July 29, 2020 8:08am

As I characterize the mitigating factors of share pricing

Pre-open indications: 3 BUYs and 1 SELL < another Biostage (BSTG) Chronicle offers 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? 

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Dow futures are UP +0.06% (+17 points), S&P futures are UP +0.18% (+6 points) and NASDAQ futures are UP +0.48% (+50 points)

 

Stock futures were fluctuating on the low side early Wednesday as investors await a congressional hearing on antitrust and the latest corporate earnings results and the Fed’s policy decision;

European stocks were flat as countries around the world report rises in new coronavirus cases with the pan-European Stoxx 600 hovered just below the flatline in early trade;

Asia Pacific stocks were mixed as shares in mainland China led gains among the region’s major markets as investors awaited the U.S. Fed’s interest rate decision and the MSCI Asia ex-Japan index rose 0.13%.

 

Data Docket: 8:30 a.m. Advanced economic indicators, 10:00 a.m. Pending home sales, 2:00 p.m. FOMC statement and 2:30 p.m. Fed Chairman Jerome Powell briefing

  • The fed is expected to keep short-term interest rates unchanged at near zero to support the economy still struggling with the coronavirus pandemic. Yesterday, the Fed announced it would extend its emergency lending programs through the remainder of 2020.

 

Henry’omics:

The busiest week of corporate earnings rolls-on as we wait for Thursday release of Ultragenyx (RARE) expectation beat or miss.

In my view, the upcoming stimulus payments and increasing government debt is keeping markets strong for now; its effect as we will be paying it down later – will be tortuous .

Tuesday night’s post title - a recap: “the sector trimmed the ballast while the market was distressed as momentum was thrown overboard”

  • The NASDAQ closed DOWN -134.18 points (-1.27%)
  • The IBB closed down -1.35% and XBI also closed down -2.55%
  • Sector volume was LOW with x of the 6-upside having higher than the 3-month average volume and x out of the 27-downside having higher than the 3-month average volume;
  • The CBOE Volatility Index (VVIX: INDEX) was up +0.86 points or +3.48% at 25.59;
  • Tuesday’s percentage (%) of the 6-upside were +0.31% (GBT) to +4.44% (RENE.L) while the 27-downside ranged from -0.32% (BLUE) to -9.64% (SGMO); 

Last five (5) sessions:

  • Tuesday closed negative with 6 advancers, 27 decliners and 2 flats
  • 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
  • Last Wednesday closed negative with 12 advancers, 22 decliners and 1 flat

 

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

Maintaining Sell:

Biostage (BSTG); Is there an issue of compliance and completeness in the IND filing to the FDA and are there other questions that exist …

  • Have medical monitors and designated oversight roles for the clinical trial parts of the IND been fulfilled and contracts initiated?
  • Has BSTG fulfilled the spirit of the filing and proper notifications to the FDA re FINANCIAL DISCLOSURE PAGES of registered and unregistered stock ownership of involved parties?  The CEO of Connecticut Children owning shares, while sitting on the BOD of Biostage as a director, the Connecticut Children’s owning shares (and executing warrants) as well as the principal investigator, Dr. Christine FINCK, MD also owning shares.
  • The hospital is also the grantee of a $1 million dollar gift from BSTG initiated 5/19 /17 of which approximately $429,500 (bill dated and due 2/29/2020 was due) after a $25,000 payment on 7/10/19 with $570,500 paid to date;
  • Biostage (BSTG) is all but, BROKE with a limited capacity to raise further funds from accredited U.S. investors yet, it had GIFTED $1 million dollars it didn’t have to pay the final $429,500.00 amount due? Conflict … and has this liability been carried on the “books” or appropriately lost or surprisingly temporarily “deferred”?
  • Has the principal investigator, Dr. Christine Finck, MD disclosed shares personally owned and whose lab was funded by multiple levels of spending and reimbursements from BSTG.

From a past front page of the NY Times in a similar circumstance, “a VP of Memorial Sloan Kettering Cancer Center got caught in the light of an ethics scandal regarding a for profit stock holdings and industry conflict while representing the hospital on a biotech BOD and receiving stock options whose valued soared, employees have been barred from accepting compensation while representing their institutions on a corporate board. Also, the hospital itself had an equity stake which it had to disgorge.”

  • Has the major investor Mrs. bin Zhou INFORMED her investors in Biostage (BSTG) of many of those issues that have come out?
  • Has James Shmerling, BSTG’s BOD member placed the IND, himself, Connecticut Hospital and BSTG in a precarious position by NOT disclosing his personal BSTG holdings, the hospital’s holdings and the principal investigator’s personal holding of shares or stake in BSTG to the FDA when the IND was filed.
  • Has Jason Chen, the chairman of the Board condoned these transactions having been made aware of these many “challenges”?

Questions NEED answers … these issues NEED to be transparent … also do these events constitute a need of oversight by regulatory bodies like U.S. Department of Health and Human Services, Office of the Inspector General (OIS) that oversees the FDA?

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

 

BUY:

CRISPR Therapeutics (CRSP) closed down -$5.72 to $86.40 after Monday’s +$1.77, Friday’s -$0.45, Thursday’s -$2.17 and last Wednesday’s $92.97. CRSP has a positive +$2.14 or +2.48% aftermarket indication after an earnings and revenue miss;

Editas Medicine (EDIT) closed down -$1.50 to $30.20 after Monday’s +$1.82 and has a positive +$0.54 or +1.79% aftermarket indication;

Sangamo Therapeutics (SGMO) closed down -$1.07 to $10.03 after Monday’s $11.10 and last Friday’s $10.75 and has a positive +$0.02 (was +$0.17) or +0.20% (was +1.69%) aftermarket indication

 

SELL:

Brainstorm Cell therapeutics (BCLI) closed down -$0.57 to $14.93 after Monday’s $15.50 and Friday’s $15.59 and has a negative -$0.08 or -0.54% aftermarket indication;

 

The BOTTOM LINE: An earning’s beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earning’s beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earning’s miss.

Q2 “numbers” are being compiled; some say masking the “motion” of pricing – think electronic trading and algorithms pursuing their capacity of emotionless profit taking

The match of expectation and forecasts is about to play out for “our” universe.

The next release is Ultragenyx Pharmaceuticals (RARE) on 7/30.

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

Expectation versus forecasts will be the theme of Q2’s earnings’ season.

Even if some RegMed/cell and gene therapy companies manage to exceed expectations, the overall picture remains bleak as many companies have been shuttered with employees working from home “zooming” for corporate and development interaction.

Thus, my line in writing is separating actionable numbers or intelligence and news into a short-term investment thesis to tackle the “unknown unknowns”

 

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.