RegMed Investors’ (RMi) closing bell analysis: a week packed with FY16’s financial results

March 10, 2017 6:03pm

Relieving the question of runways for some, but terminal for the sector as the sector closed neutral after opening up and crashing mid-day!

What analytics were there today and why it was important in today’s sector outcomes?

… Readership is a team sport, are you on it?

Henry’omics:

From the pre-open’s investor’s letter title, “will your portfolio be any safer post Q4/16 financial results?  Quarterly releases just might be the oil to calm volatility, the timing of trades and share amounts traded”

• As I had stated, “Speculation has run roughshod on share pricing, but now with many companies announcing their losses, spending, cash positions and development prospects – volatility should ease for some!”

Cell therapy equities struggled for direction Friday, with major benchmarks trading between slight losses and gains, as financial results weighed on a sector strung-out on speculation.

The iShares Russell 2000 (IWM) indicated up +0.52% at the pre-open and closed UP +0.44%;

The iShares NASDAQ Biotechnology (IBB) did NOT indicate at the pre-open and closed UP +0.63% while …

Weakness in the “our’ universe is just an extension of last week’s alternating positive/negative closes and the past two days of  positive closes <Wednesday and Thursday> following  two negative closes <Monday and Tuesday>.

Today’s declines are <I believe> attributable to the usual rebalancing of the overbought and oversold!

• This week’s performance sets-up the pricing routine for next Monday through Friday’s sessions.

I see it, do you?

Analytics:

The NASDAQ closed UP +22.92 or +0.39% to 5861.73 and the DOW closed UP +44.79 or +0.21% to 20,902.98.

… Quarterly financial results: Vericel (VCEL)

… Pre-open indications:  7 hit and 1 miss

… Highest highs: 5 and lowest lows: 5

… Flat versus a splat: 4

… The advance/decline line scenario of 43 SCGT & RT covered companies:   

·         The opening bell was positive with an A/DL of 23/17 and 3 flats;

·         The mid-day slipped negative with an A/DL of 18/24 and 1 flat;

·         The close was neutral with an A/DL of 19/19 and 5 flats;

The upside …

• Kite Pharma (KITE) closed up +$2.19 after Thursday’s +$6.01 after Wednesday’s +$1.41 after Tuesday’s +$0.47 and a completed financing;
• bluebird bio (BLUE) closed up +$1.75 after Thursday’s +$2.30 after Wednesday’s +$2.20 after Tuesday’s <down> -$1.20;
• Stemline (STML) closed up +$0.95 after Thursday’s +$0.65;
• Intrexon (XON) closed up +$0.87;
• Spark Therapeutics (ONCE) closed up +$0.75 after Thursday’s (down) -$0.97 after Wednesday’s up +$1.28 after Tuesday’s down -$4.14;

The downside:

• Osiris (OSIR) closed down -$0.23;
• Cellectis SA (CLLS) closed down -$0.19;
• BioLife Solutions (BLFS) closed down -$0.17;
• International Stem cell (ISCO) closed down -$0.16;
• Neuralstem (CUR) closed down -$0.13 after Thursday’s +$0.87;

Pre-open indications:  7 hit and 1 miss

• BioLife Solutions (BLFS) closed down -$0.17 – miss;
• Juno Therapeutics (JUNO) closed UP +$0.05 – hit;
• Kite Pharma (KITE) closed up +$2.19 – hit;
• Athersys (ATHX) closed down -$0.03 – hit;
• Biostage (BSTG) closed down -$0.00 – hit;
• Cellectis SA (CLLS) closed down -$0.19 – hit;
• Fibrocell (FCSC) closed down -$0.00 – hit;
• Neuralstem (CUR) closed down -$0.13 – hit;

Flat:

​Asterias Biotherapeutics (NYSEMKT: AST) at $3.15;

​AxoGen (AXGN) at $10.05;

​Cesca Therapeutics (KOOL) at $2.90;

​Regebxbio (RGNX) at $20.15;

