RegMed’s close: too frequently, the gain is followed by pain

November 19, 2015 6:30pm

An oversold sector suffered an overbought reaction and we’re back to volatility engineering value while the iShares Nasdaq Biotechnology ETF (IBB) fell more than 1.5%

As I stated yesterday, don’t call a victory as the speculators will “nibble” the edges of appreciation.  Subscription required … http://www.regmedinvestors.com/create-account

I say today what others won't, so you can do what others can't - access insight into sector sentiment and share pricing!

U.S. stocks closed little changed Thursday, holding solid gains for the week so far, as investors eyed some corporate news and sought further indications of support for a December rate hike from data and Fed speakers.

The NASDAQ closed DOWN -1.56 or -0.03% to 5,073.64 and the DOW is also DOWN -4.41 or -0.02% to 17,732.75.

Henry’omics:

Cautionary tales of those getting caught on the wrong side of risky bets in “our” universe are rampart.

• Slowing momentum and relative strength is decreasing < RSI stands for ‘Relative Strength Index’ and it is a popular indicator used by technically focused investors. It compares the average of gains in days that closed up to the average of losses in days that closed down; readings above 70 suggest an asset is overbought, while an RSI below 30 suggests undervalued conditions are present>.

The clock is ticking … of slowing momentum!

• Health care fell more than 1.5% as the greatest laggard in the S&P 500; such … little help for “our’ universe while the major averages fluctuated between slight gains and losses;

• When you’re long, the worst you can do is lose is everything. But when you’re short, everything and a lot more is at stake.  Many should know better!

The stem, cell and gene therapy RegMed sector opened positive, slipped negative through the mid-day and closed in positive territory (of 43 covered companies)!

The lyrics from Johnny Cash resound with an insert of words:

• You can run on for a long time;
• Run on for a long time
• Sooner or later the market’ll cut you down

The iShares Nasdaq Biotechnology ETF (IBB) traded Thursday down -1.5% after Wednesday’s advance of +2% following Tuesday’s improvement +1.3% while Monday was slightly higher.

• My fear gauge is flopping – The CBOE Volatility Index (VIX) traded Thursday near 17 following Wednesday’s above 17 after Tuesday’s near 19 following Monday’s below 19.

A day in the life of the stem, cell and gene therapy RegMed (SCGT & RM) sector:

• The SCGT & RM equities opened positive with an Advance/Decline line (A/DL) of 21/19 and 3 flats;

• The mid-day flopped to a negative A/DL of 15/28 and 0 flats;

• The closing bell rang positive to end Thursday’s session with an A/DL of 16/26 and 1 flat.

Out and about:

It is important to recognize that no one knows what will happen in the future.

• MY view is just that, a view based on the facts in evidence and current precedent, as well as personal opinion. Usually a short-term view can be discarded but any indicator has a bearing on a near and long-term view.

Applied Genetic Technologies Corporation (AGTC) …

Has moved higher as of the past days <excluding today>, but there could definitely be trouble on the horizon for this company. T

• That is because AGTC is now in overbought territory with a Relative Strength Index <RSI> value of 74.08;

• <RSI stands for ‘Relative Strength Index’ and it is a popular indicator used by technically focused investors. It compares the average of gains in days that closed up to the average of losses in days that closed down; readings above 70 suggest an asset is overbought, while an RSI below 30 suggests undervalued conditions are present.>

Yet AGTC’s high RSI value isn’t the only reason for investors to be concerned, as there has been some decidedly negative earnings estimate revisions in Applied Genetic Technologies’ stock as of late.

• This is especially true when investors dive into some of these revisions in order to get a better picture of AGTC’s prospects for the near term;

• Over the past two months, investors have witnessed five (5) earnings estimate revisions lower compared to none higher for the current year. The consensus estimate for AGTC has also been on a downward trend over the same time period too, as the estimate has fallen from -$0.67/share two months ago to -$1.51/share.

So, given all of these factors, investors may want to consider exiting this stock now before it falls.

