April 27, 2020 8:29am
Our sector has recoiled so many times and share pricing has fallen -30% since February to consider where a bottom begins when news is either lacking or abysmal
Pre-open indications: 10 shots on goal
What I provide is an “intelligence daily” to ensure that shareholders are kept apprised based on a surveillance of “our” universe, the RegMed/cell and gene therapy sector and its surrounding market. Check the BOTTOM LINE <read more>
Dow future are UP +0.91% (+215 points), S&P futures are UP +0.92% (+26 points) and NASDAQ futures are UP +1.23% (+108 points)
U.S. stocks futures were higher as investors mulled the possibility of re-opening the economy after the coronavirus outbreak;
European markets traded higher as investors await central bank meetings this week that could decide further stimulus measures to reboot economies deeply damaged by the coronavirus pandemic as the pan-European Stoxx 600 climbed 1.5% in early deals;
Asia Pacific markets rose, with the Bank of Japan’s decision of easing, Mainland Chinese stocks were up, South Korea’s Kospi inclined while Australia’s S&P/ASX 200 also rose with the MSCI Asia ex-Japan index advancing 1.81%
- The Bank of Japan of Monday announced an enhancement of its monetary policy easing measures to combat the hit on Japan’s economy as a result of the coronavirus pandemic.
In MY view, the pain of trade WILL escalate as news of treatment and testing is not even close to breaking the train of transmission!
Many states plan to re-open their businesses and public spaces in phases. The first phase, as businesses plan for a re-opening will be met with happiness but, trepidation with the only weapons being social distancing and utilizing personal protective equipment available.
Back to market issues, the short-term implications of the Covid-19 pandemic make it difficult for the sector to accurately replicate the timing and the magnitude of development advancements in Q1-Q2 as most of the period is a bust.
Last week was an alternating week of positive (Monday, Wednesday and Friday <opened negative>) and negative closes (Tuesday and Thursday <opened positive>) while the IBB and XBI followed the same pattern.
One main theme that can resurrect and provide short-term stimuli to this market is Gilead Sciences (GILD) remdesivir improving patients’ condition – we need to wait for US trial results as “Investors are dismissing the “flop” headline from the FT (Financial Times) and continue to anticipate positive results of some kind out of (at least) one of the many Remdesivir trials now underway (while FDA approval is widely assumed).
The present setup is such that Remdesivir anticipation will very likely be more beneficial/powerful than the actual results themselves (the data most likely will show efficacy to some extent in certain instances, but a medical “silver bullet” isn’t about to emerge)”.
The U.S. economy is expected to shrink at an annual rate of almost 40% in Q2, and the budget deficit will explode <the nonpartisan Congressional Budget Office (CBO).> In its first comprehensive look at the economic and fiscal damage done by the coronavirus, the CBO also said the unemployment rate would peak at 16% in Q4/2020.
ANY forecast of events, economics, drug interaction and sector/market responses are ALL subject to … enormous uncertainty!
Friday night’s title: “the upside feels good and shaky in the next weeks.”
- The NASDAQ closed UP +139.77 points (+1.65%);
- The IBB closed UP +2.42% and XBI also closed up +3.44%;
- The CBOE Volatility Index (VVIX: INDEX) was down -13.17%;
- The % of the 29-upside were +0.52% (AGTC) to +139.53% (MESO) while the xx-downside ranged from -0.88% (SLDB) to -4.74% (CLLS);
- 10 out of the 29-upside had higher than the 3-month average volume;
- 1 out of the 6-downside had higher than the 3-month average volume;
- April registered 8 negative, 9 positive closes and 1 holiday.
- March registered 11 negative, 10 positive closes and 1 neutral close.
- February registered 9 negative, 9 positive closes, 3 vacation days and 1 holiday.
- January registered 9 negative, 10 positive closes and 2 holidays.
Companies in my headlights – It’s your decision; I provide an idea and context:
Maintaining SELL on principle and into strength:
- AxoGen (AXGN +0.03) and Athersys (ATHX +$0.46) for taking PPP monies cheating the needy (in The Bottom Line)
- Caladrius Bioscience (CLBS) closed up +$0.09 on news of a registered direct at-the-market offering with 3.24 million new shares are a lot to digest on top of the 10.4 million outstanding (8.14 million float);
- Many of the newest highs will be targeted by algorithms and electronic trading; thins:
- MESO, QURE – if rumors of a Sanofi (SNY) acquisition don’t resound, Alnylam Pharmaceuticals (ALNY)after 3 up sessions, and Regenxbio (RGNX), ReNeuron (RENE.L) and Sage therapeutics (SAGE) - 3 session surges and Pluristem (PSTI) two session surge
The BOTTOM LINE: The response to this pandemic, in respect to sector and market conditions, it’s all about share pricing; it will be longer than some surmise. One pundit, Howard of Oaktree Capital Marks proteolyzed “took seven years to get back to the 2000 highs in 2007. It took 5½ years to get back to the 2007 highs in late 2012”.
So, is it really possible that, given all the bad news, we could get back to the highs in the short-term?
NO, only after multiple quarters well beyond Q1 earnings which are about to be “conferenced” – 2021 will be MY goal of controlling this and future “Black Swan” events that are NOT over by a long shot.
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.