October 18, 2023 4:45pm

Geopolitical issues and uncertainty create a flight to safety for cell/gene therapy sector equities as Q4 could be choppy

News: Caribou Biosciences (CRBU -$0.26) received clearance of its IND application from the FDA for CB-012, an allogeneic anti-C-type lectin-like molecule-1 (anti-CLL-1) CAR-T cell therapy. CB-012 will be evaluated in the multicenter, open-label, AMpLify P1 clinical trial for patients with relapsed or refractory acute myeloid leukemia (r/r AML). Intellia Therapeutics (NTLA -$1.09) the FDA has cleared the new IND application for NTLA-2001 for the treatment of transthyretin (ATTR) amyloidosis with cardiomyopathy.

Pre-open Indications: 8 Hits and 0 Miss

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The Dow closed DOWN -332.57 points or -0.98%, the S&P closed DOWN -58.60 points or -1.34% while the Nasdaq closed DOWN -219.45 points or -1.62%

 

I continue to ask “What’s SAFE” … “No one company is immune in the sector and this market of rolling downdrafts? Welcome to my world of defining the “grey’ in our universe!”

Investors are going to need to prepare for another reporting cycle to confirm whether or not any bottoms are even close to happening.

 

Henry’omics:

We need to more than consider the economic environment - rising rates and inflation to comprehend the micro re “our” universe of cell and gene therapy companies …

Indexes fell on Wednesday as growing tensions in the Middle East, diving risk sentiment; investors need to be focused-on economic releases related to inflation and high interest rates on businesses.

U.S. Treasury yields resumed their uphill climb as a sharp rebound in U.S. homebuilding pointed to economic resiliency.

Economic Data Docket: Housing starts accelerated in September, though at a slower than expected pace, while building permits fell, but by less than expected.

  • Private owned starts totaled a seasonally adjusted 1.358 million for the month, up 7% from August but below the Dow Jones estimate for 1.37 million. Starts were down 7.2% from a year ago.
  • Permits totaled 1.473 million, 4.4% below the August level but ahead of the forecast for 1.45 million. Permits were off 7.2% from September 2022.
  • The average rate on the popular 30-year fixed mortgage rate hit 8%.

 

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

  • Wednesday’s advance/decline line opened negative at 10 up/ 22 down and 3 flats, staying negative with 6 incliners, 29 decliners and 0 flat at the mid-day, ending with a negative close of 5 incliners, 30 decliners and 0 flat

 

Pre-open Indications: 8 Hits < Alnylam Pharmaceuticals (ALNY -$0.90), Ionis Pharmaceuticals (IONS -$2.53), Prime Medicine (PRME -$0.17), Regenxbio (RGNX -$0.53), Vericel (VCEL -$1.18), Blueprint Medicine (BPMC -$2.05), Ultragenyx Pharmaceuticals (RARE -$5.10), Verve Therapeutics (VERV -$0.58) > and 0 Miss

 

52-week low;

  • Generation Bio (GBIO) at $2.75
  • Intellia Therapeutics (NTLA) at $28.00
  • Verve Therapeutics (VERV) at $11.09

 

Ebb and flow:

Q4:  October – 7 negative and 6 positive closes

·         Q3: September – 1 holiday, 8 positive and 12 negative closes

·         August – 9 positive and 14 negative closes

·          July - 1 holiday, 12 positive and 8 negative close

 

Key Metrics:

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

  • Wednesday, the IBB was down -2.10% and the XBI was down -2.56%

The CBOE Volatility Index (VVIX: INDEX) tracked:

  • Wednesday was up +1.85 points or +10.35% at 19.73

 

Closing Down (10 of 30):

  • Ultragenyx Pharmaceuticals (RARE -$5.10 after Tuesday’s -$0.19 and Monday’s +$3.45),
  • CRISPR Therapeutics (CRSP -$3.23 after Tuesday’s -$1.15 and Monday’s +$0.50),
  • Ionis Pharmaceuticals (IONS -$2.53 after Tuesday’s +$0.37 and Monday’s +$0.16),
  • Blueprint Medicine (BPMC -$2.05 after Tuesday’s +$2.26 and Monday’s +$0.52),
  • Beam Therapeutics (BEAM -$1.47),
  • Vericel (VCEL -$1.18 after Tuesday’s +$2.11 and Monday’s +$2.00),
  • Intellia Therapeutics (NTLA -$1.09 after Tuesday’s -$0.58 and Monday’s -$0.20),
  • Harvard Apparatus GN (HRGN -$0.98 after Tuesday’s +$0.47 and Monday’s -$0.39),
  • Alnylam Pharmaceuticals (ALNY -$0.90 after Tuesday’s -$1.27 and Monday’s -$0.87),
  • BioLife Solutions (BLFS -$0.77 after Tuesday’s $0.00 after Monday’s +$0.34),

