September 5, 2018 7:56am

What’s next to buffet the sector?

 

Pre-open indications: 1 BUY and 4 SELLs

Out and about: Histogenics (HSGX -$1.94 or -70.04% having closed at $2.77, -$0.15 or -5.14%) is taking a BIG hit pre-market on news of not meeting its primary endpoint - statistically significant improvement in pain and function in a dual threshold responder analysis one year after treatment as compared to microfracture.

 

RMi provides a pre-market synopsis for the U.S. trading day.

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

Portfolio question, are you POSITIONED for September?

 


U.S. stock index futures are a deep dive

Dow futures are DOWN -0.31% (-80 points) and NASDAQ futures are DOWN -0.31% (-24 points)

 

U.S. stock index futures tumbled ahead of Wednesday's open, as market became increasingly nervous over trade frictions between the U.S. and major partners.

European markets lower amid heightened trade tensions;

Asia markets were largely negative on Wednesday, after Wall Street posted losses on its first trading day of the month, and as emerging markets sold off overnight.

 

Data docket: mortgage applications are due at 7 a.m. ET, followed by international trade figures by 8:30 a.m. ET, and the Quarterly Financial Report, due out at 10 a.m. ET.

Downside: Mortgage interest rates are stuck near recent highs and beginning to rise again, further weakening home affordability.

 

Today’s indications:

  • The iShares Nasdaq Biotechnology (IBB) is indicating a -0.5% DOWNSIDE in Wednesday’s pre-market;
  • The SPDR S&P Biotech ETF (XBI) is indicating a +0.1% UPSIDE in Wednesday’s pre-market;
  • The Health Care Select Sector SPDR ETF (XLV) is NOT indicating in Wednesday’s pre-open;
  • The iShares Russell 2000 (IWM) is indicating a -0.15% DOWNSIDE in Wednesday’s pre-open

 

Henry’omics:

Trade anxieties continue as investors await news surrounding the U.S.' relationships with Canada and China. Markets in China and the U.S. remain on edge after a report from Bloomberg last week revealed that the U.S. administration was on standby to inflict additional levies on $200 billion worth of Chinese goods as soon as this week. Trump also added uncertainty in the World Trade Organization (WTO) membership, telling Bloomberg that if the organization didn't "shape up," he'd consider withdrawing the States from it <CNBC>.

I do NOT fear the month of September – historically a bad month for equities – I fear the decline of share pricing as Q3 ends!

  • The real weakness came in years that were negative going into September.

Quarterly results are NOT over yet; we still have Applied Genetic technologies (AGTC) to report Q4 and end of year “numbers” on 9/10.

 

I always want to know what happened PRIOR to what might happen today – it sets a tone of consequence:

From Tuesday’s night’s newsletter: “low volume deflates share pricing as quick as they inclined.’

I also stated, “Sector stocks fall on first trading day of September – due to being overbought and the low volume incline which begot a low volume decline.”

The iShares NASDAQ Biotechnology (IBB):

  • Tuesday was down -0.97%
  • Monday was a holiday
  • Friday closed up +0.16%
  • Thursday closed up +0.39%
  • Last Wednesday closed up +1.3%
  • For a five session aggregate of +0.88% - could be taking another hit!

Of the 45 companies covered on Tuesday; 22 downside equities finished in a range of -0.09% (EDIT) to -7.89% (ADVM) while the 19 upside equities oscillated from +0.02% (SAGE) to +13.69% (KOOL +$0.06) with 4 flat closes (OSIR, AGTC, ATHX and PSTI).

  • In 1 session in September – 1 negative close;
  • In 21 August sessions – 6 had negative and 15 positive closes

 

Companies in my headlights – It’s your decision; I provide the idea and context:

Aduro BioTech (ADRO) closed down -$0.05 to $7.35. The aftermarket indication is a positive +$0.16 or +2.11% with the publication of a peer reviewed paper in Leukemia authored by scientists from the Dana Farber Cancer Institute and Aduro as part of their ongoing collaboration to study the role of APRIL (A PRoliferation Inducing Ligand) in multiple myeloma (MM). The authors profile the impact that APRIL, acting through its receptor TACI (transmembrane activator and cyclophilin ligand interactor), has on immune regulatory T cells (Tregs) in MM. The paper further reports that APRIL binding to TACI contributes to the immunosuppressive and treatment resistant MM bone marrow microenvironment, an effect that could potentially be mitigated by anti-APRIL antibody, BION-1301. Aduro is currently advancing BION-1301 in a P1/2 dose escalation trial for the treatment of MM – BUY;

Editas Medicine (EDIT) closed down -$0.03 to $32.80 and has a negative aftermarket indication of -$0.80 or -2.44%. EDIT in August was up +10.4% and has a 52 week upside of +63.82% and a short ratio of 12.38% or 5.59 M shares of 42.54 M “floating” shares. I have also been saying that EDIT has been overbought for months – SELL;

Histogenics (HSGX) closed down -$0.15 to $2.77 and has an extremely negative pre-open indication of -$1.94 or 70.04%. HSGX’s P3 clinical trial of NeoCart did not meet the primary endpoint of a statistically significant improvement in pain and function in a dual threshold responder analysis one year after treatment as compared to microfracture.  In the modified Intent to Treat (mITT) population (which excludes those patients who were randomized but not treated with NeoCart), 74.2% of the NeoCart patients exhibited clinically meaningful improvements in pain and function compared to 62.0% of microfracture patients at one year (p=0.071).  However, in this mITT population, patients treated with NeoCart achieved a statistically significant improvement in pain and function (p=0.018) six months after treatment as compared to patients treated with microfracture.  Both NeoCart and microfracture were well tolerated and exhibited strong safety profiles – SELL:

MiMedx Group (MDXG) closed up +$0.32 to $5.62. August 20 saw a pricing of $3.80, jumping on the 29th to $5.42, dropping to $5.13 on the 30th – too many issues – SELL;

Solid Biosciences (SLDB) closed up +$2.15 to $44.82 and has a negative aftermarket indication of -$0.53 or -1.18% - too much volatility on small volume. August 29th saw a price of $38.12, in four (40 sessions – there is a premium of $6.70 or +14.948%, time to “give it a haircut” – SELL;

 

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.