RegMed Investors’ closing bell analysis, a soft outlook

August 9, 2016 6:10pm

… As financial results/earnings play through

Investors need to pass on slow and non-appreciators

… Especially when the portfolio demands a trading maneuver to tee off

Pre-open indication’s tally:  4 hits and 1 miss:

Earnings: ADVM, ATHX, BTX, CLBS and XON

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 Wednesday'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. stocks ended slightly higher, with the NASDAQ posting a fresh record close,

The NASDAQ closed UP +12.34 or +0.24% to 5,225.48 and the DOW closed UP +3.76 or +0.02% to 18,533.05.

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 negative with an A/DL of 19/20 and 4 flats;
• The mid-day continued negative  with an A/DL of 16/23 and 4 flats;
• The closing bell was neutral with A/DL of 21/21 and 1 flats;

Henry’omics:

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

• The iShares Nasdaq Biotechnology NASDAQ GM (IBB) was UP +0.13%
• The iShares Russell 2000 NYSE Arca (IWM) was UP +0.11%,
• The SPDR S&P Biotech ETF (XBI) was DOWN -0.14% and
• The Health Care Select Sector SPDR ETF (XLV) was UP +0.24.

Alluding to the title, the terms "play through" and "playing through" refer to the act of a faster group of golfers on a golf course being invited to or allowed to pass a slower group - for the faster group to get ahead of the slower group.

• Ideally, this happens at the invitation of the slower group but, who needs an invitation when you are losing money.

Let's say you're stuck in a non-moving or depreciating equity and you as an investor, you notice that other sector “participants” are moving forward and you want to stay in the universe – why wait?

• Yet, there is always room in front of your group - the hole ahead is open. In this case, trade it and come back if the pricing returns or just invite the fast group to "play through.

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

Pre-open indication’s tally:  4 hits and 1 miss:

• Cellectis SA (CLLS) closed UP +$0.13 – hit;
• Kite Pharma (KITE) closed UP +$0.95 – miss;
• Mesoblast’s (MESO) closed UP +$0.64 - hit;
• Stemline (STML) closed DOWN -$0.19 – hit;
• Vericel (VCEL) closed DOWN -$0.06 – hit;

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

• Tuesday traded near 1.6;
• Monday traded near 11.5;
• Friday traded near 11.3;
• Thursday traded near 12.5;
• Wednesday traded near 12.8;
• Last Tuesday traded near 13.5;

Today’s Bottom Line:

Diversification is a risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio constructed of different investments will, on average, yield higher returns and pose a lower risk within a portfolio.

Diversify is ALSO a verb to enlarge your range of options

Out and about:

 Fibrocell Science (FCSC) ditches share and warrant offering for $25 M convertible promissory notes and warrants

• FCSC announced that it has terminated the previously announced underwritten public offering of common stock and warrants in order to enter into another financing transaction on more favorable terms.  The financing transaction provides for the issuance of up to $25 M in aggregate principal amount of convertible promissory notes
• The Financing is greater than 50% subscribed and is not subject to any minimum aggregate investment amount.  The initial closing of the financing is expected to occur as soon as reasonably possible.
• In the initial closing of the financing, Fibrocell will issue 10-year Notes that are convertible into FCSC common stock at a conversion price of $1.13625 per share and will accrue interest at a rate of 4% per annum. Interest may be paid or accrued, at the option of FCSC.  Upon the fifth anniversary of the issuance of the Notes and until they mature, each investor has the right to require the Company to repay all or any portion of the unpaid principal and accrued and unpaid interest.
• Each $1 of principal invested in the Notes entitles the investor to a 5-year warrant to purchase one (1) share of FCSC’s common stock at an exercise price equal to $1.50 per share.  The warrants can be exercised on a cashless basis.

The Bottom Line to be noted: The offering of the notes and warrants has NOT been registered under the Securities Act of 1933, as amended (the Securities Act), and the notes and warrants may NOT be offered or sold in the United States absent registration under the Securities Act or an applicable exemption from registration requirements.

• FCSC closed at $1.00 and is UP +$0.20 or +19.4%. Make your own decision to invest but, clever… another way to beat shareholder approval and the increase in the number of shares at the moment?

