Raphael Stevens

American Airlines’ pilots approved the new contract that includes an immediate 21% pay bump.
The carrier is the second of the major U.S. airlines to seal a deal with pilots this year.
American sweetened its contract offer after United’s union reached a richer deal with the airline.

An American Airlines plane takes off from the Miami International Airport on May 02, 2023 in Miami, Florida. 
Joe Raedle | Getty Images

American Airlines pilots approved a sweetened labor deal, making the carrier the second major U.S. airline to seal a new contract with its highest-paid work group.
The more than 15,000 pilots at American will get immediate raises of 21% with compensation increasing more than 46% over the duration of the four-year contract, including 401(k) contributions, their union said Monday.

An earlier deal between American and the union fell apart after rival United Airlines and that carrier’s union reached a richer, preliminary deal. But American increased its offer last month.
American’s pilots voted more than 72% in favor of the new contract, and there was a 95% turnout, according to the Allied Pilots Association. The agreement also includes improvements in scheduling and benefits.
Pilots have been pressing airlines for better compensation and work rules as the industry faces a shortage of aviators in the wake of the Covid pandemic.
“This agreement will help American immediately expand our pilot training capacity to support under-utilized aircraft and future flying and provide our pilots with more opportunities to progress in their careers,” American’s CEO, Robert Isom, said in a statement.
Delta Air Lines pilots ratified a new agreement earlier this year. More

Leading cannabis company Tilray Brands is expanding its beverage portfolio in hopes of attracting a wider consumer base.
The company this month announced a range of acquisitions from beverage giants Molson Coors and Anheuser-Busch.
As growth in the North American cannabis industry stalls, weed-focused companies aim to expand their portfolios.

Dry cannabis flowers inside the packaging room at the Aphria Inc. Diamond facility in Leamington, Ontario, Canada, on Wednesday, Jan. 13, 2021.
Anne Sakkab | Bloomberg | Getty Images

Tilray Brands is expanding its footprint in alcoholic and cannabis beverages, buying up brands from Molson Coors and Anheuser-Busch as legal restrictions hamper the marijuana industry.
The major cannabis company announced Friday it will acquire the remaining 57.5% equity ownership of cannabis-infused drinks maker Truss Beverage from Molson Coors Canada. The transaction price was not disclosed.

The move comes amid a broader push by Tilray to branch out from more traditional cannabis products. Tilray announced earlier this month that it would acquire eight beer and beverage brands from Anheuser-Busch for $85 million. It was the latest in a string of craft beer acquisitions that has made Tilray one of the biggest forces in the space in the U.S.
Tilray is one of the largest cannabis companies in the world with a market cap of $1.79 billion. The company also specializes in beverage and wellness products, and has become the fifth largest craft beer company in the U.S.
The Truss acquisition is a part of a larger “diversification strategy” underway at Tilray. As growth in the North American cannabis industry stalls, weed-focused companies aim to expand their portfolios.
THC beverages and craft beer are among the fast-growing beverage sectors that have caught the interest of cannabis executives.
Tilray said the deal to buy the remainder of Truss makes it the leader in adult-use cannabis beverages in Canada, with a combined market share of about 36%.

The company said in a news release that cannabis beverages “present a significant opportunity” to reach legal-aged consumers who haven’t explored cannabis yet. It also expects “regulatory shifts” to fuel substantial growth for the market.
Blair MacNeil, the president of Tilray Canada, said the acquisition will “further diversify our product offerings while broadening our consumer reach.”

