RegMed Investors’ closing bell analysis, the sector slumps

August 8, 2016 6:06pm

… I felt today’s “burn” coming - right again!

The question is whether investors should be more fearful, especially in a sector that has so many visible hot spots seemingly about to burst into flames

Volume is low affecting share pricing volatility  

If the market runs out of buyers, it runs into trouble just like a fire that runs out of wood.

Earnings: BLCM, FATE, KITE, STML, VSTM and VCEL

I answer one question; in which company should investors put, keep and commit their money!

Do you care what happened today, you should … because it has implications to Tuesday's sector activity?   Where has today’s market gone – subscribe and find out. 

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

U.S. equities close slightly lower on Monday, despite a rise in oil prices, as investors awaited key retail sales data due later this week.

The NASDAQ closed DOWN -7.98 or -0.15% to 5,213.14 and the DOW closed DOWN -14.24 or -0.08% to 18,529.29.

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

• The open was positive with an A/DL of 31/9 and 3 flats;
• 10:30 am, the sector slipped neutral with an A/DL of 21/21 and 1 flat;
• The mid-day continued neutral  with an A/DL of 21/21 and 1 flat;
• The closing bell was negative with A/DL of 20/23 and 0 flat;

Henry’omics:

The stem, cell, gene and regenerative therapy (SCGT&RT) sector opened positive, flipped neutral at the mid-day with the sector closing negative.

• The iShares Nasdaq Biotechnology NASDAQ GM (IBB) was DOWN -1.05%
• The iShares Russell 2000 NYSE Arca (IWM) was also DOWN -0.05%,
• The SPDR S&P Biotech ETF (XBI) was DOWN -1.89% and
• The Health Care Select Sector SPDR ETF (XLV) were DOWN -0.85%.

The sector was just grinding lower!

• Tracking volume - the amount of shares traded in stocks gives investors insight into the intensity of trading “feelings”.

Call me cantankerous, contrarian or even a curmudgeon but at last I get it right …

Pet peeve:

High-frequency trading accounted for 49% of August's daily trading volume of about 6.90 billion shares <TABB Group>.

• During the peak levels of high-frequency trading in 2009, about 61% of 9.8 billion of average daily shares traded were executed by high-frequency traders.

Pre-open indication’s tally:  0 hits and 3 miss:

• Cellectis SA (CLLS) closed DOWN -$0.59 – miss;
• Juno Therapeutics (JUNO) closed UP +$1.23 – miss;
• Intrexon (XON) closed DOWN -$1.66 – miss;

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

• Monday traded near 11.5;
• Friday traded near 11.3;
• Thursday traded near 12.5;
• Wednesday traded near 12.8;
• Tuesday traded near 13.5;
• Last Monday traded 12,63;

Today’s Bottom Line:

It’s NOT going to be a good week for reporting especially those companies with low cash positions

Out and about:

 Immunocellular (NYSEMKT: IMUC) cuts the amount of shares and warrants for an offering in filing 45 M shares offering and 33.75 M warrants to raise $7.8 M

• Down from 51.5 M as warrants also decrease to 33.75 M
• Maxim Group and Laidlaw are the book managers

Fate Therapeutics (FATE) starts the day with a $10.3 M common stock private placement

• On August 6, 2016, FFATE entered into a securities purchase agreement for a private placement of the company’s common stock, under which funds managed by Franklin Advisers, Inc., together with certain other institutional investors, agreed to purchase 5.25 M shares of common stock at $1.96 per share for gross proceeds of $10.3 M.
• The private placement transaction is expected to close on or about August 10, 2016, subject to customary closing conditions.
• FATE did not use a placement agent in connection with the transaction.

Fibrocell Science (FCSC) closed DOWN -$0.0050 to $1.005

• Intends to offer and sell shares of its common stock and related warrants to purchase shares of its common stock in an underwritten public offering. 
• The shares of common stock and related warrants will be immediately separable and will be issued separately.
• NO numbers

• Cantor Fitzgerald & Co. is acting as sole book-running manager for the offering. Roth Capital Partners, LLC and Griffin Securities, Inc. are acting as co-managers for the offering. 

Biostage (BSTG) closed DOWN -$0.03 to $1.11

• BSTG filed a prospectus <shelf registration> to offer shares and warrants for $20 M offering <after the close>

Organovo Holdings (ONVO) rose 5.71% or +$0.26 to $4.81

• The shares climbed from $4.55 with solid volume of 1.841 M shares, the highest in at least a year, from Thursday’s $4.33.
• ONVO had a loss of $0.09 a share on a comparable basis for the latest quarter versus the estimate for a net loss of $0.10 and it had sales of $891,000, versus $525,000. The company reported on Aug. 4.
• In addition to the rising stock price, analysts have increased their consensus sales estimate for the third quarter to $750,000 from $675,000 in the past four weeks.
• Trading in Organovo's call options was 2.1 times more than the average of the past 20 days.
• Institutional holdings of Organovo shares decreased by 16%, according to the latest filings by the company and investors

The stock is 1.3% below the Bloomberg consensus one- year target price. It returned 88% so far this year and a gain of 50% in the past 52 weeks.

