By Mrinalika Roy and Leroy Leo

(Reuters) -Biogen Inc said on Tuesday that chief executive Michel Vounatsos will step down and that the company is pulling back on selling its controversial Alzheimer’s drug Aduhelm, in what appears to be a final blow to its prospect of becoming a big seller.

The future of Aduhelm has been in doubt since the U.S. government’s Medicare program restricted coverage of the medicine to patients in clinical trials.

Aduhelm was expected to be the company’s next big blockbuster treatment, but controversy over its approval without clear evidence of patient benefit and the U.S. decision to severely limit access cast serious doubt on its sales potential.

Biogen said on Tuesday https://bit.ly/3LHu8vF it was looking at “substantially” eliminating commercial infrastructure related to Aduhelm and plans for more cost cuts, in addition to the current program to save $500 million annually.

Biogen last month decided to withdraw its marketing application for Aduhelm in Europe after failing to convince the European regulator of the treatment’s benefits.

The company said it will retain minimal resources to make Aduhelm available to patients currently taking the drug in the United States.

Vounatsos, who was named as the CEO in 2016, will continue in his role until a successor is appointed, the company said. Under his leadership, the U.S. biotech developed and launched several important growth drivers including spinal muscular atrophy drug Spinraza and multiple sclerosis drug Vumerity.

“The news (about Vounatsos) is not surprising, given the many setbacks the company has faced,” said RBC Capital Markets analyst Brian Abrahams, adding that it “may help add to the perception that Biogen will turn the page from being overly levered to Alzheimer’s to assembling a more diverse pipeline.”

Biogen shares were up about 1.3% at $210.03 on Tuesday. The stock is down 47% since Aduhelm was approved in June.

The company was betting on Aduhelm, the first new treatment for the memory-robbing disease in nearly 20 years, to act as a buffer as its main established revenue drivers face rising competition.

The U.S. Food and Drug Administration approved the treatment last June despite a lack of clear evidence that it slowed cognitive decline and over objections of the agency’s panel of outside expert advisers.

Aduhelm had sales of just $2.8 million in the first quarter, missing analysts’ diminished estimates. The company said its earnings were hit by a $275 million Aduhelm inventory write-off.

Excluding items, Biogen earned $4.38 per share, in line with analysts’ estimates.

Vounatsos called the setbacks faced by the company in the last 12 months “significant,” but said Biogen remained committed to Alzheimer’s disease.

Biogen is still counting on a second Alzheimer’s drug, lecanemab which, like Aduhelm, was developed with Japanese company Eisai Co. Ltd.

Biogen plans to complete a rolling submission of data for lecanemab under the U.S. accelerated approval pathway in the current quarter before submitting it for full approval in 2023.

On Tuesday, Eisai revised down its operating profit forecast for the year ended March 31 by 31.4% to 53.5 billion yen ($411 million), citing the impact of the U.S. coverage policy for Aduhelm.

($1 = 130.1300 yen)

(Reporting by Leroy Leo and Mrinalika Roy in Bengaluru; Additional reporting by Makiko Yamazaki in Tokyo; Editing by Shounak Dasgupta and Bill Berkrot)

LONDON -HSBC has kicked off its planned $1 billion share buyback on Wednesday, as it seeks to redeploy excess capital and reward shareholders.

The London-listed global lender has appointed Merrill Lynch International to conduct the process, which could see as many as 2 billion HSBC ordinary shares cancelled in a move that should lead to a boost in average earnings per share.

Merrill Lynch will make trading decisions in relation to the buyback independently of HSBC and will purchase shares ‘on exchange’, the bank said.

The process is due to end on Aug. 31.

Late last month, HSBC said it would put plans for a 2022 buyback programme on ice after reporting a larger than expected hit to capital reserves driven by rising inflation and geopolitical tension.

(Reporting By Sinead Cruise, editing by Pamela Barbaglia)

By Uditha Jayasinghe and Alasdair Pal

COLOMBO -Sri Lanka plans to replace its current “unrealistic” budget and is in talks with the World Bank to extend its support by $300 million to $700 million, the country’s finance minister said on Wednesday.

The island nation, hit hard by COVID-19 and short of revenue after steep tax cuts by President Gotabaya Rajapaksa’s government, is critically short of foreign exchange and has sought an emergency bailout from the International Monetary Fund.

Rampant inflation and shortages of imported food, fuel and medicines have led to weeks of protests that have occasionally turned violent.

“The existing budget is unrealistic, given our challenges,” finance minister Ali Sabry told a parliament session.

“We will bring in a new budget that will seek to address core issues of low public revenue.”

Sabry said he wanted to increase tax revenue as a share of gross domestic product to 14% within the next two years, from 8.7% now.

Sri Lanka will appoint within the next two weeks financial and legal advisers for a proposed restructure of its sovereign debt, Sabry said, adding that the government was keen to work with the IMF on structural reforms.

“This is the only way to put the economy on a sustainable footing,” he said.

(Reporting by Uditha Jayasinghe and Alasdair Pal; Editing by Clarence Fernandez)

By Jamie McGeever

ORLANDO, Fla. -The highest inflation in decades is unraveling whatever policy consensus there was between the world’s major central banks since the Great Financial Crisis and global markets could buckle under resulting waves of stress and volatility.

A turbo-charged dollar, which often both reflects and fuels financial market stress, risks a vicious cycle as a scramble for dollars intensifies, tightens global financial conditions and increases volatility.

The dollar’s surge to its strongest level in 20 years not only reflects how aggressive investors expect the Federal Reserve to be in raising interest rates, but also how fragmented the global central bank landscape is.

