May 5, 2017 8:08am

 

… And share pricing risks are increasing as Q1 financial results are announced

It’s still an accountability play of increased spending with shrinking results

 

… It’s also time to play portfolio defense, but focus on cash positions …

 

Mixed open expected as non-farm data is released, i.e. jobs day

 

Pre-open indications:  six (6) – 4 SELLS, 2 BUYS –

 

Critical information ahead of “our” universe’s open! I provide intelligence and analysis for short and near-term investment.

 

Readership is a team sport, are you on it?

 

 

Expectation is the word for 2017 – meeting the unknowns with the soon to be exposed concerns will be the subject of investing decisions throughout this year.

 

 

Dow futures are DOWN -0.08% and NASDAQ futures are UP +0.04%

 

 

U.S. stock index futures pointed to a mixed open on Friday …

European markets were lower as tumbling oil prices weighed on investor sentiment.

Most Asian markets lost ground as traders await the U.S. nonfarm payrolls data later and after drops in commodity prices overnight.

 

Data docket: the release of nonfarm payrolls at 8:30 a.m. ET.; economists expect the U.S. economy to have added 185,000 jobs last month versus 98,000 in March.

  • while consumer credit is set to come out at 3 p.m. ET.

 

 

The cell therapy sector closed NEGATIVE on Thursday, Wednesday and Tuesday, POSITIVE on Monday and NEGATIVE last Friday.

The cell therapy sector’s record after the last 5 days (of 43 covered companies):

·         Thursday closed NEGATIVE with 21 decliners, 16 advancers and 6 flats;

·         Wednesday closed NEGATIVE with 24 decliners, 14 advancers and 5 flats;

·         Tuesday closed NEGATIVE with 29 decliners, 13 advancers and 1 flat;

·         Monday closed POSITIVE with 8 decliners, 33 advancers and 2 flats;

·         Last Friday closed NEGATIVE with 26 decliners, 16 advancers and 1 flat;

 

 

Remembering Thursday’s closing bell newsletter, “the sector stood up at the open and fell down at the close. Just when we thought speculation would help the upside … The healthcare vote made for a choppy market.”

Reiterating,” The share pricing misconception, just as one starts to expect an upside, it’s time to readjust expectation.”

  • What did I see on Thursday, the DOW closed down -0.03% and The NASDAQ closed up +0.05% while volatility traded near 10.48!

 

It’s been a long week - decliners versus gainers – it frames the state of the sector - rotating:

·         Thursday’s decliners ranged from -0.05% <XON> to -14.22% <IMUC> in 22 equities;

·         Wednesday’s decliners ranged from -0.15% <BSTG> to -7.02% <RGNX> in 24 equities;

·         Tuesday’s decliners ranged from -0.04% <CLLS> to -7.19% <RGNX> in 29 equities;

·         Monday’s decliners ranged from -0.28% <NWBO> to -10.81% <AST> in 8 equities;

·         Last Friday’s decliners ranged from -0.11% <BLUE> to -3.90% <AST> in 26 equities;

versus:

·         Thursday’s gainers ranged from +0.34% <ONCE> to +6.82% <BLUE> in 14 equities;

·         Wednesday’s gainers ranged from +0.20% <CLLS> to +4.95% <BLFS> in 14 equities;

·         Tuesday’s gainers ranged from +0.28% <NWBO> to +5.11% <MDXG> in 13 equities;

·         Monday’s gainers ranged from +0.02% <MESO> to +12.12% <VTGN> in 33 equities;

·         Last Friday’s gainers ranged from +2.53% <BSTG> to +11.32% <MDXG> in 16 equities;

 

 

Referencing the title, “playing portfolio defense” …

With the sector flirting with new lows, some investors have reckoned the sector is self-destructing – which is a partial truth; however drug discovery as everyone knows, offers more risks than rewards.

  • And that leads to the worrisome question: How do we and our portfolios manage these risks?

For sector investors looking to manage their risk there are two broad choices: trade to lower volatility or remain on the sidelines.

  • Historically, high volatility and modulating volume have correlated with more exposure to the vagaries of the cell therapy sector.

Investors worried about the constancy of share pricing alteration need to consider not just the when to sell but the why to buy!

