Actual finance blog

A generic drug maker plans to make a version of the Gilead Sciences Inc. chronic hepatitis B drug Hepsera.

Privately held Sigmapharm Laboratories LLC of Bensalem, Pa., submitted an abbreviated new drug application, or ANDA, to the Food and Drug Administration for permission to make and market generic Hepsera, according to Foster City-based Gilead (NASDAQ: GILD)

Sigmapharm claims that two patents for Hepsera, or adefovir dipivoxil, are invalid, unenforceable or will not be infringed by its generic.

Gilead, which said it is reviewing Sigmapharm’s notice, has 45 days to respond to the application, possibly by filing a patent infringement suit against Sigmapharm. That would suspend the FDA approval process for as long as 30 months.

If Gilead does not respond, Sigmapharm would be able to continue through the FDA drug approval process.

Once-a-day Hepsera tablets, approved by the FDA in September 2002 and European regulators in March 2003, registered sales of $271 payday loan lenders.6 million last year, down 20 percent from 2008. Six-month sales this year of $109.5 million were off nearly 22 percent from the same period last year.

Hepsera costs patients $813 per month.

As the first to challenge Gilead’s patent, Sigmapharm’s drug, if approved, would receive a 180-day monopoly on its lower-cost generic version. That generic monopoly period can translate into big bucks, since the price can be significantly less than that charged for a brand-name drug but not as low as when other generic companies jump in.

Sigmapharm, whose executive team includes former Impax Laboratories sales leader Mitchell Goldberg, has three approved drugs marketed by Rising Pharmaceuticals Inc.

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The Austin Independent School District is expected to negotiate pricing this month for $78.5 million worth in bonds rated AA+, Fitch Ratings released Tuesday.

The unlimited tax refunding bonds will be rolled out in two series of $17.4 million and $58.4 million. The school district maintains about $749 million in outstanding bonds with the same rating. The district's rating outlook is stable, according to the press release. The bonds are secured by an unlimited ad valorem tax pledge.

The agency attributed the positive rating to leaders making $13.1 million in budget cuts that successfully balanced its budget. The district is expected to experience a drop in taxable values next fiscal year, but those will be balanced by previous rates of rapid expansion.

The city's generally positive economic indicators also added to the rating as well as strong voter approval for school capital needs and modest draws on reserves.

AISD serves about 85,000 students across 100 campuses.

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Visit St. Petersburg Clearwater on Friday formally requested $5 million from BP.

The funding would help Pinellas County's convention and visitors bureau fight oil spill perception issues in feeder markets such as New York City, Chicago, and Philadelphia during the fall and winter seasons.

Visit Florida research has shown negative perceptions stemming from the BP oil spill could cost Florida as much as $6 billion in lost revenues in the coming year, a news release said.

BP earlier on Friday announced it would award $7 million to several locations in Florida’s Panhandle region.

VSPC in June was awarded $1.15 million out of BP’s initial $25 million tourism marketing and advertising award to Florida.

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A grocery store. Restaurants. A wine bar. Renovated apartments and office space. And a badly neglected movie theater restored into a new nonprofit independent film center.

Those were the ideas four developers pitched to a large and eager crowd of North Side residents at the Children’s Museum of Pittsburgh Monday night, on how they would redevelop the focal block of long dilapidated property on North Street in front of Allegheny Commons Park.

The developers — Lawrenceville-based Barron CRE; Spokane, Wash.-based Wells and Company, suburban Philadelphia-based Zukin Realty and locally-based Aaron Stubna — presented their plans for the block best known for the looming presence of the Garden Theater. The neighborhood movie theater was originally built in 1915, but has become an image of blight for decades thanks to its use as a pornographic movie house.

With the theater now long closed and the entire block under the ownership of the Urban Redevelopment Authority, a nonprofit organization called North Side Tomorrow is now leading the effort to choose a developer to take on the block of property.

