“Broad Markets Tread While APA, APLS, CRM & HL Move Higher” Vista Partners Daily Market Recap For January 7, 2020

By John Heerdink LinkedIn

Trading today brought forth a great deal of sideways action that ended in the broad markets trading a bit down across the board. The rising tensions in the middle east continue to add a cloud of darkness but the markets seem to be proving quite resilient as the situation evolves.

On the day, the S&P 500 ended at 3,237.18, -.28%. All 11 S&P 500 sectors were in the red with the real estate sector falling the most dropping -1.7%.

The Dow Jones Industrial Average ended at 28,583.68, -.42%. The Nasdaq Composite ended at 9,068.58, -.03%.

The Russell 2000 also dropped by -.3% ending at 1658.31.

The “fear gauge” Vix (TVIX) also ended down at $50.30/share, -.89% and traded in a range of $49.3 – $52.45.

Markets

Symbol Name Last Price Change % Change

Bond Markets & US Dollar

Treasuries yields results were mixed today. The 2-yr yield closed flat at 1.54% while the 10-yr yield rose another two basis points to end at 1.83%. The U.S. Dollar Index strengthened to end at 97.02, +.4%.

 

Symbol Name Last Price Change % Change

Economic Reports

We did not receive any significant economic data Monday.

On Tuesday, the ISM Non-Manufacturing Index Report for December confirmed a 55% reading (an increase) while the Factory Orders Report showed a decrease by -.7% month/month in November as Shipments rose +.3%. The trade deficit tightened to $43.1B in November.

 

Big Movers

 

Shares of Apache Corporation (APA) jumped to $32.51/share,+26.29% today after announcing a significant oil discovery at the Maka Central-1 well drilled offshore Suriname on Block 58. The well was drilled using the drillship Noble Sam Croft with Apache as operator holding a 50% working interest and Total holding a 50% working interest. “We are very pleased with results from Maka Central-1. The well proves a working hydrocarbon system in the first two play types within Block 58 and confirms our geologic model with oil and condensate in shallower zones and oil in deeper zones. Preliminary formation evaluation data indicates the potential for prolific oil wells. Additionally, the size of the stratigraphic feature, as defined by 3-D seismic imaging, suggests a substantial resource,” said John J. Christmann, Apache CEO and President.

Shares of Apellis Pharmaceuticals, Inc. (APLS) skyrocketed higher to close at $38.73/share, +28.29% after the global biopharmaceutical company pioneering targeted C3 therapies announced positive results from the Phase 3 PEGASUS study evaluating pegcetacoplan (APL-2) in adults with paroxysmal nocturnal hemoglobinuria (PNH). Top-line data show that pegcetacoplan met the study’s primary efficacy endpoint, demonstrating superiority to eculizumab with a statistically significant improvement in adjusted means of 3.8 g/dL of hemoglobin at week 16 (p<0.0001). At week 16, pegcetacoplan-treated patients (n=41) had an adjusted mean hemoglobin increase of 2.4 g/dL from a baseline of 8.7 g/dL, compared to eculizumab-treated patients (n=39) who had a change of -1.5 g/dL from a baseline of 8.7 g/dL. Additionally, pegcetacoplan showed promising results in key secondary endpoints. Pegcetacoplan met non-inferiority on transfusion avoidance and absolute reticulocyte count. Pegcetacoplan also showed positive trends on lactate dehydrogenase (LDH) and fatigue as measured by the Functional Assessment of Chronic Illness Therapy (FACIT)-fatigue score. APLS also announced that it has commenced an underwritten public offering of 7,000,000 shares of its common stock. All of the shares are being offered by Apellis. In addition, Apellis expects to grant the underwriters a 30-day option to purchase up to an additional 15% of the shares of its common stock sold in the public offering. Citigroup, J.P. Morgan and Evercore ISI are acting as joint book-running managers for the offering.

Shares of San Francisco’s Salesforce (CRM) rose to a new all-time high of $176.87/share before closing at $176/share, up another +1.47%. RBC Capital Markets recently raised its rating to a “Top Pick” as this monster CRM and acquisition machine continues to grow.

Symbol Name Last Price Change % Change

Agriculture & Energy

Oil prices closed at $62.8/bbl, -.9%.

Symbol Name Last Price Change % Change

Biotech & Healthcare

The S&P 500 healthcare sector closed at 1184.41, -.24%.

The Ishares Nasdaq Biotechnology ETF (IBB) moved higher today closing at $119.15, +.03%.  The 52-wk range is $96.03 – $123.74.

The NYSE Arca Biotech Index (^BTK) closed at 5,051.59, +.34%.

Johnson & Johnson (JNJ) closed at $144.98, +.61%.

Shares of Atossa Therapeutics,  Inc. (NASDAQ: ATOS) closed at $1.62/share and are up to $1.78/share in after-hours trading +9.88%. Yesterday, ATOS announced that its corporate name change from “Atossa Genetics Inc.” to “Atossa Therapeutics, Inc.” became effective at 12:01 a.m. ET today, January 6, 2020. The Company’s common stock will continue to trade on the NasdaqCM exchange under the ticker symbol “ATOS.”

