August 19, 2022 6:52pm

All week the advance/decline (A/D) lines deteriorated as Friday’s $2.3 trillion options expiration removed critical support for stocks

Pre-open indications: 6 HIT and 1 MISS

WHY and HOW is this market affecting the cell and gene therapy sector … “The Bottom Line” underlines the framework of share pricing actions.  Who else is tracking a broad grouping of cell and gene therapy equities – can you afford to not read facts supported by real numbers?

No tunnel vision here, I get into the weeds of daily share pricing and causes

The week in review - what happened and to whom, the root metrics

TGIF

If I have learned one thing as a former research analyst, venture and public fund investor now a journalist; it is that your life and your bank account are largely tied to your knowledge of price movements and questioning pricing targets.

 

The Dow closed DOWN -292.30 points (-0.86%); the S&P closed DOWN -55.26 points (-1.29%) while the Nasdaq closed DOWN -260.13 points (-2.01%)

 

Henry’omics:

Indexes tumbled on Friday as the summer rally appeared to falter, reviving rate hike fears and putting the major averages ended the week on a sour note.

$2 trillion notional value worth of options contracts expired on Friday. Options expirations can add volatility to markets as some holders may be forced to move into their positions.

For the week, the S&P 500 was last down 1.21%, while the Dow slipped -0.16% while the Nasdaq is closed the week -2.62%.

 

RegMed Investor’s (RMi) Pre-Open: “the cell and gene therapy sector begs for direction on option expiration Friday. Review the highs of the 2021 advancing into 2022 and the continuing share pricing downfalls; will coming higher interest rates choke off even more of the upside in the market and reflexively cell and gene therapy sector” …  https://www.regmedinvestors.com/articles/12570

 

RegMed/Stem/Cell and Gene Therapy’s 35 covered equities’ Advance/Decline (A/D) lines: what happened …

  • Friday’s advance/decline line opened negative at 0 up/ 34 down and 1 flat, stayed negative with 4 up/30 and 1 flat at the mid-day, ending with a negative close of 5/29 and 1 flat.
  • Thursday’s advance/decline line opened negative at 6 up/ 28 down and 1 flat, stayed negative with 5 up/28 and 2 flats at the mid-day, ending with a negative close of 14/20 and 1 flat.
  • Wednesday’s advance/decline line opened negative at 1 up/ 30 down and 4 flats, stayed negative with 5 up/30 and 0 flat at the mid-day, ending with a negative close of 6/29 and 1 flat.
  • Tuesday’s advance/decline line opened negative at 6 up/ 35 down and 1 flat, stayed negative with 10 up/24 and 1 flat at the mid-day, ending with a negative close of 7/25 and 3 flats.
  • Monday’s advance/decline line opened negative at 14 up/ 20 down and 1 flat, flipped negative with 20 up/14 and 1 flat at the mid-day, ending with a positive close of 26/8 and 1 flat.

 

Pre-open Indications: 6 HITs < Biostage (BSTG $0.00 with 37 shares traded), Sell into Strength: BioLife Solutions (BLFS -$1.01), uniQure NV (QURE -$0.17), CRISPR Therapeutics (CRSP -$3.55), Editas Medicine (EDIT -$1.22), Voyager Therapeutics (VYGR -$0.27)> 1 MISS <Ultragenyx (RARE +$0.36)>

 

Key Metrics: low volume is a problem ...

  • Friday - Sector volume was LOW with 2 of the 5-upside having higher than the 3-month average volume with LOW volume of 2 of 29-downside having higher than the 3-month average volume;
  • Thursday - Sector volume was LOW with 2 of the 14-upside having higher than the 3-month average volume with LOW volume of 5 of 20-downside having higher than the 3-month average volume;
  • Wednesday - Sector volume was HIGH with 3 of the 6-upside having higher than the 3-month average volume with LOW volume of 9 of 28-downside having higher than the 3-month average volume;
  • Tuesday - Sector volume was HIGHER with 4 of the 7-upside having higher than the 3-month average volume with LOW volume of 9 of 25-downside having higher than the 3-month average volume;
  • Monday - Sector volume was LOW with 5 of the 26-upside having higher than the 3-month average volume with LOW volume of 3 of 8-downside having higher than the 3-month average volume;

The iShares NASDAQ Biotechnology (IBB) and the SPDR S&P ETF (XBI) indicators:

  • Friday, the IBB was down -1.27% and the XBI was down -1.80%
  • Thursday, the IBB was down -1.13% and the XBI was down -0.78%
  • Wednesday, the IBB was down -1.95% and the XBI was down -3.01%
  • Tuesday, the IBB was down -1.36% and the XBI was down -2.49%
  • Monday, the IBB was up +1.74% and the XBI was up +1.19%

The CBOE Volatility Index (VVIX: INDEX) tracked:

  • Friday was up +1.04 points or +5.32% at 20.60
  • Thursday was down -0.38 points or -1.91% at 19.52
  • Wednesday was up +0.42. points or +1.63% at 20.01
  • Tuesday was down -0.40 points or -1.50% at 19.65
  • Monday was up +0.30 points or +1.54% at 19.83

