Lower open expected; RegMed Investors’ pre-open, momentum only lasts so long

September 13, 2016 7:12am

… The Dow was down some 87 points around 5.30 a.m. ET, while the S&P 500 was down 11 points and the NASDAQ down 25 points.

Value doesn’t stay valued for long

Indexes and ETFs: The IBB (-0.60), IWM (-0.73%) while the XBI and XLV are NOT indicating

Companies in my headlights: SELL - AGTC, AST, CAPR and VTGN; BUY - BLUE

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

Where is “our” universe going today?  If you don’t 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 -0.52% and NASDAQ futures are DOWN -0.55%

U.S. stock index futures pointed to a sharply lower open on Tuesday, as investors kept an eye on the price fluctuations in oil, amid speculation over when the Federal Reserve could raise interest rates.

European stocks came off their session highs in morning trade as investors digested comments from a U.S. FED official that suggested a rate hike was not imminent and the latest data from China.

Asian markets were mixed, giving up earlier gains despite slightly better-than-expected China data and a dovish speech from FED Governor Lael Brainard.

Data docket: National Federation of Independent Business's (NFIB) Small Business Optimism Index, due out at 6.00 a.m. ET. The Federal Budget is also set for release at 2.00 p.m. ET.

The stem, cell, gene and regenerative therapy (SCG&RT) sector closed POSITIVE on Monday, 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):

• Monday closed POSITIVE with 11 decliners, 30 advancers and 2 flats;
• 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
• Last Tuesday closed POSITIVE with 12 decliners, 29 advancers and 2 flats;

Remembering Monday’s closing post, “For months, we have been grinding up, down, yet incrementally sideways without being able to take out some resistance regions as support levels ate blurred. The only way to explain the upside is basically many sector “participants” were oversold – plain and simple!”

• My primary pattern is to watch the advance/decline lines (A/DL) as well as maintain an open mind based upon how the changes in the A/DL take shape.  As a word of caution to investors – we are solidly stuck in a trading market with investors left on the sidelines!

My expectation is to see the usual stock price destruction continue and the upswings to incrementally take pricing higher and slower.

• Keep in mind the recent sector action and do NOT make any certain assumptions of what the market will do in relation to “our” universe!

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 Monday up +3.04% and is DOWN -0.60% in Tuesday’s pre-market;
• The SPDR S&P Biotech ETF (XBI) closed Monday up +3.61% and is DOWN -0.08% in Tuesday’s  pre-market;
• The Health Care Select Sector SPDR ETF (XLV) closed up Monday +1.48% and is UP +0.04% in Tuesday’s pre-market;
• The iShares Russell 2000 (IWM) closed up +1.40% on Monday and is DOWN -0.73% in Tuesday’s pre-market.

Companies in my headlights:

Applied Genetic technologies (AGTC) closed UP +$0.82 to $13.19 after being down Friday -$0.67 to $12.37. Monday, AGTC reported financial results for Q2/16. I have taken MY hits with my LONG consideration of AGTC being oversold but, after listening to the conference call, I am left numb having been spoken AT versus TO by the management team. Scripted comments ran too long and should now be published and then maybe, the CEO and CFO could actually address and talk about their accomplishments WITH investors. The numbers were good, a few issues but, call participants were left cold as if management was trying to overwhelm call participants with I am so smart and science oriented that speaking to investors was below them.  This is beyond the style versus substance verbal presentation and the issues of enrollment, execution, visibility of data reads and the uncertaintu of catalysts! No wonder there is such a dismal following amongst retail investors, Fidelity sold a major portion of their holding leaving the retail flank even more exposed as institutions aren’t picking-up the slack. Changing my tune – BUY to SELL;

Asterias Biotherapeutics (NYSEMKT: AST) closed UP +$0.05 to $3.93 after Friday’s $3.88 (+$0.38) after Thursday’s $3.50 (+$0.37) post Wednesday’s $3.13 (+$0.18) and last Tuesday’s $2.95. I just don’t like the chart and question resistance and the evidence of support. 8/25’s pricing was $2.73; a $1.20 is on the table. A trader bullseye is on AST’s back; let’s see if support weakens – Maintaining SELL;

bluebird bio (BLUE) closed UP +$5.38 to $58.81. BLUE fell 13.7% in August after posting a Q2/16 net loss of $58.8 M, which came out to $0.15 per share greater than the “street” had expected. Then things got complicated. The next day, Juno Therapeutics announced an exclusive license agreement with Memorial Sloan Kettering Cancer Center and Eureka Therapeutics for a fully human binding domain targeting B-cell maturation antigen (BCMA) for treatment of multiple myeloma. That's bad for Bluebird because its lead oncology candidate, bb2121, is a T-cell based chimeric antigen receptor (CAR-T) immunotherapy also directed at BCMA. The reason Bluebird stock only fell 13.7% last month is because bb2121 is a relatively minor asset. Most of the company's perceived value is based on its non-oncology program -- namely, LentiGlobin for treatment of beta-thalassemia and sickle cell disease.  If eventually approved, LentiGlobin would probably lead to improved outcomes at a lower cost compared to current treatment methods -- a recipe for commercial success. Both genetic diseases lead to production of dysfunctional hemoglobin, a crucial protein in red blood cells that delivers oxygen. Standard treatments include frequent blood transfusions, which leads to further complications at an enormous lifelong expense. With a market cap of about $1.88 B, no debt, and $779 M in cash <Motley Fool>. One of BLUE's gene therapies for treatment of a much smaller patient population, Lenti-D, appears headed for FDA approval that could bolster (or damage) LentiGlobin's safety profile.  The aftermarket indication is positive +$0.69 to +1.17 – BUY;

Capricor (CAPR) closed UP +$3.92. CAPR reported a Q2/16 loss of $4.7 M or -$0.23 per share. CAPR has two ongoing clinical trials of CAP-1002 (allogeneic cardiosphere-derived cells, or CDCs): the HOPE trial in boys with Duchenne heart disease and the ALLSTAR trial in adults with cardiac dysfunction following a large heart attack. They have milestones - top-line six-month data from HOPE due in Q1/17 and delivering six-month ALLSTAR data to Janssen at the same time. BUT, what if the data is inconclusive and/or Jansen<J&J> decide to negate or decline its option? TOO many IFS for me as well as CAPR, who I also believe DESPERATELY NEEDS cash i.e. access to capital markets for a raise that will effect a BIG discount in its pricing and increase dilution.  CAPR had $11.7 M in cash post Q2 reporting and spending $5.7 to $6 M a quarter.  MY read, a 50/50 bet with NO indicators – I wouldn’t be TOO deep into CAPR – SELL;

VistaGen (VTGN) closed DOWN -$0.12 to $3.98 after Friday’s $4.10 (+$0.12) following Thursday’s $4.17 (+$0.22) after Wednesday’s $3.95 (-$0.12) and last Tuesday’s $4.07 (+$0.44).  VTGN has cash problems, with only $8.5 M in the till and debt of $106.8 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.