassed around a $ 700 million stake in Elan and Wyeth. In March 2008, when other executives at SAC Capital were questioning the large investment in the two companies, Cohen defended it by writing that Martoma “anticipated positive news” from the drug trial and he was the person “closest” to it.

On July 17, 2008, just days before he was to share his confidential findings at a health-care conference, Gilman told Martoma there were problems with the drug trial. Martoma then e-mailed Cohen: “Is there a good time to catch up with you this morning? It’s important.” One hour later, Cohen responded with his cell-phone number. According to the sworn affidavit of the FBI agent investigating the case, the two men talked for 20 minutes. At Cohen’s direction, during the next four days, SAC Capital dumped most, but not all, of its stock in the companies. It also put on a large short trade—betting the companies’ stock would fall.

On July 30, after the public announcement about the drug trial at the industry conference, the shares of Elan and Wyeth fell, 42 percent and 12 percent, respectively. According to Bharara, SAC Capital not only made profits of about $ 83 million on its short trade but also avoided losses of about $ 194 million had it not sold its stock in the two companies a few weeks earlier—a $ 276 million swing. (Bharara called it “The most lucrative inside tip of all time.”) In 2008, SAC paid Martoma a $ 9.3 million bonus. In 2010, Martoma was fired from the firm after two years of unsatisfactory performance and because he appeared to be “a one-trick pony with Elan,” according to an SAC e-mail. (His lawyer said in a statement that Martoma is innocent.)

In exchange for his cooperation, Dr. Gilman and the U.S. Department of Justice have entered into a non-prosecution agreement. According to the Wall Street Journal, the FBI and Bharara tried for a year to get Martoma to flip and cooperate with them against Cohen. Unlike the Rajaratnam case, there are no recordings of incriminating conversations involving Cohen and his portfolio managers or outside tipsters. The New York Times described the evidence compiled by the FBI against Cohen as “entirely circumstantial.”

Among other things, Cohen is a brilliant poker player—which means he’s adept at not tipping his hand. In a rare interview with Vanity Fair’s Bryan Burrough in July 2010, he brushed aside the implication that he had done anything like what Rajaratnam was accused of. “I look at my firm, and I don’t see any of that. In some respects I feel like Don Quixote fighting windmills,” he told Burrough. “There’s a perception, and I’m trying to fight that perception. I find it offensive that they lump SAC into these articles. I really do. The press, I mean, they don’t understand what the hell—they don’t understand what they’re writing about.”

When it comes to winning a conviction for insider trading, the law requires not only proof that material, nonpublic information was exchanged but also that the exchange of that information constituted “a breach of duty” to someone—say, shareholders or a board of directors. When Bharara won the conviction of Rajat Gupta, the former McKinsey senior partner who was on the board of directors of Goldman Sachs (GS), the jury found that Gupta had both shared insider information about Goldman with Rajaratnam and violated his duty to Goldman’s shareholders not to do so. That could be a snag in any case against Cohen. To whom did Cohen “breach” his “duty”? Certainly not his fund investors, who benefited tremendously from the trade. Still, the one journalist who has spoken to Cohen in recent years, Burrough, predicted in an e-mail to me, “They’re gonna get Cohen. They wouldn’t be building this pyramid if they didn’t intend to.”

If Cohen and his firm are nothing more than a criminal enterprise engaged in widespread insider trading, then Bharara is absolutely right to spend his time and his office’s resources going after them. Insider trading is justifiably illegal because the proper functioning of the capital markets depends on people having confidence the market is not a rigged game.

The bigger question for government prosecutors, though, is why none of the traders, bankers, or executives at the Wall Street banks who caused the 2008 financial crisis has been brought to justice. After the savings and loan scandal of the 1980s, some 3,500 bankers ended up criminally prosecuted and behind bars. This time around, no one on Wall Street has done jail time. In a June 2011 speech, Bharara said, “We too want to hold accountable anyone who deserves to be punished. … Any case we make, however, will be because it is appropriate and deserved, not because there is overwhelming public pressure to do so.”

It’s true that the only thing worse than allowing the bankers to get away unscathed is prosecutorial misconduct. There’s a world of difference, however, between being meticulous and careful in bringing cases and appearing to do nothing at all when trillions of dollars have been lost and not a soul has been held accountable. That doesn’t mean the government should stop looking into the misdeeds of the likes of Steve Cohen. But it shouldn’t ignore those who did worse.

