Raphael Stevens

Chipotle shares jumped after the company’s earnings and revenue topped Wall Street’s estimates.
Same-store sales rose 10.9%, topping StreetAccount estimates of 8.6%.  
Menu prices are up roughly 10% from a year earlier.

Chipotle Mexican Grill on Tuesday reported quarterly earnings and revenue that topped analysts’ expectations, fueled by better than expected same-store sales growth.
Like McDonald’s, Chipotle said traffic to its restaurants grew during the first quarter despite higher menu items. Chipotle’s menu prices are up roughly 10% from a year earlier. CEO Brian Niccol said the chain has demonstrated that it has pricing power.

“We don’t want to be in front of the inflationary environment, but we also don’t want to fall behind,” he said on the company’s conference call.

Pedestrians wearing protective masks walk in front of a Chipotle restaurant in San Francisco, California, April 19, 2021.
David Paul Morris | Bloomberg | Getty Images

For now, Chipotle is pausing price increases, Niccol said on CNBC’s “Closing Bell.”
Shares of the company rose more than 7% in extended trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

Earnings per share: $10.50 vs. $8.92 expected
Revenue: $2.37 billion vs. $2.34 billion expected

Chipotle reported first-quarter net income of $291.6 million, or $10.50 per share, up from $158.3 million, or $5.59 per share, a year earlier. The company’s menu price hikes and lower avocado prices helped improve profit margins compared with the year-ago period.

Revenue climbed 17.2%, to $2.37 billion, from $2 billion during the year-earlier period. Same-store sales rose 10.9%, topping StreetAccount estimates of 8.6%. 
Niccol said that higher-income consumers are returning to restaurants more frequently. Even lower-income diners are visiting more often than they were in the prior six months, although their traffic remains down from a year ago. Overall, traffic rose roughly 4% in the quarter, reversing last quarter’s decline.
In February, executives said January’s same-store sales grew by double digits. A year earlier, the company saw sluggish sales as the omicron Covid outbreak put pressure on staffing and caused some temporary store closures.
Chipotle’s chicken al pastor is on track to be the chain’s most popular limited-time protein option ever, Niccol said on the company’s conference call. The company launched it in mid-March.
Digital orders accounted for nearly 40% of sales during the quarter. Chipotle customers have been ordering their burritos and tacos more in person compared with the year-ago period.
Executives also outlined changes coming to restaurants to improve speed of service and accuracy. The chain has been testing new grills that cook faster and more consistently. It has also been experimenting with how to staff its two make lines to keep up with demand from both in-person diners and digital orders.
The company opened 41 new locations during the quarter, 34 of which included its drive-thru lanes reserved for digital order pickup.
Looking to the rest of the year, Chipotle is anticipating same-store sales growth in the mid-to-high single digits. It’s expecting the same range for its second-quarter same-store sales growth, roughly in line with StreetAccount estimates of 5.8%.
The company reiterated its plans to open between 255 to 285 new restaurants during 2023. More

Illumina unveiled plans to cut costs as it faces shrinking margins
The plans aim to reduce Illumina’s annualized run rate expenses by more than $100 million starting later this year, according to the company’s first-quarter earnings release.
The company reported gross margins of 60.3% for the first quarter, down from 66.6% during the year-earlier period.

A building on the campus at the world headquarters of Illumina is shown in San Diego, California, September 1, 2021.
Mike Blake | Reuters

Illumina on Tuesday unveiled plans to cut costs in a bid to improve the DNA sequencing company’s shrinking margins.
The plans aim to reduce Illumina’s annualized run rate expenses by more than $100 million starting later this year, according to the company’s first-quarter earnings release.

The company reported gross margins of 60.3% for the period, down from 66.6% during the year-earlier period.
“These cost savings will accelerate progress toward higher margins as well as free up capital to increase investment in high-growth areas,” Illumina said in the release.
Among Illumina’s plans is to use its NovaSeq X sequencing system to accelerate genomic discoveries. The system, which launched in September 2022, sequences DNA twice as fast and three times as accurately as previous Illumina products.
The San Diego-based company said it also plans to save by “enabling activities” in more cost-effective areas around the world. Illumina did not reveal any specifics about those activities.
The company is battling criticism and a falling market cap in the wake of its controversial $7.1 billion acquisition of Grail, a cancer test developer.