“This is a good problem to have,” emphasized Kirk Burkley, board president for NorthSide Tomorrow. “We could be here today with (no developers). And we have five.”

The fifth developer, James Welker, was unable to attend Monday's meeting.

The first presentation by Bill Barron proposed tearing down the bulk of the auditorium for the Garden Theater, leaving a restored facade, as required by city historic standards, developing the theater’s front into a restaurant, freeing up space behind it for parking while redeveloping the rest of the surrounding buildings into 34 apartments.

Barron acknowledged up front that he expected the plan to be controversial, his plan calling for the URA to ensure the stability of some of the other long neglected property before taking them on as redevelopment projects. He expects to pursue the remaining four-story Bradberry and Mason Hall buildings as viable redevelopment projects, using the remaining space from eliminating the Garden Theater auditorium to provide dedicated parking for each of the apartment units.

Wells and Company has done many historic redevelopments in Downtown Spokane and have become familiar with Pittsburgh thanks in part to their relationship with Mike Edwards, CEO of the Pittsburgh Downtown Partnership. Edwards served in a similar role with Downtown Spokane’s business improvement district.

Wells proposed pursuing the development under the ownership of a separate nonprofit ownership entity, and then leasing the property for a 50-year term, enabling them to structure financing and development plans to better access historic tax credits and other forms of a assistance.

The company wants to restore the theater and make it available to local arts groups while doing historic rehabs to all the surrounding buildings. Their plan calls for developing as many as 100 apartment units on the site, a number predicated on whether or not the considerably damaged properties on the eastern edge of the block that runs up Federal Street are deemed too far gone to rehabilitate.

If not, Wells plans to develop four-story apartment building there with first-floor retail, a project estimated to cost $10.1 million. If the can be restored, the total project by Wells would call for between 50 and 70 apartments. Their total project cost estimate was between $15 million and $20 million.

Zukin Realty Company, which first became familiar with the Pittsburgh market after it bought the Forbes and Murray building occupied by Vivisimo in 2006 for $11.46 million, also proposed redeveloping only the facade and front portion of the Garden Theater building for a new 5,000 square foot grocery. Wayne Zukin, who has developed historic property in Philadelphia and West Chester, Pa., emphasized an approach based on establishing local independent retailers and restaurants and doing basic rehabilitations of all the buildings that are already in place in the Garden Theater block, adding between 35 and 40 apartments. He estimated his total development cost at between $8 million to $10 million.

Stubna, working with partner Bill Porko, only expressed interest in the theater itself, proposing to restore it into a independent film center that would be redeveloped with a companion wine bar and cafe.

While financing for any real estate development is difficult in the current economy, said Burkley, the North Side’s collaborating community organizations have established a strong package of public assistance for the project. That includes $4 million in new market tax credits raised by the North Side Community Development Fund, $2 million in state funding, and $1.5 million in tax increment financing.

Burkley said North Side Tomorrow plans to make a final selection of a developer this fall and break ground on construction in summer 2011.

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First-time homebuyers will have until Sept. 30 to close on their purchases and land an $8,000 tax credit under a bill passed by the Senate late Wednesday.

President Obama is expected to sign the bill, which was overwhelmingly approved by the House on Tuesday. The deadline had been June 30.

The bill doesn’t help anyone currently shopping for a home. Buyers must have signed a contract by April 30 to qualify for the tax break. At issue is when the deal must be finalized.

Qualified existing homeowners also have until Sept. 30 to close on new homes and receive a tax credit of up to $6,500.

Congress has been trying to pass the extension for the last month, but it got caught up in Washington politics. Only when it was separated from a larger jobs bill did deficit-wary lawmakers sign off on it. The extension will lower the deficit by $9 million over a decade since it is offset by certain other provisions cashadvance.

An estimated 200,000 people have missed out on the tax credit because they wouldn’t have been able to close by the end of business Wednesday. Many are trying to take advantage of short sales, which are complicated deals to complete.

