September 13, 2016 5:55pm

… Volatility, low volume and rootless sentiment

The real question is what’s next?  There are no easy answers … but, I know a few!

 

Pre-open indication’s tally:  4 hits (AGTC, AST, CAPR and VTGN) and 1 miss (BLUE)

Advance/Decline and Flat Recap: 5/34 and 4 flats

 

Do you care what happened today, you should … because it has implications to Wednesday's sector activity?  

 

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

 

I predicted today’s sector action, in fact if you had read the am post - you would have known momentum only lasts so long and value doesn’t stay valued for long

 

 

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 closed sharply lower Tuesday, as investors digested a spike in volatility and falling oil prices, while looking ahead to next week's Federal Reserve meeting.

The NASDAQ closed DOWN -56.63 or -1.09% to 5,155.25 and the DOW closed DOWN -257.77 or -1.41% to 18,067.30.

 

 

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 10/31 and 2 flats;
  • The mid-day stayed negative with an A/DL of 6/35 and 2 flats;
  • The closing bell continued negative with A/DL of 5/34 and 4 flats;

 

 

Henry’omics:

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

  • The broken record whines on, I keep telling investors in the a.m. to check the indexes and ETFs; the IBB indicated -0.60% and the IWM indicated -0.73% - a BAD day was about to happen!

Volume spikes that stand out:  Northwest Bio (NWBO) – 5th day <22.346 M shares versus 3 month average = 964.8 K>, Applied Genetics Technologies (AGTC) 1st day <2.167 M shares versus 3 month average =90.7 K>, Sangamo (SGMO) – 5th day <1.255 M shares versus 896.5 K shares>

Volume is picking-up.

  • As volatility in the downside averaged –0.26% to 31.77%
  • While the upside volatility spread averaged +0.11% to 42.61%.

 

Reiterating 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 to continue and the upswings to incrementally take pricing higher and slower.

 

Call me cantankerous, contrarian or even a curmudgeon but at the least I get it right and investors make money!

 

 

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

  • Applied Genetic Technologies (AGTC) closed DOWN -$4.19 – hit;
  • Asterias Biotherapeutics (NYSEMKT: AST) closed DOWN -$0.25 – hit;
  • bluebird bio (BLUE) closed DOWN -$0.53 – miss;
  • Capricor (CAPR) closed DOWN -$0.19 – hit;
  • VistaGen (VTGN) closed DOWN -$0.01 – hit;

               

 

Today’s Bottom Line:

Fundamentals have been thrown out with the bathwater

 

 

Out and about:

Applied Genetics Technologies Corp (AGTC)

What did I say at 7:30 am …

  • “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! 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”

 

Shares of AGTC suffered their biggest ever one-day selloff Tuesday, after a disappointing update of a clinical trial prompted an analyst to swing to a bearish stance from a bullish one.

  • The gene therapy company in its late reporting financial results/ earnings conference call said late Monday that patient enrollment for an early-stage trial for its treatment of retinoschisis--the separation of the retina into two layers--has been slower than planned.
  • The clinical protocol for the XLRS trail expects enrollment of up to 27 patients, but as of August 2016, a total of eight patients were enrolled, most of whom were in the lowest level group.

XLRS is a program on which the company is collaborating with Biogen (BIIB) -1.73% 

“The company does not expect to report further data on the XLRS study this year, but intends to provide quarterly updates on its patient enrollment,” Applied Genetics said in a statement.

  • AGTC dumped -31.77% plummeting -$4.19, or 31.77%, to $9.00;
  • To close at the lowest level since going public on March 27, 2014 at an initial-public-offering price of $12;
  • Volume of 2.2 M shares was about 29 times the full-day average.

The stock was the biggest percentage decliner trading on U.S. exchanges, according to FactSet. The price and percentage decline exceeded the stock’s previous record drop of $3.10, or 16%, on May 4, 2015.

Biogen is AGTC’s largest shareholder, according to FactSet, with 1.45 M shares, or 8.1% of the shares outstanding. The stock’s selloff means BIIB’s stake is worth about $6.1 M less than it was on Monday. Biogen shares shed 1.7% on Tuesday.

  • Analyst Debjit Chattopadhyay at Janney Montgomery Scott downgraded AGTC shares two notches to a rare SELL rating from a BUY, and slashed his fair value estimate to $11 from $23. Chattopadhyay said he was expecting preliminary data on the XLRS trial during the fourth quarter of 2016, but the poor enrollment and other execution issues suggests any data is unlikely before mid-2017. “Given the uncertainties, the lack of near-term catalysts and a hit to management credibility, we see little reason to own the stock at current levels,” and are therefore downgrading the stock, Chattopadhyay wrote in a note to clients.
  • Wedbush Securities analyst David Nierengarten cut his stock price target to $20 from $36, but kept his rating at a relatively bullish outperform, saying current valuations provide investors with a “favorable” risk-versus-reward scenario.

Applied Genetics shares have lost more than half their value year to date, with the SPDR S&P Biotech exchange-traded fund XBI, +0.45%  has lost 11% and the S&P 500 has gained 4.1% SPX, -1.48% SPX, -1.48%  (With help from Tomi Kilgore, MarketWatch)

 

 

Northwest Bio (NWBO) is UP +42.61% or +$0.17 to a wholesome $0.57 on NO news …

  • After Monday’s +17.56% or +$0.0597;
  • NWBO showed serious some volume – 22.346 M shares <3 month average = 964.8 K shares – a 23.15 % increase.
  • Considering the sector's tumble and down day – it can’t be executing warrants to have some cash to keep – the lights on.

Less than a week ago, NASDAQ informed the company that its remediation plan to address its failure to comply with listing rules regarding its unregistered issuance of securities to Cognate BioServices was acceptable and the company had regained compliance with rules. In other words, the matter has been closed.

  • During the DCVax-L P3 study in GBM brain cancer, NWBO paid some of Cognate's invoices in restricted stock instead of cash. The shares were unregistered despite contractual obligations to register them;
  • They were revoked, reverse or registered;
  • To be more than possibly redeemed …

 

 

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

  • Tuesday traded at 17.74 – 18% higher;
  • Monday traded 15.7 – 13% lower;
  • Friday traded 16.4 – 30% higher;
  • Thursday traded 12.2;
  • Wednesday traded 11.94;
  • Last Tuesday traded near 12.2;

 

 

Decliners:

  • Applied Genetic Technologies (AGTC) -31.77%;
  • Adverum (ADVM) -9.16%;
  • Histogenics (HSGX) -7.20%;
  • Biostage (BSTG) -10.09%;
  • Asterias Biotherapeutics (NYSEMKT: AST) -6.36%

 

Advancers:

  • Northwest Bio (NWBO) +42.61% after Monday’s +17.56% or +$0.0597;
  • BioLife Solutions (BLFS) +0.67% or +$0.03;
  • Regenxbio (RGNX) +1.48%;
  • Brainstorm (BCLI) 0.41%;
  • Intrexon (XON) +0.11% or +$0.03;

 

Flat:                                                            

  • Fate Therapeutics (FATE) at $2.70;
  • International stem Cell (ISCO) at $1.89;
  • ReNeuron (RENE.L) at $2.625;
  • Vericel  (VCEL) at $2.32

                                                                                                                               

 

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.