Business activity crawls forward

U.S. business activity expanded in early July at the slowest pace in five months as services growth moderated.

The S&P Global flash U.S. composite purchasing managers index fell 1.2 points to 52 in July, the group reported Monday.

Readings above 50 indicate growth. A gauge of future activity also declined, slipping to its weakest level this year as service-provider optimism waned.

“The darkening picture adds downside risks to output growth in the coming months which, alongside the slowing in the pace of expansion in July, will keep alive fear that the U.S. economy may yet succumb to another downturn before the year is out,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement.

“The stickiness of price pressures meanwhile remains a major concern,” he said.

The composite gauge of prices charged ticked up in early July, indicating the stubbornness of inflationary pressures.

Manufacturers’ input prices increased for the first time in three months.

Service providers reported higher operating expenses, with wages being the primary driver as companies continue to have difficulty retaining workers. The index of employment at service providers slid to a six-month low.

The group’s overall services gauge dropped 2 points to a five-month low of 52.4.

The manufacturing index continued to show contraction, though at a slower rate. Factories pared inventories of materials and finished goods as domestic and global demand remained soft, the report showed.

American pilots delay contract vote

American Airlines’ pilots will delay voting on their new tentative agreement after United Airlines’ pilot contract set a new standard on pay and benefits.

This past weekend, American’s 15,000 pilots represented by the Allied Pilots Association were offered a new $9 billion contract that matched the new pay standards set by United’s pilot contract agreement earlier this month.

On Sunday, the union’s board voted to postpone union membership’s vote on a new contract.

Monday was set to be the first day pilots would vote for their new contract.

“We do not intend to move forward with a TA that simply adopts the economic aspects of the United AIP – and management’s proposal does not even do that in all respects,” the board wrote in a memo to American’s pilots. “We have highlighted to management various quality-of-life and work-rule improvements that would bring us in line with our peers. Most of those items remain unaddressed in management’s most recent proposal.”

It’s unclear when an agreement will be reached, but the union intends “to continue our efforts to reach an amended TA that contains sufficient compensation, work rules and quality-of-life enhancements comparable to those offered to our peers.”

Last week, American reported a record revenue of $14.1 billion in its second quarter, the highest quarterly revenue in the airline’s history. Under the new deal, airfares could go up at American, but that’s the same story with every major airline readying for new pilot contracts with similar wage increases.

Isom told American’s pilots this weekend that he plans to maintain a target of an August ratification and have a “new quality of life” improvements to pilots by Labor Day.

Roche working on hypertension drug

Roche will work together with Alnylam Pharmaceuticals on a potential treatment for high blood pressure in a deal worth as much as $2.8 billion, expanding the Swiss company’s footprint beyond the cancer therapies that long anchored its business.

Roche will pay Alnylam $310 million in cash upfront, together with development, regulatory and sales milestones, the companies said in statements on Monday.

If they’re successful in bringing the drug to market, they’ll sell it together in the U.S. while Roche gets exclusive rights in the rest of the world.

Pressure is growing on Roche to deliver results from its pipeline of experimental drugs after high-profile failures last year in both cancer and Alzheimer’s disease. The company has reshaped its portfolio amid biosimilar competition for its trio of blockbuster cancer medicines.

“We do believe that it has best in disease potential in a very large market,” Teresa Graham, Roche’s pharmaceuticals chief, said of the Alnylam drug, zilebesiran.

Given as an injection, it uses RNAi technology to block production of angiotensinogen, a protein that plays a key role in raising blood pressure, in the liver.

It’s in midstage human trials after delivering promising results in an early study, published last week in the New England Journal of Medicine.

From wire reportsAlmost half of patients with high blood pressure aren’t able to lower it to target levels using existing medicines, according to the journal.

In the early-stage study, the experimental shot’s effects lingered over 24 weeks, meaning the drug could be given about every six months.

Roche expects readouts from two mid-stage trials of zilebesiran by early next year and plans to start a third mid-stage trial, Graham said.

The company would make a decision about a late-stage clinical program at that point, she said, but anticipates that a large study to determine whether the drug can not only lower blood pressure but improve outcomes for patients would probably be needed.