Today in New West news: Peabody Energy declares bankruptcy, pair of Idaho conservation groups file against salvage logging project, and FDA halts Clovis’ lung cancer drug.
For months, Peabody Energy has been dancing around the question of bankruptcy. Countering a deleterious year in 2015, when energy prices plummeted, bringing with it massive deficits and setting off a wave of Chapter 11 filings, including one from Arch Coal, the nation’s second largest coal miner. A month ago, we reported Peabody was on the brink, with Standard and Poor’s saying the writing was on the wall, as it were.
Now, according to the Casper Star Tribune, Peabody, the nation’s largest coal miner, has succumbed, filing for bankruptcy protection earlier this morning:
Mines and offices at Peabody, a company founded in 1833 by 24-year-old Francis S. Peabody, will continue to operate as it moves through the bankruptcy process. However, Peabody’s planned sale of its New Mexico and Colorado assets were terminated after the buyer was unable to complete the deal.
The company’s bankruptcy filing comes less than three months after another from Arch Coal, the country’s second-largest miner, which followed bankruptcy filings from Alpha Natural Resources, Patriot Coal and Walter Energy.
New energy technology and tightening environmental regulations have throttled the industry and led to a wave of mine closures and job cuts. Peabody makes most of its money by selling its coal to major utilities that power the nation’s electric grid.
New drilling techniques allowed U.S. energy companies to free enormous amounts of natural gas, driving prices lower. The result of those plunging prices and changing environmental regulations has pushed major utilities to choose natural gas over coal to power electric grids.
Coal demand has tumbled and the effects have been devastating in coal mining communities from West Virginia to Montana. Slowing economic growth globally has added to the pressures.
“We will seek an in-court solution to Peabody’s substantial debt burden amid a historically challenged industry backdrop,” said CEO Glenn Kellow. “This process enables us to strengthen liquidity and reduce debt, build upon the significant operational achievements we’ve made in recent years and lay the foundation for long-term stability and success in the future.”
Earlier this month, we reported that a wave of layoffs was sweeping Wyoming’s two largest coal mines—operated by Arch and Peabody, respectively. It is not known currently what will happen to those mines as bankruptcy proceedings go forward.
Over in Idaho, according to the Idaho Statesman, Idaho Rivers United and Friends of the Clearwater have filed a motion to halt a salvage logging project in a patch of northern Idaho forestland near the Selway and Middle Fork Clearwater rivers. The groups allege the 2,100-acre project flies in the face of the Wild and Scenic Rivers Act, threatening biodiversity and recreation quality, among other things. From the Statesman:
“The project activities threaten serious an irreversible harms to water quality, endangered fish habitat, and Wild and Scenic values,” the groups say in the motion seeking the injunction.
The groups say potential harm to federally protected steelhead, salmon and bull trout from sediment as a result of logging hasn’t been adequately considered. The U.S. Fish and Wildlife Service and National Oceanic and Atmospheric Administration are also named in the lawsuit.
A wildfire burned more than 20 square miles in 2014, mostly on the Nez Perce-Clearwater National Forests. The Forest Service wants to start salvage logging in the middle of May.
Joyce Thompson, a spokeswoman for the Nez Perce-Clearwater National Forests, said the agency doesn’t comment on litigation. Speaking in general, she said burned trees tend to lose value the longer salvage logging is delayed.
“The timing of salvage timber sales is always critical,” she said. “The sooner you can salvage it, the more value you get from the timber, which will help with reforestation and other rehab activities on the fire.”
At issue is salvage logging in an area following the 2014 fire. But the motion for the injunction also notes 2015 wildfires that burned another 73 square miles.
The Statesman adds that a federal judge, ruling on a case pertaining to both Idaho Rivers United and the 2014 fire, said the Forest Service had erred in allowing Idaho officials to plan a salvage logging project on state land without applying for a special use permit for a road crossing private land within a Wild and Scenic River corridor.
Finally, we previously reported on the U.S. Food and Drug Administration’s investigation into Clovis Oncology Inc. and the efficacy of their lung cancer drug, rociletinib. Yesterday, Nasdaq halted trading of Clovis shares, as the FDA was meeting with Clovis officials to discuss the drug. Now, according to the Boulder Daily Camera, the FDA has said they will not grant fast approval to rociletinib until TIGER-3 (an Phase 3 trial) finishes:
The FDA was expected to decide on an accelerated approval for rociletinib by June 28. TIGER-3’s patient enrollment is expected to be complete in late 2018.
“We are disappointed with today’s outcome, as we believe in the strength of the data we presented for rociletinib,” Clovis president and CEO Patrick J. Mahaffy said in a statement. “We will work with the FDA to evaluate the best path forward as it continues to review our application.”
Following a trading halt issued in advance of pending material news, Clovis shares closed down 5.4 percent at $14.24.
Clovis officials declined to comment further.
Rociletinib, a targeted oral tablet for non-small-cell lung cancer, has faced significant hurdles on its path toward commercialization.
In November, just days after AstraZeneca received approval for competing drug Tagrisso, the FDA sought additional information about rociletinib, lengthening the review process by months. Clovis’ stock was pummeled, plunging 70 percent to $30.24.
On Friday, a briefing from the FDA staff noted that 47 percent of patients had serious adverse reactions, including abnormal — and potentially fatal — heart problems.
After that release, Clovis’ stock tumbled to its lowest level in three years. On Monday, Clovis shares dropped more than 5 percent to $15.06. Clovis’ 52-week high was $116.75.
FDA staff on Friday recommended the product carry a “black box warning” that the drug could lead to a condition known as Torsades de pointes, in which the heart can beat as fast as 250 beats per minute. FDA staff also recommended that patients receive ECG monitoring while on the drug.