RegMed Investors’ closing bell analysis, sector dumps after jumping

August 16, 2016 5:21pm

… Profit taking as the sector churns through resistance

Should have recognized the shift from risk-on pricing into risk-off sentiment

… The sector got a more than a bit overbought thus a correction

Pre-open indication’s tally:  6 hits and 3 miss

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.

Stocks closed lower Tuesday, with telecommunications lagging, as investors awaited the release of the minutes from the Fed's July meeting.

The NASDAQ closed DOWN -34.90 or -0.66% to 5,227.11 and the DOW closed DOWN -84.03 or -0.45% to 18,552.02.

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 13/29 and 1 flat;
• The mid-day stayed negative  with an A/DL of 14/26 and 3 flats;
• The closing bell was negative with A/DL of 12/28 and 3 flats – opposite of yesterday;

Henry’omics:

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

• The day’s theme was profit taking.

We had a trifecta with recent best ever highs …

• Monday closed POSITIVE with 13 decliners, 28 advancers and 2 flats;
• Friday closed POSITIVE with 14 decliners, 27 advancers and 2 flats;
• Thursday closed POSITIVE with 13 decliners, 27 advancers and 3 flats;

The three major indexes simultaneously closed at record highs for the second time in less than a week on Monday. Last week, they posted record closes at the same time for the first time since 1999.

• The sector was overbought after experiencing an oversold number of sessions back tracking to last week.

Watch list dipped after jumping dangerously to unsustainable levels which I identified yesterday and it did come - true:

• The iShares Nasdaq Biotechnology NASDAQ GM (IBB) was DOWN -1.40%
• The iShares Russell 2000 NYSE Arca (IWM) was DOWN -0.82%,
• The SPDR S&P Biotech ETF (XBI) was DOWN -1.67% and
• The Health Care Select Sector SPDR ETF (XLV) was DOWN -0.89%.

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

Out and about:

StemCells (STEM) merges with Microbot Medical Ltd.

• STEM closed UP +$2.27 or +598.55% to $2.60

Microbot will pursue the development of robotics based medical devices for the treatment of cerebrospinal fluid and gastrointestinal disorders, as well as other conditions.  

In connection with the merger, STEM will seek to amend its certificate of incorporation to:

• Affect a reverse stock split of the common stock, if necessary to comply with the listing requirements of the NASDAQ Capital Market;
• Increase the number of authorized shares of company common stock; and
• Change the name of the company to "Microbot Medical Inc." or another name designated by Microbot

Three of the members of the board resigned that day “in connection with the announcement of the merger agreement,” according to the SEC filing, leaving three other members that will continue to serve.

The reverse-merger also marks an abrupt departure from a plan to wind down STEM in the face of limited financial resources that was announced just two-and-a-half months ago.

Microbot and investors are willing to provide $4 M in financing as an incentive for the merger, which should fund STEM’s operations after the deal closes for at least 18 months <in filing>.

As part of his resignation, former CEO Ian Massey should receive a one-time $216,667 payment, and former CFO Gregory Schiffman should receive a one-time $187,500 payment along with a year of COBRA premiums. Kenneth Stratton took over as interim president on Monday.

A round-about way for a public listing, little cash after change of control and the ability to raise capital in US markets; STEM closed at $0.37 and is UP +$0.34 or +90.52% to $0.71

Spark Therapeutics’ (ONCE) largest holder is selling 1 M-share block

Children’s Hospital of Philadelphia Foundation offering 1 M shares at $61.30-$61.90, or 3.08%-4.02% discount versus last night’s close,

• Deal size ~$61.6m at midpoint, hospital held 6.7 M shares (22.1% stake) as of June 20:
• UBS is sole book runner

Pre-open indication’s tally:  6 hits and 3 miss:

• Asterias Biotherapeutics (NYSEMKT: AST) closed DOWN -$0.11 – miss;
• Capricor (CAPR) closed UP +$0.05 – hit;
• Cellectis SA (CLLS) closed DOWN -$0.31 – hit;
• Fate Therapeutics (FATE) closed DOWN -$0.06 – hit;
• Histogenics (HSGX) closed UP +$0.87 – miss;
• Juno Therapeutics (JUNO) closed UP +$0.29 – miss;
• Kite Pharma (KITE) closed DOWN -$0.67 – hit;
• Regenxbio (RNGX) closed DOWN -$0.11 – hit;
• Spark Therapeutics (ONCE) closed DOWN -$4.58 – hit;

Today’s Bottom Line:

“Bada Bing”, I was right again …!

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

• Tuesday traded 12.5;
• Monday traded 11.81;
• Friday traded near 11.5;
• Thursday traded near 11.6;
• Wednesday traded near 12.5;
• Last Tuesday traded near 1.6;

Decliners:

• Mesoblast (MESO) -9.91% after Monday’s -2.60%;
• Spark Therapeutics (ONCE) -7.17%;
• Cesca Therapeutics (KOOL) -7.14% after Monday’s +6.06%
• Adverum (ADVM) -5.46%;
• BioLife Solutions (BLFS) -5.42% after Monday’s-2.40%;

Advancers:

• StemCells (STEM) +598.55% after merger;
• Neuralstem (CUR) +40.40% or +$0.08;
• Histogenics (HSGX) +30.85% after Monday’s +33.02% after Friday’s +6.05%;
• Verastem (VSTM) +4.58%;
• International Stem Cell (ISCO) +4.52% 0r +$0.09 after being FLAT at $1.99 on Monday

Flat:

• Fibrocell (FCSC) at $1.05;
• Northwest Bio (NWBO) at $0.40;
• 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.