June 17, 2019 7:43am

Markets tank, but they recover; the sector will shudder, but it adjusts as is always does

News: UniQure NV is exploring options including a potential sale amid interest from pharmaceutical companies looking to expand in gene therapy. Pfizer (PFE) to buy Array Biopharma for $48 per share ($11.4 B in cash including debt). Homology Medicines (FIXX) presented data highlighting the ability of a single administration of HMI-102, for the treatment of phenylketonuria (PKU) in adults, to achieve long-term correction of PKU in an animal model.

Pre-open indications: 6 BUYs and 1 SELL

Insight from what's likely to remain a volatile climate

 

The 6 W’s: Who, what, where, when, why and what of it … the real question are the trading “machines” with us or against investors?  If you think you understand perception, think again and then again.

 

Dow futures are UP +0.09% (+23 points), S&P futures are UP +0.09% (+3 points) and NASDAQ futures are also UP +0.19% (+15 points)

 

U.S. stock index futures were higher on Monday morning, as investors look ahead to a crucial Federal Reserve meeting this week.

European stocks were mixed as investors await this week’s Fed meeting as the pan-European Stoxx 600 traded around the flat line during the morning session,

Asia Pacific markets were mixed after data released last Friday showed China’s industrial output growth in May slowing to a more than 17-year low, widely below expectations and then there is the U.S. Fed anticipation.

 

Data docket: Empire State manufacturing data at 8:30 a.m. ET, and the National Association of Home Builders housing index due at 10 a.m. ET.

 

Henry’omics:  

I am focused on “our” universe getting off the bottoms as news of “cousins” being acquired or available sets portfolios beating while traders are largely focused on monetary policy with a Federal Reserve meeting due to start Tuesday.

News of concern (continued), “QURE is working with advisers as it weighs options including a sale or partnerships, according to the people, who asked not to be identified because the information is private. UniQure’s shares have risen 151% in U.S. trading this year, giving it a market value of about $2.7 billion”.

Major pharmaceutical firms have been pursuing gene-therapy companies that promise to treat rare, debilitating diseases by correcting DNA flaws. While the field has yet to deliver a blockbuster, the promise of dramatic cures carrying multimillion-dollar price tags has triggered a flurry of deal activity. Cantor Fitzgerald LP said in February that UniQure “could be next” and may attract interest from large-cap companies such as Novo Nordisk A/S, Pfizer Inc. and Sanofi.

A deal with UniQure would bring access to a pipeline of experimental treatments for hemophilia, Huntington’s disease and other disorders. QURE is incorporated in the Netherlands, with about 200 employees spread between Amsterdam and Lexington, Massachusetts. UniQure developed Glybera, the first gene therapy approved for sale in Europe, though the $1 million treatment had disappointing sales and the company said it wouldn’t renew its marketing authorization in 2017. Since then, the company has focused on hemophilia treatments <Bloomberg>.

 

From Fri day night’s post, “alchemy in reverse; Thursday’s gold became Friday’s tin.”

I also stated, “The “machines” pushed the sector into a tantrum as the market whipped itself with geopolitical issues but what’s more problematic is the fact we’re in a liquidity vacuum.”

  • Last week there were 2 positive, 2 negative and 1 neutral closes;
  • Friday closed NEGATIVE with 30 decliners, 11 advancers, 2 flat and 2 acquired (AST & OSIR);
  • Friday’s range of the 11 upside was +0.30% (PSTI) to +10.24% (VSTM) while the 30 downside ranged from -0.39% (BLFS) to -6.15% (GBT);
  • 2 out of the 11 upside had higher than the 3 month average volume;
  • 8 out of the 30 downside had higher than the 3 month average volume;
  • The iShares NASDAQ Biotechnology (IBB) indicator:  Friday closed down -0.93% after Thursday’s +0.75% after Wednesday’s +0.61%, Tuesday’s -0.49% and last Monday’s -0.60% - should be seeking some upside!”

 

Q2/19 so far:

  • In June, there were 5 positive, 1 neutral and 5 negative close, so far;
  • In May, there were 14 negative, 1 holiday and 8 positive closes;
  • In April, there has been 10 positive and 11 negative closes;

 

Companies in my headlights – It’s your decision; I provide an idea and context ...

