RegMed Investors’ (RMi) pre-open: the “JUNO” effect

January 23, 2018 7:49am

The saying "a rising tide lifts all boats" is associated with the idea that pricing upswings based on an acquisition event will benefit other sector “participants”.

The slogan also shines the light on capital market access for those in need of offerings …

Is it worth staying in the water or chasing other equities that won’t be acquired in the short or near-term?

Out and about: Stemline Therapeutics (STML) proposed an offering of 3.7 M shares. In the aftermarket, STML is down -$0.50 or -3.51%; Histogenics (HSGX) Priced a Registered Direct Offering (RDO) of 2,340,430 Shares at $2.35. HSGX closed at $2.56 – an 8.2% discount, not bad with anticipated proceeds of $5.5 M.

Pre-open indications: 8 SELLs and 0 BUYs

Slightly higher and struggling open expected

Dow futures are UP +0.01% (+2 points) and NASDAQ futures are UP +0.03 % (+2 points)

U.S. stock index futures rose cautiously pre the market open on Tuesday, as investors reacted to the news that the government's three-day shutdown had ended.

European markets posted solid gains, following news that lawmakers had secured a deal to allow U.S. government operations to get back into action.

Asian indexes closed with significant gains following the stronger lead from U.S. markets after U.S. lawmakers reached a deal to end a government shutdown. Investors also digested the Bank of Japan's decision to keep monetary policy steady.

Issues that will affect the trading day: The JUNO effect, will the upside trajectory continue?

Data docket:  the Philadelphia Fed non-manufacturing survey is set to come out at 8:30 a.m. ET, followed by the Richmond Fed Survey of Manufacturing Activity at 10 a.m. ET.

Issues on the political front: While political news is expected to dominate sentiment, earnings and data will also be in focus.

Last week’s RegMed, stem and cell therapy sector’s record over 5 sessions (of 40 covered companies):

·         Monday closed POSITIVE with 9 decliners, 26 advancers and 5 flats;

·         Friday closed closely POSITIVE with 18 decliners, 21 advancers and 1 flat;           

·         Thursday closed NEGATIVE with 20 decliners, 15 advancers and 5 flats;

·         Wednesday closed barely POSITIVE with 18 decliners, 19 advancers and 3 flats;

·         Last Tuesday closed NEGATIVE with 31 decliners, 9 advancers and 0 flats;

Henry’omics:

From Monday night’s closing bell post, “…Celgene’s (CELG) acquisition renews interest in cell therapy as sector leaders’ jumps with percentage (%) gains while smaller caps incrementally slip to the downside while the iShares Nasdaq Biotechnology ETF (IBB) was up 3.14%. The market rebounded after a shutdown reopened government for three weeks. The question is WHAT to hold-on to?”

Watch out for ... "Falling knives"!

Today’s indications:

• The iShares Nasdaq Biotechnology (IBB) is indicating a POSITIVE +0.33% in Tuesday’s pre-market;
• The SPDR S&P Biotech ETF (XBI) is indicating a NEGATIVE -0.46% in Tuesday’s pre-market;
• The Health Care Select Sector SPDR ETF (XLV) is a POSITIVE +0.11% indicating in Tuesday’s pre-open;
• The iShares Russell 2000 (IWM) is indicating a NEGATIVE -0.16% in Tuesday’s pre-open

Companies in my headlights:

Applied Genetic Technologies (AGTC) closed up +$0.05 to $4.15 with 31.6 K shares traded <3 month average = 102.3 k shares> after Friday’s +$0.10 to $4.10 with 57.8 K shares traded. On Thursday, AGTC closed up +$0.05 to $4.00 after Wednesday’s -$0.05 to $3.95 with 65.7 K shares traded after last Tuesday’s $3.95. AGTC has clinical trial timing issues and spending woes – Maintaining SELL;

bluebird bio (BLUE) closed up +$18.70 to $194.65 with 2.48 M shares traded <3 month average = 927.4 K shares> after Friday’s -$6.15 to $175.95 with 739.6 K shares traded up +$6.85 to $182.10 with 1 M shares traded after Thursday’s $182.10, Wednesday’s +$11.90 to $175.25 with 1.8 M shares traded after Tuesday’s -$7.35 to $163.35. During last week, the stock ran from $163.35 to $182.10  and then there was Friday’s $175.95. The pre-market indication is a positive +$2.35 or +1.21% yet, after all the “ups’ – greed will set in – BUY to SELL;

Fate Therapeutics (FATE) closed up +$0.92 to $8.29 with 902.3 K shares traded <3 month average = 470.3 K shares>. The is a $1.74 or +20.98% premium on the table and there was an aftermarket indication of +$0.17 or +2.05% in five (5) sessions; however I wouldn’t chase the ups” although I like the company – SELL;

Histogenics (HSGX) closed flat at $2.56 and after the market closed announced a Registered Direct Offering (RDO) priced at $2.35. The aftermarket indication is a negative -$0.17 or -6.61% - SELL;

Spark Therapeutics (ONCE) closed up +$6.09 to $57.35 with 1.239 M shares traded <3 month average = 1 M shares>. A dramatic move forward with a $6.80 or +11.8% premium over three (3) sessions, the greed factor is always there and the aftermarket indication is a negative -$0.15 or -0.26% - I don’t see an acquisition on the short or near-term horizon - SELL;

Stemline Therapeutics (STML) closed up +$0.70 to $14.25 with 309.8 K shares traded <3 month average = 278.6 K shares>. STML has announced an offering of 3.7 M shares. In the aftermarket, STML is down -$0.50 or -3.51% - SELL;

uniQure (QURE) closed up +$1.72 to $19.71 with 571.4 K shares traded <3 month average = 621.1 K shares> after Friday’s -$0.01 to $17.99 as last week, QURE received an Orphan Medicinal Product Designation (OMPD) from the European Medicines Agency. AMT-130 represents the first investigational AAV-gene therapy in Huntington’s disease to receive such designation. In October 2017 QURE announced that the U.S. FDA granted orphan drug designation for the same indication. With a big “pot” on the table, what’s in the cards to hold it up – BUY to SELL;

Verastem (VSTM) closed up +$0.16 to $3.28 with 742 K shares traded <3 month average =887.7 K shares>.  I wouldn’t be chasing any of the ups, VSTM is down in the aftermarket -$0.08 or -2.44% - SELL;

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.