October 20, 2023 5:06pm
Post a painful burning of share pricing; algos and electronic trading are sealing the sector preventing further a share pricing bleed
Pre-open Indications: 2 Hits and 2 Miss
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The week in review
The Dow closed DOWN -286.89 points or -0.86%, the S&P closed DOWN -53.84 points or -1.26% while the Nasdaq closed DOWN -202.37 points or -1.53%
I continue to ask “What’s SAFE” … “No one company is immune in the sector and this market of rolling downdrafts? Welcome to my world of defining the “grey’ in our universe!”
Investors are going to need to prepare for another reporting cycle to confirm whether or not any bottoms are even close to happening.
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 dropped on Friday as U.S. Treasury yields hovered near multi-year highs following hawkish remarks by Fed Chair Powell, while the Middle East conflict kept investors jittery.
The 10-year yield hit 5.001% around 5 p.m. ET Thursday, the first time it has traded above that level since July 2007. It was last trading at 4.92%.
All three major indexes suffered weekly losses
RegMed/Stem/Cell and Gene Therapy’s 35 covered equities’ Advance/Decline (A/D) lines: what happened – differences
- Friday’s advance/decline line opened negative at 12 up/ 20 down and 3 flats, flipped negative with 22 incliners, 13 decliners and 0 flat at the mid-day, ending with a negative close of 9 incliners, 25 decliners and 1 flat
- Thursday’s advance/decline line opened negative at 5 up/ 25 down and 5 flats, staying negative with 10 incliners, 24 decliners and 1 flat at the mid-day, ending with a negative close of 5 incliners, 26 decliners and 4 flats
- Wednesday’s advance/decline line opened negative at 10 up/ 22 down and 3 flats, staying negative with 6 incliners, 29 decliners and 0 flat at the mid-day, ending with a negative close of 5 incliners, 30 decliners and 0 flat
- Tuesday’s advance/decline line opened positive at 19 up/ 13 down and 3 flats, staying positive with 20 incliners, 14 decliners and 1 flat at the mid-day, ending with a barely positive close of 17 incliners, 16 decliners and 2 flats
- Monday’s advance/decline line opened negative at 9 up/ 25 down and 1 flat, flipped positive with 18 up/ 16 down and 1 flat at the mid-day, ending with a positive close of 21 incliners, 14 decliners and 0 flat
Pre-open Indications: 2 Hits <BioLife Solutions (BLFS -$0.99), CRISPR Therapeutics (CRSP -$1.16)> and 2 Miss < Beam Therapeutics (BEAM -$0.67), Verve Therapeutics (VERV -$0.36)>
Ebb and flow:
Q4: October – 9 negative and 6 positive closes
· Q3: September – 1 holiday, 8 positive and 12 negative closes
· August – 9 positive and 14 negative closes
· July - 1 holiday, 12 positive and 8 negative close
The iShares NASDAQ Biotechnology (IBB) and the SPDR S&P ETF (XBI) indicators:
- Friday, the IBB was down -0.37% and the XBI was down -0.25%
- Thursday, the IBB was down -1.64% and the XBI was down -2.07%
- Wednesday, the IBB was down -2.10% and the XBI was down -2.56%
- Tuesday, the IBB was down -0.13% and the XBI was up +0.13%
- Monday, the IBB was up +0.55% and the XBI was up +0.83%
The CBOE Volatility Index (VVIX: INDEX) tracked:
- Friday was up +0.13 points or +0.61% at 21.53
- Thursday was up +1.40 points or +7.28% at 20.62
- Wednesday was up +1.85 points or +10.35% at 19.73
- Tuesday was up +0.67 points or +3.89% at 17.88
- Monday was down -2.04 point or -10.56% at 17.28
Closing Down (10 of 25):
- CRISPR Therapeutics (CRSP -$1.16 after Thursday’s -$0.65, Wednesday’s -$3.23, Tuesday’s -$1.15 and Monday’s +$0.50),
- BioLife Solutions (BLFS -$0.99 after Thursday’s -$0.43, Wednesday’s -$0.77, Tuesday’s $0.00 and Monday’s +$0.34),
- Vericel (VCEL -$0.90 after Thursday’s -$0.40, Wednesday’s -$1.18, Tuesday’s +$2.11 and Monday’s +$2.00)
- Beam Therapeutics (BEAM -$0.67 after Thursday’s -$2.44 after Wednesday’s -$1.47),
- Intellia Therapeutics (NTLA -$0.46 after Thursday’s -$0.86, Wednesday’s -$1.09, Tuesday’s -$0.58 and Monday’s -$0.20),
- Ionis Pharmaceuticals (IONS -$0.40 after Thursday’s +$0.58, Wednesday’s -$2.53, Tuesday’s +$0.37 and Monday’s +$0.16),
- Verve Therapeutics (VERV -$0.36 after Thursday’s -$1.30),
- Ultragenyx Pharmaceuticals (RARE -$0.33),
- Prime Medicine (PRME -$0.24 after Thursday’s $0.00),
- Editas Medicine (VYGR -$0.14),
- UniQure NV (QURE)
Closing Up (9 of 9):
- Alnylam Pharmaceuticals (ALNY +$1.29 after Thursday’s -$4.58, Wednesday’s -$0.90, Tuesday’s -$1.27 and Monday’s -$0.87),
- Harvard Apparatus GN (HRGN +$0.81 after Thursday’s $0.00, Wednesday’s -$0.98, Tuesday’s +$0.47 and Monday’s -$0.39),
- Regenxbio (RGNX +$0.25),
- Blueprint Medicine (BPMC +$0.16 after Thursday’s -$2.56, Wednesday’s -$2.05, Tuesday’s +$2.26 and Monday’s +$0.52),
- Sage Therapeutics (SAGE +$0.16 after Thursday’s -$0.98),
- bluebird bio (BLUE +$0.08),
- Adverum Biotechnologies (ADVM +$0.07),
- Compass Therapeutics (CMPX +$0.05 after Thursday’s $0.00),
- Graphite Bio (GRPH +$0.015),
Q4/23 – October's weekly
- Friday closed negative with 9 incliners, 25 decliners and 1 flat
- Thursday closed negative with 5 incliner, 26 decliners and 4 flats
- Wednesday closed negative with 5 incliners, 30 decliners and 0 flat
- Tuesday closed positive with 17 incliners, 16 decliners and 2 flats
- Monday (10/16) closed positive with 21 incliners, 14 decliners and 0 flat
The BOTTOM LINE: I say today what others won't, so you can do what others can't!