Illumina’s market value has fallen to roughly $34.5 billion from around $75 billion in August 2021, the month it closed its acquisition of Grail. 
Antitrust regulators have repeatedly pushed back on that deal. 
The Federal Trade Commission earlier this month ordered Illumina to divest the acquisition, saying it would stifle competition and innovation. 
Last year, the European Commission, the executive body of the European Union, blocked the deal over similar concerns.   
Illumina is appealing both orders and expects final decisions in late 2023 or early 2024. 
The Grail deal is also the focus of a proxy fight between activist investor Carl Icahn and Illumina. They have been trading jabs for more than a month.
Icahn, who owns a 1.4% stake in the company, is seeking seats on Illumina’s board of directors and pushing it to unwind the Grail deal. He is also calling for Illumina to oust its CEO Francis deSouza “immediately.” 
The company is urging shareholders to reject Icahn’s three board nominees during its annual shareholder meeting on May 25. 
Illumina has repeatedly claimed that Grail has “tremendous long-term value creation potential.” 
Grail claims to offer the only commercially available early screening test that can detect more than 50 types of cancers through a single blood draw. 
The cancer test generated around $55 million in revenue in 2022 and is expected to rake in up to $110 million this year, Illumina said. More

Bavarian Nordic is planning to dramatically scale up production capacity for its Jynneos vaccine in the event of a smallpox emergency, CEO Paul Chaplin said.
Chaplin said the sudden and rapid spread of mpox in 2022 was a wake-up call for his company about the need to prepare for smallpox.
Mpox, which was previously known as monkeypox, and smallpox are related viruses.
The Jynneos vaccine is approved by the Food and Drug Administration to protect against both pathogens.

A health care worker prepares a dose of the JYNNEOS Monkeypox vaccine at a pop-up vaccination clinic in Los Angeles, California, on August 9, 2022.
Patrick T. Fallon | AFP | Getty Images

The maker of the mpox vaccine is looking at ways to dramatically scale up its production capacity to prepare for a potential threat from smallpox.
Bavarian Nordic CEO Paul Chaplin said the rapid spread of mpox last year was a wake-up call for the company, which is based in Denmark.

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“If it wasn’t mpox but it was smallpox, we are completely at the wrong scale,” Chaplin told CNBC in an interview.
“We’re looking at ways we can dramatically change the way we manufacture to increase our scale,” he said.
Mpox is in the same virus family as smallpox. Bavarian Nordic’s Jynneos vaccine is approved by the U.S. Food and Drug Administration to protect against both pathogens.
Previously known as monkeypox, the World Health Organization changed the name to mpox last year to reduce stigma.
Bavarian Nordic plans to simplify its production process so it can easily partner with other manufacturers and scale up production capacity to hundreds of millions of doses in the event of an emergency.

The company’s current production capacity is tens of millions of doses.
Smallpox was eradicated from the world in 1980 after a successful global vaccination campaign. Though the risk of the virus returning is low, some governments don’t want to take any chances.
“There are concerns either through reengineering or accidental outbreaks from containment, or other terrorist activities that it could be reintroduced,” Chaplin said of smallpox. 
Smallpox was one of the most deadly diseases known to humankind. It had a mortality rate of up to 30% depending on the strain, according to the WHO.
In the wake of the mpox epidemic, the European Union’s Health Emergency Preparedness and Response Authority and at least two European national governments have shown interest in stockpiling the Jynneos vaccine for use against smallpox, Chaplin said. 
“Last year it was all about mpox. And now it’s a mixture of mpox, but also more strategic stockpiling, including the smallpox indication,” Chaplin said of discussions about future orders.
“The discussions have definitely intensified and increased,” he said.
The U.S. has a long-standing stockpile of more than 100 million doses of an older smallpox vaccine, called ACAM2000.
Bavarian Nordic will finish delivering an order of 5 million Jynneos doses for the U.S government in the first half of this year. That contract was signed during the mpox outbreak.