It hopes to achieve a similar effect by snapping up beer brands from Anheuser-Busch. Included in the deal announced earlier this month are the brands Shock Top, Breckenridge Brewery, Blue Point Brewing Company, 10 Barrel Brewing Company, Redhook Brewery, Widmer Brothers Brewing, Square Mile Cider Co., and HiBall Energy.
The transaction includes all of the brands’ current employees, breweries, and associated brewpubs. The deal is expected to triple the size of Tilray’s beer business, increasing its output from 4 million to 12 million cases a year. 
Tilray Brands already owns other craft breweries including Alpine Beer, Green Flash Brewing, Montauk Brewing and SweetWater Brewing.
Even as it diversifies, Tilray aims to become a leader in the U.S. adult-use cannabis market if it gets legalized on the federal level. The lack of reform nationwide and the patchwork of state rules have hampered growth in the U.S.
“Upon federal cannabis legalization,” said CEO Irwin D. Simon in a statement announcing the Anheuser-Busch deal, “we expect to leverage our leadership position, wide distribution network and portfolio of beloved beverage and wellness brands to include THC-based products and maximize all commercial opportunities.” More

Mortgage rates soared to the highest level since November 2000, crushing affordability for potential homebuyers.
The average rate on the popular 30-year fixed mortgage hit 7.48%, according to Mortgage News Daily.
The average on the 30-year fixed last year at this time was around 5.5%.

A For Sale sign displayed in front of a home on February 22, 2023 in Miami, Florida. 
Joe Raedle | Getty Images

Mortgage rates jumped Monday, following a rise in bond yields driven by investors’ concerns that high interest rates and inflation will linger longer than expected.
The average rate on the popular 30-year fixed mortgage hit 7.48%, the highest level since November 2000, according to Mortgage News Daily. It has risen 29 basis points in just the past week.

“Investors just aren’t seeing the kind of deterioration in economic data that they expected,” said Matthew Graham, chief operating officer of Mortgage News Daily.
He noted that the Federal Reserve wants to see the same deterioration before considering a policy shift, and that shift would likely favor short-term rates first.
“The net effect is that longer-term rates like 10-year Treasury yields and mortgages are bearing the brunt of the market’s negative rate sentiment. This won’t change until the data forces the Fed to start talking about the first rate cut.”
Higher rates are hitting potential homebuyers hard, adding insult to the injury of Covid pandemic-inflated home prices. Rates set more than a dozen record lows in 2020, setting off a homebuying spree that caused prices to rise over 40% from the start of the pandemic to the summer of 2022. Prices pulled back slightly at the end of last year but are now increasing again due to still-strong demand and very lean supply.
Higher mortgage rates exacerbate the supply situation. Current homeowners are reluctant to list their homes for sale because the vast majority of them have rates around or below 3%. To move to another home would mean more than doubling that rate. It has created what is now being called “golden handcuffs” among potential sellers.

For a buyer today, the difference in affordability from just a year ago is dramatic. The average on the 30-year fixed last year at this time was around 5.5%. For someone buying a $400,000 home, with 20% down on a 30-year fixed loan, the monthly payment today, with principal and interest, is roughly $420 more than it would have been a year ago.
More borrowers are now opting for adjustable-rate loans, which offer lower interest rates for shorter fixed terms. The average rate on a 5-year ARM last week was 6.2%, according to the Mortgage Bankers Association. The ARM share of applications rose to 7%. In 2020, when the 30-year fixed was setting multiple record lows, that share was less than 2%.
The nation’s homebuilders have been trying to offset higher mortgage rates by either buying down those rates for short or long terms, or by lowering home prices. They had slowed those incentives earlier this year, as demand surged and rates fell back, but they recently ramped them up again.
Homebuilder sentiment in August, however, dropped sharply, with builders citing higher interest rates as the main reason. More

The Pentagon’s Space Development Agency on Monday awarded $1.5 billion in contracts to Lockheed Martin and Northrop Grumman for prototype communications satellites.
The 72 satellites will be for a Beta variant in part of SDA’s growing constellation, a network the U.S. military is building to provide encrypted communications through a fleet of hundreds of satellites.
Lockheed’s contract is worth $816 million, and Northrop’s is worth $733 million.

An artist illustration shows the functions of the Space Development Agency’s satellite constellation.
Space Development Agency

The Pentagon’s Space Development Agency on Monday awarded $1.5 billion in contracts to Lockheed Martin and Northrop Grumman for prototype communications satellites.
SDA said the 72 satellites will be for the Beta variant of its Tranche 2 Transport Layer constellation, a network the U.S. military is building to provide encrypted communications through a fleet of hundreds of satellites, which it calls the Proliferated Warfighter Space Architecture.

