August 16, 2022 4:45pm

A downgrade or crash is not coming?

News – sign of the times: Homology Medicines (FIXX $0.00 at $2.89) paused enrollment in the pheNIX gene therapy P1/2 trial of HMI-102 for adults with phenylketonuria (PKU) to free up cash. In June, the FDA lifted the clinical hold previously placed on the pheNIX gene therapy clinical.

Earnings: where is Applied Genetic Technologies (AGTC) earnings report while CFO bonuses (8-K) up, what’s he hiding?

Pre-open indications: 6 HIT and 2 MISS

WHY and HOW is this market affecting the cell and gene therapy sector … “The Bottom Line” underlines the framework of share pricing actions.  Who else is tracking a broad grouping of cell and gene therapy equities – can you afford to not read facts supported by real numbers?

No tunnel vision here, I get into the weeds of daily share pricing and causes 

If I have learned one thing as a former research analyst, venture and public fund investor now a journalist; it is that your life and your bank account are largely tied to your knowledge of price movements and questioning pricing targets.

 

The Dow closed UP +239.57 points (+0.71%); the S&P closed UP +8.06 points (+0.19%) while the Nasdaq closed DOWN -25.50 points (-0.19%)

 

Henry’omics:

The Dow outperformed, rising 239.57 points, or +0.71%. The S&P 500 traded +0.26% higher and the Nasdaq dived -25.50 points or -0.11%.

A quote to consider, “Markets are poised for a short-term pullback amid the recent rally, Morgan Stanley Investment Management’s Andrew Slimmon said.”

In line with my thoughts …!

 

RegMed Investor’s (RMi) Pre-Open: “incoming, duck and squat. Will coming higher interest rates depress cell and gene therapy sector stock multiples while I worry about low volume upside percentage moves?” … https://www.regmedinvestors.com/articles/12564

 

RegMed/Stem/Cell and Gene Therapy’s 35 covered equities’ Advance/Decline (A/D) lines: what happened …

  • Tuesday’s advance/decline line opened negative at 6 up/ 35 down and 1 flat, stayed negative with xx up/6 and 1 flat at the mid-day, ending with a negative close of 7/25 and 3 flats.
  • Monday’s advance/decline line opened negative at 14 up/ 20 down and 1 flat, flipped positive with 20 up/14 and 1 flat at the mid-day, ending with a positive close of 26/8 and 1 flat.

 

Pre-open Indications: 6 HITs <Biostage (OTCQB: BSTG $0.00 with 1824 shares traded), Agenus (AGEN -$0.16), Beam Therapeutics (BEAM -$6.75), CRISPR Therapeutics (CRSP -$4.29), uniQure NV (QURE -$1.29), Voyager Therapeutics (VYGR +$0.06). 2 MISS < BioLife Solutions (BLFS -$0.66), Fate Therapeutics (FATE -$3.16)>

 

Key Metrics:

  • Tuesday - Sector volume was HIGHER with 4 of the 7-upside having higher than the 3-month average volume with LOW volume of 9 of 25-downside having higher than the 3-month average volume;

The iShares NASDAQ Biotechnology (IBB) and the SPDR S&P ETF (XBI) indicators:

  • Tuesday, the IBB was down -1.36% and the XBI was down -2.49%

The CBOE Volatility Index (VVIX: INDEX) tracked:

  • Tuesday was down -0.40 points or -1.50% at 19.65

 

Jumping with share pricing momentum (7 of 7):

  • Chinook Therapeutics (KDNY +$1.49),
  • Caribou Biosciences (CRBU +$0.73),
  • Mesoblast (MESO +$0.09 after Monday’s -$0.02),
  • Voyager Therapeutics (VYGR +$0.06 after Monday’s -$0.05),
  • MiMedx (MDXG +$0.05),
  • Solid Biosciences (SLDB +$0.037),
  • AxoGen (AXGN +$0.02 after Monday’s +$0.93),

Flat:

  • Biostage (BSTG), Homology Medicine (FIXX) and Verastem (VSTM)

Closing down (10 of 25):

  • CRISPR Therapeutics (CRSP -$4.29 after Monday’s +$1.48),
  • Intellia Therapeutics (NTLA -$4.25 after Monday’s +$0.68),
  • Fate Therapeutics (FATE -$3.16 after Monday’s +$2.24),
  • Alnylam Pharmaceuticals (ALNY -$2.86 after Monday’s -$2.84),
  • Ultragenyx (RARE -$1.89 after Monday’s -$0.37),
  • Regenxbio (RGNX -$1.51),
  • uniQure NV (QURE -$1.29 after Monday’s +$0.40),
  • Editas Medicine (EDIT -$1.12 after Monday’s -$0.31),
  • Verve Therapeutics (VERV -$0.69 after Monday’s +$2.27),
  • BioLife Solutions (BLFS -$0.66 after Monday’s +$1.42),

 

August, Q3/2022:

  • Tuesday closed negative with 7 incliner, 25 decliners and 3 flats
  • Monday closed positive with 26 incliner, 8 decliners and 1 flat

 

The BOTTOM LINE: I try to keep it simple … and short!

It was expected to see the magnitude of the lack of EPS strength in Q2 and after the prior quarter (Q1) in the face of the difficulty that investors are facing in the inflation continuum of soon to be experiencing rising rate environment which is about to get worse!

I am still hobbling with walking stick for use and have trouble sitting on a chair for a period of time (with a pillow on hard chair (versus my usual business chair) - back injury; not 35 anymore as 50 lb. leaf blower and heavy yard work times are now - OVER <a favorite> having been headed by chiropractor.

Thanks, Rich (Dr. Richard B. Waller, D.C. Bolton, Mass) who was able to get me walking (barely without a walking stick – screw the cane) again!!!

While I welcome the upside moves; I’m STILL a firm believer in the “flight of Icarus” …  since the cell and gene therapy equities have oscillated between gains and losses since the first of the year!

There are ONLY net and per share losses in Q2. SG&A’s are, I believe “OUT-OF-CONTROL”, CEOs are skimming shareholders with HIGH salaries and perks as share pricing gets hammered on alternate sessions.

The real question is how recently have CEOs bought-into their depreciated share pricing such as two: AVRO and AGTC.

As I have “noticed” yet again from to date reporting, “Most reporting sector companies … to date have reported net losses, lagging revenue estimates … although AXGN, FATE, RGNX, FIXX and NTLA beat on revenues generating forward motion while ATM use is up.”

 I was proven RIGHT after having written … “I am STILL … skeptical that Tuesday through Friday’s rally can be sustain! I am also NOT convinced that the lows are in the cell and gene therapy sector are behind us.”

The coming weeks will reveal more about the cell and gene therapy sector's state of health.

I find it very interesting to evaluate share price over earnings and a shortage of revenue reporting as a proxy for performance.

We always need a villain and they are multiplying – We are stuck in “Earnings’ season, investors NEED to focus on LPS (loss-per-share), collaboration revenues and cash positions i.e., runways”.

I stick to my view of anticipating the risks – as my careers focus has been “warning analysis”.

 

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.

Regulation Analyst Certification (Reg AC): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.