 

 

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 Thursday up +0.71%, and does NOT indicate in Friday’s pre-market;
  • The SPDR S&P Biotech ETF (XBI) closed Thursday up +0.34% was DOWN in the aftermarket -0.23% and is NOT indicating in Friday pre-market;
  • The Health Care Select Sector SPDR ETF (XLV) closed up +0.66% Thursday, was UP in the aftermarket +0.07% and is NOT indicating in Friday’s pre-open;
  • The iShares Russell 2000 (IWM) closed down-0.14% on Thursday and is indicating a positive +0.11% Friday’s pre-open
  •  

 

Companies in my headlights - There is NO market timing but there are indications to consider!

AxoGen (AXGN) closed down -$0.55 to $11.55.  AXGN’s net loss for the first quarter of 2017 is $3.8 million, or $0.11 per share, compared with a net loss of $3.7 million, or $0.12 per share, in the first quarter of 2016. AXGN ended Q1/17 with $25.9 million in cash compared to $30 million at the end of 2016. Net cash burn in Q1 was $4.1 million and includes $1.2 million payment of the 2016 all-employee annual performance bonus. Biggest issue, the quarter ended with $25 million of total bank debt, compared to $25 million at the end of 2016.  The aftermarket indication is a negative -$0.10 or -0.85% - Maintaining SELL;

Biostage (BSTG) closed down -$0.01 to $0.31. What a share pricing fall in the past three years. What’s expected a NASDAQ delisting unless a remedy by May 16th which could be rendered null and void if a reverse split is enacted as voted by their BOD; so expect an increase in the pricing and a reduction in the amount of shares. But, there is a caveat – shareholders have been burned enough as the reverse will be executed to affect a warrant exercise which will raise the outstanding shares back to the old heights before the reverse effect.  Historically reverses always have a depreciating consequence – Maintaining SELL;

Fate Therapeutics (FATE) closed down -$0.19 to $4.29. FATE has been feeling the cold shoulder in May as the month’s range started at $4.64 and ran as high as $4.73 while April ranged from $4.13 to $4.73. As a market bettor, I feel the equity is oversold especially with NO news of consequence – BUY;

Juno Therapeutics JUNO) closed up +$0.54 to $25.65. JUNO’s net loss for Q1/17 was $82.2 million, or $0.79 per share, compared to Q1/16’s $71.1 million, or $0.72 per share. Cash, cash equivalents, and marketable securities as of March 31, 2017 were $850.7 million compared to $922.3 million as of 12/31/16. The aftermarket indication is a negative -$0.40 or -1.56% - SELL;

Osiris (OSIR) closed up +$0.24 to $5.25 following Wednesday’s $5.01 (+$0.11), Tuesday’s $4.90, and Monday’s $4.80. After five (5) sessions, OSIR ranged from $4.71 to $5.01 and with a federal indictment and NO recent (two years’ worth) K or Q filings, Why say more - Maintaining SELL;

Sangamo Biosciences (SGMO closed UP +$0.10 to $4.60.  SGMO had (5/4/17) received notice from the U.S. FDA of special regulatory designations for three clinical programs: Rare Pediatric Disease (RPD) designation for SB-913 in vivo genome editing treatment for Mucopolysaccharidosis Type II (MPS II).  SB-913 has already received Orphan Drug designation from the FDA. FDA has cleared an Investigational New Drug Application (IND) for this program, and a P1/2 clinical trial evaluating SB-913 in adults with MPS II is open and screening subjects for enrollment. Orphan Drug designation for SB-525 cDNA gene therapy for Hemophilia A. FDA has cleared an IND for this program, and a P1/2 clinical trial evaluating SB-525 in adults with Hemophilia A is expected to be opened and to begin screening subjects for enrollment later this quarter. Fast Track designation  for SB-FIX in vivo genome editing treatment for Hemophilia B has also been recieved. The aftermarket indication is +$0.05 or +1.09%. May’s ranges <so far> are $4.50 to $4.85 while the month of April ranged from $4.05 to $5.00 – BUY;

 

 

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.

Henry’s comments are for informational purposes only and are not a substitute for personalized advice. Consult your advisor about what is best for you.