Sharply lower open expected; RegMed Investors’ pre-open, grab you socks

September 12, 2016 8:01am

… There is only so far one can bend over before you are forced to rise

Friday’s sector massacre highlighted the sector’s recurring pricing risk

It’s time to take a hard look at your portfolio and “cherry pick” through the recurrent sector trends

Indexes and ETFs: The IWM (-0.87%), IBB (-0.94%) and XBI (-0.85%) are DOWN and the XLV is NOT indicating

Companies in my headlights: AGTC, AST, JUNO, KITE and VTGN,

Financial results/earnings: Applied Genetic Technologies (AGTC)  

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

Where is “our” universe going today?  If you want to know, subscribe and find out! 

I say what others won't, so you can do what others can't!

How does the old saying go? It's easier to ask for forgiveness than ask for permission. Maybe it's the other way around. Whatever the case, to the extent I need to, I'm NOT going to ask for forgiveness for what I say – someone NEEDS to speak up and out!

The Dow futures are DOWN -0.63% and NASDAQ futures are DOWN -0.81%

U.S. stock index futures pointed to a sharply lower open on Monday, as talk of an interest rate hike by the U.S. Federal Reserve coming as soon as this month, along with weak oil prices, rattled investors.

European stocks were sharply lower in afternoon trade as investor sentiment was rattled by concerns that the U.S. Federal Reserve could be considering an imminent interest rate hike.

Asian shares tumbled after a sharply lower finish for major U.S. indexes on Friday amid concerns central banks, particularly the Fed, will become less accommodative.

Data and speech docket: Fed Governor Lael Brainard is expected to give a speech at the Chicago Council on Global Affairs at 1.15 p.m. ET, with the topic expected to be about the economic outlook and on monetary policy implications.  Atlanta Fed President, Dennis Lockhart is also expected to deliver a keynote presentation to the Monday session of the 58th NABE Annual Meeting, at 8.00 a.m. ET. Minneapolis Fed President Neel Kashkari is also due to speak to CNBC on Monday.

The stem, cell, gene and regenerative therapy (SCG&RT) sector closed NEGATIVE on Friday, POSITIVE on Thursday, Wednesday and Tuesday while last Monday was a holiday.

The SCG&RT sector’s record after the last 5 days (of 43 covered companies):

• Friday closed NEGATIVE with 37 decliners, 5 advancers and 1 flat;
• Thursday closed POSITIVE with 4 decliners, 35 advancers and 4 flats;
• Wednesday closed POSITIVE with 15 decliners, 27 advancers and 1 flat
• Tuesday closed POSITIVE with 12 decliners, 29 advancers and 2 flats;
• Last Monday was a holiday;

Remembering Friday’s closing post, “Volume picks up as market participants complete their late-summer vacations, resulting in a return to fully staffed trading desks.  As I watch the charts during these weeks of Q3, they reveal a fickle sentiment and trading influences.”
 

• Reiterating, despite these unfavorable tendencies, there remain a few positives - many in viable trading ranges and more negatives – related specifically to those companies that DESPERATELY NEED to raise CAPITAL.

The superficiality of speculation in “our” universe has plagued recent days, weeks, even months and quarters.

Volume is picking up as sector “participants” complete their summer vacations, resulting in more eyes on the sectors low and over-sold conditions.  However, traders have returned to their desks.

• It’s also too risky to be long at this time especially as Q3 approaches its end, but it’s also too early to be totally short.

You’ve made it to the office, turned on the monitor, having just gotten your coffee and it hits you - what could be today’s trades? 

Watch list:

• The iShares Nasdaq Biotechnology (IBB) closed Friday down -3.26% and is DOWN -0.94%in Monday’s pre-market;
• The SPDR S&P Biotech ETF (XBI) closed Friday down -3.60% and is DOWN -0.85% in Monday’s  pre-market;
• The Health Care Select Sector SPDR ETF (XLV) closed down Friday -1.97% and is NOT indicating in Monday’s pre-market;
• The iShares Russell 2000 (IWM) closed down -3.12% on Friday and is DOWN -0.87in Monday’s pre-market.

