RegMed’s close postmortem: good to bad to worse to not so bad again

February 19, 2016 5:35pm

… the stem, cell and gene therapy regenerative medicine sector has suffered more this year to date than other times …

A short-short strategy works better in these times unfortunately; one has to pay very close attention.

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Closing the wek on a BETTER note!

U.S. stocks closed mixed Friday, mostly shaking off pressure from declines in oil prices to post their best weekly gain of the year so far.

The NASDAQ closed UP +16.89 or +0.38% to 4,504.43 and the DOW closed DOWN -21.44 or -0.13% to 16,391.99.

A day in the life of the stem, cell and gene therapy RegMed (SCGT & RM) sector – the advance/decline line scenario of our 43 covered companies.

• Friday, the stem, cell and gene therapy RegMed sector opened negative with an A/DL of 16/26 and 1 flats;

•  The mid-day swung positive with an A/DL of 34/6 and 3 flats;

•  The closing bell rang positive with A/DL of 23/17 and 3 flats

Henry’omics:

The stem, cell and gene therapy RegMed (SCGT&RM) sector opened negative, flipped positive as the oversold hurdles were jumped at the mid-day  and closed positive (of 43 covered companies).

• The bounce from oversold to fairly valued was supported by a short-term momentum.

SCGT&RM stocks traded in a narrow range in most cases on Friday setting-up for gains to compensate for the downward spiral of the previous session.

• The major U.S. averages ended the week up 2.5% or more, with the Dow and S&P 500 posting their best week since the one ending Nov. 20. The NASDAQ outperformed, up nearly 4% for the week, its best since the one ending July 17.

There's still a whole lot of overhead resistance which will come forth next week!

My pet peeve:

High-frequency trading accounted for 49% of February's daily trading volume of about 9.37 billion shares <TABB Group>.

Out and about:

Pluristem (PSTI) - just could NOT wait for the … I told you so – of its depreciation -$0.03 to $1.25!

·         My bet, it’s back to a $1.00 by next month.

Caladrius Biosciences (CLBS) licensed its dermatology cell technology to AiVita Biomedical and hasn’t “gone” anywhere … this week, closing FLAT at a wholesome $0.62! 

·         CEO Mazzo should be remembered as the “Great Destructor of Value” – what a sad story for investors, when he took over as CEO the stock was priced at $3.75.

Athersys (ATHX) – the other day, I questioned … the “blue sky” results of the MultiStem data and excuse me – I haven’t been the only one as TheStreet.com, Adam Feuerstein came out also re ATHX’s trial. MultiStem hasn’t made the cut … in past trails maybe, they will get – “lucky” this time with questionable results … let’s see if ATHX’s “drumbeaters keep up the beat as the stock declines?

• ATHX closed DOWN -$0.09 to $1.60 on 2.173 M share volume <3 month average = 600 K shares. Back to 1/15/16’s$1.13 within a month!

Avalanche Biotech roars down the hill …

The proposed merger between Avalanche Biotechnologies (AAVL and privately held Annapurna Therapeutics is running into resistance from some of AAVL's institutional shareholders. They want the beleaguered gene therapy company to cancel the deal, sell off assets and return their cash.

• Avalanche CEO Paul Cleveland has been meeting with shareholders and analysts this week in New York, trying to rally support for the Annapurna deal.

Last June, Avalanche's lead program for macular degeneration posted mediocre results in a mid-stage clinical trial, collapsing the stock price and forcing then-CEO Thomas Chalberg out the door.

• Acquiring Annapurna adds new gene therapy programs for other rare diseases, including Friedrich's ataxia and hereditary angioedema, to Avalanche's pipeline.

Avalanche intends to issue 17.6 M new shares to acquire Paris-based Annapurna. If the deal closes, Annapurna would own 37% of the combined company, which would retain the Avalanche name. The cost of the deal was $106 M based on Avalanche's $6 stock price when the deal was announced on Feb. 1.