Sangamo (SGMO) at $4.35;

The downside showed a pricing trend of:

• Friday’s decliners ranged from -0.80% <VSTM> to -10.26% <ISCO> in 19 equities;
• Thursday’s decliners ranged from -0.58% <CLBS> to -10.23% <BSTG> in 16 equities;
• Wednesday’s decliners ranged from -0.35% <ONVO> to -5.24% <VTGN> in 7 equities;
• Tuesday’s decliners ranged from -0.30% <BSTG> to -8.79% <SGMO> in 28 equities;
• Monday’s decliners ranged from -0.17% <OSIR> to -7.78% <AGTC> in 28 equities;
• Last Friday’s decliners ranged from -0.17% <OSIR> to -7.75% <CAPR> in 19 equities;

The upside showed a pricing trend of:

• Friday’s gainers ranged from +0.22% <JUNO> to +10.80% <STML> in 20 equities;
• Thursday’s gainers ranged from +0.35% <XON> to +19.64% <CUR> in 24 equities;
• Wednesday’s gainers ranged from +0.48% <RGNX> to +12.95% <ISCO> in 35 equities;
• Tuesday’s gainers ranged from +0.27% <NWBO> to +17.13% <FCSC> in 15 equities;
• Monday’s gainers ranged from +0.23% <CUR> to +7.32% <ISCO> in 12 equities;
• Last Friday’s gainers ranged from +0.34% <KOOL> to +9.68% <BSTG> in 20 equities;

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

·         Friday traded near 12.7;

·         Thursday traded near 11.9;

·         Wednesday traded near 11.4;

·         Tuesday traded near 11.5;

·         Monday traded near 11.3;

·         Last Friday traded near 10.9;

Financial results as reported:

Vericel (VCEL) …

VCEL reported a net loss for Q4/16 of $6.2 million, or $0.34 per share, and an FY16 loss of $19.6 million, or $1.18 per share, respectively, compared to a net loss of $4.9 million, or $0.28 per share, and $16.3 million, or $0.97 per share, for the same periods in 2015. 

Vericel reported an adjusted net loss, a non-GAAP financial measure, for the quarter and year ended December 31, 2016 of $3.5 million, or $0.14 per share, and $16.9 million, or $0.73 per share, respectively, compared to an adjusted net loss of $5.0 million, or $0.20 per share, and $16.7 million, or $0.67 per share, for the same periods in 2015. 

The adjusted net loss excludes the non-cash loss on impairment of the Carticel-related intangible asset, the non-cash change in the fair value of warrants and the non-cash accumulated dividend on the Series B convertible preferred stock.

The adjusted net loss per share includes common shares reserved as treasury shares received in exchange for the Series A non-voting convertible preferred stock in 2015.  The Series A non-voting convertible preferred stock was exchanged for common shares in 2016.  On March 9, 2017 all outstanding shares of Series B Convertible Preferred Stock were converted into common stock.  As of March 10, 2017, the company had 32,723,646 shares of common stock outstanding.

As of 12/31/16, VCEL had $23 million in cash and cash equivalents compared to $14.6 million in cash and cash equivalents at 12/31/15.

Loss from operations for the quarter and year ended December 31, 2016 was $5.9 million and $19.2 million, respectively, compared to $5.0 million and $16.7 million for the same periods in 2015. 

Material non-cash items impacting the operating loss for the quarter and year ended December 31, 2016 included $0.5 million and $2.5 million, respectively, of stock-based compensation expense and $0.5 million and $1.9 million, respectively, in depreciation and amortization expense. 

Loss from operations for the quarter and year ended December 31, 2016 also included $2.6 million from the write-off of the commercial use rights primarily related to Carticel.  Given the approval of MACI in December 2016 and the planned replacement of Carticel with MACI, it was determined that the Carticel-related intangible asset was fully impaired as of December 31, 2016.  Excluding this charge, loss from operations for the quarter and year ended December 31, 2016 would have been $3.3 million and $16.6 million, respectively.                                                                   

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.