Today’s news companies are glorified puppet masters: They pull our emotional strings to drive clicks, ratings, and revenue. The chart below depicts the frequency of negative, fearful, positive, and neutral words in headlines since 2000. Spoiler: The bad ones have soared and the good ones have declined. And the data ends before 2020.

Our goal with this newsletter and RocaNews in general is to present the news as it is. Big News preys on human psychology because it’s good business. We refuse to play that game and appreciate you joining us.

In today's edition:

• WeWork is on the brink of failure

• Youngest athlete in US pro sports

• The Kingpin

 🔑 Key Stories

WeWorried

WeWork said there is “substantial doubt” about its ability to stay in business

• WeWork is an office space leasing company that provides businesses with flexible leases and business space packages. Founded in 2010, it reached a peak valuation of $47B in 2019

• But WeWork overstated its success and after a disastrous attempt to IPO in 2019, lost 80%+ of its value. It later went public in 2021 at a $9B valuation

• The company has continued to struggle, and on Tuesday it said it has “substantial doubt” about its “ability to continue.” Its stock is down 98% since 2021

Dig Deeper

• Below is a chart showing the change in WeWork’s valuation since its first public valuation in 2013

China Investment Ban

President Biden signed an executive order banning investments in some high tech Chinese industries

• For years, US companies have invested billions of dollars into Chinese companies. China now has one of the world’s most advanced technology sectors

• On Wednesday, President Biden signed an executive order restricting US investments in certain high-tech Chinese industries. It specifically targets quantum computing, AI, and superconductor manufacturing

• The executive order will outright ban investments into certain industries while increasing reporting requirements for others. The Biden administration will solicit feedback for several months before issuing final rules

Dig Deeper

• The ban is intended to block China’s access to capital and “intangible benefits that often accompany United States investments” – ie., technological know-how

• “The U.S. habitually politicizes technology and trade issues,” a Chinese spokesperson said in a statement. “We will closely follow the developments”

Ohio’s Issue 1 Defeated

Ohio voters rejected a Republican-led proposal that would make it harder to amend Ohio’s constitution

• Abortion is currently legal in Ohio within 22 weeks of pregnancy. Last month, a citizen-led petition to add abortion rights to Ohio’s constitution gained enough signatures to warrant a referendum this November. Polls suggested 58-59% of Ohioans supported that

• In response, Republicans introduced a referendum, Issue 1, to make it harder to pass amendments by requiring 60%+ of the vote to pass, rather than 50%+

• On Tuesday, 57% of Ohioans voted against Issue 1. Abortion rights activists hailed it as a major victory

Dig Deeper

• Issue 1 sparked a statewide political showdown, with activists on both sides spending millions of dollars on ad campaigns, ~80% of which came from out-of-state donors. 2.8M Ohioans voted – a 69% larger turnout than for last year’s midterm elections

Saudi-Israel Deal

The US and Saudi Arabia have reached the outline for a deal to have Saudi recognize Israel for the first time

• Saudi, like many other Arab states, doesn’t recognize Israel and has fought several wars against it. It sees itself as a leading advocate for Palestinian statehood

• The Biden administration is now brokering a normalization deal between Israel and Saudi

• Saudi has reportedly demanded US security assurances, aid in launching a nuclear energy program, and Israeli concessions related to Palestine. Israel has also requested US security pledges and opposes Saudi’s nuclear energy plan. The US says it’s optimistic a deal will be reached

Dig Deeper

• Advocates for the deal say it would represent a major step toward achieving peace in the Middle East and would allow the US to divert its attention elsewhere, including to China

• Critics worry it would cement Israel’s occupation of the Palestinian territories and strengthen Saudi Arabia, which has a record of human rights violations

🍿 Popcorn

ICYMI

• Speedy justice: A judge sentenced former Las Vegas Raiders wide receiver Henry Ruggs III to three to 10 years in prison for a fatal 2021 DUI crash in which he was driving 127 mph and had a BAC twice the legal limit