• Short interest was 6.9 times the company's average daily trading and represented 12% of the shares available as of the latest quarterly filing.

Earnings:

Verastem (VSTM) closed DOWN -$0.04 to $1.32

• Net loss for the second quarter ended June 30, 2016 (2016 Quarter) was $8.6 M, or $0.23 per share, as compared to a net loss of $15.4 million, or $0.42 per share, for the second quarter ended June 30, 2015 (2015 Quarter). Net loss includes non-cash stock-based compensation expense of $1.7 million (Q2/16) and $2.6 million (Q2/15).
• As of June 30, 2016, VSTM had cash, cash equivalents and investments of $92.9 M compared to $110.3 M as of December 31, 2015. Verastem used $6.7 M for operating activities during Q2. The number of outstanding common shares as of June 30, 2016, was 36,992,418.
• Q2 EPS of -$0.23 beat by $0.06.

Vericel (VCEL) closed DOWN -$0.07 to $2.28

• Net loss was $5 M or -$0.21 per share, compared to $2.3 M or -$0.10 for Q2/15. 
• Total net revenues for were approximately $12.8 M and included approximately $9 M of Carticel net revenues and approximately $3.8 M of Epicel net revenues.  Carticel and Epicel net revenues decreased 3.9% compared to Q2/15 with Carticel net revenues decreasing less than $100 K and Epicel net revenues decreasing approximately $400 K, compared to Q2/15.  Gross profit for Q2 was $5.5 M, or 43% of net product revenues, compared to $6.7 M, or 49% of net product revenues, for the Q2/15.
• VCEL closed the Q with $9.8 M in cash

Bellicum Pharmaceuticals (BLCM) closed DOWN -$0.31 to $17.05

• BLCM reported a net loss of $16.5 M or -$0.61 per share compared to a net loss of $10.5 M or -$0.40 per share in Q2/15.
• As of June 30, 2016, cash and investments totaled $136.6 M.
• Bellicum continues to expect to end 2016 with approximately $80 to $90 M in cash, cash equivalents and investments, and that current cash resources will be sufficient to meet operating requirements through 2017.
• This guidance includes planned spending in the second half of 2016 of approximately $15 M for capital projects to enable in-house U.S. manufacturing.

Fate Therapeutics (FATE) closed UP +$0.48 to $2.59

• The Q2 net loss was $8.4 M or -$0.29 per shares as compared to Q2/15’s -7.77 M net loss or -$0.33 per share
• Cash, cash equivalents and short-term investments as of June 30, 2016 were $45.9 M compared to $64.8 M as of 12/31/15.
• The decrease is primarily driven by the company’s use of cash to fund operating activities and to service principal and interest obligations under its loan agreement with Silicon Valley Bank.
• This balance as of June 30, 2016 did not include $10.3 M in proceeds which FATE expects to receive upon the closing of the private placement transaction.

Kite Pharma (KITE) closed DOWN -$0.34 to $58.25

• Q2’s net loss was $64.3 M, or $1.31 per share.
• Non-GAAP net loss for the second quarter of 2016 was $44.5 M, or $0.91 per share, which excludes non-cash stock-based compensation of $19.8 M.
• As of June 30, 2016, Kite had $531.1 million in cash, cash equivalents, and marketable securities.
• Kite continues to expect the full year 2016 net cash burn to be $235 M to $250 M, which includes approximately $20 M in capital expenditures, but excludes any inflows or outflows from future business development activities.
• The estimated full year 2016 net cash burn is primarily driven by an estimated net loss of $295 M to $310 M, which includes an estimated $80 M of non-cash stock-based compensation expense.

Stemline Therapeutics (STML) closed UP +$0.26 to $7.73

• Q2’s had a net loss was $9.3 M, or $0.52 per share, compared with a net loss of $10.2 M, or $0.58 per share, for Q2/15.
• STML ended with $81.2 M in cash, cash equivalents and investments, as compared to $87.8 M as of 3/31/16, which reflected a cash burn of $6.6 M for the quarter.

Decliners:

• Intrexon (XON) -5.78%;
• uniQure (QURE) -5.28% after Friday’s +7.74%;
• StemCells (STEM) -3.75%;
• bluebird bio (BLUE) -4.05% after Friday’s +7.41% post Thursday’s -9.43%;;
• Spark Therapeutics (ONCE) -3.12%

Advancers:

• Fate Therapeutics (FATE) +22.75%;
• Neuralstem (CUR) +10.36% after Friday’s+5.61% ;
• Regenxbio (RGNX) +9.09%;
• Organovo (ONVO) +5.71%;
• ReNeuron (RENE.L) +4.35%

Flat:

• 0                                                                                                                            

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.