RegMed Investors’ (RMi) closing bell analysis, driven by distraction

May 8, 2017 5:24pm

It wasn’t just Kite Pharma’s (KITE) that took down the session

Yet, it did overshadow on a report of a patient death in its clinical trial

Anxiety surrounds Q1/17 financial results as this is the week that will set the expectation for the next months

Pre-open indications: 0 hits and 2 miss, with all the reporting that is about to go on and the resulting influences – I will HOLD until the Q1/17 financial result “situations” become clear as dark clouds are gathering.  

Financial results: Kite Pharma (KITE -$10.79) and Bellicum Pharma (BLCM -$0.87)

The truth is harsh, but reality is what it is!

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

RMi’s daily and continual “reads” of the goings-on of the SCG&RT sector can improve investor’s and trader’s odds - just because a stock underperforms the market doesn’t mean you have to lose money.

Henry’omics:

From the pre-open’s investor’s newsletter “rain clouds are gathering … sixteen (16) sector companies are reporting Q1/17 results this week>”

• Reiterating, “Some of the oversold are totally undervalued yet, there is always a chance the sun will cut through the reporting season.”

KITE isn't the only biotech feeling the pain today … Bellicum Pharma (BLCM) also announced financial results …

While other non-reporting immuno-oncology stocks got hit hard today in symphony with KITE included some of the more widely followed names.  It is likely unfair for some of the companies to be down because they are getting caught up in today's sell-off in the space.

• From a technical standpoint, the IBB is finding a bit of a bounce (-289.45 or -2.17%) as has been the plague lately.

Unfortunately, on days like today, there is lots of punishment levied on the entire sector, because traders come in to sell a group of stocks within a sector. In this case, the immuno-oncology names, which pushes the ETF lower, which creates selling within the basket, which then creates pressure on names outside of the space that is intended to be sold.

• Another perfect example of what happens in a world dominated by ETFs and algorithmic trading. For KITE and BLCM, investors are not taking any chances.

Even Celgene’s (CELG) stock toppled for the second day running on Monday after one of its partners, Acceleron Pharma (XLRN), reported Q1 losses and sales that not only lagged the “street” but fell 80% vs. the year-earlier quarter.

CELG stock closed 3.3% lower at 118.36 on the stock market today, below the 122.49 entry point of a flat base that began forming in March. Volume was huge, running more than 70% above typical levels.

Acceleron stock, too, was down 9.2%, near 28.80. For the quarter, Acceleron reported adjusted losses of $0.66 per share on $3.7 million in sales, compared with $0.13 per share and $18.2 million a year ago. Analysts had modeled a $0.54 per share loss on $3.9 million in sales.

But those lackluster first-quarter results came two days after XLRN and CELG unveiled strong P2 results for a drug dubbed luspatercept in patients with lower-risk bone-marrow disorders known as myelodysplastic syndromes, a form of leukemia.<IBD>

I still believe the issues surrounding the declines relate to Q1 financial results – spending is up with minimal results over Q4/16.

Daily analytics:

U.S. equities closed UP on Monday … with the DOW closing up +0.03% as the NASDAQ also closed up +0.03% …

The cell therapy sector had NO great moves over the last two weeks while we're treading water.

… The CBOE Volatility Index (VIX) widely considered the best gauge of fear in the market, traded near 10 …

·         Friday traded near 10.7 following Thursday’s 10.48, Wednesday ‘s near 10.7,  Tuesday trading near 9.90 and last Monday near 10.2;

Welcome to another day of the sector’s roller coaster …

… The iShares Russell 2000 (IWM) indicated a negative -0.34% at the pre-open was and closed DOWN -0.24%;

… The iShares NASDAQ Biotechnology (IBB) indicate a positive +0.04% at the pre-open and closed DOWN -2.17%

The advance/decline line scenario of 43 SCGT & RT covered companies:   

·         The open was positive  with an A/DL of 23/15 and 5 flats;

·         The mid-day stayed negative with an A/DL of 13/27 and 3 flats;

·         The close was negative with an A/DL of 12/28 and 3 flats;

The range count - decliners versus gainers: look at the differences in the spreads and advance/decline lines:

• Monday’s decliners ranged from -0.65% <CAPR> to -13.56% <CUR> in 28 equities;
• Friday’s decliners ranged from -0.41% <ONCE> to -12.83% <IMUC> in 24 equities;

Versus

• Monday’s gainers ranged from +0.37% <ONVO> to +11.84% <OSIR> in 12 equities;
• Friday’s gainers ranged from +0.37% <ONVO> to +8.09% <AXGN> in 15 equities;

Pre-open indications: 0 hit and 2 miss

• Histogenics (HSGX) closed down -$0.02 – miss;
• Osiris (OSIR) closed up +$0.58 – miss;

Financial results a.k.a. earnings:

Kite Pharma (KITE) … http://www.regmedinvestors.com/articles/9722

Bellicum Pharmaceuticals (BLCM)

BLCM reported a net loss of $22 million for Q1/2017, compared to a net loss of $15.1 million for Q1/2016.

·         The results included non-cash, share-based compensation charges of $3.4 million and $3.1 million for Q1 of 2017 and 2016.

·         During Q1/2017, BLCM completed an underwritten public offering of common stock that provided approximately $64.6 million of net proceeds. Bellicum also borrowed the final $10.0 million tranche under its loan agreement with Hercules Capital.

·         As of March 31, 2017, BLCM had cash, restricted cash and investments totaling $164.6 million, compared to $113.4 million at December 31, 2016.

·         Based on current operating plans, Bellicum expects to end 2017 with approximately $85 to $95 million in cash and investments, and that current cash resources will be sufficient to meet operating requirements through the end of 2018.

At 3/31/17, Bellicum had 33,078,089 shares of common stock outstanding.

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.