• More stream-flation: Disney announced that it will increase the costs of its standard ad-free Disney+ and Hulu packages by 20%+. It also plans to crack down on password sharing

• Down goes Feinstein: Sen. Dianne Feinstein (D-Calif), 90, went to the hospital after a “minor fall” at her home. Feinstein missed three months of work earlier this year with shingles

Wildcard

• Minor league soccer: The Sacramento Republic FC soccer team signed 13-year-old Da’vian Kimbrough, making him the youngest pro athlete in American team sports

• Florida man wins lottery: A Florida resident won the record-breaking ~$1.58B Mega Millions jackpot, ending 31 consecutive draws without a winner

• Don’t mess with Texas: As a Texas woman mowed her lawn, a snake fell from the sky and attacked her – and a hawk later joined in. The hawk had dropped the snake and swooped in to reclaim its prey. The woman was hospitalized but okay

👇 What do you think?

Today's Question:

Do you think the Middle East is important to US interests?

Reply to this email with your answers!

See yesterday's results below the Wrap! 

🌯 Roca Wrap

In 2009, the Drug Enforcement Agency (DEA) uncovered a drug ring in Tennessee.

Further investigation connected that ring to a Florida doctor, Barry Schultz. In a single 11-month period, Schultz had received 92,400 oxycodone tablets. Those pills found their way onto the black market, contributing to the opioid crisis.

The investigation into Schultz – who later received a 157-year jail sentence – shed light on how a company called Mallinckrodt was flooding the country with opioids. In 2010, the DEA referred to the company as the “the kingpin” of companies fueling the opioid crisis.

In 1995, Purdue Pharma secured FDA approval for OxyContin – a long-lasting and potent pain pill – without conducting any long-term studies of its addictiveness. While the FDA’s then-commissioner would later call that approval “one of the worst medical mistakes,” the drug was initially hailed as a breakthrough.

Several years later, it emerged that Purdue had misrepresented OxyContin’s effectiveness. A judge invalidated the patent that would have let Purdue exclusively produce OxyContin. Other companies – including Mallinckrodt – began producing a generic, oxycodone.

Mallinckrodt – which was founded in St. Louis but based in Ireland for tax purposes – became the leading oxycodone producer. Between 2006 and 2014, Mallinckrodt produced 27% of opioids sold in the US, more than any other company.

As it produced billions of pills, one of them – a blue, 30mg oxycodone tablet – became the most popular illicit prescription opiate, helping fuel the opioid crisis.

As Mallinckrodt produced billions of pills, it pressured its salespeople to target doctors who frequently wrote opiate prescriptions. Salespeople who sold the most opiates received awards, bonuses, and company-paid vacations.

One supervisor told his people to “ATTACK” so they could get “big bonus dollars”; another said one opioid was “the BEST opportunity to make lots of money!!!”

Doctors who wrote the most prescriptions were paid thousands by Mallinckrodt to appear at “speaker programs,” where they recommended the drugs to other doctors. “All it ever took was a speaker program to get them writing [prescriptions],” one sales rep wrote in a now-public email.

Internal documents show that the company sold pills to doctors who had been marked as over-prescribing or clinics that were labeled “pill mills.” In total, Mallinckrodt produced 28.9B opiate pills shipped within the US between 2006 and 2012.

In 2011, Mallinckrodt’s high rate of sales led to a warning from the DEA.

Yet the company continued to rank doctors by their willingness to prescribe opiates, then target those who topped the list. In 2013 – when 14,000 Americans died of prescription opioid overdoses – Mallinckrodt ranked 239 doctors as top opioid prescribers and contacted them 7,000 times in a five-month period. 65 of them were later fined, convicted of medical crimes, or had their medical licenses revoked.

In another set of released emails, a drug distribution executive wrote to Mallinckrodt that it’s “like people are addicted to these things. Oh, wait, people are.” The Mallinckrodt executive responded: “Just like Doritos…Keep eating, we’ll make more.”