The Senate approved the stand-alone homebuyers tax credit shortly after a failed attempt to advance a bill that combined the credit with an unemployment benefits extension.

Senate Majority Leader Harry Reid, D-Nev., said the chamber will take up the benefits bill again once a replacement for the late Senator Robert Byrd, D-W.Va., is named. Byrd, the longest serving member of Congress in history, died Monday at age 92. 

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Is it better to buy or rent in Omaha, Neb.?

If you guessed buy, you’d be wrong. According to the new Trulia Rent vs. Buy index, it makes more fiscal sense to rent in this farm city due to the huge gap between rental and purchase prices.

Until recently, the perennial real estate question of whether to rent or buy was dead. During the boom years, the question was largely irrelevant as people rushed to pay ever increasing prices for already expensive real estate. But now that national home prices have slid substantially and potential buyers are being more cautious, the debate has been reinvigorated.

Many people hunting for a home these days are considering both alternatives, according to Tara-Nicholle Nelson, a spokeswoman for Trulia, the real estate website. "We did a survey of site visitors and found that 30% of them were thinking either of buying or renting," she said.

In response, on Thursday the company will launch a Rent vs. Buy index for 50 major cities.

To determine which option is better, Trulia compares the costs of buying a two-bedroom condo with the costs of renting one. Then, Nelson said, the results can be extrapolated to other classes of homes, such as larger single-family houses.

Another factor, of course, is price stability. Unlike home prices, rents tend to rise or fall just a few percentage points each year. Even 2009’s record decline in average rents was a paltry 2.9%, according to Reis Inc, which tracks the rental market.

On the other hand, the national median home price jumped 12.2% in 2005 and fell nearly 20% in 2008, according to housing, according to housing groups.

Minneapolis was the city on Trulia’s index where it makes the most sense to buy. The average listing price for a two-bedroom there was about $150,000, while the average annual rent for one came to about $20,400. Buying, therefore, costs less than eight times the annual cost of renting. Economists generally hold that anything below 15 times the annual rent is a buyer-friendly city.

Trulia also signed off on purchasing in Arlington, Tex., Miami, Fresno, Calif., and San Antonio, Tex..

In Manhattan, on the other hand, renting is a much better deal. The price-to-rent ratio of 33 was by far the least favorable for buyers, seven points higher than the runner-up city, Omaha, Neb.

That’s despite very high rents, an average of more than $42,000 for a two-bedroom apartment. Gotham selling prices are so astronomical — $1.38 million for a two-bedroom condo — that it still makes more sense to rent.

Seattle, Portland, Ore., and San Francisco were also much more expensive to buy.

These stats cover the costs of buying vs. renting; they don’t take into account future price appreciation or depreciation. If, for example, prices rapidly decline in Minneapolis, the total cost of ownership could exceed rental cost, especially when the transactional costs, such as real estate broker commissions, taxes and mortgage origination costs are factored in.

On the other hand, soaring home prices have made New York a good place to buy in the past, and it’s possible, although unlikely, that it could again.

More likely though, is that prices in many cities will remain sluggish for a number of years; home price appreciation should not be a strong consideration when deciding whether to rent or buy.

These analyses are also just a general guideline; individual circumstances matter, too. People in higher tax brackets, for example, may get more bang for their purchase buck because they’re able to deduct more interest costs and property taxes.

And, once people purchase, their home-buying costs tend to be fairly stable. Fixed-rate loans don’t go up ( although taxes and maintenance costs can.) Rents usually do.

There are also many intangible benefits for both buyers and renters, according to Trulia’s Nelson. Buyers often feel more invested in their communities, more likely to put down roots, make friends and join local organizations. Home ownership often brings them pride and joy.

Renters, on the other hand, may not want the responsibilities of home ownership or being tied down. If another place comes along that suits them better, they can easily move. They’re also freer to pursue employment opportunities in other cities without worrying about selling their old homes and buying new ones.

The new index addresses none of those intangibles, but Nelson said it’s still a useful tool for consumers: "You have to make the decision on whether you want to buy based on your lifestyle choices more than anything else." 

