RegMed Investors’ (RMi) closing bell analysis, speculative sentiment is shaped to be warped

October 11, 2016 5:13pm

… The iShares Nasdaq Biotechnology ETF (IBB) dropping -3.84%, as the IBB was led lower by Illumina (ILMN) , which saw its shares plunge 24.8% after slashing its revenue guidance.

As I stated in the pre-open, there’s little to entertain than watching “our” universe “spit the bit” <when a tired horse stops running> as traders define a good or bad “trip” and money is better made on the  downside sell.

… I am right again …

Pre-open indication’s tally:  3 hit (AXGN, OSIR and VSTM) and 2 miss (AGTC and BSTG)

Out and about: Vericel (VCEL) – new ATM; MiMedx (MDXG) guides Q3 and Organovo (ONVO) guides fiscal Q2 and Biostage (BSTG) closes up but, a big fix needed …

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?   Subscribe or lose!

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

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 on Tuesday as concerns of a Democratic sweep weighed on health care and biotechnology stocks, while crude prices fell amid a strong dollar and rising Treasury yields.

The NASDAQ closed DOWN -81.89 or -1.54% to 5,246.79 and the DOW closed DOWN -200.38 or -1.09% to 18,128.66.

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 18/22 and 3 flats;
• The mid-day stayed negative with an A/DL of 8/34 and 1 flat;
• The closing bell  was negative with A/DL of 10/32 and 1 flat – the opposite of yesterday;

Out and about:

Biostage (BSTG) closed UP +$0.02 to a wholesome $0.92 … lucky but, who is smoking what as an offering is DESPARETELY needed …

• After Monday, Friday and Thursday’s being a major depreciator of the shallowest pricing.
• It will be hard to “stem” this damage without some casualties – so, who should be the first to go …
• I’d start with the “bored” of directors (BOD) and there is a LONG list of their lack of oversight and personal enrichment …
• WHY again, were BOD members buying BELOW the last offering of $1.76 after the pricing and before the close of the deal … maybe legal (?) but, the OPTICS were appalling …
• WHO do they, the BOD represent again – Investors – NO way!
• MORE issues are going to come out as the microscope focuses of the relationships between the individuals …

Vericel (VCEL) was DOWN -$0.45 to $2.56 …

• After initiating an ATM with Cowan and Company, On October 10, 2016 Vericel entered into a Sales Agreement  which will act as sales agent to sell, from time to time, VCEL's common stock, no par value per share having an aggregate sale price up to $25 M through an "at the market offering" program (the "ATM Offering");
• I actually believe it is a good thing with a good name – yes debt increases but, VCEL has access to cash and with Cowan choosing to “bank the deal” means they will offering the financing to the future.

MiMedx (MDXG) closed DOWN -$0.64 to $8.50 … announced its revenue for Q3/16:

• Q3 2016 revenue of $64.4 M is a 31% increase over Q3 2015 revenue
• Q3 2016 revenue exceeds $64.0 M upper end of guidance
• Q3 2016 revenue beats analyst's estimates of $63.1 M
• Revenue for the nine months ended 9/30/16 is a 29% increase over same 2015 period

MDXG recorded record revenue for Q3 of $64.4 M, a $15.4 M or 31% increase over Q3/15 revenue of $49 M. For the nine months ended September 30, 2016, MDXG recorded record revenue of $175.1 M, a $39.7 M or 29% increase over revenue of $135.4 M recorded in the same nine month period of 2015.

Organovo Holdings (ONVO) closed UP +$0.12 to $3.93

• ONVO’s preliminary fiscal Q2 total revenue was approximately $1.4 M, consisting largely of product and service revenue.  This result reflects a 357% increase in total revenue versus the comparable period of fiscal 2016 and a 54% increase versus Q1/17. 
• Product and service revenue was approximately $1 M, up 400% from the prior-year period, largely driven by an increase in customer contracts for ONVO’s tissue research services.
• Collaborations and grant revenue totaled approximately $400 K, primarily supported by a milestone achievement from ONVO’s agreement with Merck & Co. to develop multiple custom tissue models.

ONVO’s preliminary cash and cash equivalents balance was approximately $51.7 M as of the end of the fiscal Q2, which compares to $53.5 M for Q1.  ONVO’s preliminary net cash utilization during the period was approximately $6.8 M.  During the fiscal Q2, ONVO generated net proceeds of approximately $4.5 M from the issuance of 997,181 shares of common stock in at-the-market (“ATM”) offerings at a weighted average price of $4.67 per share and approximately $0.5 million from the exercise of stock options and warrants.

ONVO updated its full-year fiscal 2017 outlook for total revenue and net cash utilization: 

• Total revenue of between $4.5 M and $6.2 M for fiscal-year 2017 with fiscal 2016 total revenue recorded at $1.5 M;
• Net cash utilization of between $31 M and $34 M for fiscal-year 2017; 
• ONVO had cash and cash equivalents balance of $62.1 M for its fiscal year ended March 31, 2016.

Henry’omics:

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

• As I stated in the pre-open letter, “Stocks were running in a sprint … however, a “foul” will compromise any finish … I am NOT an “on the nose” handicapper as “objections” can be easily lodged”
• As to that a.m. title, maybe you watch horses racing once a year but, the qualifying races are the key to the big one - the Kentucky Derby.   Why do I bring it up, some sector companies are … “off the board” … a horse that fails to finish in the money!

