Twitter and Square CEO Jack Dorsey speaks during a press event at CES 2019 on January 9, 2019 in Las Vegas, Nevada.
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Shares of Square surged 13% Wednesday after the White House and Senate leaders reached a deal on a bill that would help keep small businesses afloat and would allow some nonbank lenders to participate in the emergency loan program.
The $2 trillion bill — said to be the largest rescue package in history — includes small business loans to ease the economic impact of the coronavirus slowdown. The Senate is expected to vote on the bill as early as Wednesday evening. The House has not yet voted on it.
Square has become a popular lending option for businesses such as coffee shops and restaurants, many of which are closed due to “shelter in place” measures in major cities.
As part of the terms agreed to on Wednesday, “additional lenders” can be approved through the Secretary of the Treasury if they have the “necessary qualifications to process, close, disburse and service loans made with the guarantee of the administration.”
Square and other fintech companies had been lobbying to be included in the bill and touted their speed and automated underwriting as a reason for inclusion. Financial Innovation Now — an industry group representing Square, PayPal, Intuit, Stripe and other nonbank finance companies — sent a letter to Congress on Friday asking that their members be included in any emergency U.S. government funding.
When asked about it on a call with investors Tuesday evening, CEO Jack Dorsey said Square would be “happy to help” and “was definitely open to working with the government” on distributing loans. The “speed aspect is critical,” said Dorsey, who is also the CEO of Twitter.
“The benefit we would add to disbursement is really around speed,” Dorsey said. “Square Capital can get a loan to a business in under 24 hours.”
Coronavirus a ‘bump in the road’
Square held an investor day Tuesday evening that outlined a near-term slowdown from the coronavirus shutdown. The company cut first-quarter guidance and withdrew its full-year guidance due to “uncertainty” around the virus. Square now expects total net revenue of $1.3 billion to $1.34 billion, versus the $1.34 billion to $1.36 billion range originally forecast.
The slowdown is already hitting Square’s first-quarter profitability, according to CFO Amrita Ahuja. Over the past 10 days, gross payment volume was 25% lower than it was this time last year. Payment volumes are down 45% year over year in metro areas such as New York, San Francisco and Seattle, according to the company.
But the drag from COVID-19 will likely be “a mere bump in the road,” according to Dan Dolev, Macquarie senior payments analyst.
“We see SQ emerging stronger post crisis, accelerated share gains by adapting to change faster than many competitors, and building a more balanced business and customer mix,” Dolev said in a note to clients Wednesday. He also said the government stimulus to individuals and relief for small businesses “can be a near-term benefit.”
Despite the March slowdown, Square outlined strong growth in January and February before the outbreak threatened to cripple the U.S. economy. Square saw 51% gross profit growth in those two months. Its Cash app, a competitor to Venmo, grew 118% vs. 104% in the fourth quarter.
Instanet analyst Bill Carcache upgraded Square to “neutral” from “reduce” on Wednesday.
“While it’s too early to ascertain the failure rate of SQ’s large SME customer base, we no longer believe a Reduce rating is appropriate given the 46% decline in shares from their February highs,” Carcache said in a note to clients.
Square had planned to invest in a brand awareness campaign. Instead, Square’s Ahuja said the company is focusing on helping existing customers navigate the current environment. For example, it expedited the launch of no-contact delivery and curbside pickup and will be debuting a public, web-based directory of Square sellers to promote electronic gift card purchases.
Even with the help of government stimulus, the economic slowdown from coronavirus is weighing on Square’s lending program. Square Capital head Jackie Reses said the company was reining in loan origination growth and tightening lending standards. It’s also offering a payment relief for some small business loans, she said.
Correction: The Senate and White House agreed to terms of a proposed bailout bill on Wednesday, but the bill has not been passed.
British American Tobacco, the maker of brands including Lucky Strike, Dunhill, Rothmans and Benson & Hedges, has said it has a potential coronavirus vaccine in development using tobacco plants.
BAT has turned the vast resources usually focused on creating products that pose health risks to millions of smokers worldwide to battling the global pandemic.
“If testing goes well, BAT is hopeful that, with the right partners and support from government agencies, between 1m and 3m doses of the vaccine could be manufactured per week, beginning in June,” the company said.
The London-listed company used the announcement to trump the positive aspects of its tobacco empire, saying that “new, fast-growing tobacco plant technology” put it ahead of others trying to develop a vaccine.
“Tobacco plants offer the potential for faster and safer vaccine development compared with conventional methods,” the company said.
BAT said its US biotech subsidiary, Kentucky BioProcessing (KBP), has moved to pre-clinical testing and that it will work on the vaccine on a not-for-profit basis.
