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Investigational Medical Products for Rare Diseases: Ethical Concerns and Unresolved Issues with Expanded Access

By Alison Bateman-House, PhD, MPH, MA and Lisa Kearns, MS, MA Introduction Patients who have no therapeutic or diagnostic options available may seek access to investigational (experimental) products in development by enrolling in clinical trials. For…

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By Alison Bateman-House, PhD, MPH, MA and Lisa Kearns, MS, MA

Introduction

Patients who have no therapeutic or diagnostic options available may seek access to investigational (experimental) products in development by enrolling in clinical trials. For seriously ill patients who cannot join a trial, Expanded Access (EA) may be a viable alternative. EA is a United States Food and Drug Administration (US FDA) regulatory pathway by which certain patients may access unapproved medical products outside of trials, if the entities developing the products agree to provide them. EA can take on heightened importance for rare- and ultra-rare disease communities, for whom there are often limited approved drugs/diagnostics and trial options. Yet EA––as an exceptional therapeutic effort involving products of unknown efficacy and safety––raises myriad ethical concerns, chief among them how to balance the welfare of individual patients with that of a patient population; whether access to products via EA can ever be equitable; and how to navigate the challenges EA presents regarding informed decision-making. In this article, we discuss these concerns in the context of EA for rare diseases, fact-check some common perceptions, and discuss unresolved issues that, while thorny, demand deliberation and eventual resolution.

The Purpose of Expanded Access

The majority of patients who try investigational products, defined here as medical products in development prior to approval by a regulator for any use, do so in clinical trials. Patients often enroll in trials in hopes of benefiting personally; however, they can also be motivated by a desire to help generate knowledge for the benefit of other patients with their condition. Those who participate in trials help advance understanding of a condition and its treatment by contributing to the collection of safety and efficacy data. This societal and public health gain is why most nations prioritize participation in clinical trials over non-trial access to investigational products. Still, many nations allow non-trial access to some patients who cannot participate in a trial; such access occurs under a dizzying array of terminology including “compassionate use,” “expanded access,” “preapproval access,” “special access,” “managed access,” “single patient INDs,” “named patient programs,” and more [1].

Non-trial access

regulations vary globally but generally require eligible patients to have serious or life-threatening conditions with no untried approved therapeutic options. The potential benefit of the experimental product must outweigh its risk of harm, and a patient (or surrogate decision-maker) must give informed consent. Additionally, eligible patients must be unable to participate in a clinical trial, and the product’s developer (“sponsor”) must have determined that provision of the product will not interfere with its clinical development, such as by making trial accrual less appealing [2]. These stipulations are designed to prioritize the clinical development of the product while still providing seriously ill patients non-trial access to potentially beneficial treatments or diagnostics.

In the US, non-trial access to investigational medical products is permitted via two routes: EA and Right to Try (RTT). Importantly, access via either route hinges on the willingness of the sponsor, most often a biopharmaceutical company, to provide the requested product. EA, the far more common and preferred route, accommodates both individuals and groups of patients and allows access to products at any stage of development. In single patient EA, the patient’s physician creates a customized plan in cooperation with the sponsor, the FDA, and an ethics entity called an institutional review board (IRB). Figure 1 reflects the most recent data on single patient EA requests from FDA’s Centers for Drug Evaluation and Research (CDER) and Biologics Evaluation and Research (CBER). Note that the FDA allowed the overwhelming majority of single patient EA requests to proceed.

Figure 1
Source: www.fda.gov/news-events/expanded-access/expanded-access-compassionate-use-submission-data

There is also a second type of EA, for larger groups of patients. These “cohort” EA programs resemble clinical trials in that they operate under protocols developed by a sponsor and approved by the FDA and an IRB. However, while in clinical trials inclusion and exclusion criteria are established to prevent harm to participants and to facilitate the generation of quality data from which robust conclusions can be derived, in a cohort EA program these criteria are set to prevent harm to patients and to ensure that participants are truly ineligible for a clinical trial. EA programs can be “intermediate” size, accommodating two to an unspecified number of patients, or “treatment” size, accommodating large numbers of patients. Treatment EA programs are frequently opened after sponsors have submitted marketing applications for the investigational products and are intended to provide wide-scale access to patients who cannot wait for commercial availability of the product. RTT is an alternative route to EA requiring neither FDA nor IRB oversight. Only single patients who suffer from life-threatening conditions are eligible, and it applies only to drugs, which must be in active development and have completed a successful Phase I trial. The many ethical concerns surrounding RTT have been addressed extensively elsewhere [3,4]. Because this pathway is used exceedingly rarely, we do not discuss it further.

Expanded Access Perceptions and Facts

An entire journal could be devoted to clarifying what EA is meant to achieve, how it works, its legal history, and more. The same goes for ethical concerns and unresolved issues: the below is by no means exhaustive. The items we’ve included are ones we have encountered most often in years of studying the topic.

Perception: It is difficult to access medical products via EA, and this is due to the FDA or IRB.

Reality: The FDA allows virtually all EA requests to proceed (see Figure 1), as do IRBs. [5] However, these entities can only review EA requests submitted to them, and they receive requests only after a sponsor has agreed to grant access; if a sponsor says no, the request will never be reviewed by the FDA or an IRB.

The primary gatekeeper to EA is the sponsor, which has no legal obligation to allow preapproval access to its products. How often sponsors deny requests for EA is a mystery: some major pharmaceutical companies voluntarily report the numbers of single patient requests they receive and grant, but there is no public accounting by the majority of sponsors. Many medical products are initially developed by small companies, with larger companies acquiring the rights to the products if they show commercial potential. Products targeting rare diseases often have less commercial appeal than those in development for much larger patient populations; thus, rare disease products tend to be brought to market by smaller companies. This has implications for EA, as, anecdotally, small companies are less likely to allow EA than large ones, for a variety of reasons [6].

