August 11, 2016 5:42pm

… With the iShares Nasdaq Biotechnology ETF (IBB) gaining 1.07%

Stocks flirt with upside headwinds, increasing volume highlights pricing softness

 

Pre-open indication’s tally:  6 hits and 0 miss:

Earning’s review:  HSGX, BLFS, BSTG, BCLI, CUR and OPXA

 

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 Friday'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.

 

 

Stocks closed higher Thursday, with the three major indexes closing at new record highs, amid sharp gains in oil prices and strong quarterly results from retailers.

The NASDAQ closed UP +23.81 or +0.46% to 5,228.40 and the DOW closed UP +117.86 or +0.64% to 18,613.52.

 

 

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 12/28 and 3 flats;
  • 11:30 am, the sector turned negative with an A/DL of 19/24 and 0 flats;
  • The mid-day flipped positive  with an A/DL of 27/13 and 3 flats;
  • The closing bell was positive with A/DL of 27/13 and 3 flats;

 

 

Henry’omics:

Referencing the pre-open post, MY version is of a “Proof of Life” certificate is produced by solid institutional investors to confirm that a public entity is still alive and able to continue to survive.

  • It is also referred to … when someone has been kidnapped, the people paying the ransom can demand proof of life, that the victim is still alive.

The evidence is still questionable whether a public or listed company is alive when its prospects are uncertain.

  • How many are the “walking dead” without access to cash to sustain their development and G&A spending … without “killing” their stakeholder’s value or capital.  

That uncertainty is related to being able to finance themselves out of a lack of cash without killing their investors by discounts and dilution.

 

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

  • The iShares Nasdaq Biotechnology NASDAQ GM (IBB) was UP +1.07%
  • The iShares Russell 2000 NYSE Arca (IWM) was UP +0.37%,
  • The SPDR S&P Biotech ETF (XBI) was UP +1.64% and
  • The Health Care Select Sector SPDR ETF (XLV) was UP +0.58%.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 11.6, down 3.6%.

 

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

 

 

Pre-open indication’s tally:  6 hits and 0 miss:

  • Athersys (ATHX) closed UP +$0.00 – hit;
  • BioLife Solutions (BLFS) closed DOWN- $0.06 – hit;
  • bluebird bio (BLUE) closed UP +$1.96 – hit;
  • Caladrius Biosciences (CLBS) closed DOWN -$0.08 – hit;
  • Histogenics Corp. (HSGX) closed DOWN -$0.02 – hit;
  • Intrexon (XON) closed UP +$0.75 – hit;

 

 

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

  • Thursday traded near 11.6;
  • Wednesday traded near 12.5;
  • Tuesday traded near 1.6;
  • Monday traded near 11.5;
  • Friday traded near 11.3;
  • Last Thursday traded near 12.5;

 

 

Today’s Bottom Line:

Isn’t it FUNNY that in all the financial results/ earnings conference calls – NO management teams talk about the fluctuations in their share pricing …?

 

 

Earnings:

Biostage (BSTG) closed UP +$0.03 to $1.14 …

Q2’s net loss was $2.7 M, or $0.17 per basic share, compared to $4.5 M, or $0.44 per basic share, for Q2/15.

  • R&D expense increased $600 K to $1.7 M compared with $1.1 M in Q2/15, due primarily to increased spending on pre-clinical studies of $300 K, outsourced lab services of $100 K, payroll related and other expenses totaling $200 K.
  • G&A expense decreased $2.3 M to $1.2 M in Q2 2016 compared with $3.5 M in Q2 2015 due to a $2.2 M decrease in non-cash stock-based compensation costs related primarily to the departure of the former CEO in April 2015, and decreases of $200 K and $100 K in recruiting cost and other costs. Those decreases were partially offset by a $200 K cost increase related to the name change to Biostage and greater investor communications efforts.
  • Cash used in operating activities was $1.5 M in Q2/16 compared with $2 M in Q2/15.

Cash position at 6/30/16 was $8.1 M.

I notice that the $20 M shelf registration was mentioned – BSTG is spending by their words $2 to $2.5 M a quarter which means they will be OUT of cash in Q1/17 – when they “hope” to launch an IND backed pivotal trial.

One HUGE issue that wasn’t mentioned was registering the warrants issued in the last financing; there was a six month term to the offering.

  • I believe there will be a serious downside from this event, right about the time BSTG should be initiating a road show for a more than much needed financing!

With a three month “tail” and a six month right of first refusal based on the recent financing agreement could mean that Wainright <Rodman Renshaw> will be affecting another DOWN financing. May’s financing was priced at $1.76 following a financing by National Securities of $1.95.

 

 

Histogenics (HSGX) closed DOWN -$0.02 to $1.96 …

  • Q2’s net loss was $8 M, or -$0.61 per share, compared to $7.6 M, or -$0.58 per share in Q2/15.
  • R&D expenses were $5.8 M compared to $5.9 M inQ2/15.  The decrease in expense was primarily due to raw materials purchases in Q2/15to support the NeoCart P3 clinical trial combined with a reduction in consulting expense in Q2/16.  This decrease was partially offset by an increase in headcount and clinical trial related expenses.  G&A expenses were $2.2 M, compared to $1.7 M in Q2/15. The increase was primarily due to higher salaries, facility-related and legal costs which were partially offset by a reduction in consulting expense.
  • At 6/30/16, HSGX had cash, cash equivalents and marketable securities of $15.9 M, compared to $30.9 M at December 31, 2015. 

