RegMed Investors’ (RMi) closing bell; Q1 results stimulate headwinds

May 3, 2018 6:42pm

Which are not helping sentiment …?

As reporting accelerates, we haven’t seen the worst of it yet

While Sage Therapeutics (SAGE) sails upward

Out and about: leadership changes at Adverum (ADVM), and Sangamo Therapeutics (SGMO)

Pre-open indications: 4 HIT and 5 MISS

Q1/18 “earnings”: Sage Therapeutics (SAGE), Editas Medicine (EDIT) and Verastem Oncology (VSTM)

End of day briefing; the “numbers” speak; if you know what happened today, you’ll understand what you need to do tomorrow!

Henry’omics:

Today’s moves … The Dow edged out a 5.17-point gain by the closing bell after falling nearly 400 points in morning trading.

• Unsteady trade was underpinned by quarterly results that failed to impress … although SAGE beat the rap!

What’s missing from the sector is something to make investors jump through the usual hoops – low volume, volatility and sentiment’s depression!

• I don’t see pronounced catalysts, and if weak earnings reports aren’t enough, what pushes us away from the SELL button – losses but is there a reason to push the BUY button to even consider doubling down for a … perceived upside?

ome sector “names” stocks kept the lights on: and AXGN (again), SAGE, FIXX, SLDB and ADRO

While losers hide in the open – BLUE (again), ONCE, ALNY (again), IONS and GBT

The advance/decline line scenario of 45 covered companies:   

• The open started negative with an ADL of 17/20 and 8 flats;
• The mid-day stayed negative with an A/DL of 16/25 and 4 flats
• The close concluded negative with an A/DL of 16/29 and 5 flat;

From Thursday’s pre-open newsletter, “…Q2 will be a show me period. Platforms and development are always sketchy; it’s the cash position that will define the runway of progress and it ain’t for a faint-hearted investor as one clinical endpoint miscue could totally destabilize a share’s pricing.”

Pre-open indications: 4 hit and 5 miss

• Aduro Biotech (ADRO) closed up +$0.30 – miss;
• Alnylam Pharmaceuticals (ALNY) closed down -$1.71 – hit;
• bluebird bio (BLUE) closed down -$2.90 – miss;
•  Cellectis S.A. (CLLS) closed down -$0.09 – miss;
•  CRISPR Therapeutics (CRSP) closed down -$0.75 – hit;
• Sage Therapeutics (SAGE) closed up + $1.53 - miss;
• uniQure (QURE) closed down -$1.28 – hit;
• Spark Therapeutics (ONCE) closed down -$2.62 – miss;
• Verastem (VSTM) closed down -$0.05 – hit;

MY working five (5) trend lines:

… The greatest volume to the downside:  QURE, SGMO, MDXG, EDIT and ALNY

… Upside volume was weighted to:  ADRO, AXGN, SAGE, CUR and BTX

… Biggest $ downside:  BLUE (-$2.90), ONCE (-$2.62), ALNY (-$1.71), IONS (-$1.47) and GBT (-$1.40)

… Best moves to the $ upside:  AXGN (+$2.30), SAGE (+$1.53), FIXX (+$0.72), SLDB (+$0.61) and ADRO (+$0.30)

… Flats: RENE.L, ADVM, VCEL, BSTG and STML

Q1/18 financial results i.e. earning – the LPS (loss-per-share) skirmish:

Verastem (VSTM)

Development platform:

Duvelisib NDA Accepted by FDA with Priority Review

In May 2018, changed its name to “Verastem Oncology” to reinforce its commitment to developing and commercializing treatment options for patients battling cancer

The “numbers”:

Net loss for Q1/18 was $21.1 million, or $0.41 per share, as compared to $13 million, or $0.35 per share, for Q1/17.

Increased Debt Facility to up to $50 Million – In January 2018, it amended its loan and security agreement with Hercules Capital, increasing its existing potential borrowing limit under the loan facility from $25 million;

VSTM ended with cash and cash equivalents of $64.2 million compared to $86.7 million of cash, cash equivalents and investments as of December 31, 2017.

From April 1, 2018 to May 3, 2018, VSTM sold 5,903,073 shares of common stock under its ATM for net proceeds of approximately $21.9 million (after deducting commissions and other offering expenses). Giving effect to these sales under the ATM, pro forma cash and cash equivalents balance at March 31, 2018 is approximately $86.1 million.

“Runway”: funding into 2019

VSTM closed down -$0.05 and is up +$0.06 or +1.49%

Sage Therapeutics, Inc. (SAGE) …

Platform Development:

• Steps to further Sage’s planned transition to a commercial stage company, starting with the submission of our New Drug Application (NDA) for brexanolone IV,
• Advancing a portfolio of novel CNS product candidates targeting the GABA and NMDA receptor systems; moving three additional drug candidates forward through 7 clinical programs, several of which we expect to initiate in the coming months
• Trial Initiations: P1 multiple ascending dose trial for SAGE-718 (2Q 2018), P1 single ascending dose trial for SAGE-324 (3Q 2018), P2 clinical trial for SAGE-217 in Parkinson’s disease (2H 2018) with SAGE-217 programs in MDD, bipolar depression, and sleep disorders (2018)

Data Readouts: Results from … P2 trial of SAGE-217 in PPD (4Q 2018), P1 multiple ascending dose trial for SAGE-718 (2H 2018)and SAGE-217 in MDD, bipolar disorder, Parkinson’s disease and sleep disorders expected to be initiated in 2018 (2019)

The “numbers”:

Cash, cash equivalents, and marketable securities as of 3/31/18 were $1.1 billion, compared with $518.8 million at 12/31/17. The increase was primarily due to net proceeds of $632.2 million from its follow-on public offering completed in February 2018,

Net loss was $74.6 million or -$1.68 per share for Q1/18 compared to a net loss of $56.8 million or -$1.52 per share for Q1/17.