Perception: EA requires time and effort on the part of physicians and patients.

Reality: Just as sponsors have no legal obligation to grant access to their products via EA, physicians have no legal obligation to facilitate EA, and some patients will have to devote additional time and expense to find physicians willing to help them.

Cohort EA programs, which are often established by sponsors but in some cases can be initiated by physicians, resemble clinical trials and thus require significant effort to establish and monitor. Clinicians who take leadership roles in these efforts will spend considerable time communicating with the FDA, IRB, sponsor, and others. Clinicians without leadership roles need only to refer patients to the EA program, as they would do for a clinical trial.

For single patient EA, which involves a physician, sponsor, IRB, and FDA, the majority of effort falls to the physician, who must shepherd the entire process, often without dedicated time, remuneration, support staff, or knowledge or training about how to do so [7]. Recent years have seen several efforts to simplify single patient EA and make navigating the process more straightforward. In 2019, the FDA launched Project Facilitate, a concierge program that guides oncologists through the process[8]. The Reagan-Udall Foundation for the FDA and individual biopharmaceutical companies have worked to enhance transparency of EA-related policies and procedures in accordance with the 21st Century Cures Act, which mandates disclosure of certain sponsor’s EA policies [9]. Despite these laudable steps, there are still reasons to believe that physicians do not understand EA very well [7,10], which can hinder their ability to navigate the process. Patients with rare diseases may actually fare better on this front, because tightly knit networks can help increase awareness and understanding of EA for both patients and clinicians.

Perception: Sponsors do not grant EA requests because of cost.

Reality: Some large companies with lots of products on the market are willing to provide EA regardless of its expense. This may not be the case for many companies in the rare disease space. Despite inducements such as those created in the Orphan Drug Act [11], sponsors can be hesitant to tackle rarer diseases, and when they to do, it may be with less capital and at higher risk than for sponsors developing medical products for more prevalent conditions. This can lead sponsors to be more conservative in responding to EA requests, by either declining to offer EA or limiting the size of programs. While federal regulations allow sponsors to recoup direct manufacturing costs, sponsors usually provide products via EA for free.

Sponsors have other concerns beyond cost. One is that serious adverse events that occur in an EA context may threaten the development of the product. Although this concern is overblown—FDA has said that it realizes that EA involves very sick patients and that not all serious adverse events necessarily stem from the experimental intervention [12]—until sponsors internalize this, fears of regulatory, and potentially investor, repercussions will persist, perhaps leading sponsors to be leery of EA. Furthermore, sponsors developing single-administration therapeutics for very small populations may worry that EA will reduce their eventual consumer markets. For example, a sponsor that provides an investigational gene therapy  via EA will lose that patient from its already limited pool of potential consumers post-approval. Finally, sponsors may decide not to offer EA due to concern about how to most ethically allocate a limited supply of a product.

Perception: EA requires time and effort on the part of physicians and patients.

Reality: Just as sponsors have no legal obligation to grant access to their products via EA, physicians have no legal obligation to facilitate EA, and some patients will have to devote additional time and expense to find physicians willing to help them.

Cohort EA programs, which are often established by sponsors but in some cases can be initiated by physicians, resemble clinical trials and thus require significant effort to establish and monitor. Clinicians who take leadership roles in these efforts will spend considerable time communicating with the FDA, IRB, sponsor, and others. Clinicians without leadership roles need only to refer patients to the EA program, as they would do for a clinical trial.

For single patient EA, which involves a physician, sponsor, IRB, and FDA, the majority of effort falls to the physician, who must shepherd the entire process, often without dedicated time, remuneration, support staff, or knowledge or training about how to do so [7]. Recent years have seen several efforts to simplify single patient EA and make navigating the process more straightforward. In 2019, the FDA launched Project Facilitate, a concierge program that guides oncologists through the process [8]. The Reagan-Udall Foundation for the FDA and individual biopharmaceutical companies have worked to enhance transparency of EA-related policies and procedures in accordance with the 21st Century Cures Act, which mandates disclosure of certain sponsor’s EA policies [9]. Despite these laudable steps, there are still reasons to believe that physicians do not understand EA very well[7,10], which can hinder their ability to navigate the process. Patients with rare diseases may actually fare better on this front, because tightly knit networks can help increase awareness and understanding of EA for both patients and clinicians.

Perception: Sponsors do not grant EA requests because of cost.

Reality: Some large companies with lots of products on the market are willing to provide EA regardless of its expense. This may not be the case for many companies in the rare disease space. Despite inducements such as those created in the Orphan Drug Act [11], sponsors can be hesitant to tackle rarer diseases, and when they to do, it may be with less capital and at higher risk than for sponsors developing medical products for more prevalent conditions. This can lead sponsors to be more conservative in responding to EA requests, by either declining to offer EA or limiting the size of programs. While federal regulations allow sponsors to recoup direct manufacturing costs, sponsors usually provide products via EA for free.

Sponsors have other concerns beyond cost. One is that serious adverse events that occur in an EA context may threaten the development of the product. Although this concern is overblown—FDA has said that it realizes that EA involves very sick patients and that not all serious adverse events necessarily stem from the experimental intervention [12]—until sponsors internalize this, fears of regulatory, and potentially investor, repercussions will persist, perhaps leading sponsors to be leery of EA. Furthermore, sponsors developing single-administration therapeutics for very small populations may worry that EA will reduce their eventual consumer markets. For example, a sponsor that provides an investigational gene therapy via EA will lose that patient from its already limited pool of potential consumers post-approval. Finally, sponsors may decide not to offer EA due to concern about how to most ethically allocate a limited supply of a product.