Companies in my headlights:

Applied Genetic technologies (AGTC) closed DOWN -$0.67 to $12.37. AGTC closed Thursday at $13.04 after Wednesday’s $13.01 (+$0.16) following Tuesday’s $12.85 (+$0.32) after Friday’s $12.52 (-$0.13) following last Thursday’s $12.66 (-$0.12) following the previous Wednesday’s $12.78. We are getting closer, AGTC will report financial results for Q2 after the market closes on Monday, 9/12/16. AGTC management will host a conference call beginning at 5:00 pm ET that day to review results and provide a corporate update. I have taken MY hits with my LONG consideration of AGTC being oversold but, I am sticking by – Maintaining BUY;

Asterias Biotherapeutics (NYSEMKT: AST) closed Friday UP +$0.38 after Thursday’s $3.50 (+$0.38) after Wednesday’s $3.13 (+$0.18). AST  has had a good multiple session run with Tuesday’s $3.13, last Friday’s $2.95, the previous Monday’s $2.96, Tuesday’s $2.82, Wednesday’s $2.79, and the previous Tuesday’s $2.74 as well as the previous Monday’s $2.73. I just don’t like the chart and question resistance and the evidence of support – Maintaining SELL;

Juno Therapeutics (JUNO) closed DOWN – $1.73 to $28.02. Review the past week’s session pricing, Thursday’s $29.75, Wednesday’s $28.67, Tuesday’s $28.81, the previous Friday’s $28.44 and Thursday’s $29.29. While trials have shown positive results, a few cases of severe side effects have dominated the news. These included the death of three patients in July who were in a trial with JUNO, leading to a temporary suspension of its leukemia study, which was later allowed to resume. Despite recent concerns, I perceive the current level as a good opportunity to buy shares. After last week’s decline, JUNO’s shares rose Thursday by around 3.7% based on new findings. JUNO reported a higher success rate in trials where tumors disappeared completely when chemotherapy agent fludarabine was taken along with cyclophosphamide before T-cell treatments. Many believe that the recent decline based on Novartis's news is a market overreaction, and the CAR-T technology remains a long-term play. The retreat or exit of a leading competitor like Novartis would benefit JUNO. Oversold, BUY;

Kite Pharma (KITE) closed DOWN -$4.25 to $56.73. It hasn’t been a good week in share pricing, last Thursday’s $60.98, Wednesday’s $61.12, Tuesday’s $60.20, the previous Friday’s $58.76 and Thursday’s $58.87 and the previous Wednesday’s $57.62. The last time I saw pricing close was on 8/2’s $55.98 and 7/29’s $56.63. KITE's KTE-019 could be the first to market next year, but it's not yet known how its data will ultimately compare with Juno's. Oversold – BUY;

VistaGen (VTGN) closed UP +$0.12 to $4.10 following Thursday’s $4.17 (+$0.22) after Wednesday’s $3.95 (-$0.12) following Tuesday’s $4.07 (+$0.44) after last Friday’s $3.56 (-$0.06) post last Thursday’s $3.62 (+$0.18) followed by the previous Wednesday’s $3.44 (+$0.16), Tuesday’s $3.28 (+$0.31), Monday’s $2.99 and the previous Friday’s $3.07.  VTGN has cash problems, only $8.5 M in the till and debt of $1.06.8 K, thus a need for an offering. I read the article in “Insider Monkey”, which identified the relevance of their research but, also opined on treatment-resistant depression, or TRD.  The problem with ketamine though is that it’s dangerous, addictive, and prone to abuse. Using ketamine to treat TRD is something akin to using heroin to treat chronic pain. It works, yes, but at a cost. To quote, “here are two companies working on the problem. One is Naurex Inc., which was acquired by Allergan plc (NYSE:AGN) in 2015 but the more speculative option in terms of high return potential is VistaGen Therapeutics (VTGN. It is still a relatively unknown company. Speculation is the BIG word here and will be there versus a well-funded “daddy” such as AGN.  A steep peak stands out on the chart and I never trust being too long– Maintaining SELL;

Whether information or intelligence is good, bad or somewhere in between; I put into context what is relevant and useful for investors.

Henry McCusker, the editor and publisher of RegMed Investors does not hold or have positions in securities referred to in this publication.