July 28, 2020 8:05am
Patterns and quarterly earnings
Pre-open indications: 0 BUYs and 5 SELLs < the Biostage (BSTG) Chronicle offers a cautionary tale of regulatory issues?>
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Dow futures are DOWN -0.57% (-138 points), S&P futures are DOWN -0.39% ( -13 points) and NASDAQ futures are DOWN -0.48% (-51 points)
U.S. stock futures trimmed lower on Tuesday morning ahead of stimulus finale and earnings’ announcements;
European stocks gave back early gains as stimulus efforts overshadowed coronavirus resurgence worldwide as the pan-European Stoxx 600 slid 0.2% by late morning;
Asia Pacific were mostly higher as South Korea led gainers after mainland China, Japan and Australia dipped as the MSCI Asia ex-Japan index added 0.93%.
Data Docket: The Federal Reserve starts its two-day policy meeting on Tuesday, followed by an interest rate decision on Wednesday. The FOMC decided to maintain the target range for the federal funds rate at 0-0.25% at its last meeting in June as it continued to deal with the impact of the coronavirus (COVID-19) pandemic on the U.S. economy.
- The Conference Board’s consumer confidence index for July will be released at 10 a.m. on Tuesday. Economists polled by Dow Jones are expecting a read of 96, down from June’s read of 98.1.
Dow futures pointed to an opening loss of more than 50 points, while S&P 500 futures were little changed. Nasdaq-100 futures still fluctuated.
Senate Majority Leader Mitch McConnell unveiled the Republican coronavirus relief plan Monday after the bell. The legislation would include relief for jobless Americans, another direct payment to individuals of up $1,200, more Paycheck Protection Program small business loan funds, among other provisions. McConnell said the bill would set federal unemployment insurance at 70% of a worker’s previous wages, replacing the $600 per week which states stopped paying out this week. <CNBC>
Monday night’s post title - a recap: “the sector was stirred, not shaken. Don’t drink the <market’s> Kool-Aid, time to eat the olive, sip a real drink and close the tab”
- The NASDAQ closed UP +173.09 points (+1.67%);
- The IBB closed up +2.67% and XBI also closed up +2.59%
- Sector volume was LOW with 3 of the 22-upside having higher than the 3-month average volume and 3 out of the 11-downside having higher than the 3-month average volume;
- The CBOE Volatility Index was down -1.10 points or -4.26% at 24.74;
- Monday’s percentage (%) of the 22-upside were +1.64% (RGNX) to +10.01% (MESO) while the 11-downside ranged from -0.58% (BCLI) to -10.53% (SLDB);
Q3’s last four (4) sessions:
- Monday (7/27) closed positive with 22 advancers, 11 decliners and 2 flats
- Friday closed negative with 7 advancers, 27 decliners and 1 flat
- Thursday closed negative with 4 advancers, 29 decliners and 2 flats
- Wednesday closed negative with 12 advancers, 22 decliners and 1 flat
- Last Tuesday closed negative with 10 advancers, 24 decliners and 1 flat
Companies in my headlights – It’s your decision; I provide an idea and context:
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 is 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, 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 of oversight by regulatory bodies?
Facts are irrefutable and the First amendment of the U.S. Constitution protects American’s free speech.
SELL into Strength:
Adverum Biotechnologies (ADVM) closed up +$0.43 to $17.64 after Friday’s -$0.06, Thursday’s $17.27, Wednesday’s $17.38 and last Tuesday’s +$16.78 with a 52-week high of $26.98, a low of $4.96 and a 52-week change of +23.37%. chart looks “peaky”;
CRISPR Therapeutics (CRSP) closed up +$1.77 after Friday’s -$0.45, Thursday’s -$2.17, Wednesday’s $92.97 and last Tuesday’s $93.55. CRSP has a negative -$3.45 or -4.07% aftermarket indication after an earnings and revenue miss;
Mesoblast (MESO) closed up +$1.25 to $13.74 after Friday’s +$0.17 to $12.49, Thursday’s -$0.12 to $12.32, Wednesday’s $12.44 and last Tuesday’s $12.30 and has a positive +$0.06 or +0.44% aftermarket indication
Homology Medicine (FIXX) closed up +$0.26 to $15.03 after Friday’s -$0.53 to $14.77, Thursday’s -$0.74 to $15.30, Wednesday’s $16.04 and last Tuesday’s $16.48 and has a positive +$0.12 or +0.80% aftermarket indication;
The BOTTOM LINE: The match of expectation and forecasts is about to play out for “our” universe.
The stage was set by Q2 sector results with CRISPR Therapeutics (CRSP) missing expectation; the next is 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.
An OPINION, I am a BIG fan of Jim Chanos of Kynikos Capital Partners (hedge fund); “He claimed we’re in a “golden age of fraud,” describing the current market climate as rife with euphoria, FOMO and Trumpian “post-truth” politics — “a really fertile field for people to play fast and loose with the truth, and for corporate wrongdoers to get away with it for a long time,” he said.”
For which I have called-out Biostage (BSTG)!
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.