Expanded Access for Rare Diseases: Ethical Concerns

Three-quarters of rare diseases affect children, and often these conditions are fatal and/or lead to significant morbidities. Despite the undeniable appeal of preapproval access for this special class of patients, EA nevertheless raises troubling ethical concerns. We and colleagues have argued that developers of gene therapies have an ethical obligation to consider providing EA to their products [13], even though such access is not legally required. We premise this argument on the fact that many gene therapy products address serious unmet needs that require urgent intervention and thus merit proactive deliberation about foreseeable EA requests. This argument extends to non-genetic interventions for serious indications that require urgent intervention.

EA policies should reflect the severity of the medical condition, the available alternatives, the product’s known and unknown risks and benefits, the current and future availability of the product, and the modality of administration. Of paramount importance when sponsors make EA policies is that there should be considerations about informed consent and equity of access.

Informed Consent

Short windows for commencing treatment, few alternative options, lack of medical literacy, and hype about interventions’ purported benefits can all lead patients or guardians to overestimate an unproven treatment’s therapeutic benefit and underestimate its risk. In addition to a thorough explication of known and unknown risks and benefits, the informed consent process should cover relevant financial and other concerns; for example, that use of the invention may preclude the patient from receiving other medical products, in or out of a trial. Ethical concerns about patients’ ability to provide valid informed consent to unproven interventions are not particular to EA nor to rare disease. However, this already troublesome issue is intensified with rare diseases, because of the scarcity of approved treatments and trials—and thus scarcity of data about risks and benefits—and because so many rare diseases strike children, meaning decisions about whether to attempt EA will be made by parents or other guardians on behalf of patients unable to make their own treatment decisions. Regulators, clinicians, and ethicists, among others, have long sought to address the difficulty in making treatment decisions for children, and regulations and policy reflect this. However, EA undergoes less strict ethical review than do clinical trials, so clinicians and patient advocacy groups must play a larger role in ensuring patients or surrogates understand all aspects of their decision.

Justice

Inequitable access to healthcare in the US and around the world includes inequitable access to investigational medical products. As a pathway, EA is fundamentally limited by a patient’s ability to find a physician who is willing and has the resources to identify a possible intervention and then pursue access to it. This factor has a hidden socioeconomic component, as those patients who are barred by lack of financial and other resources (the inability to find childcare or take time off from work/school, for instance) are less likely to be able to search for a willing physician, to seek second opinions, or to travel for treatment. This is particularly relevant for patients with rare diseases who engage in “diagnostic odysseys,” expensive and time-consuming searches for accurate diagnoses; even if they obtain correct diagnoses, there may be relatively few specialists or institutions that can provide appropriate treatment. Uneven access to EA on socioeconomic grounds worsens if patients must pay out of pocket for either the unapproved product itself or ancillary costs, such as physician fees.

Public and private payers typically do not cover unapproved treatments and may refuse to pay associated costs as well, leaving even those with insurance potentially vulnerable to large expenses [14]. In sum, EA is typically a viable option only for those with the ability, time, and resources to find and afford a willing physician and promising intervention.

The inequity in EA is brought into even starker relief in a particular niche of the rare disease world: the development of individualized therapeutics. The most famous such case to date is that of milasen, an antisense oligonucleotide developed for one patient, a child with a unique mutation of Batten disease [15]. Estimated costs of the development and administration of milasen are estimated to be seven figures, not including costs incurred by the family for travel and housing for treatment, and the like [16].

With individualized therapeutics, there is no intention to develop the product for regulatory approval, so EA is not something that happens secondary to a clinical trial of an experimental product. Rather, non-trial preapproval use of the drug via EA is the intended, and only, use. Yet, EA was meant to be an exceptional option accompanying clinical development of a medical product. This major shift in usage of the pathway will require policymakers and regulatory bodies, including IRBs, to reconsider the process and their roles in it [17]. Likewise, it will require grappling with the principle of justice, given that not all patients have the resources to self-fund such endeavors, and not all patients will be able to garner charitable support [18,19].

Unresolved Issues in Expanded Access for Rare Diseases Cost

As mentioned, cost can be an important factor for sponsors deciding whether to offer EA. Cost is a bigger consideration if the product in question entails complicated manufacturing or delivery or a companion diagnostic. Autologous treatments, such as CAR-T or stem cell–based products, involve collection of biological materials from a patient, customized development of a product, and then delivery of that product to the patient, possibly via surgery—associated costs that may fall to the patient. Although the hope is that ongoing development of individualized therapeutics will lead to techniques that can eventually reduce costs, it’s difficult to imagine individualized medicine becoming easily affordable, especially if insurers continue to view it as experimental. Unfortunately, inequities in access will only persist and deepen. This issue must be factored into all decisions about EA, and the status quo must be recognized as unacceptable by anyone concerned about justice in access to healthcare.

Unintended Consequences of Early Intervention

For many rare diseases, early intervention is vital to halt or slow disease progression and forestall reduced quality of life and the possibility of early death. This has two implications. The first is that there must be ways to detect diseases in time for early intervention. This requires infrastructure for early detection— infrastructure that must be designed with equity in mind. For instance, universal childhood testing for a rare diseases would be costly, yet through an equity lens, it would be morally preferable to the current system, in which often only those who are able to seek out and pay for such testing are able to benefit. Allocating resources to one program, such as universal newborn screening for diseases, typically means that those resources will have to be diverted from other programs, so there are no easy answers here.