Earnings:

Caladrius Biosciences (CLBS) closed DOWN -$0.08 to $6.14

• CLBS reported a net loss of $7.9 M, or $1.33 per share, compared with a net loss for Q2/15 of $17.2 M, or $3.84 per share.
• Total revenues Q2/16 increased 41% to $8.3 M compared with $5.9 M for Q2/15.  Gross margin on revenues was 15% in Q2/16 compared with 1% in Q2/15.
• As of June 30, 2016, CLBS had cash and cash equivalents of $17.7 M.

Adverum (ADVM) closed UP +$0.01 to $4.41

• Q2 net loss was $61.6 M or $1.76 per share compared to a net loss attributable to common stockholders of $9.8 M, or $0.38 per share, for Q2/15. 
• The increase in net loss is primarily due to a preliminary non-cash goodwill impairment charge of $49.1 M. The non-cash charge has no effect on our current cash balance or operating cash flows.
• Cash, cash equivalents and marketable securities were $241.3 M as of June 30, 2016,

BioTime (NYSEMKT: BTX) closed DOWN -$0.02 to $2.95

• Net income attributable to BioTime was $24.5 M for Q2 or $0.26 per share primarily due to the $49 M non-cash gain on deconsolidation of Asterias, offset by unrealized losses of $13.5 M from the decline in the fair value of the NYSEMKT: AST shares owned by BioTime that occurred during the period May 13 through June 30, 2016.
• There was no deferred income tax provision or benefit recorded in Q2. For Q2/15, net loss attributable to BioTime was $9.7 M, or ($0.12) per share. Net income (loss) attributable to BioTime includes losses from BioTime’s majority owned and consolidated subsidiaries based upon BioTime’s percentage ownership of those subsidiaries.
• BTX strengthened its balance sheet by completing a successful public equity offering with gross proceeds of approximately $20.1 M from new and existing investors.
• Cash Position and investments: Cash and cash equivalents totaled $27.7 M as of June 30, 2016, compared to $42.2 M as of December 31, 2015, which included Asterias’ cash and cash equivalents of $11.2 M.
• The cash on hand as of June 30, 2016 includes $7 M held by subsidiaries and excludes Asterias due to the deconsolidation.

Athersys (ATHX) closed UP +$0.02 to $2.19

• Q2 net loss was $7 M or -$0.8 per sharecompared to net loss of $1 M or $0.01 per share for the same period in 2015.  The $6 M net variance is due primarily to a $5.7 M decrease in non-cash income from the change in the fair value of our warrant liabilities, combined with the net impact of the $400 K increase in revenues and the $700 K increase in operating expenses for the three-month period ended June 30, 2016. 
• Cash used in operating activities was $6.5 M during Q2/16 compared to $5.8 M in Q2/15.
• Q2 revenues were $600 K compared to $200 K in the same period in 2015, due to an increase of $100 K in contract revenues from royalties and a $300 K increase in grant revenue. Grant revenues relate to both clinical and preclinical studies.
• ATHX ended the quarter with $24 M in cash and cash equivalents and available-for-sale securities.

Intrexon (XON) closed DOWN -$0.09 to $29.96

• Net loss of $49.1 M attributable to Intrexon, or -$0.42 per basic share, including non-cash charges of $44 M;
• Total revenues of $52.5 M, an increase of 17% over Q2/15;
• Adjusted EBITDA of $110.7 M, or $0.94 per basic share;
• Cash consideration received for reimbursement of research and development services covered 59% of cash operating expenses (exclusive of operating expenses of consolidated subsidiaries);
• Total consideration received for technology access fees, reimbursement of research and development services and products and services revenues covered 279% of consolidated cash operating expenses; and
• Cash, cash equivalents, and short-term and long-term investments totaled $321.2 M, the value of investment in preferred stock totaled $120 M, and the value of marketable equity securities totaled $39 M at June 30, 2016.

Decliners:

• ImmunoCellular (NYSEMKT: IMUC) -32.38%;
• Neuralstem (CUR) -6.12% after Monday’s +10.36% after Friday’s+5.61% ;
• Cesca Therapeutics (KOOL);
• Capricor Therapeutics (ONCE) -5.33%
• Organovo (ONVO) -4.16% after Monday’s +5.71%;

Advancers:

• Bellicum (BLCM) +16.60%;
• Fibrocell (FCSC) +16.42%;
• Mesoblast (MESO) +15.65%;
• Regenxbio (RGNX) +10.35% after Monday’s +9.09%;
• BioLife Solutions (BLFS) +7.89%

Flat:

• ReNeuron (RENE.L) at $3.00                                                                       

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.