“Over the last several years, we have transitioned the Company’s focus on developing therapies to treat breast cancer, breast density and other breast conditions,” said Steve Quay, Ph.D., M.D., president and CEO of Atossa. “Changing our name to Atossa Therapeutics, Inc. more clearly reflects our focus on developing therapies and continues to honor Princess Atossa, the great queen of the Achaemenid Empire, who reigned in the fifth century BCE and who is the earliest recorded woman with breast cancer. She is featured in the The Emperor of All Maladies: A Biography of Cancer, the Pulitzer Prize-winning book by Siddhartha Mukherjee on the history of cancer.”

Recently,  ATOS announced that it has contracted with Stockholm South General Hospital in Sweden to conduct a Phase 2 study of Atossa’s proprietary oral Endoxifen to reduce mammographic breast density (MBD) in women. The study is being led by principal investigator Per Hall, M.D., Ph.D., Head of the Department of Medical Epidemiology and Biostatistics at Karolinska Institutet. MBD is an emerging public health issue, as studies conducted by others have shown that MBD increases the risk of developing breast cancer and that reducing MBD can reduce the incidence of breast cancer. The primary endpoint of the new Phase 2 study is to determine whether oral Endoxifen administration results in an individual change in MBD, which will be measured after three and six months of treatment. The secondary endpoints are safety and tolerability. Assuming the institutional review board (IRB) approves the study, enrollment is expected to open in the first quarter of 2020.

Steve Quay, M.D., Ph.D., President and CEO of Atossa stated, “Atossa’s primary strategic objective is to develop oral Endoxifen to reduce MBD and this Phase 2 study is a major milestone in advancing this objective. Dr. Hall and his clinic are uniquely qualified to lead this study as they recently successfully completed the Phase 2 study of our topical Endoxifen, which demonstrated MBD reduction and they have conducted numerous studies using tamoxifen in both the treatment and prevention setting.”

Maxim Group’s Analyst Jason McCarthy recently issued an update report upgrading ATOS shares to a Buy with a $4/share 12-month price target, stating that the company is “ready to advance its modified-release oral tablet of endoxifen to a P2 study for the treatment of mammographic breast density (MBD).”

INVO Bioscience, Inc. (IVOB) is a medical device company focused on creating alternative treatments for patients diagnosed with infertility and developers of INVOcell®, the world’s only in vivo Intravaginal Culture System, & recently announced that it has entered into commercialization agreements to distribute the revolutionary INVOcell system across many parts of the world including the continent of Africa, covering Nigeria, Uganda, Sudan, and Ethiopia, as well as in Europe (Turkey & Jordan) & the US. Steve Shum (pictured above), Chief Executive Officer of INVO Bioscience, commented recently, “We are excited with the progress being made to drive revenue growth domestically through our U.S. commercialization agreement with Ferring and now in other parts of the world with the recent signing of new commercial distribution agreements for Nigeria, Turkey, Jordan, Uganda, Ethiopia, and Sudan. We believe there is an incredible opportunity to drive the adoption of the INVOcell over the coming years through the creation of commercialization agreements with partners. We will remain diligent to find partners that are incentivized to support the product through minimum purchase requirements or similar arrangements. Our agreement with Ferring for the U.S. and our recent agreements for Africa and Eurasia are great templates to continue working from and we look forward to further agreements announced in the future. Other near-term objectives include the initiation of our follow-on clinical study for the INVOcell device to expand S current label from a 3-day incubation period to a 5-day incubation period. As part of the Ferring agreement, if we achieve 5-day labeling approval from the FDA, we receive an additional $3 million non-dilutive milestone payment. In addition to the milestone payment, the new study will allow us to update our clinical data which we believe will allow us to show improved clinical pregnancy and birth rates and further enhance the value proposition we can provide to the market as an alternative to traditional IVF. Our technology is a simple and more natural solution, with comparable rates of effectiveness to existing options at lower costs, that has been designed to help the millions of couples worldwide that struggle with infertility but are currently unable to receive treatment. We are beginning to put in place the commercialization strategy that can allow for the proliferation of this technology which I believe has the ability to significantly enhance shareholder value.”

Symbol Name Last Price Change % Change

Consumer Goods & Trends

Shares of Nike (NKE) closed at $101.78/share, -.05% today.

Shares of Disney (DIS) closed at $145.79/share, +.03%. Recently, Rosenblatt Securities stated that they expect 20% more Disney+ streaming service subscribers than was expected by the end of Q1 2020 which would mean they could have 25 million subscribers.

Symbol Name Last Price Change % Change

Financials & Fintech

 

Reportedly, American Express  (AXP) cardholders will have exclusive access to the newly opened two lounges at the Phoenix Sky Harbor International Airport. The 9,500 square feet Centurion Lounge and Escape Lounge opened side-by-side in Terminal 4 are exclusively for American Express Platinum Card and Centurion members offering them more options and premium amenities as they travel through Phoenix. Read the complete story.

