RegMed Investors’ (RMi) closing bell analysis, the sector opened up, flipped down and regained ground at session’s end

January 27, 2017 5:24pm

… However, fear and uncertainty are acerbated as Athersys’ (ATHX) public offering depreciates and discounts in a very dilutionary financing

There is a lesson to be understood for “others” in need and the stacked-up list of those desperately hoping to access capital markets

Pre-open indication’s tally:  3 hit (ATHX, BSTG and XON) and 2 miss (CLBS and OSIR)

Out and about: Athersys (ATHX) priced its 19.8 M share offering  at $1.01 after Wednesday’s close at $1.52 – a HUGE $0.51 discount!

I answer one question; in which company should investors put, keep and commit their money!

… As I focus on the facts in evidence …

Whether information or intelligence is good, bad or somewhere in between; I put into context what is relevant and useful for investors.

U.S. equities traded mixed on Friday after the initial read on fourth-quarter GDP fell short of estimates, but were still on pace to record weekly gains.

The NASDAQ closed UP +5.61 or +0.10% to 5660.78 and the DOW closed DOWN -7.13 or -0.04% to 20,093.78.

A day in the life of the stem, cell, gene and regenerative therapy (SCGT & RT) sector – the advance/decline line scenario of our 43 covered companies:   

• The open was positive with an A/DL of 21/19 and 3 flats;
• The mid-day slipped negative with an A/DL of 19/21 and 3 flats;
• The close flipped positive with an A/DL of 23/1 and 2 flats;

Henry’omics:

From the mid-day’s investor’s letter, “who is buying offerings that haven’t proven their value in years … bottom feeders and warrant clippers?”

• As I had stated, “Do investors really know what they’re buying into and understand the relationship between CEO compensation that incrementally increases as share pricing decreases? Don’t fall for the hyperbole and amplifications bordering on stretching the facts.”

This week finishes in an ironic fashion with …

• Athersys’ (ATHX) offering’s pricing being an OMEN for those in the queue of capital market access!

I also believe it is a verdict on the sentiment of the sector in relation to the market.

• By the way, do you know why some companies are rushing-out financings – they’re … BROKE … beyond Q1/17 …

I further believe that the pricing decline is a “declaration of war” against those CEOs that can’t deliver on expectation after ALL these years – ATHX is reduced to a “micro-cap” financing!

• The key to the ….future (?) of ATHX’s future will be the “NAMES” of the investors who step-up.

The lesson, what does it all mean? In a simple vernacular, buyers are stretched and hard-pressed!

• IF an overnight deal was lined up to buy this offering and was executed after a dip in pricing – the discount would NOT have been onerous…

It is NOT about the sector – it is about – Athersys (ATHX); a company that has NOT delivered to its shareholders but ... has distributed ... excessive executive compensation to its management – not in any way related it’s share pricing - a pay for non-performance system!!!

My pet peeve:

• High-frequency trading accounted for 52 percent of January's daily trading volume of about 6.75 billion shares <TABB Group>.
• During the peak levels of high-frequency trading in 2009, about 61% of 9.8 billion of average daily shares traded were executed by high-frequency traders.

Indexes, the ebb and flow:

• The iShares Russell 2000 (IWM) indicated a positive +0.12% in the pre- open and closed DOWN -0.34%.
• The iShares NASDAQ Biotechnology (IBB) did NOT indicate in the pre-open and closed UP +0.88%

Pre-open indication’s tally:  3 hit (ATHX, BSTG and XON) and 2 miss (CLBS and OSIR)

• Athersys (ATHX) closed DOWN - $0.40 – hit;
• Biostage (BSTG) closed UP +$0.0214 – hit;
• Caladrius Biosciences (CLBS) closed UP +$0.505 – miss;
• Intrexon (XON) closed UP +$0.82 – hit;
• Osiris (OSIR) closed UP +$0.50 – miss;

Out and about:

Athersys (ATHX) priced its previously announced public offering of 19,802,000 shares at a price of $1.01. 