Histogenics believes its current cash position will fund its operations into Q1/17.  Needs a financing but, has a DEEP pocket partner in Intrexon (XON) that was mention frequently in the conference call.

Also HSGX has a number of positives in its pocket:  an advancing P3 trial, solid enrollment criteria, 4 analyst coverage, has Cowen as its banker with 41% held by insiders, 40.8% <20 institutions> held by institutional and mutual fund  

 

 

Brainstorm (BCLI) closed DOWN -$0.05 to $2.35 …

Q2’s net loss was $962 K, or -$0.05 per share, compared to a net loss of $2,265 M, or -$0.12 per share in Q2/15.

  • As of 6/30/16, BCLI had cash, cash equivalents, and short-term deposits of approximately $11.5 M.
  • R&D expenses, net $151 K, compared to $1.375 M in Q2/15. This decrease is due to a higher Israel’s Chief Scientists grant and also related to the winding down and completion of the U.S. Clinical Trial.
  • G&A expenses were approximately $832 K, compared to $988 K in Q2/15.
  • Loss from operation was $983 K compared to $2.363 M in Q2/15.

A P2 trial of NurOwn® in Amyotrophic Lateral Sclerosis, or ALS with the trial is being conducted at three major medical centers in the U.S. to demonstrate the safety of and its ability to provide a clinical benefit to ALS patients.

  • BCLI is currently working with its investigators on the design of a larger powered to efficacy multiple dose trial. 
  • BCLI plan to meet with the FDA in order to present the results and discuss the next steps for NurOwn including the various pathways available for its orphan drug fast track status product.

My view – fumblers … watch out for the hype and hyperbole.

 

 

BioLife Solutions (BLFS closed DOWN -$0.06 to $

Q2 net loss was $1.4 M or -$0.11 per share compared to Q1/15’s $994 K or -$0.08 per share.

  • In Q2/16, BLFS entered into a $4 M credit facility that should provide sufficient capital to enable positive cash flow from operations. BLFS drew down $1 M from this facility in Q2 and ended the period with $1.3 M in cash.
  • G&A rose to $1.263 M from $1.031 M in Q2/15.

I noticed BLFS is NOT articulating their financial position in the release making investors check the balance sheet and income statement for specifics – WATCH OUT!

 

 

Opexa (OPXA) closed UP +$0.04

Q2’s net loss was $2.1 M, or $0.30 loss per share (basic and diluted), compared with a Q1/15’s $3.5 M or $0.56 loss per share.

  • R&D expenses were $1.81 M compared to $2.795 M for Q1/15. The decrease in expenses is primarily due to cost reductions in connection with the winding down of the clinical trial of Tcelna in SPMS, especially a reduction in milestone payments to its CRO as well as a reduction in site expenses.
  • There was also a decrease in the procurement and use of supplies for product manufacturing and development which was partially offset by an increase in supplies and legal expenses related to the NMO study development. 
  • G & A expenses were $953,582 in Q2/16 compared with $1.345 M for Q2/15.

Cash and cash equivalents were $7.84 M as of 6/30/16, compared to $12.58 M as of December 31, 2015.

 

 

Neuralstem (CUR) closed   at $

An 8-K filing versus a release …

  • Q2/16 net loss was -$3.85 M or -$0.04 versus Q2/15’s 5.448 M or -$0.06 per share
  • Cash position was 11.128 M

An on-going concern company with a NASDAQ listing issue

An issue … on March 1, 2016, Neuralstem, entered into a General Release and Waiver of Claims with I. Richard Garr in connection with his resignation as the CEO.

  • Pursuant to the General Release, Mr. Garr will: (1) continue to receive his monthly salary of $36,667 until March 1, 2017, (2) receive lump sum payments of $177,000 to be paid on June 1, 2016, January 1, 2017 and March 1, 2017, (3) receive healthcare benefits until January 1, 2017, and (4) be entitled to the immediate vesting of any previously outstanding but unvested equity awards.
  • This General Release and Waiver of Claims was amended on June 16, 2016, whereupon Mr. Garr voluntarily agreed to forego the lump sum payments due to him on January 1, 2017 and March 1, 2017.

X-CEO Garr put CUR in the “toilet” and gets paid to keep it there!

 

 

Decliners:

  • International Stem Cell (ISCO) -7.25% after Wednesday’s +4.55%;
  • Sangamo (SGMO) -2.84%;
  • BioLife Solutions (BLFS) -2.88%;
  • Brainstorm (BCLI) -2.08%;
  • Cellectis SA (CLLS) -2.03%

 

Advancers:

  • Mesoblast (MESO) +15.53%;
  • AxoGen (AXGN) +8.35%;
  • Spark Therapeutics (ONCE) +8.14%;
  • Osiris (OSIR) +4.34% after Wednesday’s -7.48%;
  • Regenxbio (RGNX) +4.29% post Wednesday’s -8.43% after Tuesday’s +10.35% post Monday’s +9.09%

 

Flat:

  • Athersys (ATHX) at $1.96;
  • Pluristem (PSTI) at $1.53;
  • Reneuron (RENE.L) at $2.875                                                                     

                                                                                                  

 

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.