Another implication of the drive for early intervention is that making products available via EA may have the unintentional downstream impact of depleting both the pool of patients available for future clinical trials and the future market for a product. For both situations, providing broad non-trial access to patients who may benefit from it may result in harm to a wider patient community, which relies upon both the rapid conduct of trials to advance knowledge and ongoing investment, most frequently by profit-driven biopharmaceutical companies, to create next generation interventions. The most obvious solution to the depletion of future trials in the rare disease space is for sponsors working on a common therapeutic target to be transparent about their plans for current and future clinical trials and EA programs and then work together—pre-competitively—to ensure that a limited pool of patients is preferentially channeled into trials and those who cannot be accommodated in a trial would have the opportunity for EA. This goes hand in hand with championing innovation in clinical trial design so that more patients can access experimental products through them, thereby reducing overall demand for EA. A silver lining of the coronavirus pandemic is that it has forced researchers to think creatively about how to conduct trials remotely, knowledge that should be applied to post-pandemic research.

Conclusion

Everyone involved with rare diseases must understand what EA is intended to do and the ethical and other challenges it entails. The valuable time and energy that have been wasted on initiatives—such as Right to Try legislation, which was premised on the false claim that the FDA was a near-insurmountable bureaucratic obstacle to EA—would have been better spent tackling real issues concerning the use of experimental medical products for rare diseases, such as what to do about the fact that trials are often burdensome for patients and can limit participation and cost is a significant barrier. Admittedly, medical innovation is expensive and involves a complex web of stakeholders with some shared and some unique interests. This makes it difficult to state hard and fast rules about how or when access to unapproved medical products should occur or what changes to current practices are needed. This difficulty only increases when the interventions are novel or complex and for indications that face relatively steeper market and diagnostic hurdles. Increased understanding of these issues and a streamlined focus on the underlying ethical and other concerns will help to expedite progress for the benefit of patients and the general public.

 

Alison Bateman-House, PhD, MPH, MA (Alison.Bateman-House@nyulangone.org), Division of Medical Ethics, Department of Population Health, NYU Grossman School of Medicine, New York.

Lisa Kearns, MS, MA (Lisa.Kearns@nyulangone.org), Division of Medical Ethics, Department of Population Health, NYU Grossman School of Medicine, New York.

 

References

  1. Kimberly LL, Beuttler MM, Shen M, Caplan AL, Bateman-House A. (2017). Pre-approval access terminology: a cause for confusion and a danger to patients. Ther Innov Regul Sci. Jul;51(4):494-500. doi: 10.1177/2168479017696267. Epub 2017 Mar 3. PMID: 30227050.
  2. Bunnik EM, Aarts N, van de Vathorst S. (2018). Little to lose and no other options: ethical issues in efforts to facilitate expanded access to investigational drugs. Health Policy. Sep;122(9):977-983. doi: 10.1016/j.healthpol.2018.06.005. Epub 2018 Jun 18. PMID: 29935731.
  3. Folkers K, Chapman C, Redman B. (2019) Federal Right to Try: where is it going? Hastings Cent Rep. Mar;49(2):26-36. doi: 10.1002/hast.990. PMID: 3099828.1
  4. Bateman-House A, Kimberly L, Redman B, Dubler N, Caplan A. Right-to-try laws: hope, hype, and unintended consequences. (2015) Ann Intern Med. Nov 17;163(10):796-7. doi: 10.7326/M15-0148. Epub 2015 Sep 29. PMID: 26413841.
  5. Chapman CR, Shearston JA, Folkers KM, Redman BK, Caplan A, Bateman-House A. Single-patient expanded access requests: IRB professionals’ experiences and perspectives. AJOB Empir Bioeth. 2019 Apr-Jun;10(2):88-99. doi: 10.1080/23294515.2019.1577192. Epub 2019 Apr 9. PMID: 30964737.
  6. Chapman CR, Moch KI, McFadyen A, Kearns L, Watson T, Furlong P, Bateman-House A. (2019). What compassionate use means for gene therapies. Nat Biotechnol. Apr;37(4):352-355. doi: 10.1038/s41587-019-0081-7.
  7. Chapman CR, Belli H, Leach D, Shah L, Bateman-House A. (2021). A survey of pediatric hematologists/oncologists’ perspectives on single patient Expanded Access and Right to Try. Med Access Point Care. 5. 239920262110059. 10.1177/23992026211005991.
  8. Project Facilitate. Accessed Sep 3, 2021.
  9. Kang S, Chang S, Ross JS, Miller JE. 2021. Implementation of 21st Century Cures Act expanded access policies requirements. Clin Pharmacol Ther. Aug 24. doi:10.1002/cpt.2401. Online ahead of print.
  10. Moerdler S, Zhang L, Gerasimov E, Zhu C, Wolinsky T, Roth M, Goodman N, Weiser DA. (2019). Physician perspectives on compassionate use in pediatric oncology. Pediatr Blood Cancer. Mar;66(3):e27545. doi: 10.1002/pbc.27545. Epub 2018 Nov 8. PMID: 30408307.
  11. 97th Congress (1981-1983). Public Law 97-414. Accessed Sep 13, 2021.
  12. U.S. Food and Drug Administration. (2016, updated 2017). Expanded access to investigational drugs for treatment use—questions and answers: guidance for industry. Accessed Aug 28, 2021.
  13. Kearns L, Chapman CR, Moch KI, Caplan AL, Watson T, McFadyen A, Furlong P, Bateman-House A. (2021). Gene therapy companies have an ethical obligation to develop expanded access policies. Mol Ther. Apr 7;29(4):1367-1369. doi: 10.1016/j.ymthe.2021.03.008. Epub 2021 Mar 13. PMID: 33714373; PMCID: PMC8058481.
  14. McBride Folkers K, Bateman-House A, Robertson C. (2020). Wake Forest Law Rev. Vol11:1.
  15. Kim J, C Hu, C Moufawad El Achkar, LE Black, J Douville, A Larson, MK Pendergast,SF Goldkind, AL Eunjung, et al. (2019). Patient-customized oligonucleotide therapy for a rare genetic disease. N Engl J Med 381(17):1644-1652.
  16. Hayden EC. This girl’s dramatic story shows hyper-personalized medicine is possible—and costly. Accessed Sep 4, 2021.
  17. Bateman-House A, Kearns L.(forthcoming) The Ethics of N=1 Development for Rare Diseases. Nucleic Acid Ther.
  18. Snyder J, Bateman-House A, Turner L. Is right to try being tried? Using crowdfunding data to better understand usage of nontrial pre-approval access pathways. (2020). Regen Med. Aug;15(8):1979-1985. doi: 10.2217/rme-2020-0043. Epub 2020 Oct 7. PMID: 33023369.
  19. Kenworthy NJ. Crowdfunding and global health disparities: an exploratory conceptual and empirical analysis. (2019) Global Health. Nov 28;15(Suppl 1):71. doi: 10.1186/s12992-019-0519-1. PMID: 31775896; PMCID: PMC6882318.

