February 27, 2023 5:11pm

Is it worth the risk to buy cell/gene therapy sector equities; while interest rates are driving stock values - NOT until the earnings’ season reaps what it has sone

Back from a short vacation and brief escape from market and sector 'forces" of a long weekend with 80 degree temperatures having also been reminded of an obstruse concept known as the “equity risk premium”

I write this blog/newsletter to inform investors with facts and supporting numbers focused on what they need to hear that others won’t say or write about - truth!  

Subscription is coming, it’s not conscription but, an offer to join our collective of like-minded investors!  Join me … in the NO spin zone.

 


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 portfolio are largely tied to your knowledge of price movements and questioning pricing targets.

 

The Dow closed UP +72.23 points (+0.22%); the S&P closed UP +12.27 points (+0.31%) while the Nasdaq closed UP+72.04  points (+0.63%)

 

Henry’omics:

We need to more than consider the economic environment - rising rates and inflation to comprehend the micro re “our” universe of cell and gene therapy companies …

Indexes rose Monday as traders tried to recover some ground following the worst week of the year.

A title definition, ”What Is Equity Risk Premium?"

·         From the term equity risk premium refers to an excess return that investing in the stock market provides over a risk-free rate. This excess return compensates investors for taking on the relatively higher risk of equity investing.”

·         Inflation's varying impact on stocks tends to increase the equity market volatility and risk premium.

·         The equity risk premium helps to set portfolio return expectations and determine asset allocation. A higher premium implies that you would invest a greater share of your portfolio into stocks.

·         The five main risks that comprise the risk premium are business risk, financial risk, liquidity risk, exchange-rate risk, and country-specific risk. These five risk factors all have the potential to harm returns and, therefore, require that investors are adequately compensated for taking them on.

·         What happens when equity risk premium increases?  If the risk premium rises, investors are doubtful about a country's ability to repay its debts. The higher interest rate makes it more expensive for a country to raise money, as it pays a higher interest on its debt.

 

Economic Data Docket: Durable goods orders fell in January as consumers pulled back spending on big-ticket items.

  • New orders for manufactured durable goods in January plunged to 4.5%, the biggest drop since April 2020, the Census Bureau reported. The drop was more pronounced than economist estimates of 4.0%.
  • The National Association of Realtors’ index of pending home sales climbed 8.1% to 82.5 in January, higher from the projected estimate of 1.0%.

 

RegMed Investors (RMi) Research Note: Q4 and FY22 earnings reporting … https://www.regmedinvestors.com/articles/12843

RegMed Investors (RMi) Research Note: Upcoming Q4 earnings reporting dates … https://www.regmedinvestors.com/articles/12830

 

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

  • Monday’s advance/decline line opened positive at 26 up/ 8 down and 1 flat, stayed positive with 25 up/ 8 down and 3 flats at the mid-day, ending with a positive close of 26/8 and 1 flat

 

Key Metrics:

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

  • Monday, the IBB was up +0.36% and the XBI was up +0.87%

The CBOE Volatility Index (VVIX: INDEX) tracked:

  • Monday was down-0.68 points or -3.14% at 20.99

 

Closing Down (8 of 8):

  • Ultragenyx (RARE +$0.66),
  • Solid Biosciences (SLDB -$0.29),
  • Biostage (OTCQB: BSTG -$0.20),
  • Chinook Therapeutics (KDNY -$0.14),
  • Cellectis SA (CLLS -$0.07),
  • Editas Medicine (EDIT -$0.020
  • Mesoblast (MESO) -$0.02),
  • Agenus (AGEN -$0.010,

Flat (1):

  • Adverum Biotechnologies (ADVM)

Closing Up (10 of 26):

  • Intellia Therapeutics (NTLA +$1.65)
  • CRISPR Therapeutics (CRSP +$1.14)
  • uniQure NV (QURE +$1.04),
  • Regenxbio (RGNX +$0.63)
  • Ionis Pharmaceuticals (IONS +$0.52),
  • BioLife Solutions (BLFS +$0.52),
  • Prime Medicine (PRME +$0.52),
  • Verve Therapeutics (VERV +$0.31),
  • Sangamo Therapeutics (SGMO +$0.30),
  • Alnylam Pharmaceuticals (ALNY +$0.23),

 

Q1/23 – February

  • Monday closed positive with 26 incliner, 8 decliners and 1 flat
  • Friday was a vacation day
  • Thursday was a vacation day
  • Wednesday closed positive with 19 incliner, 15 decliners and 1 flat
  • Tuesday closed negative with 3 incliner, 31 decliners and 1 flat
  • Monday was a holiday

 

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

A very appropriate quote, “You don't do well by trying to be right; it is impossible for humans. You do well by figuring out when you're wrong faster than others do.” <Nassim Nicholas Taleb>

The lower the sector’s equities dive, divines their capacity to rebound!

Reiterating “Investors should recognize inflation may not return to normal levels begetting more volatility and DIPPING and CHOPPY sector share pricing.”

I do NOT believe there aren't a lot of cell/gene therapy companies in position yet – UNTIL earnings (Q4) are reported – any breakout is a false hope with the inevitable downside re-occurring.

Upcoming Q4 earnings reporting will present challenges to share pricing.

·         Chinook Therapeutics (KDNY) - 2/27- Monday

·         Mesoblast (MESO) 2/28 -Tuesday

·         Fate Therapeutics (FATE) 2/28- Tuesday

·         MiMedx (MDXG) 2/28 – Tuesday

·         Regenxbio (RGNX) 2/28 - Tuesday

If you thought of buying on weakness, you might be jumping onto a sinking ship.

I am also catching-up on publishing results of ALNY, VCEL, NTLA, EDIT, QURE and MESO earnings’ releases.

 

There are clear losers today …Ultragenyx (RARE), Solid Biosciences (SLDB) and Biostage (OTCQB: BSTG),

With winners … Intellia Therapeutics (NTLA), CRISPR Therapeutics (CRSP) and uniQure NV (QURE)

 

Biostage (OTCQB: BSTG)

2Wednesday closed down-$0.20 with 382 shares traded. <3-month average volume = 1,320 shares>

·         David Green, CEO and Chairman of Board did accomplish ONE THING – he was able to shift LIABILITY of $5 M death suit (enabled Paolo Macchiarini artificial organ lawsuit) after he made the decision and were PERSONALLY LIABLE to SHAREHOLDERS …???

·         This IND – now almost 4 years old without a clinical trial that will last 3-5 years for ADULT patients before BSTG can EVEN consider a pediatric venue!

·         Question: is OTCQB: BSTG a Ponzi scheme (with their pump/promote buy and sell agenda) as shares are bought to replace those sold??

 

My question that resounds, that should be asked is how many companies are at the end of sentiments …  leash?

 

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.