I keep telling investors in the a.m. to check the indexes:  

• The iShares Russell 2000 (IWM) indicated negative pre-open -0.26%, and was DOWN -1.83% at the close while the iShares Nasdaq Biotechnology (IBB) indicate a negative pre-open -1.24% and closed DOWN -3.84% at the close.

The NASDAQ is NOT doing stem, cell, gene and regenerative therapy (SCG&RT) sector stocks investors any favors – these days, as the NASDAQ is idling just inches from its record high.

• The game of musical chairs continues until the music stops and the game of losers and the seated begins again with one less chair!

The real key to knowing when an -0.76% to -14.95% daily downside or even a daily  upside of +0.22% to +8.15% -- corrections highlight the action of the sector stocks.

Look close at today and the past days – think crossword or puzzle – I see patterns evolving as technicals and fundamentals matter … yet they seem over-ridden as:

The downside trend reflects a pricing trend range of

• Tuesday’s decline ranged from -0.76%  to -14.95% in thirty-two (32) equities;
• Monday’s decline ranged from -0.00 to -10.45% in ten (10) equities
• Friday’s -0.06% to -14.55% in 28 equities;
• Thursday’s -0.11% to -9.48% in 9 equities;
• Wednesday’s -0.68% to -3.71% in 4 equities;
• Last Tuesday’s-0.34% to -15.92% on Tuesday of 12 equities;

The upside shows a pricing trend range of

• Tuesday’s upside ranged from +0.22% to +8.15% in ten (10) equities;
• Monday’s +0.47% to +10.07% in thirty-three (33) equities;
• Friday’s +0.11% to 12.63% in 15 equities;
• Thursday’s +0.26% to 7.19% in 32 equities;
• Wednesday’s +0.43% to +12.22% in 35 equities;
• Last Tuesday’s of +0.76% to +2.82% of 30 advancing equities following …

The SCG&RT sector stocks dumped Tuesday after Monday rise, as value was stolen by declines in …

• Vericel (VCEL)
• Fibrocell (FCSC);
• Bellicum Pharma (BLCM);
• Spark Therapeutics (ONCE);
• MiMedx (MDXG);
• Opexa (OPXA)

Yesterday appreciators now reflect being down and overbought in today’s market.

• bluebird bio (BLUE),
• Spark Therapeutics (ONCE),
• Regenxbio (RGNX),
• Bellicum (BLCM),
• Juno (JUNO) and
• Kite Pharma (KITE)

Today’s session flight welcomes investors to try the ipecac as short-term momentum regurgitates after yesterday’s positive close,  Monday and Friday’s  down closes and one stale session followed by another two negative sessions  highlighting the shift of the undervalued to the newest week’s overbought and some call me a skeptic!

The day’s gains were minimal, with all but a few of the usual … value destroyers were still down - Immunocellular (NYSEMKT: IMUC), Pluristem (PSTI), Cesca Therapeutics (KOOL), BioLife Solutions (BLFS) and

When pricing breaks up or down on volume, which I watch … the message is sent that will speak to the patterns – NOT the crystal balls in the world.

Abnormal volume … highs and lows

• Vericel (VCEL -$0.45 after Monday’s +$0.16) 2.054 M shares traded <3 month average = 209.3 K shares>:
• Cellectis SA (CLLS -$0.81) 108.6 shares traded <3 month average = 81 K shares>;
• Pluristem (PSTI -$0.03) 32.2 K shares <3 month average = 149.8 K shares>;
• BioLife Solutions (BLFS -$0.01) 10.4 K shares traded <3 month average =425.8 K shares>;

Pre-market indication review:  3 hit and 2 miss:

• Applied Genetic Technologies (AGTC) closed DOWN -$0.25 – miss;
• AxoGen (AXGN) closed DOWN -$0.31 – hit;
• Biostage (BSTG) closed UP +$0.02 – miss;
• Osiris (OSIR) closed DOWN -$0.19 – hit;
• Verastem (VSTM) closed DOWN -$0.04 – hit;

Percentage decliners:

• Vericel (VCEL) -14.95%;
• Fibrocell (FCSC) -9.08%;
• MiMedx (MDXG) -7%;
• Bellicum Pharma (BLCM) -5.92%;
• Athersys (ATHX) -5.36%

Percentage advancers:

• Northwest Bio (NWBO) +8.15% after Monday’s +8.46% or +$0.035;
• International Stem Cell  (ISCO) +4.57% after Monday’s +6.06% or +$0.10 after Friday’s -9.84% after Thursday’s FLAT at $1.83;
• Organovo (ONVO) +3.15%;
• Stemline (STML) +2.82% after Monday’s +6.66% after Friday’s +12.62%;
• Biostage (BSTG) +2.23% after Monday’s -4.25% after Friday’s -14.55%;

Flat:                                                                                                      

• ReNeuron (RENE.L) at $2.50

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

• Tuesday traded 15.9 – a +18.6% increase;
• Monday traded near 13.4;
• Friday traded near 13.4;
• Thursday traded near 12.84;
• Wednesday traded near 13.06;
• Last, Tuesday closed near 13.63;

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.