While the U.S. monetary authority appears strapped in for the most aggressive tightening cycle since 1994 both in scale and speed, others are at various stages of the battle against inflation, and with varying degrees of appetite for the fight.

The Fed’s expected path stands in stark contrast to its three biggest peers. Central banks in Japan and China are still easing policy and the European Central Bank will struggle with its plans to tighten amid recession fears from a Ukraine-related energy shock.

Whatever path major central banks follow, the burst of global inflation and fragmented policy response has put a fire under global market volatility – U.S. Treasuries implied volatility is the highest since 2009 and global financial conditions are also the tightest in 13 years.

As analysts at Bank of America put it, two years of pandemic-fueled quantitative easing worth around $11 trillion globally is ending and markets’ ‘volatility anchor’ has been removed, threatening the disorderly moves in rates and currency markets that policymakers are desperate to avoid.

“Market panics (are) often associated with divergent central bank policy objectives,” BofA wrote on Friday.

$1 TRILLION DEBT

The dollar index, a measure of the greenback’s value against six major currencies, is the highest since 2002. Although it has risen rapidly this year and may be due a profit-taking pause, many analysts reckon it still has room to appreciate further.

A stronger dollar makes it more expensive to service dollar-denominated debt for overseas borrowers. According to Institute of International Finance estimates, well over $1 trillion of dollar debt held in emerging economies will mature by the end of next year.

A rising dollar and U.S. borrowing costs have slammed global financial markets – the S&P 500 just had its worst January-April performance since the 1930s, while U.S. bond market volatility and Goldman Sachs’s global financial conditions index are the highest since 2009.

The additional problem policymakers face is essentially the irrationality and herd-like behavior of financial markets. Once currency traders sense weakness or fracture, they go for the jugular, and market overshoots can exacerbate underlying economic problems.

ECB Executive Board member Isabel Schnabel in a March 17 speech nodded to the danger of allowing policy divergence to widen too much.

“A reaction function that differs materially from that of other central banks facing a protracted period of above-target inflation risks amplifying the energy price shock by weighing on the exchange rate, thereby adding to the burden on real household income,” she warned.

Chris Marsh, senior advisor to Exante Data and a former economist at the International Monetary Fund, says the wide divergence can only continue for so long before other central banks have to follow the Fed.

“If the ECB and others don’t keep up, they end up importing inflation. And inflation is already very high. So to not keep up with the Fed will be very difficult for them,” Marsh said.

Related columns:

Given what followed, emerging markets fear 1994 Fed redux (Reuters, April 25)

Pumped-up dollar compounding global liquidity squeeze (Reuters, April 22)

Hedge funds’ bullish dollar view distorted by yen outlier (Reuters, April 18)

Euro FX reserve demand returns after years of neglect (Reuters, April 13)

(The opinions expressed here are those of the author, a columnist for Reuters)

(By Jamie McGeever; Editing by Andrea Ricci)

By Florence Tan and Chen Aizhu

SINGAPORE – The world’s largest independent oil trader, Vitol, loaded a cargo of Russian ESPO Blend crude for the United Arab Emirates this week, the first such voyage for the grade, data from several analytics firms showed.

Suezmax tanker Kriti Breeze, chartered for $2.3 million, loaded the 740,000-barrel cargo from the Far East port of Kozmino on May 3, and is heading to the port of Fujairah, data from Refinitiv, Kpler and Vortexa showed.

The tanker is expected to discharge the cargo at Fujairah in late May or early June, according to the data.

Two traders who regularly track ESPO crude said the crude is typically sold to North Asia.

The shipment is “very creative and FOB (free-on-board) discounts must be huge for it to work”, one of the traders said, referring to the crude’s spot discount to Dubai quotes, excluding freight cost.

Shipping data shows rare trade in ESPO crude from Far East Russia to Fujairah https://fingfx.thomsonreuters.com/gfx/ce/gkvlgkqyepb/KritiiBreezeMay42022.png

Vitol could not be immediately reached for comment outside office hours.

The European Union is expected to outline oil sanctions against Russia on Wednesday for invading Ukraine. Moscow calls its actions there a “special military operation”.

Vitol has previously said traded volumes of Russian oil “will diminish significantly in the second quarter as current term contractual obligations decline,” and it will cease trading Russian oil by the end of 2022.

(Reporting by Florence Tan and Chen Aizhu; Editing by Clarence Fernandez and Tom Hogue)

HOUSTON – The United Steelworkers union (USW) seeks this week to renew talks with Chevron Corp over a six-week-old strike at the company’s Richmond, California, refinery, said a USW official.

The company and union haven’t met at the bargaining table in two weeks after each rejected the other’s proposal.

“We are going for a meeting this week,” said B.K. White, first vice president of USW Local 12-5, which represents 500 workers who went on strike on March 21 after rejecting for a second time a Chevron contract proposal.

Chevron has reached agreement with unions at three U.S. refineries and one fuel and lubricant additives plant, said company spokesperson Tyler Kruzich.

“We look forward to continuing negotiations with the USW Local 5 so they can rejoin our workforce soon,” Kruzich said.

U.S. refiners have concluded contracts with workers at 34 of 35 locations, he added.

Chevron continues to operate the 245,271-barrel-per-day (bpd) San Francisco Bay-area refinery with managers, supervisors and temporary workers.

(The story corrects to say U.S. refiners, not Chevron, in 6th paragraph. Adds number of agreements reached at Chevron sites in 4th paragraph)

(Reporting by Erwin Seba; Editing by Sandra Maler)