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Five Aerospace Investments to Buy as Wars Worsen Copy

Five aerospace investments to buy as wars worsen give investors a chance to acquire shares of companies focused on fortifying national defense. The five…

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Five aerospace investments to buy as wars worsen give investors a chance to acquire shares of companies focused on fortifying national defense.

The five aerospace investments to buy provide military products to help protect freedom amid Russia’s ongoing onslaught against Ukraine that began in February 2022, as well as supply arms in the Middle East used after Hamas militants attacked and murdered civilians in Israel on Oct. 7. Even though the S&P 500 recently reached all-time highs, these five aerospace investments have remained reasonably priced and rated as recommendations by seasoned analysts and a pension fund chairman.

State television broadcasts in Russia show the country’s soldiers advancing further into Ukrainian territory, but protests have occurred involving family members of those serving in perilous conditions in the invasion of their neighboring nation to be brought home. Even though hundreds of thousands of Russians also have fled to other countries to avoid compulsory military service, the aggressor’s President Vladimir Putin has vowed to continue to send additional soldiers into the fierce fighting.

While Russia’s land-grab of Crimea and other parts of Ukraine show no end in sight, Israel’s war with Hamas likely will last for at least additional months, according to the latest reports. United Nations’ leaders expressed alarm on Dec. 26 about intensifying Israeli attacks that killed more than 100 Palestinians over two days in part of the Gaza Strip, when 15 members of the Israel Defense Force (IDF) also lost their lives.

Five Aerospace Investments to Buy as Wars Worsen: General Dynamics

One of the five aerospace investments to buy as wars worsen is General Dynamics (NYSE: GD), a Reston, Virginia-based aerospace company with more than 100,000 employees in 70-plus countries. A key business unit of General Dynamics is Gulfstream Aerospace Corporation, a manufacturer of business aircraft. Other segments of General Dynamics focus on making military products such as Abrams tanks, Stryker fighting vehicles, ASCOD fighting vehicles like the Spanish PIZARRO and British AJAX, LAV-25 Light Armored Vehicles and Flyer-60 lightweight tactical vehicles.

For the U.S. Navy and other allied armed forces, General Dynamics builds Virginia-class attack submarines, Columbia-class ballistic missile submarines, Arleigh Burke-class guided missile destroyers, Expeditionary Sea Base ships, fleet logistics ships, commercial cargo ships, aircraft and naval gun systems, Hydra-70 rockets, military radios and command and control systems. In addition, the company provides radio and optical telescopes, secure mobile phones, PIRANHA and PANDUR wheeled armored vehicles and mobile bridge systems.

Chicago-based investment firm William Blair & Co. is among those recommending General Dynamics. The Chicago firm gave an “outperform” rating to General Dynamics in a Dec. 21 research note.

Gulfstream is seeking G700 FAA certification by the end of 2023, suggesting potentially positive news in the next 10 days, William Blair wrote in its recent research note. The investment firm projected that General Dynamics would trade upward upward upon the G700’s certification.

“General Dynamics’ 2023 aircraft delivery guidance of approximately 134 planes assumes that 19 G700s are delivered in the fourth quarter,” wrote William Blair’s aerospace and defense analyst Louie DiPalma. “Even if deliveries fall short of this target, we believe investors will take a glass-half-full approach upon receipt of the certification.”

Chart courtesy of www.stockcharts.com.

Five Aerospace Investments to Buy as Wars Worsen: GD Outlook

The G700 is a major focus area for investors because it is Gulfstream’s most significant aircraft introduction since the iconic G650 in 2012, DiPalma wrote. Gulfstream has the highest market share in the long-range jet segment of the private aircraft market, the highest profit margin of aircraft peers and the most premium business aviation brand, he added.

“The aircraft remains immensely popular today with corporations and high-net-worth individuals,” Di Palma wrote. “Elon Musk has reportedly placed an order for a G700 to go along with his existing G650. Qatar Airways announced at the Paris Air Show that 10 G700 aircraft will become part of its fleet.”

G700 deliveries and subsequent G800 deliveries are expected to be the cornerstone of Gulfstream’s growth and margin expansion for the next decade, DiPalma wrote. This should lead to a rebound in the stock price as the margins for the G700 and G800 are very attractive, he added.

Management’s guidance is for the aerospace operating margin to increase from about 13.2% in 2022 to roughly 14.0% in 2023 and 15.8% in 2024. Longer term, a high-teens profit margin appears within reach, DiPalma projected.