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US rabbi says jailed American in good health

HAVANA (AP) — A prominent New York rabbi and physician visited an American subcontractor serving a long jail term in Cuba and said the man is in good health, despite his family’s concerns about a growth on his right shoulder.

Rabbi Elie Abadie, who is also a gastroenterologist, told The Associated Press in an exclusive interview following Tuesday’s 2 1/2-hour visit at a military hospital in Havana that he personally examined Alan Gross and received a lengthy briefing from a team of Cuban physicians who have attended him.

He said the 1 1/2-inch growth on Gross’s shoulder appeared to be a non-cancerous hematoma that should clear up by itself.

“Alan Gross does not have any cancerous growth at this time, at least based on the studies I was shown and based on the examination, and I think he understands that also,” Abadie said.

Abadie said the hematoma, basically internal bleeding linked to the rupture of muscle fiber, was likely caused by exercise Gross does in jail. He said the growth ought to eventually disappear on its own.

Gross’s plight has put already chilly relations between Cuba and the United States in a deep freeze. The Maryland native was arrested in December 2009 while on a USAID-funded democracy building program and later sentenced to 15 years in jail for crimes against the state.

He claims he was only trying to help the island’s small Jewish community gain Internet access.

Gross’s health has been an ongoing issue during his incarceration. The 63-year-old, who was obese when arrested, has lost more than 100 pounds while in jail.

Abadie, a rabbi at New York’s Edmund J. Safra Synagogue, said Gross’s weight is appropriate for a man his age and height.

Photos that Abadie and a colleague provided to AP of Tuesday’s meeting with Gross showed him looking thin, but generally appearing to be in good spirits.

In one photo, Gross holds up a handwritten note that says “Hi Mom.”

“He definitely feels strong. He is in good spirits. He feels fit, to quote him, physically. But of course, like any other person who is incarcerated or in prison, he wants to be free. He wants to be able to go back home,” Abadie said.

Gross’s family has repeatedly appealed for his release on humanitarian grounds, noting his health problems and the fact that his adult daughter and elderly mother have both been battling cancer.

Jared Genser, counsel to Alan Gross, said late Tuesday that Rabbi Abadie is not Gross’s physician and he would like an oncologist of his choosing to evaluate him.

“While we are grateful Rabbi Abadie was able to see Alan, we have asked an oncologist to review the test results to determine if they are sufficient to rule out cancer. More importantly, if Alan is so healthy, we cannot understand why the Cuban government has repeatedly denied him an independent medical examination by a doctor of his choosing as is required by international law,” said Genser.

Gross and his wife recently filed a $ 60 million lawsuit against his former Maryland employer and the U.S. government, saying they didn’t adequately train him or disclose risks he was undertaking by doing development work on the Communist-run island.

They filed another lawsuit against an insurance company they say has reneged on commitments to pay compensation in case of his wrongful detention.

Separately, a lawyer for Gross has written the United Nations’ anti-torture expert, saying Cuban officials’ treatment of his client “will surely amount to torture” if he continues to be denied medical care.

Rumors have been swirling in U.S. media that Cuba might soon release Gross as a gesture of good will or in the hopes of winning concessions from the administration of President Barack Obama, but Abadie said that those reports appeared to be false.

“As far as I know there is no truth to it,” he said.

Abadie said he met with senior Cuban officials who expressed their desire to resolve the case “as quickly as possible,” but would not say specifically who he spoke with or what they offered.

“They claim that they are more than willing to sit at the table,” he said.

Cuban officials have strongly implied they hope to trade Gross for five Cuban agents sentenced to long jail terms in the United States, one of whom is already free on bail.

Abadie said Gross made clear that he does not want his case linked to that of the agents, known in Cuba as “The Five Heroes,” because he does not believe he is guilty of espionage.

But Abadie said Gross is hoping for a “constructive and productive” dialogue between U.S. and Cuban officials to resolve his case.

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Follow Paul Haven on Twitter: http://www.twitter.com/paulhaven.