• Gross proceeds to ATHX from the offering are expected to be approximately $20 M, before deducting underwriting discounts, commissions and estimated offering expenses. In connection with the offering,
• ATHX has granted the underwriters a 30-day option to purchase up to an additional 2,970,300 shares at the offering price (less the underwriting discounts and commissions). 
• The offering is expected to close on 2/1/17, subject to customary closing conditions.  William Blair & Company, L.L.C. is acting as sole book-running manager and Needham & Company, LLC is acting as lead manager for the offering.  Maxim Group LLC served as financial advisor to Athersys.

Today’s 5 top dollar gainers included:

• bluebird bio (BLUE) +$2.65 after Thursday’s +$0.65;
• Spark Therapeutics (ONCE) +$1.47 after Thursday’s -$0.53 after Wednesday’s +$0.76 after Monday’s +$0.39 after last Friday’s +$1.23;
• Intrexon (XON) +$0.82 after Thursday’s -$0.36 after Wednesday’s -$0.51 after Tuesday’s -$0.44 after Monday’s
• Caladrius Biosciences (CLBS) +$0.505 after Thursday’s +$0.11;
• Osiris (OSIR) +$0.50

Today’s 5 largest dollar losers of the session were:

• Athersys (ATHX) -$0.40;
• Kite Pharma (KITE) -$0.32;
• Stemline (STML) -$0.20 after Thursday’s -$0.45 after Wednesday’s +$0.25;
• Neuralstem (CUR) -$0.19;
• ReNeuron (RENE.L) -$0.17

Flat:

• Applied Genetic Technologies (AGTC) at $8.15;
• Histogenics (HGX) at $1.54;

The downside trend reflects a pricing trend range of:

• Friday’s decliners ranged from -0.32% <VTGN> to -26.32% <ATHX> in 18 equities;
• Thursday’s decliners ranged from -0.02% <KITE> to -6.45% <AST> in 24 equities;
• Wednesday’s decliners ranged from -0.30% <BTX> to -7.444% <IMUC> in 12 equities;
• Tuesday’s decliners ranged from -0.44% <CAPR> to -3.57% <AGTC> in 15 equities;
• Monday’s decliners ranged from -0.08% <BLUE> to -10.46% <FATE> in 25 equities;
• Last Friday’s decliners ranged from -0.25% <MDXG> to -17.86% <PSTI> in 26 equities;

The upside shows a pricing trend range of:

• Friday’s gainers ranged from +0.25% <RGNX> to +12.77% <CLBS> in 23 equities;
• Thursday’s gainers ranged from +0.17% <MESO> to +4.95% <NWBO> in 14 equities;
• Wednesday’s gainers ranged from +0.22% <ONCE> to +10.49% <FCSC> in 28 equities;
• Tuesday’s gainers ranged from +0.35% <KOOL> to +14.78% <IMUC> in 26 equities;
• Monday’s gainers ranged from +0.55% <ONCE> to +5.07% <KOOL> in 13 equities;
• Last Friday’s gainers ranged from +0.31% <CAPR> to +14% <ISCO> in 15 equities;

The week’s beginning:

• Friday’s 23 gainers followed Thursday’s 14, Wednesday’s 28, Tuesday’s 26, Monday’s 13, Friday’s 15 and last Thursday’s 8
• Friday’s 18 decliners followed Thursday’s 24, Wednesday’s 12, Tuesday’s 15, Monday’s 25, Friday’s 26 and last Thursday’s 32

Review my fear gauge or the CBOE Volatility Index (VIX):

·         Friday traded near 10.5;

·         Thursday traded near 10.9;

·         Wednesday traded near 10.8;

·         Tuesday traded near 11.4;

·         Monday traded near 12.2;

·         Last Friday traded near 12.3;

Opinions expressed are those of the author and are subject to change, and not intended to be a forecast of future events, a guarantee of future results, nor investment advice.

Whether information or intelligence is good, bad or somewhere in between; I put into context what is relevant and useful for investors.  All investments are subject to risks. Investors should consider investment objectives.

Henry McCusker, the editor and publisher of RegMed Investors does not hold or have positions in securities referred to in this publication.