• AGTC closed DOWN -$0.71 to $16.06 with 172.3 k shares traded <3 month average = 140.1 k shares>;

• For the record, I have maintained a STRONG BUY on AGTC but, as unreturned calls has left me … a mere impotent re continuing MY ranking …

Harvard Apparatus RT (HART) experience some unbelievable volumes in the past week

• Monday <2.17 M shares traded>;

• Tuesday <1.922 M shares>;

• Wednesday <1.716 M shares>;

• Thursday <8.02 M shares>;

• HART closed at $1.67 closed UP +$0.16 having been up as high as +$0.73 <1 PM> and to top it off is UP in the aftermarket +$0.12 to $1.79 <the last offering in 2014 was completed at $1.75>;

• The question is … can it be sustained and ... is it DEPENDENT on one set of experimental surgeries - which NEED to be replicated through multiple time periods 8, 16 and 24 week duration to JUSTIFT the proof of concept. ONE data point does NOT make a reliable and regulatory significance ...fact set!

Aduro Biotech (ADRO) …

• Established a European subsidiary in the Netherlands, named Aduro Biotech Europe;

• On October 30, 2015, Aduro acquired BioNovion, a biopharmaceutical antibody discovery and development company, to broaden its technology portfolio and increase its immunotherapy capabilities;

• Near term clinical development plans include the initiation of a global P3 trial to evaluate the combination of CRS-207, a LADD-based immunotherapy, and standard-of-care chemotherapy in patients with un-respectable malignant pleural mesothelioma (MPM);

• Clinical trial sites in Europe will open in 2016;

• ADRO closed DOWN -$0.31 to $28.42

Thursday’s trading indications:  3 hit/ 2 miss

• Capricor (CAPR) closed DOWN – hit;
• Harvard Apparatus RT (HART) closed UP - hit;
• Juno Therapeutics (JUNO) closed DOWN – hit;
• Regenxbio (RGNX) closed UP – miss;
• Verastem (VSTM) closed DOWN -$0.03 to $1.97 with a book value of per share of $3.04 still a miss;

Riding the indexes and ETFs roller-coaster:

• The iShares Biotechnology Stocks ETF (IBB) closed Thursday -5.32 or -1.57% after Wednesday’s +9.60 or +2.92% following Tuesday’s advance of +4.25 or +1.31% after Monday’s advance of +1.25 or +0.39%;

• The NASDAQ Biotechnology index (NBI) closed Thursday -54.06 or -1.53% after Wednesday’s +100.77 or +2.93% following Tuesday’s up of +45.73 or +1.35% after Monday’s+10.84 or +0.32%;

• The Russell 2000 (IWM) closed Thursday -0.49 or -0.42% after Wednesday‘s+1.94 or +1.69% following Tuesday’s decline of -0.44 or -0.38% after Monday’s advance of +0.98 or +0.86%;

• The SPDR SD&P Biotech ETF (XBI) closed Thursday -1.27 or -1.80% after Wednesday’s +2.03 or +2.96% following Tuesday’s advance of +0.50 or +0.73% after Monday’s decline of -0.12 or -0.18%;

Dosing the sector – what a day for the 43 Patients:

• Open: POSITIVE with 19 decliners, 21 advances and 3 flats;             

• Mid-day (1 pm): NEGATIVE with 28 decliners, 15 advancers and 0 flats;

• Closing bell: NEGATIVE with 26 decliners, 6 advancers and 1 flat

Who was UP – top 5:

• Intrexon (XON) closed up +$1.36 to $39.65;
• Regenxbio (RGNX) +$0.23 to $22.985;
• Asterias (NYSEMKT: BTX) +$0.18 to $5.00;
• Northwest Bio (NWBO) +$0.18 to $4.77;
• Harvard Apparatus RT (HART) closed up +$0.16 to $1.67

Who closed down – top 5:

• Bluebird bio (BLUE) closed down -$4.86 to $79.73;
• Kite Pharma (KITE) -$2.75 to $84.10;
• Spark Therapeutics (ONCE) -$1.73 to $54.01;
• Applied Genetic Technologies (AGTC) -$0.71 to $16.06;
• Juno Therapeutics (JUNO) closed down -$0.58 to $53.62;

Flat:

• Neuralstem (CUR) at $1.09;

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.