• Cleveland, who became Avalanche's CEO in November, is pitching the Annapurna combination as a reasonably priced reboot of Avalanche's gene therapy pipeline and a way to rebuild shareholder value over time.

But Avalanche stock was at $40 before last June's blow-up. Today, the stock trades at $5 a share even though cash in the company's bank account at the end of 2015 was worth $10 a share.

• Instead of buying Annapurna and burning the existing cash on gene therapy programs which haven't even begun human clinical trials, some Avalanche holders want the company shut down and its remaining assets sold off.

The liquidation of Avalanche could be worth $10-12 s share, according to a hedge fund manager who owns a stake in Avalanche. Other Avalanche shareholders also oppose the Annapurna deal, he said, although it's not clear if there are enough votes to scuttle it.

• "There are some of us who would prefer to get paid today rather than wait for the market to appreciate gene therapy again," he said, adding that other Avalanche shareholders also oppose the Annapurna deal. <TheStreet.com>

·         AAVL closed UP +$0.25 to $5.50 – a vote for or against?

Friday’s “carousel” or sector indications - dosing the sector – what a day for the 43 Patients:

• The sector opened: NEGATIVE with 26 decliners, 16 advancers and 1 flat;

• The mid-day (12:30 pm: POSITIVE with 16 decliners, 24 advancers and 3 flats;

• Closing bell: POSITIVE with 17 decliners, 23 advancers and 3 flats

Review my fear gauge or the CBOE Volatility Index (VIX) which is scary:

·         Friday traded near 20.5;

·         Thursday – n/a;

·         Wednesday traded above 22;

·         Tuesday traded near 24;

·         Monday was a holiday;

·         Last, Friday traded near 26

Riding the indexes and ETFs roller-coaster:

The iShares Biotechnology Stocks ETF (IBB) closed UP on Friday +2.41 or +0.93%

·         Thursday – na/a;

·         Wednesday +7.60 or +2.94%

·         Tuesday +7.53 or +2.37%;

·         Monday was a holiday;

·         Last, Friday +7.15 or +2.93%;

The NASDAQ Biotechnology index (NBI) closed UP on Friday +24.76 or +0.91%

·         Thursday – n/a;

·         Wednesday +80.90 or +2.99%

·         Tuesday +79.17 or +3.02%;

·         Monday was a holiday;

·         Last, Friday +73.51 or +2.88%;

The Russell 2000 (IWM) closed UP on Friday +0.50 or +0.50%

·         Thursday – n/a;

·         Wednesday +1.55 or +1.57%

·         Tuesday +2.29 or +2.37%;

·         Monday was a holiday;

·         Last, Friday +1.80 or +1.90%;

The SPDR SD&P Biotech ETF (XBI) closed UP on Friday +0.95 or +1.93%

·         Thursday – n/a;

·         Wednesday +1.98 or +4.04%

·         Tuesday +1.92 or +4.08%;

·         Monday was a holiday;

·         Last, Friday +1.31 or +2.89%;

Who was UP – top 5:

• Spark Therapeutics (ONCE) closed up +$1.78 to $34.02;
• Intrexon (XON) +$0.1.48 to $32.42;
• Kite Pharma (KITE) +$1.40 to $48.13;
• Aduro Biotech (ADRO) +$0.50 to $14.95;
• uniQure (QURE) closed up +$0.47 to $15.54

Who was FLAT?

• Sangamo (SGMO) at $5.32;
• Northwest Bio (NWBO) at $2.38;
• VistaGen (VSTA) at $8.00                                    

Who was leading the declines – to of the bottom 5?

• Juno Therapeutics (JUNO) closed down -$0.15 to $35.62;
• Reneuron (RENE.L) -$0.12 to $2.75;
• Verastem (VSTM) -$0.11 to $1.18;
• Athersys (ATHX) -$0.09 to $1.60;
• Organovo (ONVO) closed down -$0.07 to $2.09

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.