In other General Dynamics business segments, William Blair expects several yet-unannounced large contract awards for General Dynamics IT, to go along with C$1.7 billion, or US$1.29 billion, in General Dynamics Mission Systems contracts announced on Dec. 20 for the Canadian Army. General Dynamics shares are poised to have a strong 2024, William Blair wrote.

Five Aerospace Investments to Buy as Wars Worsen: VSE Corporation

Alexandria, Virginia-based VSE Corporation’s (NASDAQ: VSEC) price-to-earnings (P/E) valuation multiple of 22 received support when AAR Corp. (NYSE: AIR), a Wood Dale, Illinois, provider of aviation services, announced on Dec. 21 that it would acquire the product support business of Triumph Group (NYSE: TGI), a Berwyn, Pennsylvania, supplier of aerospace services, structures and systems. AAR’s purchase price of $725 million reflects confidence in a continued post-pandemic aerospace rebound.

VSE, a provider of aftermarket distribution and repair services for land, sea and air transportation assets used by government and commercial markets, is rated “outperform” by William Blair. The company’s core services include maintenance, repair and operations (MRO), parts distribution, supply chain management and logistics, engineering support, as well as consulting and training for global commercial, federal, military and defense customers.

“Robust consumer travel demand and aging aircraft fleets have driven elevated maintenance visits,” William Blair’s DiPalma wrote in a Dec. 21 research note. “The AAR–Triumph deal is valued at a premium 13-times 2024 EBITDA multiple, which was in line with the valuation multiple that Heico (NYSE: HEI) paid for Wencor over the summer.”

VSE currently trades at a discounted 9.5 times consensus 2024 earnings before interest, taxes, depreciation and amortization (EBITDA) estimates, as well as 11.6 times consensus 2023 EBITDA.

Five Aerospace Investments to Buy as Wars Worsen: VSE Undervalued?

“We expect that VSE shares will trend higher as investors process this deal,” DiPalma wrote. “VSE shares trade at 9.5 times consensus 2024 adjusted EBITDA, compared with peers and M&A comps in the 10-to-14-times range. We think that VSE’s multiple will expand as it closes the divestiture of its federal and defense business and makes strategic acquisitions. We see consistent 15% annual upside for shares as VSE continues to take share in the $110 billion aviation aftermarket industry.”

William Blair reaffirmed its “outperform” rating for VSE on Dec. 21. The main risk to VSE shares is lumpiness associated with its aviation services margins, Di Palma wrote. However, he raised 2024 estimates to further reflect commentary from VSE’s analysts’ day in November.

Chart courtesy of www.stockcharts.com.

Five Aerospace Investments to Buy as Wars Worsen: HEICO Corporation

HEICO Corporation (NYSEL: HEI), is a Hollywood, Florida-based technology-driven aerospace, industrial, defense and electronics company that also is ranked as an “outperform” investment by William Blair’s DiPalma. The aerospace aftermarket parts provider recently reported fourth-quarter financials above consensus analysts’ estimates, driven by 20% organic growth in HEICO’s flight support group.

HEICO’s management indicated that the performance of recently acquired Wencor is exceeding expectations. However, HEICO leaders offered color on 2024 organic growth and margin expectations that forecast reduced gains. Even though consensus estimates already assumed slowing growth, it is still not a positive for HEICO, DiPalma wrote.

William Blair forecasts 15% annual upside to HEICO’s shares, based on EBITDA growth. HEICO’s management cited a host of reasons for its quarterly outperformance, highlighted by the continued commercial air travel recovery. The company also referenced new product introductions and efficiency initiatives.

HEICO’s defense product sales increased by 26% sequentially, marking the third consecutive sequential increase in defense product revenue. The company’s leaders conveyed that defense in general is moving in the right direction to enhance financial performance.

Chart courtesy of www.stockcharts.com.

Five Dividend-paying Defense and Aerospace Investments to Purchase: XAR

A fourth way to obtain exposure to defense and aerospace investments is through SPDR S&P Aerospace and Defense ETF (XAR). That exchange-traded fund  tracks the S&P Aerospace & Defense Select Industry Index. The fund is overweight in industrials and underweight in technology and consumer cyclicals, said Bob Carlson, a pension fund chairman who heads the Retirement Watch investment newsletter.

Bob Carlson, who heads Retirement Watch, answers questions from Paul Dykewicz.

XAR has 34 securities, and 44.2% of the fund is in the 10 largest positions. The fund is up 25.82% in the last 12 months, 22.03% in the past three months and 7.92% for the last month. Its dividend yield recently measured 0.38%.

The largest positions in the fund recently were Axon Enterprise (NASDAQ: AXON), Boeing (NYSE: BA), L3Harris Technologies (NYSE: LHX), Spirit Aerosystems (NYSE: SPR) and Virgin Galactic (NYSE: SPCE).

Chart courtesy of www.stockcharts.com

Five Dividend-paying Defense and Aerospace Investments to Purchase: PPA

The second fund recommended by Carlson is Invesco Aerospace & Defense ETF (PPA), which tracks the SPADE Defense Index. It has the same underweighting and overweighting as XAR, he said.

PPA recently held 52 securities and 53.2% of the fund was in its 10 largest positions. With so many holdings, the fund offers much reduced risk compared to buying individual stocks. The largest positions in the fund recently were Boeing (NYSE: BA), RTX Corp. (NYSE: RTX), Lockheed Martin (NYSE: LMT), Northrop Grumman (NYSE: NOC) and General Electric (NYSE:GE).

The fund is up 19.07% for the past year, 50.34% in the last three months and 5.30% during the past month. The dividend yield recently touched 0.69%.