In 2014, the tobacco firm bought KBP, which has previously worked on a treatment for Ebola. BAT said its work was “potentially safer [than conventional vaccine technology], given that tobacco plants cannot host pathogens which cause human disease”.
BAT said it had engaged with the Food and Drug Administration in the US and the Department for Health and Social Care in the UK to “offer our support and access to our research with the aim of trying to expedite the development of a vaccine for Covid-19”.
Dr David O’Reilly, the director of scientific research at BAT, said: “Vaccine development is challenging and complex work but we believe we have made a significant breakthrough with our tobacco plant technology platform, and we stand ready to work with governments and all stakeholders to help win the war against Covid-19.
“KBP has been exploring alternative uses of the tobacco plant for some time. One such alternative use is the development of plant-based vaccines.”
BAT said it had cloned a portion of the genetic sequence of the coronavirus and developed a potential antigen. The antigen was then inserted into tobacco plants for reproduction and, once the plants were harvested, the antigen was purified. It is now undergoing pre-clinical testing.
Almost a fifth of small businesses are at risk of collapsing within the next month as they struggle to secure emergency cash meant to support them through the coronavirus lockdown, according to research by an accountancy network.
The chancellor, Rishi Sunak, has pledged unprecedented aid to companies to try to cushion the blow from much of the economy shutting down but businesses and politicians have raised concerns that there are gaps in the schemes.
Some 18% of small and medium-sized enterprises (SMEs) either probably or definitely will not be able to obtain additional cash from the government to survive for a four-week period, according to the Corporate Finance Network.
Its accountancy firm members estimated that almost a third of their 13,000 small-company clients from around the UK would be unable to acquire the cash needed to ride out an extended, three-month lockdown.
Rachel Reeves, the Labour MP who heads the business select committee, wrote to the chancellor on Tuesday outlining concerns with the schemes to support companies.
“The challenge now is getting the money out of the door to support businesses before it’s too late,” she told BBC radio on Wednesday. “There are many businesses who if they don’t quickly access this cash they are going to go under.
“That will have huge consequences for employment and also our ability to grow the economy when this pandemic has passed. If businesses collapse they won’t be able to ensure our economy can recover. They will be lost for ever.”
The banking industry body, UK Finance, has said it is running the schemes in line with the government’s design.
In her letter to Sunak, Reeves said the history of support to the banking sector meant they had to step up. The industry and regulators at the Bank of England have said that banks are well positioned to support the economy through the crisis. The banks on Tuesday night agreed to scrap dividend payouts to shareholders after Bank of England pressure.
“Banks were kept afloat by government and taxpayers during the financial crisis,” Reeves wrote. “I would urge them to play their part in helping small and medium-sized businesses through this crisis.”
One month ago, Chris Austin was running a little-known mom-and-pop business in Texas that fielded a few dozen orders a week for his helmet-style ventilation devices.
He had five employees and a handful of volunteers from the family’s church who would pitch in at the workshop behind their home in the small town of Waxahachie.
Then the coronavirus epidemic hit.
Austin’s company, Sea-Long Medical Systems Inc., is getting thousands of orders every day, from America’s top hospitals to countries as far flung as the United Arab Emirates. Researchers say the device, which costs less than $200, could help hospitals free up ventilators for only the most critically ill coronavirus patients.
“‘Overwhelmed’ doesn’t scratch the surface,” Austin told NBC News.
The demand for the Sea-Long helmet underscores the dire shortage of ventilators in the U.S. and around the globe fueled by a surge in hospital patients suffering from COVID-19.
In the last few weeks, hospitals have been flooded with patients experiencing respiratory problems so severe they need the help of a machine to help them breathe.
Governors have made impassioned pleas for more equipment. Companies like General Motors and Ford have redesigned their assembly lines to produce the lifesaving devices. And hospital executives are scrambling to snap up any equipment that might help ease the escalating crisis playing out inside their facilities.
The Sea-Long device doesn’t look the part of a lifesaving medical device. It resembles a crude spacesuit helmet, with a transparent hood sealed at the neck and two tubes extending from its base. The helmet was originally designed to supply oxygen to patients receiving treatment in hyperbaric chambers.
But doctors in Italy, where a version of the helmet has long been used to treat people experiencing breathing problems, found it to be effective in helping some COVID-19 patients.
Dr. Bhakti Patel, who has been studying the devices for four years, said they hold promise as an early intervention that could spare respiratory patients the need to be put on the more traditional — and costly and invasive — ventilators.