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if people had listened then, the idea would have saved taxpayers untold billions today — the government’s bailout of the two mortgage agencies is unlimited, with the Congressional Budget Office estimating it could cost $373 billion by 2020.

The "trigger" for conversion from debt to equity would be a decline in the company’s regulatory capital ratios, as disclosed in its quarterly earnings reports. If these ratios dropped below "well-capitalized" levels (typically defined as equity equal to about 8% of assets), then each dollar of the contingent capital debt would be changed into common stock, based on a fixed conversion ratio.

Everyone loses — except taxpayers

The debt holders would lose, but at least they wouldn’t have to wait for bankruptcy to determine their recoveries. Shareholders would lose too — but without the conversion, they would need to raise emergency capital at a depressed share price, leading to much worse dilution, assuming the company could raise any capital at all. (Remember when Citigroup traded for $1 per share?).

Not only would conversion be speedy, but it would protect the taxpayer. Government-guaranteed deposits (and other debt that might need to be guaranteed) would be protected from losses by the new equity.

Given the severity of the recent crisis, systemically important financial firms ought to hold contingent capital equal to their normal equity requirement, effectively doubling taxpayers’ protection.

In normal times, issuing this special kind of debt should not be expensive. Firms that look systemically dangerous might face higher costs. To avoid these costs, risky firms could shrink their balance sheets or rethink their business models. In this way, the contingent capital requirement would brake the growth of large, risky financial firms, another goal of regulatory reform. And if we’re not truly preventing systemic failures with our reform plans, it’s worth asking whether they’re worth pursuing at all.

Kenneth A. Posner is the author of Stalking the Black Swan: Research & Decision-making in a World of Extreme Volatility 

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Healthcare Trust of America Inc., a Scottsdale-based real estate investment trust, has purchased the Federal North medical office building in Pittsburgh for about $40.5 million.

Federal North is a four-level medical office building comprising nearly 192,000 square feet. Included in the deal is a separate four-level, 525-space parking garage. The Class A building, located near a 724-bed hospital, is 99 percent occupied.

“This acquisition is consistent with our long-term strategy of acquiring high-quality medical office buildings in key markets which are affiliated with strong health care systems,” Mark Engstrom, HTA’s executive vice president of acquisitions, said in a prepared statement bad credit pay day loans.

Engstrom added that Federal North is the REIT’s 10th acquisition in 2010.

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Commerce Bancshares saw profits per-share jump 39 percent in the first quarter, despite a 10 percent drop in lending compared to a year ago.

Commerce, the region’s biggest locally based bank, earned $44.2 million, or 53 cents per share, in the quarter ended March 31 compared to $30.8 million, or 38 cents per share a year earlier.

Commerce blamed the big drop in lending on weak demand from borrowers. Loans fell in all categories except consumer credit cards easy pay day loans.

David Kemper, CEO, credited the rise in profits in part to a decline in money put aside to cover bad loans. The amount of problem loans and foreclosed property fell, as did loan charge-offs. Problem loans and foreclosed property made up 0.61 percent of assets, a low figure compared to most banks.

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SWBC’s LendingXpress subsidiary has teamed up with Equity National to offer home valuation and analytic products to lenders to process real estate loans.

LendingXpress focuses on helping financial institutions order all of the products necessary to close a real estate loan, including property valuations and lien position. Equity National is a East Providence, R.I.-based company that provides lenders with a full range of valuation services to process mortgages.

“There are a lot of appraisal management companies fighting for business today, and after exhaustive due diligence, we chose Equity National to be our strategic partner based on their focus on the customer, (Home Valuation Code of Conduct) orientation, and their management team, which is unmatched in the industry,” says Ted Robinson, senior vice president and general manager of LendingXpress.

San Antonio-based SWBC is a financial services company that provides insurance, mortgage and investment services to financial institutions, businesses and individuals nationwide.

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