Chart courtesy of www.stockcharts.com

Other Fans of Aerospace

Two fans of aerospace stocks are Mark Skousen, PhD, and seasoned stock picker Jim Woods. The pair team up to head the Fast Money Alert advisory service They already are profitable in their recent recommendation of Lockheed Martin (NYSE: LMT) in Fast Money Alert.

Mark Skousen, a scion of Ben Franklin, meets with Paul Dykewicz.


Jim Woods, a former U.S. Army paratrooper, co-heads Fast Money Alert.

Bryan Perry, who heads the Cash Machine investment newsletter and the Micro-Cap Stock Trader advisory service, recommends satellite services provider Globalstar (NYSE American: GSAT), of Covington, Louisiana, that has jumped 50.00% since he advised buying it two months ago. Perry is averaging a dividend yield of 11.14% in his Cash Machine newsletter but is breaking out with the red-hot recommendation of Globalstar in his Micro-Cap Stock Trader advisory service.


Bryan Perry heads Cash Machine, averaging an 11.14% dividend yield.

Military Equipment Demand Soars amid Multiple Wars

The U.S. military faces an acute need to adopt innovation, to expedite implementation of technological gains, to tap into the talents of people in various industries and to step-up collaboration with private industry and international partners to enhance effectiveness, U.S. Joint Chiefs of Staff Gen. Charles Q. Brown Jr. told attendees on Nov 16 at a national security conference. Prime examples of the need are showed by multiple raging wars, including the Middle East and Ukraine. A cold war involves China and its increasingly strained relationships with Taiwan and other Asian nations.

The shocking Oct. 7 attack by Hamas on Israel touched off an ongoing war in the Middle East, coupled with Russia’s February 2022 invasion and continuing assault of neighboring Ukraine. Those brutal military conflicts show the fragility of peace when determined aggressors are willing to use any means necessary to achieve their goals. To fend off such attacks, rapid and effective response is required.

“The Department of Defense is doing more than ever before to deter, defend, and, if necessary, defeat aggression,” Gen. Brown said at the National Security Innovation Forum at the Johns Hopkins University Bloomberg Center in Washington, D.C.

One of Russia’s war ships, the 360-foot-long Novocherkassk, was damaged on Dec. 26 by a Ukrainian attack on the Black Sea port of Feodosia in Crimea. This video of an explosion at the port that reportedly shows a section of the ship hit by aircraft-guided missiles.


Chairman Joint Chiefs of Staff Gen. Charles Q. Brown, Jr.
Photo By: Benjamin Applebaum

National security threats can compel immediate action, Gen. Brown said he quickly learned since taking his post on Oct. 1.

 

“We may not have much warning when the next fight begins,” Gen. Brown said. “We need to be ready.”

 

In a pre-recorded speech at the national security conference, Michael R. Bloomberg, founder of Bloomberg LP, told the John Hopkins national security conference attendees about the critical need for collaboration between government and industry.

 

“Building enduring technological advances for the U.S. military will help our service members and allies defend freedom across the globe,” Bloomberg said.

 

The “horrific terrorist attacks” against Israel and civilians living there on Oct. 7 underscore the importance of that mission, Bloomberg added.

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street JournalInvestor’s Business DailyUSA Today, the Journal of Commerce, Seeking Alpha, Guru Focus and other publications and websites. Attention Holiday Gift Buyers! Consider purchasing Paul’s inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The uplifting book is great gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many othersCall 202-677-4457 for special pricing on multiple-book purchases or autographed copies! Follow Paul on Twitter @PaulDykewicz. He is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper, after writing for the Baltimore Business Journal and Crain Communications.

The post Five Aerospace Investments to Buy as Wars Worsen Copy appeared first on Stock Investor.

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Health Officials: Man Dies From Bubonic Plague In New Mexico

Health Officials: Man Dies From Bubonic Plague In New Mexico

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Officials in…

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Health Officials: Man Dies From Bubonic Plague In New Mexico

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Officials in New Mexico confirmed that a resident died from the plague in the United States’ first fatal case in several years.

A bubonic plague smear, prepared from a lymph removed from an adenopathic lymph node, or bubo, of a plague patient, demonstrates the presence of the Yersinia pestis bacteria that causes the plague in this undated photo. (Centers for Disease Control and Prevention/Getty Images)

The New Mexico Department of Health, in a statement, said that a man in Lincoln County “succumbed to the plague.” The man, who was not identified, was hospitalized before his death, officials said.

They further noted that it is the first human case of plague in New Mexico since 2021 and also the first death since 2020, according to the statement. No other details were provided, including how the disease spread to the man.

The agency is now doing outreach in Lincoln County, while “an environmental assessment will also be conducted in the community to look for ongoing risk,” the statement continued.

This tragic incident serves as a clear reminder of the threat posed by this ancient disease and emphasizes the need for heightened community awareness and proactive measures to prevent its spread,” the agency said.

A bacterial disease that spreads via rodents, it is generally spread to people through the bites of infected fleas. The plague, known as the black death or the bubonic plague, can spread by contact with infected animals such as rodents, pets, or wildlife.

The New Mexico Health Department statement said that pets such as dogs and cats that roam and hunt can bring infected fleas back into homes and put residents at risk.

Officials warned people in the area to “avoid sick or dead rodents and rabbits, and their nests and burrows” and to “prevent pets from roaming and hunting.”

“Talk to your veterinarian about using an appropriate flea control product on your pets as not all products are safe for cats, dogs or your children” and “have sick pets examined promptly by a veterinarian,” it added.

“See your doctor about any unexplained illness involving a sudden and severe fever, the statement continued, adding that locals should clean areas around their home that could house rodents like wood piles, junk piles, old vehicles, and brush piles.

