July 27, 2020 8:17am

It doesn’t pay to get caught on the wrong side of the trade with substantial risks in this time frame

Pre-open indications: 3 BUYs and 4 SELLs <more of the Biostage (BSTG) Chronicle offering a cautionary tale of regulatory issues?>

What I provide is an intelligence daily. Where are the canaries in the sector coal mine, am I the only one? 

Subscription is coming, it’s not conscription but, an offer to join our collective of like-minded investors who make money and for those who read and don’t weep!

 

Dow futures are UP +0.49% (+130 points), S&P futures are UP +0.58% (+19 points) and NASDAQ futures are UP +1.07% (+113 points)

 

U.S. stock futures project a positive open on Monday as investors braced for corporate earnings and lawmakers continue coronavirus stimulus negotiations;

European markets declined as diplomatic tensions between the U.S. and China and travel stocks tumbled after the U.K. imposed quarantine measures on people returning from Spain. The pan-European Stoxx 600 fell 0.5% in early trade;

Asia Pacific markets were mixed and Gold prices surged to record highs. The MSCI Asia ex-Japan index rose 0.74%.

 

Data Docket: 8:30 a.m. Durable goods

 

Henry’omics:

The coming week was already going to be a big test for markets, it’s a busy week of earnings reporting season with only one (1) cell and gene therapy company announcing. Four (4) CEOs are scheduled to face questioning on Capitol Hill over their business practices on Wednesday.

 

Friday night’s post title - a recap: “who or what’s chewing on the bubble; geopolitical tensions, upcoming Q2 results, jobless claims, stalled reopening and renewed shutdowns during the coronavirus epidemic”   

  • The NASDAQ closed DOWN -98.24 points (-0.94%);
  • The IBB closed down -2.19% and XBI also closed down -2.34%
  • Sector volume was LOW with 0 of the 7-upside having higher than the 3-month average volume and 3 out of the 28-downside having higher than the 3-month average volume;
  • The CBOE Volatility Index (VVIX: INDEX) was down -0.24 points or +-0.92% at 25.84 <Friday>;
  • Friday’s percentage (%) of the 7-upside were +0.11% (RGNX) to +5.80% (VSTM) while the 28-downside ranged from -0.35% (ADVM) to -15.03% (BSTG); 

Q3’s last four (4) sessions: pattern or trend?

  • Friday closed negative with 7 advancers, 27 decliners and 1 flat
  • Thursday closed negative with 4 advancers, 29 decliners and 2 flats
  • Tuesday closed negative with 10 advancers, 24 decliners and 1 flat
  • Wednesday closed down with 12 advancers, 22 decliners and 1 flat
  • Last Monday (7/20) closed positive with 24 advancers, 10 decliners and 1 flat

 

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

Maintaining Sell:

Biostage (BSTG):  I, Henry McCusker, a FORMER consultant of Biostage (BSTG) acknowledge that 400, 000 non-public non –registered shares (priced at $3.70) were gifted and granted by Mrs. Bin Zhou of DST Capital … to ME!

  • When I went to validate the history/background on these shares “gifted and granted”, the former VP of Finance who walked out after giving notice and now current consultant/VP of Finance would NOT provide ANY CUSIP numbers of the restricted and unregistered share certificates.

I REFUSED (after much deliberation and consultation with others) to pursue these restricted and unregistered shares carrying a $2.00 option … as restricted shares, are not registered with the Securities and Exchange Commission (SEC).

Should Mrs. bin Zhou be interviewed by regulatory bodies to validate the past award and the particulars of these stock placements?

•             These securities are usually issued through private placements, Regulation D offerings

•             Selling unregistered shares is typically considered a felony (from government regs), but there are exceptions to this rule. SEC Rule 144 lays out the conditions under which unregistered shares may be sold: a few are …

•             They must be held for a prescribed period;

•             There must be adequate public information about the security’s historical performance;

•             The sale must be of less than one percent (1%) of shares outstanding and less than one percent (1%) of the previous four weeks’ average trading volume;

•             All normal trading conditions that apply to any trade must be met;

•             Sales of more than 500 shares or more than $10,000 worth of shares must be pre-registered with the SEC. An exception to this condition occurs if the seller is not associated with the company that issued the unregistered shares (and has not been associated with it for at least three months) and has owned the shares for more than one year;

Issues effecting the pricing of shares:

•             Claims of an IND filing with NO financial responsibility reporting and pricing of $3.70 based on what or which valuation model (or if it actually existed) with the appropriate risk definitions;

•             Unregistered investment professionals without a series #7 license “pushing” sale of securities;

•             Problems with sales documents – an on-going issue – that I have NEVER EVER seen; nor were ever provided!

