Indication intelligence, analysis and sector perception

RegMed Investors’ (RMi) closing bell: as I had stated, volatility is still drawing blood

November 5, 2018 5:24pm

Other than bluebird bio (BLUE), the sector’s upside was extremely weak (an Advance/Decline Line of 7/33 and 5 flats of my 45 covered companies

Sector equities will remain under pressure until the quarter results have evaporated share pricing

Pre-open indications: 1 HIT and 2 MISS

Quarterly results: Ultragenyx Pharmaceuticals’ (RARE -$0.93 to $52.94) grows its demand for Crysvita from both children and adults with XLH in the US. RARE reported a net loss of $87.3 M, or $1.74 per share (basic and diluted) compared with a net loss for Q3/17 of $79.2 M, or $1.87 per share (basic and diluted). The results topped “street” expectations which also had a cash position was $503.1 M

Who is defining the metrics for individual investors?

The next few trading sessions will be critical for the RegMed sector which will establish whether market reaction this month is temporary and short-lived, or if this is the start of a more fundamental correction.

I follow the dictum, quoting Churchill that “short words are best, and the old words when short are best of all.”

Daily analytics and metrics:

The Dow closed up +190.87 points or +0.76% to 25,461.70
The S&P closed up +15.25 points or +0.56% to 2,738.51
The NASDAQ closed down -28.14 points or -0.38% to 7,328.85

From the pre-open newsletter, “a busy week of quarterly reporting could cause fumbling and more sector volatility. Thus I’m back to, “Skim if you can trim, buy if it will fly and sell if compelled!”

The advance/decline line scenario of 45 covered companies:

The open was positive with an A/DL of 23/21 and 1 flat;
The mid-day was negative with an A/DL of 9/34 and 3 flats;
The close was negative with an A/DL of 7/35 and 3 flats;

Pre-open indications: 1 HIT and 2 MISS

bluebird bio (BLUE) closed up +$3.41 – miss;
Fate Therapeutics (FATE) closed up +$0.09 – hit;
Sage Therapeutics (SAGE) closed down -$11.39 – miss;

Five (5) key metrics:

… Greatest volume to the downside: HSGX, ADVM, SAGE, IONS and FATE

… Upside volume was weighted to: BLUE, NTLA, ATHX, MESOI and BLFS

… Weakness ($) to the downside: SAGE (-$11.39), SLDB (-$1.96), ONCE (-$1.27), AXGN (-$1.04) and RARE -$0.93)

… Best moves ($) to the upside: BLUE (+$3.410, MESO (+$0.27), NTLA (+$0.09), BLFS (+$0.070 and BCLI (+$0.03)

… The iShares NASDAQ Biotechnology (IBB) closed:

Monday was down -0.06% after indicating a positive +0.13% in the pre-market;
Friday was up +0.03% after indicating a negative -0.06% in the pre-market;
Thursday was up +3.84 % after indicating a positive +0.9% in the pre-market;
Wednesday was up +0.42% after indicating a positive +0.4% in the pre-market;
Tuesday was down -0.1% after indicating a positive +0.28% in the pre-market;
Last Monday was down -0.97% after indicating a positive +1.1% in the pre-market;

Henry’omics:

Markets are getting skittish looking forward to the U.S. midterm elections scheduled for tomorrow, which could send ripples throughout capital markets!

Investors in “our” universe are also grappling with uncertainty as quarterly LPS (loss-per-share) earnings. Sector equities were hit with another … bout of volatility after Friday's trading session.

I believe many are … De-RISKING!

Ultragenyx Pharmaceuticals (RARE) reported today:

RARE reported a net loss of $87.3 M, or $1.74 per share, basic and diluted, compared with a net loss for Q3/17 of $79.2 million, or $1.87 per share, basic and diluted.

For the nine months ended 9/30/18, net loss was $109.8 M, or $2.22 per share, basic and diluted, compared with a net loss for the same period in 2017 of $220.4 M, or $5.22 per share, basic and diluted. The loss from the first nine months was reduced by the sale of the Mepsevii™ (vestronidase alfa) priority review voucher (PRV) in January 2018 for net proceeds of $130.0 M and a $40.3 M gain from RARE’s portion of the sales of the PRV received with the Crysvita® (burosumab) approval. The net loss for the first nine months of 2018 reflected cash used in operations of $234.7 M compared to $172 M in 2017.