“Runway”: into 2020.

SAGE closed up +$1.53

Editas Medicine, Inc. (EDIT)…

Platform development:

• LCA10 program remains on track to file an IND by mid-2018; their leading experimental cell medicine in oncology is advancing towards an IND filing in its Celgene (CLGN) collaboration with strong data in many early programs
• EDIT-101 for Leber Congenital Amaurosis type 10 (LCA10) on track for mid-2018 IND application filing,
• Expanding oncology collaboration with Juno Therapeutics, a CLGN company,
• Advancing research programs for recurrent ocular herpes simplex virus type 1 (HSV-1) and Usher syndrome type 2A (USH2A),
• While also designing a potentially superior medicine for sickle cell disease and beta-thalassemia 

The “numbers”:

Net loss was $30.9 million, or $0.67 per share, compared to $31.1 million, or $0.85 per share, for Q1/17,

• Collaboration and other R&D revenues were $3.9 million for Q1/18, compared to $700 K for Q1/17

Cash equivalents, and marketable securities of $358.8 million

“Runway: 24 months

EDIT closed down -$1.08 and is UP +$0.82 in the aftermarket

Out and about:

Adverum Biotechnologies, Inc. (ADVM) announced that the board of directors and Amber Salzman, Ph.D., president and chief executive officer and director, made a mutual determination that Dr. Salzman step down from these roles, effective May 3, 2018.  The board of directors is initiating a search process to recruit a new president and chief executive officer. Leone Patterson, senior vice president and chief financial officer, has been appointed interim president and chief executive officer of Adverum.  Dr. Salzman has agreed to serve as a consultant to the Company for a period of time in order to help ensure a smooth transition. Separately, Athena Countouriotis, M.D., chief medical officer has resigned effective May 11, 2018. Linda Neuman, M.D., M.B.A, vice president, clinical development, will serve as interim chief medical officer.

Sangamo Therapeutics, Inc. (SGMO) today announced that Senior Vice President and Chief Business Officer, Curt A. Herberts, III will resign effective June 1, 2018 to pursue a leadership opportunity with a private biotech company. SGMO also announced the promotion of Michael Holmes, Ph.D. to Senior Vice President and Chief Technology Officer. Holmes joined Sangamo in 2001 and has served as Vice President of Research since 2015.

Daily analytics:

The afternoon rally came after a sharp fall in equities earlier in the session, as a batch of better-than-expected earnings failed to push the major averages higher while trade and geopolitical worries mounted.

• The Dow edged out a 5.17-point gain to finish at 23,930.15 by the closing bell after falling nearly 400 points in morning trading.
• The S&P 500 closed down 0.23% to close at 2,629.73 after dropping as much as 1.6%.
• The NASDAQ fell 0.18% after dropping more than 1%, ending the day at 7,088.15.

The CBOE Volatility Index (VIX) widely considered the best gauge of fear in the market,

• Thursday traded at 15.90 , down -0.44% …
• Wednesday traded at 15.97, up +3.10 %
• Tuesday traded at 15.49, down -2.76%
• Monday traded at 16.05, up +4.15%
• Friday traded at 15.41 ,down -5.11 %
• Last Thursday traded at 16.26, down -8.86%

The iShares Russell 2000 (IWM) indicated:

• Thursday was down -0.55%
• Wednesday +0.36%
• Tuesday +0.46%
• Monday -0.90%
• Friday -0.14%
• Last Thursday +0. 46%

The iShares NASDAQ Biotechnology (IBB) indication:

• Thursday was down -1.36%
• Wednesday -1.32%
• Tuesday +0.39%
• Monday -1.86%
• Friday +0.29%
• Last Thursday +1.98%

The count - decliners versus gainers:

……. look at the differences in decliners:

• Thursday’s decliners ranged from -0.08% <BMRN -$0.07> to -4.97% <SGMO -$0.85 > in 29 equities;
• Wednesday’s decliners ranged from -0.11% <XON -$0.02 > to -4.40% < BMRN -$3.79> in 15 equities;
• Tuesday’s decliners ranged from -0.75% <VCEL -$0.10> to -17.33% <RENE.L> in 15 equities;

Versus

… Look at the percentage’s (%) and spreads …

• Thursday’s gainers ranged from +0.45% <BTX +$0.01 > to +8% <AST +$0.10 > in 11 equities;
• Wednesday’s gainers ranged from +0.26% <IONS +$0.11 > to +5.66% <SLDB +$0.83 > in 22 equities;
• Tuesday’s gainers ranged from +0.45% <FIXX +0.09> to +5.30% <PSTI +$0.07> in 25 equities;

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.