“I would love for there to be a silver bullet for this pandemic,” said Patel, a pulmonologist at the University of Chicago. “My best hope is that the way it changes the game is that maybe it shaves off the number of patients who need a ventilator — even if it’s 1 out of 3 or 1 out of 5.”
“If that is the case,” Patel added, “that would be a game changer when we’re seeing this tidal wave of patients who need a ventilator.”
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Patel led a first-of-its-kind study in 2016 that tested the Sea-Long helmet against an oxygen mask for a group of 83 intensive care patients suffering from acute respiratory distress. The researchers found that the helmet led to superior outcomes: Patients using them required ventilation 18.2 percent of the time, compared to 61.5 percent for the masks, and had a better 90-day survival rate, according to the study, published in the Journal of the American Medical Association.
The trial was stopped early because the helmets proved more effective than the masks, resulting in a smaller sample size than originally intended. But Patel believes the device could lead to a sea change in intensive care units that have long relied on traditional ventilators. Those devices require doctors to fully sedate patients and insert a tube into their windpipes, a process that can cause pneumonia and other problems when used for extended periods of time.
“If we take away the ventilator — which comes with this package of sedating people, making them not move, making them sort of not have memory of what’s happening — perhaps we could spare some patients some long-term complications,” Patel said.
At $162 apiece, the Sea-Long helmet costs a tiny fraction of the five-figure ventilators.
The original devices were made to run through ventilators. But working with Patel and her mentor, Dr. John Kress, Sea-Long has modified the helmets so they can be hooked up to a hospital’s regular oxygen supply, keeping the ventilators free for those who need them most. They have also made another significant modification, adding a viral filter to prevent possible COVID-19 exposure to others.
This week, the team at the University of Chicago Medical Center used the helmet on one coronavirus patient and has gotten encouraging results, Kress said. The facility has received 20 of an expected 100 helmets and is planning to use them on additional patients, the doctors said.
Other companies make similar ventilator helmets, but Sea-Long’s is the only helmet available in the U.S. that meets requirements of the Food and Drug Administration and has been validated in a clinical study for acute respiratory syndrome. No studies have yet been done, however, examining the effectiveness of the devices in treating COVID-19 patients.
Austin’s team has been working around the clock for the past several weeks. The workforce has at least doubled to more than 10 people, Austin said, and volunteers have been showing up in droves.
“We have people showing up that we don’t even know that say: ‘We’re here to help. What can we do?'” Austin said. “They don’t ask for anything. They don’t expect anything. They just say, ‘Whatever you want me to do, we’ll do it.'”
“It just about brings tears to my eyes,” Austin added.
The attention has led to some other acts of extraordinary generosity.
Austin said he recently got a surprised call from Virgin Galactic CEO George Whitesides offering to help him produce more devices.
“Chris, I saw what you do, and we want to help,” Whitesides said, according to Austin. “Whatever it takes.”
Austin told him he needed more machines to manufacture the devices but didn’t have the cash to pay for them. Later that day, Austin got a call from his New Jersey-based supplier.
“Somebody just paid your bill,” Austin said he was told. “They’ll be shipping tomorrow.”
With the four additional machines, Sea-Long expects to produce thousands of helmets a week. The goal is to produce 50,000 per week.
“This is the classic sort of American story,” Patel said. “It’s the little engine that could.”
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James Vanderploeg, Virgin Galactic’s chief medical officer, said the company is working with Sea-Long “to help them expand their capacity, helping with recruiting additional people and getting equipment in place and helping with the logistics and so forth — anything we can do to help them expand their throughput.” Virgin Galactic is also modeling potential prototypes for its own design of helmets used for ventilation, Vanderploeg said.
Major U.S. medical centers are now stocking up on the helmets, including Massachusetts General Hospital and the Hospital of the University of Pennsylvania. Austin said he’s also received orders from Canada, Mexico and several countries in Europe, including hard-hit Italy.
A Mass General spokesperson said the hospital has ordered five Sea-Long helmets but has not yet received them.
A Penn Health spokesperson confirmed that the hospital has ordered the devices.
With so much of the world in need and so many orders coming in at once, Austin has faced a difficult question: Whom to prioritize?
“We really look at where is the need,” Austin said. “We know New York has a stronger need. We know Boston. We know Chicago. … But we also know that we have to get what we can to Italy.”
For now, the company is shipping only a limited number helmets per order, “because we still can’t afford the volume of a huge order,” he said.
Amid the worsening pandemic, Sea-Long isn’t planning to raise the price in part because it doesn’t want to limit who has access to the devices.
“This probably sounds sappy,” Austin said, “but we think of what if that was our son or daughter or grandfather sitting there in that bed gasping for air and we have to explain to him: ‘I’m sorry. We don’t have anything for you.'”