Visa (V) closed trading at $188.69/share, -.26%. Recently, Visa and the pan-African fintech leader MFS Africa announced a partnership that will help bridge the gap between the rapidly growing mobile money ecosystem in Africa and the world of online digital payments, significantly expanding Visa’s reach and its ability to open up commerce to the region.

Symbol Name Last Price Change % Change

Materials & Natural Resources

Gold prices closed at $1,611.10/0z, +2.34%.

Silver closed lower at $18.73/oz, +1.81%.

First Majestic Silver (AG) closed at $11.95/share, +2.58%. AG recently hit a new 52-wk high of $12.26/share after reporting their Q3 2019 earnings where CEO Keith Neumeyer highlighted that they added $21.4 M to their treasury during the quarter as a result of strong production from San Dimas and Santa Elana mines.

Hecla Mining Company (HL) closed at $3.41/share, +3.02% after reaching a new 52-wk high of $3.51 recently. HL today announced preliminary silver and gold production results1 for the fourth quarter and full-year 2019 as well as a significant reduction of net debt and an increase in cash position. The Lucky Friday Union workers have ratified the collective bargaining agreement, reversing the result of the vote held in early December, and many of the workers are expected to return to work.

2019 HL HIGHLIGHTS

  • Silver production of 12.6 million ounces, an increase of 22% and gold production of 272,873 ounces, an increase of 4%. The gold production in 2019 was the highest in Hecla’s history.
  • Silver equivalent production of 47.2 million ounces and gold equivalent production of 549,172 ounces.2
  • Year-end cash and cash equivalents of approximately $62 million.
  • Net debt reduction of approximately $136 million, or 23%, from the net debt high mid-2019.
  • Generated sufficient free cash flow to fully repay the $50 million drawn from the revolving line of credit at the end of the third quarter.
  • Raised approximately $49 million from issuing 21.4 million shares from the At The Market (“ATM”) facility in the fourth quarter.
  • Exchanged $31 million of debt owed to Ressources Québec for 10.7 million shares of common stock and their option to be allocated up to $35 million of a new bond offering.
  • Union workers at Lucky Friday ratified the collective bargaining agreement and many are expected to return to work.

 

“2019 marked a year of higher metal production and in the second half of the year, strong cash flow generation and an improved balance sheet,” said Phillips S. Baker, Jr., Hecla’s President and CEO. “While gold & silver prices have increased, Greens Creek’s record silver production combined with the most gold production in Hecla’s history were the primary reasons for the cash flow strength.”

Symbol Name Last Price Change % Change

Technology & Beyond

The FAANG stocks closed as follows:

  • Facebook (FB) $213.06/share, +.22%
  • Amazon (AMZN) closed at $1906.86/share, +.21%
  • Apple (AAPL) closed at $298.39/share ,-.47%
  • Netflix (NFLX) $330.75/share, -1.51%
  • Alphabet (GOOG) $1393.34/share, -.06%

 

 

Symbol Name Last Price Change % Change

Investing & Inspiration

“As long as you enjoy investing, you’ll be willing to do the homework and stay in the game.” -Jim Cramer

“I rarely think the market is right. I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” -Mark Cuban

Michael Marcus taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.” -Bruce Kovner

“The policy of being too cautious is the greatest risk of all.” -Jawaharlal Nehru

“The only true test of whether a stock is “cheap” or “high” is not its current price in relation to some former price, no matter how accustomed we may have become to that former price, but whether the company’s fundamentals are significantly more or less favorable than the current financial-community appraisal of that stock.” -Philip Fisher

“I learned to avoid trying to catch up or double up to recoup losses. I also learned that a certain amount of loss will affect your judgment, so you have to put some time between that loss and the next trade.” -Richard Dennis

Symbol Name Last Price Change % Change

Tomorrow

We are due to receive the ADP Employment Change Report for December, the Consumer Credit Report for November, & the weekly MBA Mortgage Applications Index tomorrow.

Dow futures have fallen in the 300 -400 point point range tonight while oil prices jumped ~+3.5% as tensions escalate as Iran reportedly fired a number of missiles at bases housing U.S. forces in Iraq.

On a trading basis here are 3 ideas in biotech to check out that may be even more interesting if we see a pullback tomorrow as the annual JPMorgan Healthcare conference comes into focus next week:

  • Acorda Therapeutics (ACOR) which closed at $1.96/share last Thursday when we originally highlighted them after they recently announced a $276M exchange of convertible senior debt that moved maturity out to 2024, closed today’s trading at $2.44/share after spiking to $2.77/share.

 

  •  Aduro Biotech, Inc. (ADRO) closed at $1.18/share last Thursday and has interesting data points due in the 1st half 2020. Today it closed up another +.75% closing at $1.34/share.

 

  • Neubase Therapeutics (NBSE) closed trading at $6.90/share last Thursday and expects several data points to be released in the 1st half of 2020 with regard to their gene silencing platform that is initially targeting HD and ALS. Today NBSE closed up again at $7.43/share, +3.34%.

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