RARE reported $11.8 M in total revenue: Crysvita, recognized $5.4 M in profit sharing and royalty revenue from its collaboration and license agreement with Kyowa Hakko Kirin. This includes $4.4 M in collaboration revenue in the U.S. profit share territory and $1 M in royalty revenue in the European territory. Net product sales for Crysvita in other regions were nominal. Mepsevii product revenue for the third quarter of 2018 was $2.1 M, and UX007 named patient revenue was $400 K. Ultragenyx recognized $3.6 M in revenue from its research agreement with Bayer.

Total operating expenses for Q3/18 were $101.4 M compared with $83.9 M for the same period in 2017, including non-cash stock-based compensation of $20.7 M in Q3/18 and $17.2 M in Q3/17.

Total operating expenses for the nine months ended September 30, 2018, were $316.3 M compared with $232.3 M for the same period in 2017, including non-cash stock-based compensation of $59 M in 2018 and $48.5 M in the first nine months of 2017. The increase in total operating expenses is due to the increase in commercial, development, and G&A costs as RARE commercializes, grows and advances its pipeline.

Again, traders are de-risking share pricing ahead of Q3 announcements …

Reporting tomorrow (11/6): ATHX (+$0.01) reporting followed by Vericel (VCEL -$0.48), Ions Pharmaceuticals (IONS +$0.18), Spark Therapeutics (ONCE -$1.27), Verastem (VSTM -$0.06).

Reporting Wednesday (11/7) are: Histogenics (HSGX -$0.0009), Alnylam Pharmaceuticals (ALNY -$0.98), Regenxbio (RGNX -$2.10), Editas Medicine (EDIT -$0.45) and Voyager Therapeutics (VYGR -$0.13).

Reporting Thursday (11/8) are: Histogenics (HSGX -$0.0015), BioTime (NTSEMKT: BTX $0.00 even after receiving $10 M from Juvenescence), Applied Genetic Technologies (AGTC -$0.15), Intrexon (XON -$0.30), BioLife Solutions (BLFS +$0.07), Caladrius Bioscience (CLBS -$0.14) and Biostage (BSTG – flat at $2.99).

A couple of the Crispers were down most of the session yet, came back before the close: CRSP -$0.48 or -1.30% to $36.32 in a day’s range of $35.73 to $37.05, EDIT - $0.08 or -0.29% while NTLA +$0.09 or +0.47% to $19.09 in a day’s range of $17.88 to $19.22 flashed at the close some upside.

DOWNSIDE indicators –decreasing volume:

Review the range of the 7 upside from +0.07% (CLLS) to +3.76% (MESO) while the 33 downside ranged from -0.08% (GBT) to -8.28% (SAGE) with 3 flat closes (RENE.L, BSTG and BLCM);

2 out of 7 of the upside had higher (than the 3 month average) volume;

6 out of the 35 downside experienced greater volume (than the 3 month average).

November sessions:

Monday closed NEGATIVE with 35 decliners, 7 advancers and 3 flats;

Friday closed POSITIVE with 20 decliners, 22 advancers and 3 flats;

Thursday (11/1) closed POSITIVE with 3 decliners, 42 advancers and 0 flat;

In 23 sessions in October – there were 17 negative closes and 6 positive closes
In 19 sessions in September – there were 10 negative closes and 9 positive close;
In 21 August sessions – 6 had negative and 15 had positive closes

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.

35 companies, 1 interpreter!

Insight, foresight and recommendation

My motto … never leave an investor uninformed! I say today what others won’t, so you can do what others can’t.

My name is Henry McCusker; I endorse these opinions under my own name and with a subscription based membership.

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Editor and Publisher ... Henry McCusker enters his tenth (10th) year at RegMed Investors with past experience in sell-side analysis, buy-side management, corporate management and due diligence.

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