Applied Genetic Technologies (AGTC) closed down -$0.02 to $3.88 after Thursday’s +$0.09 to $3.99, Wednesday’s +$0.04 to $3.81 after Tuesday’s -$0.07 to $3.77 and last Monday’s $3.80 – I’d be building a position as clinical date results are due in 2nd half; however, Q2 results won’t have any Biogen’s (BIIB) cash inflows  – Maintaining BUY;

BioLife Solutions (BLFS) closed down -$0.07 to $17.69 after Thursday’s +$0.38 to $17.76,  Wednesday’s -$0.19 to $17.38, Tuesday’s-$0.58 to $17.57 and last Monday’s $18.15; however, BLFS has a 52 week change of +31.65%, traders might want to profit from that % closer to month and quarter’s end although BLFS was added to the Russell 3000® Index –Maintaining BUY;

bluebird bio (BLUE) closed down -$6.28 to $117.68 after Thursday’s +$6.48 to $123.94, Wednesday’s  -$1.00 to $117.46, Tuesday’s $118.46 and last Monday’s $118.31. European regulators gave a green light to bluebird bio's (BLUE) beta-thalassemia therapy, Zynteglo; management revealed plans to charge $1.8 million for this new treatment as a million-plus price sounds exorbitant, but it may not be as ridiculous as it seems <MotleyFool>.

  • Zynteglo's $1.8 million price can be paid in equal installments over five years, and if the drug stops working before then, payers won't have to keep making their payments. This value-based approach makes a lot of sense. Payers only pay if Zynteglo works; and if it works, then payers could save hundreds of thousands of dollars per year from year five on because it can cost between $300,000 to $500,000 per year to treat people with rare diseases such as beta-thalassemia, without including costs related to complications. Zynteglo's European approval only covers its use in a few thousand people, but the commercial opportunity could be bigger if studies evaluating it in patients with the β0/β0 genotype pan out and the FDA eventually signs off on its use in the U.S. - Maintaining BUY;

Global Blood Therapeutics (GBT) closed down -$3.54 to $53.98 after Thursday’s +$2.70 to $57.52, Wednesday’s $54.82, Tuesday’s $55.81 and last Monday’s $57.24. GBT has been subject to competitive, approval and scientific news along with BLUE, EDIT and more causing the share pricing fall.

  • While voxelotor met its main goal in a late-stage study, some are questioning its ability to create benefits for patients. However, GBT options traders are active, with volume (6/14/19) running at seven times the expected intraday pace with trading of 12,000 calls and 4,500 puts have changed hands, with volume pacing in the 99th annual percentile. The June 50 put and 60 calls are most active, with more than 7,300 contracts collectively on the tape. The bulk of the action at each front-month strike has gone off at the ask price, though it's not clear if positions are being opened or closed here <Schaefer’s Investment Research>. While calls have outpaced puts on an absolute basis, the rate of put buying relative to call buying has been accelerated.

Analysts are overwhelmingly bullish on GBT, with 13 of 14 in coverage maintaining a "strong buy" rating. Plus, Guggenheim said, "we would be buyers on any weakness," while Cantor Fitzgerald raised its price target to $110 from $96, well above the average 12-month price target of $92.31 – SELL to BUY;

Homology Medicines (FIXX) closed up +$0.10 to $18.55 and has news (see title above) of  preclinical data demonstrating the therapeutic potential and efficacy of HMI-102, which provided a strong foundation for the recent initiation of a P1/2 pheNIX study, the first gene therapy candidate for PKU to enter clinical trials. Still an animal model but positive – BUY:

ReNeuron (RENE.L) closed up +$20.00 to $250.00 after Thursday’s $230.00, Wednesday’s $232.00, Tuesday’s $245.00 and last Monday’s $230.00. RENE.L has been floating on the market’s downfalls with uplifts of being oversold; a time differential trading with a negative -$7.89 or 3.16% pre-market’s indication - SELL;

uniQure N.V. (QURE) closed up +41.34 to $72.55 and has a positive +$4.95 or +6.82 pre-market indication after saying it is putting itself up for sale – BUY;

 

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.