 

Jumping with share pricing momentum (5 of 5):

  • Ultragenyx (RARE +$0.36 after Thursday’s +$1.42, Wednesday’s -$2.06, Tuesday’s -$1.89 and Monday’s -$0.37),
  • bluebird bio (BLUE +$0.16 after Thursday’s -$0.97 and Wednesday’s +$0.20),
  • Chinook Therapeutics (KDNY +$0.11 after Thursday’s +$0.14, Wednesday’s -$0.83 and Tuesday’s +$1.49),
  • Solid Biosciences (SLDB +$0.03),
  • Brainstorm Cell Therapeutics (BCLI +$0.015),

Flat (1):

  • Biostage (BSTG)

Closing down (10 of 29):

  • Alnylam Pharmaceuticals (ALNY -$7.48 after Thursday’s +$0.32, Wednesday’s -$5.02, Tuesday’s -$2.86 and Monday’s -$2.84),
  • Beam Therapeutics (BEAM -$4.29 after Thursday’s -$1.98 and Wednesday’s -$4.00),
  • CRISPR Therapeutics (CRSP -$3.55 after Thursday’s +$0.41, Wednesday’s -$4.11, Tuesday’s -$4.29 and Monday’s +$1.48),
  • Verve Therapeutics (VERV -$2.07 after Thursday’s -$0.57, Wednesday’s -$1.05, Tuesday’s -$0.69 and Monday’s +$2.27),
  • Fate Therapeutics (FATE -$1.26),
  • Editas Medicine (EDIT -$1.22 after Thursday’s -$0.38, Wednesday’s -$1.02, Tuesday’s -$1.12 and Monday’s -$0.31),
  • BioLife Solutions (BLFS -$1.01 after Thursday’s +$1.02, Wednesday’s -$2.62, Tuesday’s -$0.66 and Monday’s +$1.42),
  • Vericel (VCEL -$0.57 after Thursday’s +$1.08),
  • AxoGen (AXGN -$0.44 after Thursday’s -$0.28),
  • Regenxbio (RGNX -$0.38 after Thursday’s +$0.43),

 

August, Q3/2022:

  • Friday closed negative with 5 incliner, 29 decliners and 1 flat
  • Thursday closed negative with 14 incliner, 20 decliners and 1 flat
  • Wednesday closed negative with 6 incliner, 28 decliners and 1 flat
  • Tuesday closed negative with 7 incliner, 25 decliners and 3 flats
  • Monday closed positive with 26 incliner, 8 decliners and 1 flat

 

The BOTTOM LINE: I try to keep it simple … and short!

Sector pulled back four (4) sessions this week while the stock market rally started off the week moving toward or above key resistance, but ultimately retreated entirely on Friday.

Friday's monthly options expiration should also make way for greater short-term stock market moves as options positions expire,

bluebird bio’s (BLUE) approval of Zynteglo popped Friday a hair (+$0.16) after Thursday’s -$0.97 re its pricing which COULD be an ISSUE for other and coming gene therapy therapies.

  • Reiterating, “BLUE’s therapy Zynteglo and questions of costs. Some history re pricing: Novartis in 2019 was forced to offer discounts and work out "outcome-based" installments payments for its $2.1 million therapy Zolgensma after insurers balked at the drug's price. BLUE expects to start the treatment process for patients in the fourth quarter. No revenue is, however, expected from the therapy in 2022 as the treatment cycle would take an average of 70 to 90 days from initial cell collection to final transfusion.” <Reuters>

There are really three camps, electronic algorithms, traders versus investors who STILL don’t comprehend if the worst is behind us and those “entities” that continue to buy into selloffs.

It was expected to see the magnitude of the lack of EPS strength in Q2 and after the prior quarter (Q1) in the face of the difficulty that investors are facing in the inflation continuum of soon to be experiencing rising rate environment which is about to get worse!

The cell and gene therapy sector is STILL experiencing the “flight of Icarus” …  since “our” universe have oscillated between gains and losses since the first of the year!

There are ONLY net and per share losses in Q2. SG&A’s are, I believe “OUT-OF-CONTROL”, CEOs are skimming shareholders with HIGH salaries and perks as share pricing gets hammered on alternate sessions.

The real question is how recently have CEOs bought-into their depreciated share pricing such as two: AVRO and AGTC.

As I have “noticed” yet again from to date reporting, “Most reporting sector companies … to date have reported net losses, lagging revenue estimates … although AXGN, FATE, RGNX, FIXX and NTLA beat on revenues generating forward motion while ATM use is up.”

 I am also NOT convinced that the lows are in the cell and gene therapy sector are behind us.”

The coming weeks of August will reveal more about the cell and gene therapy sector's state of health.

I find it very interesting to evaluate share price over earnings and a shortage of revenue reporting as a proxy for share pricing performance.

I stick to my view of anticipating the risks – as my careers focus has been “warning analysis”.

 

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.

Regulation Analyst Certification (Reg AC): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.