Mallinckrodt ended up the subject of a federal lawsuit that alleged “Mallinckrodt failed to design and implement an effective system to detect and report ‘suspicious orders’ for controlled substances – orders that are unusual in their frequency, size, or other patterns.”

To settle that lawsuit, the company agreed in 2017 to pay $35M – the largest opiate-related settlement at that time. For context, Mallinckrodt’s 2016 profit was $490M.

A flood of lawsuits followed, with 3,000+ individuals and state and locals governments accusing the company of fueling the opioid epidemic through its marketing and other business practices. In 2020, Mallinckrodt filed for bankruptcy.

Under the deal, Mallinckrodt’s creditors, mainly a group of hedge funds, took control of the company, and Mallinckrodt agreed to pay $1.73B to states, hospitals, tribes, and individuals affected by the opiate crisis. The money would go to addiction treatment, Narcan purchases, and related expenses.

Mallinckrodt paid $450M of its $1.73B opiate-related obligation last year, leaving $1.3B, which it was scheduled to pay in $150M-$200M chunks each year after that. Now, though, the company and its controlling hedge funds are considering not paying. Mallinckrodt has missed several earnings projections, upsetting its shareholders (the hedge funds).

Then this June, when Mallinckrodt was scheduled to make a $200M settlement payment, the hedge funds that control the company persuaded it not to make the payment. Last month, the Wall Street Journal (WSJ) reported that Mallinckrodt is now working with the hedge funds to prepare a new bankruptcy plan that would drastically reduce the $1.3B it owes for addiction treatment.

Under the potential plan, the WSJ reports that Mallinckrodt would propose to reduce its $1.3B opiate addiction treatment obligation to a one-time $250M payment. In exchange, the hedge funds would reduce the debt Mallinckrodt owes them and increase their ownership of the company.

The WSJ reports that the hedge funds say Mallinckrodt is making less, has higher debt than had been projected, and therefore can’t afford the settlement. They have also said that if Mallinckrodt continues to make the settlement payments, it would harm the company’s finances, potentially violating its duty to shareholders.

Yet Mallinckrodt’s financials do not suggest it is at risk of going out of business.

Advocates for the opioid epidemic’s victims have said it would be disastrous if Mallinckrodt reneges on its payments, which fund life-saving treatments. Some states, which would receive most of the remaining $1.3B, are considering legal action.

Florida’s government has said that if the company “refiles for bankruptcy,” it will “consider all options, including seeking liquidation of Mallinckrodt.”

If you have thoughts, let us know at [email protected]!

 🌊 Roca Clubhouse

Yesterday's Poll:

When the lottery gets huge, do you buy a ticket?
Yes: 51%
No: 49%

Yesterday's Question:

You win $1M in the lottery and can spend the money on one thing only. What is it?

Sarah from Penang, Malaysia: "If I could only spend it on one thing it would be student loans. I would pay all of mine off and then tell them to use the rest to pay other peoples loans as well."

Walker from Long Island, New York "Put every dollar into an ATM card account, and leave home and travel til the money runs out!”

Dale from Hilltown, Pennsylvania: "50 acres in the mountains with a house smack dab in the middle. Leave me alone!!”

Summer: “Land. They aren’t making any more of it”

Gerrye from Pittsburg, Texas: “probably a Bowlus RV”

Alex from NYC: “While I'd be tempted to splurge on a Vegas trip, I'd donate the 1M to a non-profit I'm involved in, RevealBeauty.org. We've been an all-volunteer organization since 2006; we put on makeovers for women escaping domestic violence and trafficking so they can reclaim a bit of their beauty & dignity for a day. Our dream has always been to have a permanent location where an abuse shelter victim can come in anytime for a makeover then head straight to a job interview, family celebration or just to walk the streets of New York City and feel proud and strong.”

🧠 Final Thoughts

We hope you learned something new from today’s newsletter and are especially curious to hear your thoughts on the Wrap. We also hope you finish the week strong. See you tomorrow!

—Max and Max