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U.S. author sues filmmaker Tyler Perry over plot of 2012 film

NEW YORK (Reuters) – An American author sued the prolific filmmaker Tyler Perry in a federal court on Tuesday, accusing him of lifting the plot of his 2012 movie, “Good Deeds,” from her book.

Terri Donald, who also writes under the pseudonym TLO Red’ness, says Perry based the film on her 2007 book, “Bad Apples Can Be Good Fruit.”

The lawsuit, filed in Philadelphia, says Donald sent a copy of her book to Perry’s company before production on the movie began.

Donald is seeking $ 225,000 in initial damages as well as an injunction requiring the company to add a credit for her book in the opening and closing credits. The lawsuit also calls for the company to provide an accounting of the movie’s revenues.

The drama, which stars Perry as a wealthy businessman who meets a struggling single mother, earned approximately $ 35 million at the box office after its February release.

Representatives for Perry and Lions Gate Entertainment, which released the film and is also named as a defendant in the lawsuit, did not respond to requests for comment on Tuesday.

Perry is best known for his portrayal in drag of the character Madea in several of his films.

(Reporting by Joseph Ax; Editing by Paul Simao)

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Indian board rejects AstraZeneca’s patent plea on cancer drug

(Reuters) – India‘s patents appeal board has dismissed British drugmaker AstraZeneca‘s petition challenging an earlier ruling that refused patent protection for a cancer-fighting drug, in the latest blow for Big Pharma in the country.

The Indian patents office in 2007 refused patent protection to AstraZeneca’s quinazoline molecule, citing lack of invention. The Intellectual Property Appellate Board (IPAB) on Monday upheld the refusal.

The decision is also a setback for struggling AstraZeneca, which is battling to turn itself around as key drugs lose patent protection.

Global drug companies suffered a high-profile reversal in March when India granted the first ever compulsory license to domestic drugmaker Natco Pharma to sell cheap copies of Bayer’s cancer drug Nexavar. Bayer has appealed the order.

And early this month IPAB revoked a six-year-old Indian patent granted to Roche’s hepatitis C drug Pegasys, citing lack of evidence that the drug was any better than existing treatments.

Multinational drug manufacturers regard India’s $ 13 billion drug market as a huge opportunity, but are wary of what they see as lax protection for intellectual property in a country where generic medicines account for more than 90 percent of sales.

Indian generic companies, which do not need to plough money into future research, can produce drugs at a fraction of the cost of originator firms like Roche or Bayer.

Natco and another domestic drugmaker, G. M. Pharma, had opposed the initial patent application for AstraZeneca quinazoline derivative. The London-listed company filed a review petition, which India’s patent office dismissed in 2011.

A challenge to a review petition does not come under the purview of the IPAB, and even on merit the petition has failed, S. Majumdar & Co, the counsel for Natco Pharma, said in a statement.

AstraZeneca could not immediately be reached for a comment by Reuters. The company has the option to take its case to India’s Supreme Court.

(Reporting by Kaustubh Kulkarni in MUMBAI; Editing by Muralikumar Anantharaman)

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S.Africa’s rand holds on to surprise gains

JOHANNESBURG (Reuters) – S.Africa’s rand held firm against the dollar Wednesday, consolidating a surprisingly strong performance in the previous session after weaker-than-expected economic growth figures.

The rand was little changed at 0611 GMT, trading at 8.8434 against the greenback after New York’s close of 8.845.

“The international backdrop remains negative this morning but the trend for rand gains remains strong,” Rand Merchant Bank said in a note.

Investors are likely to pay attention to a speech by Reserve Bank Governor Gill Marcus at a conference of the National Union of Metalworkers of South Africa (NUMSA) at 0800 GMT.

Marcus left the repo rate unchanged at a four-decade low of 5.0 percent last week and warned that strikes in the mining sector and beyond since August would lead to job losses in a country already grappling with unemployment of over 25 percent.

Tuesday’s GDP statistics drove home that point, showing that growth slowed sharply in the third quarter after a big contraction in the strike-hit mining sector.

Government bond yields slipped one basis point each to 5.46 percent for the three year bond and 7.555 percent for the longer dated 14-year paper.

Power utility Eskom is due to auction 400 million rand between the EL29 and ES33 bonds at 0900 GMT.

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