September 20, 2022 4:47pm
All eyes are on the Fed’s policy decision on Wednesday
News: Avrobio (AVRO -$0.0269 or -3.36%) announced Rare Pediatric Disease Designation and Voucher Program and STILL drops as the FDA has granted rare designation to AVR-RD-04, an investigational gene therapy for the treatment of cystinosis, a life-threatening disease that causes progressive multi-organ damage, including early, acute kidney disease progressing to end-stage kidney disease. Good news is bad news in RESPONSE to share pricing!
Pre-open indications: 1 HIT and 2 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?
If I have learned one thing as a former research analyst in a venture and public fund 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 -313.45 points (-1.01%) the S&P closed DOWN -43.96 points (-1.13%) while the Nasdaq closed down -109.97 points (-0.95%)
Indexes slid and pared their losses in the final hour on Tuesday as the Fed kicked off its September policy meeting and stocks braced for another large rate hike due out Wednesday.
The Nasdaq retreated as investors have blamed Tuesday's market ructions on rising Treasury yields.
A serious quote to be truly considered, “The ‘70s are coming back in a big way, and while that’s not so bad in fashion or in music, it’s safe to say that no one really wants that ‘70s economy back.
· That was the decade that brought stagflation, a nasty mix of high inflation, increasing unemployment, and stagnant job growth. Economists had long thought that combo impossible, but the economic mismanagement of the Carter Administration proved them wrong.
· Mohamed El-Erian from Allianz, sees a stagflationary period on the way, in the form of a global economic crash that few nations will escape unharmed.
· As El-Erian sees it, inflation is too high, and the Fed’s interest rate hikes to curb it are insufficient; the hikes are more likely to choke off growth while forcing a contraction of the labor force. The result: a near-term of rising prices, rising unemployment, and slow to nonexistent GDP growth, or in a word, stagflation.
· “Lower US growth and a late #Fed forced to raise 75 basis points for a record third consecutive time are consistent with global stagflationary tendencies. Wouldn't surprise me to see further growth revisions,” El-Erian wrote.
Economic data Docket: Housing market data released showed an unexpected jump in starts for August, although building permits saw the biggest decline since April 2020.
- The Federal Open Markets Committee began its two-day policy meeting today, where central bankers are expected to announce a 0.75 percentage point rate hike on Wednesday.
Largest volume of the session:
- bluebird bio (BLUE) +21.503 million shares traded (+$0.93) after Monday’s -30.962 million share traded (-$0.41 or -6.47%) – EXPECT an offering!
RegMed Investor’s (RMi) Pre-Open: “RegMed Investors’ (RMi) pre-open: the limbo dance, how low can the cell and gene therapy sector go and inflation “readings”? The bar is getting lower … as investors ditch vaccine stocks after Biden says pandemic is over waiting for the Fed to sing” … https://www.regmedinvestors.com/articles/12611
RegMed/Stem/Cell and Gene Therapy’s 35 covered equities’ Advance/Decline (A/D) lines: what happened …
- Tuesday’s advance/decline line opened negative at 3 up/ 32 down and 2 flats, stayed negative with 14 up/20 down and 1 flat at the mid-day, ending with a negative close of 9/26 and 0 flat.
Pre-open Indications: 1 HITs <Biostage (BSTG -$0.10 with 2,300 shares traded)> 2 MISS < BioLife Solutions (BLFS +$0.91) Ultragenyx (RARE -$0.48)
- Tuesday - Sector volume was LOW with 2 of the 9-upside having higher than the 3-month average volume with LOW volume of 5 of 26-downside having higher than the 3-month average volume
The iShares NASDAQ Biotechnology (IBB) and the SPDR S&P ETF (XBI) indicators:
- Tuesday, the IBB was down -1.03% and the XBI was down -0.29%
The CBOE Volatility Index (VVIX: INDEX) tracked:
- Tuesday was up +1.44 points or +5.59% at 27.20
Jumping with share pricing momentum (9 of 9):
- CRISPR Therapeutics (CRSP +$1.31 after Monday’s -$1.71),
- bluebird bio (BLUE +$0.93 after Monday’s -$0.41),
- BioLife Solutions (BLFS +$0.91 after Monday’s +0.64),
- Chinook Therapeutics (KDNY +$0.40 after Monday’s -$0.87),
- Caribou Biosciences (CRBU +$0.26),
- AxoGen (AXGN +$0.09),
- Brainstorm Cell Therapeutics (BCLI +$0.04 after Monday’s -$0.25),
- Precigen (PGEN +$0.04),
- Editas Medicine (EDIT +$0.03 after Monday’s +$0.14),
Closing down (10 of 26):
- Alnylam Pharmaceuticals (ALNY -$3.99 after Monday’s +$3.00),
- Fate Therapeutics (FATE -$1.06 after Monday’s +$0.31),
- Intellia Therapeutics (NTLA -$0.94 after Monday’s -$2.24),
- Sage Therapeutics (SAGE -$0.89 after Monday’s +$1.55),
- Ultragenyx (RARE -$0.48),
- Regenxbio (RGNX -$0.39 after Monday’s -$0.24),
- Vericel (VCEL -$0.38),
- Beam Therapeutics (BEAM -$0.31 after Monday’s -$2.33),
- Ionis Pharmaceuticals (IONS -$0.24 after Monday’s +$0.41),
- Global Blood Therapeutics (GBT -$0.22 after Monday’s +$0.41),
- Tuesday closed negative with 9 incliner, 26 decliners and 0 flat
- Monday closed negative with 9 incliner, 26 decliners and 0 flat
The BOTTOM LINE: The sector ended the day in the RED - again!
Cell and gene therapy equities finished LOWER on Monday and Tuesday, as investors braced for a key Fed’ rate decision that is likely to be echoed by major central banks in Europe and Asia.
I try to keep it simple … and short!
From yesterday, “With investors now increasingly pricing-in the prospect of a U.S. recession, and more and more companies warning on the impact of fading demand and surging input costs, traders and investors will be keenly focused on any suggestion that Powell may alter the Fed's inflation fight in order to avoid longer-term damage to the world's biggest economy.” <The Street>
September continued with 1 holiday, 7 positive and 5 negative closes; August is over with 1 neutral, 11 positive and 11 negative closes while last week which ended the month.
As I continually question, “The real question that should be asked is how many companies are at the end of sentiments … leash?
Start by looking at cell and gene therapy companies trading below cash!”
Repeating myself, “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.