Mpox as a warning

Once limited mostly to Africa, mpox spread suddenly and rapidly around the world last summer, taking public health authorities and Bavarian Nordic by surprise.
Unlike smallpox, mpox is rarely lethal, but the virus can be deadly for people with severely compromised immune systems. And the skin lesions associated with the disease can cause excruciating pain.
Bavarian Nordic only had several thousand finished doses of Jynneos on hand when the United Kingdom reported the first known case of the epidemic to the WHO last May. 
“We sold the entire stock to the U.K. government, thinking that this was, as usual, an isolated case,” Chaplin said. 
Sporadic cases of mpox had occurred in countries outside Africa by travelers in the past. In 2003, there was a small outbreak in the U.S. that came from imported animals.
But when other countries in Europe started reporting cases of the virus last year, it became clear something unusual was happening, Chaplin said.
“The phone started ringing and we realized we were in a situation that we hadn’t seen before,” Chaplin said.

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The virus has since exploded to more than 87,000 cases, with 120 deaths, across 110 countries, according to WHO data.
The global epidemic is the largest in the observed history of the virus. The U.S. had the worst outbreak with more than 30% of reported cases worldwide.
At that time, “We had no plans to manufacture Jynneos,” Chaplin said. “We manufacture other vaccines and our order book was full, but we had to make the decision there and then, we need to change all our manufacturing plants and just manufacture Jynneos.”
Bavarian Nordic distributed more than 4 million doses of Jynneos to over 70 countries from May to December of last year, Chaplin said.

More production capacity needed

Mpox since last year has spread primarily through sexual contact among gay and bisexual men.
But the rate of new cases of the virus has declined dramatically as vaccine distribution ramped up and communities at risk had better information about what precautions to take. 
Bavarian Nordic estimates that the potential demand for the mpox vaccine could reach tens of millions of doses.
The company’s current annual production capacity is between 15 and 20 million doses, Chaplin said.
“It was contained in that risk population, it didn’t spread,” the CEO said of last year’s outbreak. “If that’s the way it manifests itself again, I think we can manage.” 
While mpox spreads mostly through close physical contact, smallpox infects people primarily through respiratory droplets, which means the virus has greater potential to spread widely. 
And Bavarian Nordic’s annual production capacity for Jynneos wouldn’t be sufficient to deal with a wide-spread outbreak of smallpox, Chaplin said.
“We will need many, many more doses. We need to think about how we are better prepared,” the CEO said. 
Bavarian Nordic’s current production capacity is constrained by the fact that the weakened virus used in the vaccine is produced from chicken cells that come from special hen eggs.
Bavarian Nordic has developed a permanent avian cell line that will simplify production and make it easier to bring in other manufacturers in an emergency, Chaplin said.
The company plans to introduce the new cell line in the next 18 months, he said.

Smallpox risks

Though smallpox was eradicated more than 40 years ago, there are still two known stockpiles of the virus. 
The U.S. Centers for Disease Control and Prevention and the Russian State Centre for Research on Virology and Biotechnology each have smallpox samples for research purposes. They are the only two labs in the world approved to hold the virus.
The World Health Assembly, a United Nations entity, has repeatedly passed resolutions calling for the eventual destruction of the remaining smallpox samples.
The U.S. in 2011 pushed back against that effort, contending that the samples needed to be preserved for the time being to develop countermeasures in the event someone deliberately reintroduced smallpox, or the virus escaped from an undisclosed stockpile somewhere in the world.
The U.S. has 360 samples stored by the CDC in Atlanta. And Russia has 120 samples stored at its research facility in a small town called Koltsovo in Siberia, according to a WHO report from 2021.
They are used to research the development of diagnostics, antivirals and vaccines.
In 2019, a gas cylinder exploded at the Russian facility and caused a fire. No biological material was stored in the room where the blast happened, according to a statement from Russian authorities at the time.
The Soviet Union had a biological weapons program until the early 1990s, which included storing dozens of tons of smallpox, according to congressional testimony from Ken Alibek, that program’s former deputy director, who had defected to the U.S.
And in 2018, scientists in Canada constructed a horsepox virus in the lab, raising concern that the same method could be used to synthesize smallpox.
Chaplin said, “It’s known that Russia weaponized smallpox and grew up large quantities, so there’s concerns that maybe that has gotten into the hands of other people.”
“If you can reengineer a related virus like horsepox, you can engineer variola, which is the smallpox virus that infects humans,” he said. 