While many talk about the shift in alternating sentiment, I monitor the pulse and focus of possible outcomes. But reality turns out to be a little less appealing:
After careful examination of the sector and breathe trends, we have come away more cautious. Having lived through the rise and multiple declines of “our” universe’s stock price, we must be better informed on what fluctuating markets can do to a stock, or what impact follow through sessions miss on indications on or expectations can have on a development stage company.
- The sector is … still what it is, until it isn’t and even then, it doesn’t seem to be … that is after taking a deep breath and holding it
- As insight is about understanding perception and also about putting into context what is relevant to expectation fulfillment.
- It’s not hard to be right so often, it’s about refining expectation, defining insight and NOT being indentured to ANY financial institution! That’s why the term “quantamental,” a blend of the two styles, may soon become common parlance among ordinary investors.
- All three major U.S. stock indexes closed lower pulling the Nasdaq down.
- Middle East conflict still weighed on the market as investors assessed the chances of it breaking out into a wider war. The rising geopolitical tensions in the Middle East could drive a global recession, leading investors have warned.
- I STILL believe the political aspect of the U.S.’s polarization, and disparities of the debt ceilings and rate hike arguments are contributing to the roller coaster ride for share pricing actions.
A quote of interest, “The stock market is watching the bond market and doesn’t like what it sees. Yields are rising, even with the relatively good news about inflation. This is the primary reason the stock market has been weak.” <David Donabedian, chief investment officer of CIBC Private Wealth Management>
And another, “This is a time where we just sit for a little bit. It may be for an extended period; it may not. But let’s see how things evolve over the next few months. He added that while recent data points to economic strength, contact with individual businesses indicates “things seem to be slowing down.” < Patrick Harker, Philadelphia Fed President>
The cell and gene therapy sector equities share pricing closed negative on Friday, Thursday and Wednesday following inclines on Tuesday and last Monday and the previous Friday’s positive close.
Consider: Implied volatility shows how much movement the market is expecting in the future.
- Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other.
- It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.
What’s behind the numbers:
- The sector and overall stock market tends to consistently rise and fall over the short-term with alternating volatility and involuntary momentum contraction.
- I remain EXTREMELY cautious as upcoming earnings may have a more significant negative impact on share price due to missed consensus as estimates will lessen valuations.
- Valuation suggests the cell and gene therapy sector is skating on very thin ice while the charts and data have YET to generate signals of a correction low. Thus, I believe risk is EVEN high as we enter earnings season.
- Welcome to my world of defining the “grey’ in our universe!
The top three (3) performing in the session:
- Friday: Alnylam Pharmaceuticals (ALNY), Harvard apparatus GN (HRGN) and Regenxbio (RGNX)
- Thursday: Ultragenyx Pharmaceuticals (RARE), Ionis Pharmaceuticals (IONS) and Fate Therapeutics (FATE)
- Wednesday: Adverum Biotechnologies (ADVM), Homology Medicine (FIXX) and AxoGen (AXGN)
- Tuesday: Blueprint Medicine (BPMC), Vericel (VCEL) and Prime Medicine (PRME)
- Monday: Ultragenyx Pharmaceuticals (RARE), Vericel (VCEL) and BioLife Solutions (BLFS)
The worst three (3) in the session:
- Friday: CRISPR Therapeutics (CRSP), BioLife Solutions (BLFS) and Vericel (VCEL)
- Thursday: Alnylam Pharmaceuticals (ALNY), Beam Therapeutics (BEAM) and Blueprint Medicine (BPMC)
- Wednesday: Ultragenyx Pharmaceuticals (RARE), CRISPR Therapeutics (CRSP) -2x and Ionis Pharmaceuticals (IONS)
- Tuesday: Alnylam Pharmaceuticals (ALNY) – 2x, CRISPR Therapeutics (CRSP) and Intellia therapeutics (NTLA)
- Monday: Alnylam Pharmaceuticals (ALNY), Blueprint Medicine (BPMC) and Harvard Apparatus RN (HRGN) -2x,
Right up front, “I also hate to be so negative or contrarian but, this is a NO spin zone and truth is its product; I can always be WRONG but … I am mostly EARLY!”
- Focus should be on the upcoming quarterly earnings season!
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.