Lockheed and Northrop will each build 36 of the prototype satellites, scheduled to begin launching by September 2026. Lockheed’s contract is worth $816 million, and Northrop’s is worth $733 million. An SDA spokesperson told CNBC that the agency received six proposals for the contract.

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The Pentagon is increasingly ambitious in space, seeing a need to keep up with China’s growing capabilities in a domain that has widespread ramifications for national security efforts back on Earth. The Space Force has especially seen its budget grow, with $30 billion requested for fiscal 2024. Much of that funding goes to both defense contractors and space companies providing products and services to the military.
The first satellites of SDA’s system launched in April. Those Tranche 0 satellites were the first effort to demonstrate the feasibility of SDA’s network.
In addition to communications, the SDA network aims to provide the U.S. military with features such as missile warning and tracking capabilities. SDA’s network falls under the Space Force’s contribution to the Department of Defense’s Joint All-Domain Command and Control, a project to create a unified network across its military branches.
SDA has previously awarded contracts to build and operate satellites in its fleet to York Space, SpaceX, Lockheed Martin, Northrop Grumman and L3Harris. More

Retailers with pharmacy businesses, such as Walmart, Kroger and Rite Aid, said increased demand for prescription weight loss drugs helped boost sales for the second quarter. 
But analysts note that those blockbuster treatments are minimally profitable – and may even come with margin headwinds for some retailers.
That’s because GLP-1s like Novo Nordisk’s Wegovy and Ozempic are branded drugs with low gross margins.

A pharmacist displays boxes of Ozempic, a semaglutide injection drug used for treating type 2 diabetes made by Novo Nordisk, at Rock Canyon Pharmacy in Provo, Utah, U.S. March 29, 2023. 
George Frey | Reuters

Drugmakers aren’t the only ones feeling the impact of the weight loss industry gold rush. 
Retailers with pharmacy businesses, such as Walmart, Kroger and Rite Aid, said increased demand for prescription weight loss drugs helped boost sales for the second quarter. 

But analysts note that those blockbuster treatments are minimally profitable for retail pharmacies – and may even come with margin headwinds.
“More recently, you’re starting to hear retailers talk about these drugs. But I wouldn’t say they’re necessarily beneficiaries of the increased popularity,” Arun Sundaram, an analyst at CFRA Research, told CNBC. “They’re really not making much of a profit on the drugs. So it’s really just a traffic driver and not really a profit pool for retailers.” 
Buzzy drugs like Novo Nordisk’s obesity injection Wegovy and diabetes treatment Ozempic have skyrocketed in popularity over the last year, with high-profile names like billionaire tech mogul Elon Musk among recent users.
Those treatments are known as GLP-1s, a class of drugs that mimic a hormone produced in the gut to suppress a person’s appetite. 
Other drugmakers, such as Eli Lilly and Pfizer, are developing their own GLP-1s in a bid to capitalize on a weight loss drug market that some analysts project could be worth $200 billion by 2030. An estimated 40% of U.S. adults are obese, making successful treatments a massive opportunity for drugmakers. 

But the boom in demand for GLP-1s is also being felt in other parts of the drug supply chain, including the pharmacies that dispense the prescription drugs to patients. 

Are weight loss drugs profitable? 

On an earnings call Thursday, Walmart CEO Doug McMillon said the company expects weight loss drugs to help drive sales for the rest of the year: “We still expect food, consumables, and health and wellness, primarily due to the popularity of some GLP-1 drugs, to grow as a percent total in the back half.” 
In June, likewise, Rite Aid CFO Matthew Schroeder said a jump in pharmacy revenue and the company’s decision to hike its full-year revenue guidance was “due to the increase in sales volume in Ozempic and other high-dollar GLP-1s.” Schroeder was referring to the hefty price tags of GLP-1s, which range from around $900 to $1,300 in the U.S. 
He said those drugs have high sales amounts per prescription, but emphasized that the increased volume of GLP-1s has a “minimal impact” on Rite Aid’s gross profit. 
Kroger CEO Rodney McMullen similarly said during an earnings call in June that GLP-1 drug “sales dollars are a lot bigger than the margin dollars.” 
“We would expect the GLP-1 type drugs to continue but remember, the impact on profitability is pretty narrow,” he said.
That’s because GLP-1s like Wegovy and Ozempic are branded drugs with “very, very low gross margins,” according to CFRA Research’s Sundaram. 
He said retail pharmacies generate high sales for each GLP-1 prescription they dispense but rake in low profits, which is having a slight negative impact on the overall gross margins of retailers like Walmart and Kroger. 
UBS analyst Michael Lasser similarly highlighted in a recent note that gross margins for Walmart’s U.S. business “would have looked even better had it not been for the contribution of the GLP-1 drugs since these carry very low profit rates.”