Declining population immunity

Smallpox vaccines have not been routinely administered to the general population in decades. As a consequence, many people around the world do not have protection against the virus.
“Collective immunity in the human population since that time is not what it was at the time of smallpox eradication,” Dr. Rosamund Lewis, head of the WHO’s smallpox secretariat, said last summer.
Most people under the age of 40 aren’t protected because they were born after smallpox vaccination stopped, Lewis said.
The U.S., the WHO and other countries keep stockpiles of smallpox vaccines in the event of an emergency, but many of these shots use older technology.
The overwhelming majority of the U.S. smallpox vaccine stockpile is ACAM2000. Though effective at protecting against smallpox, ACAM2000 can cause serious side effects in pregnant women, people with skin conditions like eczema and those with weak immune systems.
This is because ACAM2000 uses a mild virus strain related to smallpox that can still spread in the human body of the vaccinated patient and to others who are unvaccinated. The vaccine cannot cause smallpox.
But the vaccine virus can spread to a pregnant women’s fetus and result in still birth. It can also grow uncontrollably and cause dangerous infections in people with compromised immune systems and those with skin conditions.
People who receive ACAM2000 can also spread the virus in the vaccine for several weeks to others who are unvaccinated. This could result in severe side effects if someone in the vaccinated individual’s household is in any of the risk groups.
The Jynneos vaccine uses a weakened virus strain that cannot spread and does that not cause the side effects associated with ACAM2000.
Jynneos originally was developed with support from the National Institutes of Health for people who cannot take shots like ACAM2000.
Jynneos is administered in two doses taken four weeks apart.
The UK Health Security Agency estimated that a single dose of the vaccine was about 80% effective at preventing disease from mpox. Israeli scientists came to a similar conclusion.
But the CDC found that the two doses provide 69% protection, while a single dose provides 37% protection. The CDC recommends everyone eligible for Jynneos receive both doses. More

Warner Bros. Discovery put “Barbie” at the center of its CinemaCon studio presentation on Tuesday, with executives and Hollywood stars clad in various shades of pink.
CEO David Zaslav told attendees at the annual cinema convention that the studio will release 16 films in 2023 and hopes to do more than 20 releases annually going forward.
Warner Bros. also rolled trailers and clips of “Wonka,” “Meg 2: The Trench,” “The Nun 2” and “The Color Purple” as well as an early look at “Dune: Part Two.”

Margot Robbie will star as Barbie in an upcoming movie from Mattel and Warner Bros.
Mattel | Warner Bros.

Let’s go, Barbie.
Warner Bros. Discovery put the forthcoming film at the center of its CinemaCon studio presentation on Tuesday, with executives — including Jeff Goldstein, president of domestic distribution, and Andrew Cripps, president of international distribution — and Hollywood stars Greta Gerwig, Margot Robbie and Ryan Gosling all clad in various shades of pink.

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And all to the tune of “Barbie Girl.”
Warner Bros. is offering a wide slate of films in 2023 across drama, comedy, horror and action. CEO David Zaslav told attendees at the annual cinema convention that the studio will release 16 films in 2023 and hopes to do more than 20 releases annually going forward.
But on Tuesday it was all about Barbie.
The company showcased extended clips from the film, which elicited raucous laughter from the audience. Director Gerwig promised big laughs and big heart from the film, which arrives July 21.
Warner Bros. also rolled trailers and clips of “Wonka,” “Meg 2: The Trench,” “The Nun 2” and “The Color Purple” as well as an early look at “Dune: Part Two,” which was shot entirely with IMAX cameras.

