RegMed investors’ closing bell analysis: sector sinks like a stone, 38 down out of 43 covered companies

June 9, 2016 5:28pm

While profit taking can NOT be totally explained - why the SCGT&RM sector stocks sold-off – there is low to restrained moderate volume as one response showing a lack of conviction.

One other possibility <conspiracy theory>reason for a downturn is that traders are speculating that Friday will bring forth – some BAD news from Mesoblast (MESO) which could affect the sector as a whole!

Pre-market indications – 2 hits and 2 miss

Earnings: ONVO

Do you care what happened today, you should … because it has implications to Friday's sector activity?  

There are two things that investors need - interpretation of news and translation of related market metrics concerning the stem, cell and gene therapy and regenerative medicine sector to substantiate share pricing.

U.S. stocks closed lower Thursday.

The NASDAQ closed DOWN -16.03 or -0.32% to 4,958.62 and the DOW closed DOWN -19.86 or -0.11% to 17,985.19.

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.   

• The 10:30 am numbers were negative with an A/DL of 4/39 and 0 flats;

• The mid-day stayed negative  with an A/DL of 3/40 with 0 flat;

• The closing bell stayed negative  with A/DL of 5/38 with 0 flat

Henry’omics:

The SCGT&RM sector in the first hour were negative, stayed negative at the mid-day and closed negative.

• Yesterday I stated, “Our” universe is on the verge of falling back into “damaged” territory, and I believe investors were not seeing it – today, they definitely felt it, 38 of 43 covered companies were down in the am.

A big downside is not unusual, especially as investors become more cautious after traders “run the table”.  However, there seems to be plenty of liquidity out there looking for a return.

• While the current situation can NOT be totally explained - why the SCGT&RM sector stocks sold-off – there is low to restrained moderate volume as one response.

Another possible reason for a downturn is that traders are speculating that Friday will bring forth – some BAD news from Mesoblast (MESO) which could affect the sector as a whole!

• For stocks to surge, there needs to be some fulfillment of milestones and catalysts.

Cutting to the center of the meat:

The iShares Nasdaq Biotechnology ETF (IBB) closed lower -1.78%.

The Health Care Select Sector SPDR ETF (XLV) is down -0.14% and the iShares Trust - iShares Russell 2000 ETF (IWM) was down -0.63%.

Who were the biggest losers: VistaGen (VTGN) -11.81 or -$0.46 to $3.40 – post offering with no company or I-Bank support leaves a stock hanging – another story of sell the stock, keep the warrant and create a big short position to value the warrant?

StemCells (STEM) was DOWN -$0.0398 to $0.43 which was UP +0.0397 or +9.23% –as I stated yesterday – who is kidding whom? 

Stemline (STML) closed DOWN -$0.68 or -7.81% to $8.03. Actually I am surprised after positive clinical data from its ongoing SL-401 Phase 2 potentially pivotal clinical trial in blastic plasmacytoid dendritic cell neoplasm (BPDCN) at the 2016 American Society of Clinical Oncology (ASCO) Annual Meeting.

Biostage (BSTG) came in fourth in the losers of the day. BSTG was DOWN -$0.09 to $1.16 with 247.3 K shares traded <3 month average = 209 K>. It has been a bad week for BSTG, another company with no support as unit’s shares being sold however, the warrants were not registered but, granted and held.  The volume pressure is stronger and doesn’t seem to be abating.

Who were the winners, Cesca Therapeutics (KOOL) again closed UP +$0.63 to $3.67 after yesterday’s +5.65% or +$0.16.  KOOL is “trying” to move the endpoints from AFS to TCPO2 in a CLI trial – I think the “bong” has been passed around too many times with 49.25 K shares trading <3 month average = 226.83 K shares>.

ReNeuron (RENE.L) closed UP +$0.12 to $3.50. It usually doesn’t last as the stock floats on the waters but, the waves will swamp the pricing.

Spark Therapeutics (ONCE) closed UP +$0.25 or +0.47% to $53.55 – it was oversold.

Opexa (OPXA) closed UP +$0.03 to $3.19. One analyst thinks Opexa's T-cell-based vaccine Tcelna is targeting advanced MS - Tcelna is a personalized T-cell immunotherapy. Interesting supposition, a credit to the analyst due!

Earnings:

Organovo Group (ONVO) closed DOWN -$0.10 to $2.86.

Net loss was $8.4 M, or $0.09 per share, for Q4/16, as compared to $7.8 M, or $0.10 per share, for Q4/15.

For the full year, Organovo reported net loss of $38.6 M, or $0.43 per share, as compared to net loss of $30.1 M, or $0.38 per share, for fiscal 2015.

Organovo reported Q4 total revenue of $500 K, which consisted primarily of collaborations and product and service revenue.  Total revenue increased 105% versus Q4/15 and 67% versus the Q3/16.  Collaborations revenue, which primarily represents revenue from  ONVO’s research agreements with L’Oreal USA and Merck & Co., increased by $400 K from the year-ago period.

As ONVO look ahead to fiscal 2017, they’re focused on a few key objectives including accelerated liver tissue revenue growth, initiation of commercial contracting for our kidney product, advancement of the skin model with L’Oreal and sharing preliminary results from work with multiple tissue types in the therapeutic tissues space.  Specifically, ONVO’s moving from functional validation to a customer ‘early-access’ program with its kidney product, and are seeing strong interest from about a dozen potential customers. 

ONVO ended Q4 with a cash and cash equivalents balance of $62.1 million.  Organovo’s net cash utilization during the period was $7.9 M.  ONVO’s net cash utilization for the full-year fiscal 2016 was $31.5 M, lower than the expected net cash utilization rate of between $32 M and $34 M.

Pre-market indications – 2 hits and 2 miss

• Bellicum Pharma (BLCM) closed DOWN -$0.065 – miss;
• Capricor (CAPR) closed DOWN -$0.13 – hit;
• Kite (PHARMA) closed DOWN -$2.76 – miss;
• Organovo (ONVO) closed DOWN -$0.14 – hit;

Today’s Bottom Line:

It’s not just the sector's COLD but, without direction and any conviction or commitment!

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

• Thursday traded near 14.4
• Wednesday traded 14;
• Tuesday traded near 13.7;
• Monday traded near 13.5;
• Friday traded at 13.4;
• Last, Thursday traded 14.1;

Most active sector stocks + and -:

• VistaGen (VTGN) -11.81%;
• StemCells (STEM) -8.47%;
• Stemline (STML) -7.81%;
• Biostage (BSTG) -7.20%;
• Vericel (VCEL) -6.72%

versus …

• Cesca Therapeutics (KOOL) +20.72%;
• ReNeuron (RENE.L) +3.70%;
• Opexa (OPXA) +0.95;
• Spark Therapeutics (ONCE) +0.47%;
• AxoGen (AXGN) +0.34%

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.