A selection of injector pens for the Saxenda weight loss drug are shown in this photo illustration in Chicago, Illinois, U.S., March 31, 2023. 
Jim Vondruska | Reuters

Gross margins for branded medications are 3.5% on average for pharmacies, according to a 2017 study from USC’s Schaeffer Center for Health Policy and Economics. That suggests it may take years before a branded drug significantly contributes to a pharmacy’s bottom line.
In contrast, gross margins for generic drugs – the cheaper equivalents of branded medications – are 42.7% on average for pharmacies. 
There are several reasons for the lower margins of branded drugs. For one, branded drugs don’t directly compete with other medications because they have patent protections. That gives drug manufacturers more power when they negotiate drug discounts with wholesalers, which purchase medications and distribute them to pharmacies. 
As a result, there is “little room for wholesalers and pharmacies to capture large margins due to their relative lack of negotiating power,” according to the Association for Accessible Medicines, a trade association representing the manufacturers and distributors of generic prescription drugs. 

What other impacts do retailers face?

But there are also other impacts of GLP-1s to consider beyond a retailer’s pharmacy business.
For companies like Walmart and Kroger, GLP-1 drugs may be indirectly impacting other business categories in a positive way.
That makes some analysts less worried about margin headwinds in pharmacy: “The gross margin headwind is less of a risk overall for Walmart because any footstep in the door often ends up with multiple items in a basket,” KeyBanc analyst Bradley Thomas told CNBC. 
“Walmart is generally not a quick store that you just pop in on the way home,” he said. “They’re going to make multiple purchases, and I think we’re seeing a lot of discretionary categories actually see a lift from some of this incremental traffic they’ve been getting lately.” 
Thomas added that GLP-1 drugs only fall under one part of Walmart’s business: “If you’re listing off the most important things that are driving Walmart’s strong sales performance right now, it’s probably not making the top 10,” he said. 
It’s a slightly different situation for Rite-Aid and similar companies like CVS Health and Walgreens.
Those companies have retail pharmacies but also other business segments that are directly affected in different ways by the boom in GLP-1 drugs.
For example, CVS also operates a health insurer and pharmacy benefit manager, or PBM, which maintains formularies and negotiates drug discounts with manufacturers on behalf of insurers and large employers.
The increased demand for GLP-1 drugs is likely more of a headwind for health insurers since they have to cover the costly drugs for beneficiaries, but CVS says “the risk is manageable” in that business division.
Meanwhile, PBMs may benefit more from the increase in GLP-1 use since they negotiate significant discounts on drugs and drive competition between manufacturers – but they often don’t pass along all of the savings to insurers.
“Each of the businesses kind of has GLP-1 in them and they are impacting them in a variety of different ways,” CVS CEO Karen Lynch said during an earnings call last month.
Correction: The Association for Accessible Medicines is a trade association representing the manufacturers and distributors of generic prescription drugs. An earlier version misstated its name. More

Redwire is putting a biotech technology testbed on Sierra Space’s first mission with its inflatable space habitat.
“We go to space not just for science and discovery, but to improve life on Earth,” Mike Gold, Redwire’s chief growth officer, told CNBC.
Biological and pharmaceutical research and production is seen as a key customer market for microgravity platforms in space.

An ADSEP with blue PIL-BOXs, hardware which will be delivered to Sierra Space for the LIFE habitat pathfinder mission.