Director Denis Villeneuve promised more action and political intrigue in the second installment. “Dune,” released in 2021, generated nearly $400 million at the global box office and snared six Academy Awards during the 2022 Oscars ceremony.
Warner Bros. capped its presentation with words from Peter Safran, one half of its new duo of creative leaders at DC Studios.
Safran shared footage from “Aquaman and the Lost Kingdom,” “Blue Beetle” and “The Flash.” The company is screening the Ezra Miller-led “The Flash” to CinemaCon attendees on Tuesday.
Zaslav says he’s seen “The Flash” three times and told CinemaCon audiences “it’s the best superhero movie I’ve ever seen.”
He also reassured media and insiders that Warner Bros. Discovery is committed to long-term theatrical releases, saying the company is in “no rush to bring movies to Max,” the company’s forthcoming flagship streaming service. More

Japanese lunar exploration company ispace attempted to land its first cargo mission on the moon on Tuesday, but lost communication with the spacecraft and has deemed the attempt unsuccessful.
“We are very proud of the fact that we have achieved many things during this Mission 1,” CEO Takeshi Hakamada said, speaking from Tokyo, Japan.
The company’s mission carried scientific research and other payloads, with no people on board.

The Earth rises above the surface of the moon, as seen from the company’s lander in lunar orbit in April 2023.

Japanese lunar exploration company ispace attempted to land its first cargo mission on the moon on Tuesday, but lost communication with the spacecraft and has deemed the attempt unsuccessful, CEO Takeshi Hakamada said.
“We have not been able to confirm a successful landing on the lunar surface,” Hakamada said, speaking from Tokyo, Japan.

“We are very proud of the fact that we have achieved many things during this Mission 1,” Hakamada added. “We will keep going — never quit the lunar quest.”
The Tokyo-based company’s Mission 1 lunar lander was aiming to softly touch down around 12:40 p.m. ET in the Atlas Crater, which is in the northeastern sector of the moon. The company’s uncrewed mission carried scientific research and other payloads. There were no people on board.
The landing would have made ispace the first private entity to complete the feat. But the company lost communication with the lander at “the very end” of the landing attempt, Hakamada noted, and was not able to re-establish connection. The company’s team is investigating the situation.
“We have to assume that we could not complete the landing on the lunar surface,” Hakamada said.

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Founded more than a decade ago, ispace originated as a team competing for the Google Lunar Xprize under the name Hakuto – after a mythological Japanese white rabbit. After the Xprize competition was canceled, ispace pivoted and expanded its goals, with Hakamada aiming to create “an economically viable ecosystem” around the moon, he said in a recent interview.

The company has grown steadily as it worked toward this first mission, with over 200 employees around the world – including about 50 at its U.S. subsidiary in Denver. Additionally, ispace has steadily raised funds from a wide variety of investors, bringing in $237 million to date through a mixture of equity and debt. The investors of ispace include the Development Bank of Japan, Suzuki Motor, Japan Airlines and Airbus Ventures.

Technicians complete final preparations for launch on the company’s Mission 1 lander.

The ispace Mission 1 lander was carrying small rovers and payloads for a number of government agencies and companies – including from the U.S., Canada, Japan and the United Arab Emirates.
Before the launch, ispace outlined 10 milestones for the mission. The company had completed eight milestones prior to Tuesday, with the ninth representing a successful soft-landing on the surface and the 10th representing the establishment of stable communications with the Earth, as well steady power supply, after the landing.
The milestones demonstrate the complexity and difficulty of ispace’s mission, as it aims to complete a feat previously accomplished only by global superpowers. A previous private lunar mission, flown by Israeli nonprofit SpaceIL and also born out of the Google Lunar Xprize, crashed into the surface during an attempted landing in April 2019.
“We have an opportunity to get an improvement in the second mission and the third mission, and this is our advantage to accelerate our speed of development and make sure the next mission we have much higher maturity of the technology,” Hakamada told CNBC after the Mission 1 landing attempt.
The company hoped for this to be the first of multiple missions to the moon. Last year ispace won a $73 million NASA contract as part of a team led by Massachusetts-based Draper to fly cargo to the moon’s surface in 2025 under the Commercial Lunar Payload Services (CLPS) program.

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Correction: This story has been updated to correct that ispace had completed eight goals associated with its lunar mission prior to an attempt to land cargo on the surface of the moon Tuesday. An earlier version of this story misstated the goals and the company’s progress. More