The plague, which is spread by the bacteria Yersinia pestis, famously caused the deaths of an estimated hundreds of millions of Europeans in the 14th and 15th centuries following the Mongol invasions. In that pandemic, the bacteria spread via fleas on black rats, which historians say was not known by the people at the time.

Other outbreaks of the plague, such as the Plague of Justinian in the 6th century, are also believed to have killed about one-fifth of the population of the Byzantine Empire, according to historical records and accounts. In 2013, researchers said the Justinian plague was also caused by the Yersinia pestis bacteria.

But in the United States, it is considered a rare disease and usually occurs only in several countries worldwide. Generally, according to the Mayo Clinic, the bacteria affects only a few people in U.S. rural areas in Western states.

Recent cases have occurred mainly in Africa, Asia, and Latin America. Countries with frequent plague cases include Madagascar, the Democratic Republic of Congo, and Peru, the clinic says. There were multiple cases of plague reported in Inner Mongolia, China, in recent years, too.

Symptoms

Symptoms of a bubonic plague infection include headache, chills, fever, and weakness. Health officials say it can usually cause a painful swelling of lymph nodes in the groin, armpit, or neck areas. The swelling usually occurs within about two to eight days.

The disease can generally be treated with antibiotics, but it is usually deadly when not treated, the Mayo Clinic website says.

“Plague is considered a potential bioweapon. The U.S. government has plans and treatments in place if the disease is used as a weapon,” the website also says.

According to data from the U.S. Centers for Disease Control and Prevention, the last time that plague deaths were reported in the United States was in 2020 when two people died.

Tyler Durden Wed, 03/13/2024 - 21:40

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Mike Pompeo Doesn’t Rule Out Serving In 2nd Trump Administration

Mike Pompeo Doesn’t Rule Out Serving In 2nd Trump Administration

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Former Secretary…

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Mike Pompeo Doesn't Rule Out Serving In 2nd Trump Administration

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Former Secretary of State Mike Pompeo said in a new interview that he’s not ruling out accepting a White House position if former President Donald Trump is reelected in November.

“If I get a chance to serve and think that I can make a difference ... I’m almost certainly going to say yes to that opportunity to try and deliver on behalf of the American people,” he told Fox News, when asked during a interview if he would work for President Trump again.

I’m confident President Trump will be looking for people who will faithfully execute what it is he asked them to do,” Mr. Pompeo said during the interview, which aired on March 8. “I think as a president, you should always want that from everyone.”

Then-President Donald Trump (C), then- Secretary of State Mike Pompeo (L), and then-Vice President Mike Pence, take a question during the daily briefing on the novel coronavirus at the White House in Washington on April 8, 2020. (Mandel Ngan/AFP via Getty Images)

He said that as a former secretary of state, “I certainly wanted my team to do what I was asking them to do and was enormously frustrated when I found that I couldn’t get them to do that.”

Mr. Pompeo, a former U.S. representative from Kansas, served as Central Intelligence Agency (CIA) director in the Trump administration from 2017 to 2018 before he was secretary of state from 2018 to 2021. After he left office, there was speculation that he could mount a Republican presidential bid in 2024, but announced that he wouldn’t be running.

President Trump hasn’t publicly commented about Mr. Pompeo’s remarks.

In 2023, amid speculation that he would make a run for the White House, Mr. Pompeo took a swipe at his former boss, telling Fox News at the time that “the Trump administration spent $6 trillion more than it took in, adding to the deficit.”

“That’s never the right direction for the country,” he said.

In a public appearance last year, Mr. Pompeo also appeared to take a shot at the 45th president by criticizing “celebrity leaders” when urging GOP voters to choose ahead of the 2024 election.

2024 Race

Mr. Pompeo’s interview comes as the former president was named the “presumptive nominee” by the Republican National Committee (RNC) last week after his last major Republican challenger, former South Carolina Gov. Nikki Haley, dropped out of the 2024 race after failing to secure enough delegates. President Trump won 14 out of 15 states on Super Tuesday, with only Vermont—which notably has an open primary—going for Ms. Haley, who served as President Trump’s U.S. ambassador to the United Nations.

On March 8, the RNC held a meeting in Houston during which committee members voted in favor of President Trump’s nomination.

“Congratulations to President Donald J. Trump on his huge primary victory!” the organization said in a statement last week. “I’d also like to congratulate Nikki Haley for running a hard-fought campaign and becoming the first woman to win a Republican presidential contest.”

Earlier this year, the former president criticized the idea of being named the presumptive nominee after reports suggested that the RNC would do so before the Super Tuesday contests and while Ms. Haley was still in the race.

Also on March 8, the RNC voted to name Trump-endorsed officials to head the organization. Michael Whatley, a North Carolina Republican, was elected the party’s new national chairman in a vote in Houston, and Lara Trump, the former president’s daughter-in-law, was voted in as co-chair.

“The RNC is going to be the vanguard of a movement that will work tirelessly every single day to elect our nominee, Donald J. Trump, as the 47th President of the United States,” Mr. Whatley told RNC members in a speech after being elected, replacing former chair Ronna McDaniel. Ms. Trump is expected to focus largely on fundraising and media appearances.

President Trump hasn’t signaled whom he would appoint to various federal agencies if he’s reelected in November. He also hasn’t said who his pick for a running mate would be, but has offered several suggestions in recent interviews.

In various interviews, the former president has mentioned Sen. Tim Scott (R-S.C.), Texas Gov. Greg Abbott, Rep. Elise Stefanik (R-N.Y.), Vivek Ramaswamy, Florida Gov. Ron DeSantis, and South Dakota Gov. Kristi Noem, among others.

Tyler Durden Wed, 03/13/2024 - 17:00

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