May 31, 2018 7:14am

Big swings are usually a sign of another downdraft

And the month of May is ending and should we be prepared for a June swoon?

 

Pre-open indications: 1 BUY and 4 SELLs

Gene editing equities (CRSP, EDIT and NTLA) are about to get “whacked” in concert as the FDA “put the brakes” on Vertex (VRTX) and CRISPR Therapeutics’ (CRSP) trial for more data …

Q3 and 9 month financial results: Mesoblast (MESO)

 

If you were a subscriber, and had read Wednesday’s closing “brief” you’d understand how today’s pre-open indications shed light on share pricing!

Get set for a FLAT open

Dow futures are DOWN -0.07% (-18 points) and NASDAQ futures are UP +0.06% (+5 points)

 

U.S. stock index futures are flat ahead of Thursday's open, supported by positive sentiment seen in markets overseas.

European markets edge higher as Italy anxiety cools

Asian stocks recover after Italian political concerns ease

 

Data docket: At 8:30 a.m. ET, jobless claims, personal income and outlays are all scheduled to be released, followed by a Chicago purchasing managers' index (PMI) at 9:45 a.m. ET, and pending home sales at 10 a.m. ET.

 

Today’s indications:

  • The iShares Nasdaq Biotechnology (IBB) is NOT indicating in Thursday’s pre-market;
  • The SPDR S&P Biotech ETF (XBI) is NOT indicating in Thursday’s pre-market;
  • The Health Care Select Sector SPDR ETF (XLV) is NOT indicating in Thursday’s pre-open;
  • The iShares Russell 2000 (IWM) is indicating an UPSIDE of +0.12% in Thursday’s pre-open

 

Henry’omics:

From Wednesday’s night’s newsletter: “comeback; the oversold rebound “happened” after Tuesday’s decline. Volatility will always be a by-product of the sector which also depends on volume and risks associated for some based on their cash positions.”

I also stated, “Tighten your belt as the overbought will see some downside as the month ends and June begins. Sector equities have fundamentals on their side but, for how long? Sentiment is as changeable as profit in your pocket jingles!”

 

Thursday’s moves:  Watch as some of yesterday’s “upsiders” take a “whack”!

 

We are all but done for the month of May and the old adage of “sell in May and go away” has weakened as measured by twenty one (21) sessions with thirteen (13) positive,  seven (7) negative closes and one (1) holiday;

  • In the last five  (5) sessions, the iShares NASDAQ Biotechnology (IBB) was up in four (4) session, down in one (1) after Wednesday’s +1.34%, Tuesday’s -0.45%, Monday’s holiday, last Friday’s +0.22% and the previous Thursday’s +0.08% - it’s time – it’s courting for a decline today or tomorrow;
  • Wednesday’s decliners ranged from -0.24% <MDXG -$0.02 > to -3.13% <AST -$0.05> in 12 equities;
  • Wednesday’s gainers ranged from +0.07% <BMRN +$0.06 > to +7.03% <RGNX +$3.55 > in 31 equities;

 

Last five (5) sessions:

  • Wednesday closed was POSITIVE with 12 decliners, 31 advancers and 2 flats;
  • Tuesday closed NEGATIVE with 27 decliners, 15 advancers and 3 flat;
  • Monday was a holiday
  • Friday closed NEGATIVE with 21 decliners, 18 advancers and 6 flat;
  • Last Thursday closed POSITIVE with 18 decliners, 23 advancers and 4 flats;

 

Quarterly financial results: Q3 for Mesoblast (MESO)

The net loss attributable to ordinary shareholders was US$21.1 million, or $4.47 per share, for Q3/18, compared with US$9.8 million, or -$2.43 per share, for Q3/17,

In March 2018, MESO established a non-dilutive, four-year credit facility with Hercules Capital for up to US$75 million with US$35 million drawn at closing. An additional US$15 million may be drawn on or before Q4/18, and a further US$25 million may be drawn on or before Q3/19, in each case as certain milestones are met.

Revenues were US$15.6 million for the nine months of FY2018, compared with US$1.8 million for the nine months of FY2017, an increase of US$13.8 million. This increase of US$13.8 million in the nine months of FY2018 was due to a 162% increase in commercialization revenue (US$1.6 million) from royalty income on sales of TEMCELL® Hs. Inj., an upfront payment of US$5.9 million (€5.0 million) received upon execution of a patent license agreement with TiGenix in 12/17, a future payment from TiGenix of US$5.9 million (€5.0 million), due by 12/18, was recognized, and an increase of US$0.5 million in sales milestones recognized on sales of TEMCELL® Hs. Inj.

The net loss attributable to ordinary shareholders was US$14.5 million, or a loss of -$3.12 per share, for the nine months of FY18, compared with US$49.6 million, or a loss of -$12.75 loss per share, for the nine months of FY17.

MESO ended Q3 with $59.5 M in cash

 

Companies in my headlights:

bluebird bio (BLUE) closed down -$03.40 to $182.80 with 664.9 K shares traded <3 month average = 720.3 K shares>. Many think there is “safety” after five (5) downturns in BLUE’s stock; the aftermarket reflects an upside of +$1.65 or +0.91% – BUY;

CRISPR Therapeutics (CRSP) closed up +$4.68 to $73.59 with a downside aftermarket response of -$10.59 or -14.39%. CRSP and, Vertex said the FDA put the brakes on an upcoming gene editing trial. The companies had sought approval in April to begin the early-stage study, which would be one of the first clinical trials in the U.S. involving gene editing, a method of cutting out and replacing disease-causing snippets of DNA – SELL;

Editas Medicine (EDIT) closed up +$2.28 to $37.93 with 979.1 k shares traded <3 month average = 1.238 M shares>. The aftermarket indication is for a downside move of -$1.16 or -3.06% - SELL

Intellia therapeutics (NTLA) closed up +$1.38 to $26.70 with 1 M shares traded <3 month average = 1.14 M shares. May started at $20.56 ad has been appreciating since with an approximate + $6.14 or 22.9% premium to date. The aftermarket reflects a downside response of -$0.99 or -3.71% - SELL;

Vericel (VCEL) closed at $13.95 and is down -$0.05 and the announced an offering with a downside aftermarket response of -$0.75 or -5.38% after they announced. It’s about time, ATM over-dependence has been a detriment to the share’s pricing. Shares outstanding = 36.68 M with a float of 29.14 M. VCEL intends to offer and sell 3,750,000 shares of its common stock in a public offering with a 30-day option to purchase up to an additional 562,500 shares of common stock –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.