Closing Up (5 of 5):

  • Adverum Biotechnologies (ADVM +$0.07),
  • Homology Medicine (FIXX +$0.04 after Tuesday’s $0.00 and Monday’s -$0.06),
  • AxoGen (AXGN +$0.03),
  • Precigen (PGEN +$0.005),
  • Brainstorm Cell Therapeutics (BCLI +$0.0036),

 

Q4/23 – October

  • Wednesday closed negative with 5 incliners, 30 decliners and 0 flat

 

The BOTTOM LINE: It's a daunting task to understand risk, seeing the unforeseen; on the basis of my own “rules”, I set-up my own “warning analysis” which isn’t machine oriented! 

  • One can take a good or bad feeling, re-frame it, and suddenly that feeling is the solution. Not me, I don’t run from any feeling but, take that sensation itself as a sharpened stick to “poke’ mainstream thinking.”
  • All three major U.S. stock indexes were lower pulling the Nasdaq down the most.
  • Middle East conflict still weighed on the market as investors assessed the chances of it breaking out into a wider war. The rising geopolitical tensions in the Middle East could drive a global recession, leading investors have warned.
  • I STILL believe the political aspect of the U.S.’s polarization, and disparities of the debt ceilings and rate hike arguments are contributing to the roller coaster ride for share pricing actions.

 

A quote of interest, “This is a time where we just sit for a little bit. It may be for an extended period; it may not. But let’s see how things evolve over the next few months. He added that while recent data points to economic strength, contact with individual businesses indicates “things seem to be slowing down.” < Patrick Harker, Philadelphia Fed President>

 

The cell and gene therapy sector equities share pricing declined on Wednesday following an incline on Tuesday and Monday and last Friday’s positive close post Thursday’s DIVE after Wednesday’s decline after popping on the previous Tuesday and Monday’s declines.

 

Consider:  Implied volatility shows how much movement the market is expecting in the future.

  • Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other.
  • It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

 

Some bad news: This year has seen a record high 28 biotech bankruptcies so far, SEC filings show. And more will come by year’s end.” < James Cassel, chairman and co -founder of Miami -based investment banking firm Cassel Salpeter & Co - https://twitter.com/xDILAUDEADx/status/1714604739805982990>

 

What’s behind the numbers:

  • I remain EXTREMELY cautious as upcoming earnings may have a more significant negative impact on share price due to missed consensus as estimates will lessen valuations.
  • Valuation suggests the cell and gene therapy sector is skating on very thin ice while the charts and data have YET to generate signals of a correction low. Thus, I believe risk is EVEN high as we enter earnings season.
  • Welcome to my world of defining the “grey’ in our universe!

 

The top three (3) performing in the session:

  • Wednesday: Adverum Biotechnologies (ADVM), Homology Medicine (FIXX) and AxoGen (AXGN)
  • Tuesday: Blueprint Medicine (BPMC), Vericel (VCEL) and Prime Medicine (PRME)
  • Monday: Ultragenyx Pharmaceuticals (RARE), Vericel (VCEL) and BioLife Solutions (BLFS)

The worst three (3) in the session:

  • Wednesday: Ultragenyx Pharmaceuticals (RARE), CRISPR Therapeutics (CRSP) -2x and Ionis Pharmaceuticals (IONS)
  • Tuesday: Alnylam Pharmaceuticals (ALNY) – 2x, CRISPR Therapeutics (CRSP) and Intellia therapeutics (NTLA)
  • Monday: Alnylam Pharmaceuticals (ALNY), Blueprint Medicine (BPMC) and Harvard Apparatus RN (HRGN) -2x,

 

Right up front, “I also hate to be so negative or contrarian but, this is a NO spin zone and truth is its product; I can always be WRONG but … I am mostly EARLY!”

  • Focus should be on the upcoming quarterly earnings season!

 

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.