•             All the while, Biostage (BSTG) is STILL not in good standing with a “going concern” designation;

•             There is an issue re unsolicited investment offers to U.S and foreign national individuals - checks were sent to and cashed to Mrs. bin Zhou’s account.

Which brings up a question of legal and regulatory and legitimacy of gifting for re-selling these restricted and unregistered shares by Mrs. Bin Zhou?

  • Copies of multiple checks received and deposited to Bank of America by Mrs. Bin Zhou “signature” checks and deposit slips from a local US investor do exist (!), do they pass the regulatory net worth test, definition of risk parameters that underscore the “going concern” issue of Biostage as a public company?

Do these events constitute a need oversight by regulatory bodies?

Facts are irrefutable and the First amendment of the U.S. Constitution protects American’s free speech.

 

Maintaining SELL:

Solid Biosciences (SLDB) closed down -$0.07 to $2.85 and has a negative -$0.15 or -5.26% aftermarket indication following news from the FDA that the IGNITE DMD P1/2 clinical trial remains on clinical hold;

Adverum Biotechnologies (ADVM) closed down -$0.06 to $17.21 after Thursday’s $17.27, Wednesday’s $17.38 after Tuesday’s +$16.78 and Monday’s $17.38 with a 52-week high of $26.98 and low of $4.96. chart looks “peaky” and has a negative -$0.09 or -0.50% aftermarket (Friday> indication;

Brainstorm Cell Therapeutics (BCLI) closed down -$0.24 to $15.59 after Thursday’s+$0.08 to $15.83 after Wednesday’s +$0.21 ($15.75) after Tuesday’s +$0.07 ($15.54) and last Monday’s +$0.89 ($15.47) and has a negative -$0.39 or -2.50% aftermarket <Friday> indication;

CRISPR Therapeutics (CRSP) closed down -$0.45 to $90.35 after Thursday’s -$2.17 to $90.80 after Wednesday’s $92.97, Tuesday’s $93.55 and Monday’s +$95.30. CRSP has a negative -$0.40 or -0.44% aftermarket indication;

 

SELL to BUY:

Mesoblast (MESO) closed up +$0.17 to $12.49 after Thursday’s -$0.12 to $12.32, Wednesday’s $12.44, Tuesday’s $12.30 and last Monday’s $11.98 and has a positive +$0.24 or +1.92% aftermarket <Friday> indication

Maintaining BUY:

Editas Medicine (EDIT) closed down -$0.45 to $29.88 after Thursday’s +$0.13 to $30.33, Wednesday’s -$0.12 ($30.20), Tuesday’s $30.32, Monday’s $32.56 and last Friday’s $32.23 but, has a positive +$0.62 or +2.07% aftermarket indication;

Homology Medicine (FIXX) closed down -$0.53 to $14.77 after Thursday’s -$0.74 to $15.30, Wednesday’s $16.04, Tuesday’s $16.48 and last Monday’s $16.47 and has a positive +$0.43 or +2.91% aftermarket indication;

 

The BOTTOM LINE: the game of expectation and forecasts are about to play out.

Q2 sector results should start appearing in the last week of July – Ultragenyx Pharmaceuticals (RARE) on 7/30.

The first week of August brings more … AxoGen (AXGN), Ionis Pharmaceuticals (IONS) on 8/5, before Alnylam Pharmaceuticals (ALNY) and Editas Medicine (EDIT) on 8/6 before Athersys (ATHX), Vericel (VCEL), Ionis Pharmaceuticals (IONS) and Sage Therapeutics (SAGE) on 8/10.

LPS (loss-per-share) will be the theme of the earnings’ season.

Even if some RegMed/cell and gene therapy companies manage to exceed expectations, the overall picture remains bleak.

 

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.