RegMed Investors’ (RMi) pre-open: today’s sector, an accelerant or a ricochet?

May 4, 2020 8:14am

A little of both as mounting concerns that companies would see lasting damage in the aftermath of the coronavirus pandemic spooked market participants.

Pre-open indications:  3 BUYs and 2 SELLs

News: Privately held Menarini Group, an Italian drug and diagnostics company, has agreed to acquire Stemline Therapeutics (STML) in a deal valued at up to $677 million. Vir Biotechnology, Inc. (VIR) and Alnylam Pharmaceuticals (ALNY) have identified a drug candidate (VIR-2703 also called ALN-COV) planning to begin human testing by the end of the year.

Quarterly results: Aduro Biotech (ADRO)

What I provide is an “intelligence daily” to inform the RegMed/cell and gene therapy sector and its investors utilizing my focus on indication analysis. Check the BOTTOM LINE <read more>

Dow future are DOWN -1.01% (-239 points), S&P futures are DOWN -0.71% (-20 points) and NASDAQ futures are DOW -0.65% (-54 points)

Stock futures fell early Monday morning as traders weighed the reopening of the economy along with brewing tensions between China and the U.S. over the virus outbreak;

• the Trump administration doubled down on its attack on China over the outbreak, with Secretary of State Mike Pompeo saying Sunday that the U.S. found “enormous evidence” that the virus came from a lab in Wuhan, China.

European stocks traded sharply lower on rising U.S.-China tensions around the source of the coronavirus outbreak as the pan-European Stoxx 600 fell -2.5;

Asia Pacific stocks fell as reigniting tensions between the U.S. and China weighed on investor sentiment, with major regional markets (Japan and China) closed for holidays.

• The Associated Press reported that U.S. intelligence documents accused China of concealing the severity of the coronavirus outbreak to hoard medical supplies.

Henry’omics:

Stimulating news to start the week, Stemline Therapeutics (STML) … under the terms of the deal, STML shareholders will receive $11.50 in cash and one non-tradeable Contingent Value Right, or CVR, that entitles the holder to an additional $1 in cash upon completion of the first sale of Elzonris in any EU5 country after European Commission approval. Stemline developed Elzonris for the treatment of blastic plasmacytoid dendritic cell neoplasm (BPDCN) in adult and pediatric patients, two years or older.

• The deal is expected to close in the second quarter. BPDCN is an aggressive hematologic malignancy, that often presents in the bone marrow and/or skin. Stemline shares were not yet active premarket, but have fallen 55% in the year to date, while the S&P 500 has fallen 12%.

Markets are coming off their biggest monthly surge in over 30 years, with the S&P 500 gaining 12.7% while the Dow advanced 11.1% as the Nasdaq closed 15.5% higher for April, logging in its biggest one-month gain since June 2000.

The number of new infections has fallen in recent weeks; however, let’s NOT forget disappointing economic data and the fact that U.S. states reopening will be slow and fractured.

Low trading volume suggests many investors got “screwed” in March and April – who will be reticent and continue cagey about returning to a market without significant recovery practices and stay-open procedures being identified.

Friday night’s title: “a challenged market and a low swinging sector.”

• The NASDAQ closed DOWN – 284.60 points (3.20.%);
• The IBB closed down -2.50% and XBI also closed down -2.74%;
• The CBOE Volatility Index (VVIX: INDEX) was up +8.90%; while sector volume was LOW with 2 out of the 8-upside had higher than the 3-month average volume and 8 out of the 25-downside had higher than the 3-month average volume;
• Friday closed negative at 8/25 and 2 flats;
• The % of the 8-upside were +0.43% (SLDB +$0.01) to +6.88% (FIXX) while the 25-downside ranged from -0.38% (IONS) to -16.36% (CLBS -$0.35); 

Q2:

• May registered 1 negative close
• April registered 10 negative, 11 positive closes and 1 holiday.

Q1:

• 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:

 BUY ON NEWS:

• Alnylam Pharmaceuticals (ALNY) on news of Vir Biotechnology, Inc. (VIR) and Alnylam Pharmaceuticals (ALNY) selection of a development candidate (DC) for VIR-2703 (also referred to as ALN-COV), an investigational RNAi therapeutic targeting the SARS-CoV-2 genome. The companies plan to soon meet with the U.S. Food and Drug Administration (FDA) and other regulatory authorities to discuss a potential accelerated path for filing an Investigational New Drug (IND) or IND equivalent application at or around year-end 2020, less than a year since program initiation. The companies plan to advance VIR-2703 as an inhalational formulation for the potential treatment and/or prevention of COVID-19; ALNY is down -$0.97 or +0.75% - BUY on dip;
• Stemline Therapeutics (STML) closed down -$0.48 and is UP on acquisition potential with a pre-market indication +$7.06 or +147.16%;
• CRISPR Therapeutics (CRSP) closed down -$0.74 after Thursday’s -$2.80, Wednesday’s -$0.52, Tuesday’s -$2.48 and LAST Monday’s +$0.39 after earnings;

SELL:

• bluebird bio (BLUE) closed down -$3.11 after Thursday’s -$2.65, Wednesday’s -$0.84, Tuesday’s -$4.19 and last Monday’s up +$2.94 and has a negative -$0.77 or -1.52% pre-market indication;
• ReNeuron (RENE.L) closed down on Friday, Thursday, Wednesday and has a US pre-market pricing of -$7.92 or -5.46;

The BOTTOM LINE: Sector equities are preparing for another week of earnings.

• 5/5 - Vericel (VCEL),
• 5/6 - AxoGen (AXGN), Alnylam Pharmaceuticals (ALNY), Precigen (PGEN), Global Blood Therapeutics (GBT), Alnylam Pharmaceuticals (ALNY), Ultragenyx Pharmaceuticals (RARE)
• 5/7 - Sage Therapeutics (SAGE), Athersys (ATHX), Brainstorm Cell Therapeutics (BCLI), Cellectis SA (CLLS), Caladrius Biosciences (CLBS), Intellia Therapeutics (NTLA)

As I have continued to forecast, cash in gains and WAIT for the next waves to pick the one, you want to ride.

I recommend rotating portfolio holdings to companies with strong balance sheets and runways; use pockets of strength to trim recent outperformers especially those with low volumes and sharp peaks!

The next two to four weeks are critical for the economic crisis, the health crisis and “our’ universe of RegMed/cell and gene therapy companies.

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.