June 26, 2020 8:11am
Skim and trim but, in “Texas Holdem” don’t fall for “blind bets,” these are the forced bets made before the cards are dealt
Pre-open indications: 2 BUYs and 10 SELLs
The beginning of the Biostage (BSTG) chronicles …
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Dow futures are DOWN -0.34% (- 82 points), S&P futures are DOWN -0.07% (-2 points) and NASDAQ futures are UP +0.03% (+4 points)
Friday’s stock futures are fluctuating following the release of the Fed’s latest bank stress-test results and disappointing quarterly numbers out of Nike;
European markets advanced despite surging coronavirus cases in the U.S. and further warnings about a second market meltdown from the International Monetary Fund (IMF) as the pan-European Stoxx 600 climbed +0.7%;
Asia Pacific markets mostly advanced, Hong Kong dipped and markets in Mainland China a were closed as the MSCI Asia ex-Japan index rose +0.36%.
Data docket: 8:30 a.m. Personal income and at 10:00 a.m. University of Michigan Survey of Consumer
Friday’s moves came after the Fed’s annual stress test of the major banks showed some banks could get close to minimum capital levels in scenarios related to the coronavirus pandemic.
- Because of this, banks must suspend share repurchase programs and keep dividend payments at current levels for the third quarter.
Thursday’s night post’s title: “surge, purge and gorge; dualling headlines effect markets but, the sector ascends.”
- The NASDAQ closed up +107.84 points (+1.09%);
- The IBB closed up +1.11% and XBI also closed up +2.47%
- Thursday opened positive and closed positive;
- Sector volume was LOW with 10 out of the 25-upside having higher than the 3-month average volume and 1 out of the 8-downside having higher than the 3-month average volume;
- Thursday’s percentage (%) of the 25-upside were +0.43% (MESO) to +29.73% (ATHX) while the 8-downside ranged from -0.10% (NTLA) to -21.76% (QURE) on news of an offering;
- June registered 11 positive and 8 negative closes
- May registered 9 negative, 11 positive closes and 1 holiday.
- April registered 10 negative, 11 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:
Biostage (BSTG) closed down -$0.27 after Wednesday’s +$0.29 to $2.79 on what? BSTG received a PPP loan of $404, 221. The PPP Loan matures on May 4, 2022, being two years from the funding date of the PPP Loan, and bears interest at a rate of 1.00% per annum. The PPP Loan is unsecured and is guaranteed by the SBA.
- All or a portion of the PPP Loan may be forgiven by the SBA upon application accompanied by documentation of expenditures in accordance with SBA requirements under the PPP, which includes employees being kept on the payroll for eight weeks after the date of the PPP Loan and the proceeds of such PPP Loan being used for payroll, rent, mortgage interest or utilities.
BSTG is a +92% foreign national, Chinese -stock owned company, so WHY should American taxpayers be subsidizing this company led by green card employees; who announced salary cuts so, a senior director scientist quit, which also has ramifications to a research award which could be put in play and cost the company. PLUS, BSTG JUST raised $1 million from warrant execution.
- So, WHY again do they deserve American taxpayer support?
Remember, the promissory note contains various certifications and agreements related to the PPP, as well as customary default and other provisions. Federal investigation needed …
- From Wednesday’s pre-open, “NO management with past biotech experience, is paying more for two (2) past executive’s “resignations” while a director and senior scientist sought the “door” after PPP loans were advanced to protect employees until, BSTG announced salary cuts then one critical scientist resigned). NO financial officer but, a previous employee, now a consultant who walked out without notice yet, agreed to sign the 8-K and 10-Q in return for a June ending agreement. The interim CFO walked away as BSTG’s president “interfered with the (then) on-going audit. Who could make this up and there is more and more to come?
Facts are irrefutable as is the First amendment has power in the United States
Sell into Strength and some weakness:
- Adverum Biotechnologies (ADVM) closed down -$0.59 to $23.32 and has a negative -$0.32 or -1.27%;
- Alnylam Pharmaceuticals (ALNY) closed up +$4.68 to $156.44 and has a negative -41.99 or -1.27% aftermarket indication and a 52-week change of +113.51% - skim and trim;
- Athersys (ATHX) closed up +$0.66 to $2.88 and has a positive +$0.02 or +0.69%. ATHX is “sloppy”, up, down, round and down – NO sustainability and always on the edge;
- Editas Medicine (EDIT) closed up +$0.68 to $31.41 and has a negative -$0.16 or -$0.57% aftermarket indication. Almost 7 million shares just got added to the float;
- Fate Therapeutics (FATE) closed up +$2.13 to $35.23 and has a negative -$0.88 or -2.565 aftermarket indication. Another “Icarus” flyer that dips into the sea of volatility;
- Pluristem (PSTI) closed up +$0.81 to $9.11 and has a negative -$0.04 or -0.44% aftermarket indication;
- Regenxbio (RGNX) closed up +$3.13 to $38.44 and has a negative -$1.02 or -2.64% aftermarket indication;
- Brainstorm Cell Therapeutics (BCLI) closed up +41.36 to $11.72 and has a positive +$0.43 or +3.67% after market indication – flies high and the dips;
- ReNeuron (RENE.L) closed up +$4.00 to $136.50 after Wednesday’s 132.50 and is DOWN -$0.10 to $136.40 on Wednesday’s news of a new research evaluation agreement with a major U.S. biotechnology company in connection with the use of RENE.L's proprietary exosomes for the delivery of novel gene silencing therapeutics.
- Cellectis SA (CLLS) closed up +$0.25 to $18.54 and has a positive +$0.46 or +2.48% aftermarket indication;
- uniQure NV (QURE) closed down -$13.69 to $49.22 on I thought a CSL Behring licensing deal of cash ($450 million) upfront and royalty stream (potential $2 billion) and has a positive +$0.40 or +0.81%. QURE will still be responsible for taking the therapy through a P3 trial. Since the start of the year, QURE's stock has declined 12.2%, shares of CSL have gained 4.6%, and the S&P 500 is down 5.6%.
The BOTTOM LINE: Always trim positions, never totally sell all - cash out the upsides
Biotech stock valuations are largely based on the discounted net present value of earnings many years out … when therapies get approved. What happens over the next 12 months is a cat-and-mouse game of volatility versus valuations under the cloud of Q2 results and the sunshine of clinical results i.e. news.
It was written WELL by others, “This is not a time when you need to rush into the markets for fear of missing out. Wait for price. Get out of trades and positions you are not certain about. But don’t touch core long-term positions. A disastrous long-term recession does not appear to be in the cards. Be wary of using margin. Slowly raise some cash or keep some on hand.”
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.