Space infrastructure company Redwire is putting a biotech technology test bed on Sierra Space’s first mission with its inflatable space habitat, establishing a new partnership between the two companies to make drugs in orbit.
“It’s an incredible moment for Redwire, an incredible moment for Sierra,” Mike Gold, Redwire’s chief growth officer, told CNBC. “We go to space not just for science and discovery, but to improve life on Earth.”

“I can’t tell you how long I’ve been waiting to say those words. This is the first step in an amazing journey to come,” he added.
Biological and pharmaceutical research and production is seen as a key customer market for microgravity platforms in space. Redwire is not alone in targeting that market, with startups like Varda and Space Forge also working on such test beds.
The idea is to manufacture drugs in space, leveraging the environment to create unique materials, that would be returned for use on Earth.
“Many drugs are based on crystals. In space you can create perfect, or at least different versions of, crystals that can then be leveraged to create new versions of drugs with greater efficacy with the ability to last longer,” Gold said.

An ADSEP facility, primarily supporting regenerative medicine research associated with Redwire’s Bio Fabrication Facility (BFF).

Redwire will include its ADvanced Space Experiment Processors (ADSEP), which process what it calls PIL-BOXs (Pharmaceutical In-space Laboratory – Bio-crystal Optimization Xperiment), when Sierra flies its LIFE (Large Integrated Flexible Environment) habitat on a demonstration mission, expected in 2026.

Redwire currently has an ADSEP on the International Space Station, which was installed in January, and expects to fly three PIL-BOXs on the upcoming SpaceX CRS-28 cargo mission. It’s previously partnered with Eli Lilly to conduct testing with PIL-BOXs, which were developed through a partnership with NASA.

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“The ADSEP is like the Nintendo, and the PIL-BOX is the cartridge you put in it,” Gold said.
The pathfinder mission of a LIFE module will represent the first time it flies in space. Sierra has made steady progress in testing subscale LIFE models, including a test last week at NASA’s Marshall center in Huntsville, Alabama.

An artist’s rendering of a commercial space station in orbit.
Sierra Space

Both Sierra and Redwire are among the five companies developing the Orbital Reef space station, one of several private habitats aiming to be successors to the ISS when it’s expected to be retired at the end of this decade. Orbital Reef is envisioned as a “business park” in space, hosting astronauts for research as well as tourists for exotic excursions.
Gold said this pathfinder LIFE flight will help demonstrate the business case for the larger future station. He also noted that the strategic partnership between the companies includes a road map on revenue and intellectual property sharing that “will become more explicit as we actually go into operations.” More

Space company Axiom raised $350 million in a round that was led by Saudi-owned Aljazira Capital and Korean healthcare investment firm Boryung.
The Houston-based company currently flies private and government astronauts on missions to the International Space Station via launches with SpaceX.
It’s developing technologies including a commercial space station and a lunar spacesuit and has over $2 billion in customer contracts to date.

Chief Engineer Jim Stein wears the new spacesuit during the Axiom Space Artemis III Lunar Spacesuit event at Space Center Houston in Houston, Texas, on March 15, 2023. – “Since a spacesuit worn on the Moon must be white to reflect heat and protect astronauts from extreme high temperatures, a cover layer is currently being used for display purposes only to conceal the suits proprietary design, ” Axion said in a press release.
Mark Felix | Afp | Getty Images

Space company Axiom raised $350 million in a round that was led by Saudi-owned Aljazira Capital and Korean healthcare investment firm Boryung, the company announced on Monday.
Houston-based Axiom trains and flies both private and government astronauts on missions to the International Space Station via launches with SpaceX. It’s developing human spaceflight technologies including a commercial space station and a lunar spacesuit.

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The company said the investment will further its development efforts. It has over $2 billion in customer contracts to date, Axiom said Monday. Its flown two crews to the ISS, including the recently completed Ax-2 mission, and is working to launch its first space station module by 2026.
In a statement, Aljazira Capital CEO and managing director Naif Almesned said backing Axiom is “in line with the Saudi Vision 2030’s transformative approach.” More