Growing Coronavirus Cases & Delayed Reopening’s Plus Escalating US-China Tensions Weigh Heavily This Week

Overall the markets ended in negative territory again this week as the markets seemed to take on the increasing weight of the growing number of coronavirus cases in the world and specifically in the US while the associated delays or rollbacks of reopenings in a few states took further effect. Coronavirus cases now number 15.6M up from 13,926,476 last week worldwide. The US now has reported 4.17M cases up form  3,677,453 cases last Friday.

The escalating nature of the US-China trade war came back in view as the two countries ordered the closures of the others’ consulate and went to great measures to let all know.

Coupling this weight with the fact that we have roared back to record highs in some cases and specifically on the tech-heavy Nasdaq and the fact that valuations have swelled across the board we were delivered a good recipe for the markets to go down or at least take a pause this week and it did.

The earnings season also moved forward with a number of bellwether types reporting and offering outlooks that did not exactly rev up Wall Street’s engine, while a couple announced significant delays in production. Two Dow 30 components added to this mix of sour notes at the end of the week. Intel (INTC) on Friday reported a 6-month delay in its next-generation 7nm chip technology and its shares dropped 16.245% closing at $50.59/share. However, it might be wise to look into a January 2021 $60/share call as an interesting play with this selloff. The Walt Disney (DIS) has also reportedly delayed the production of a number of movies by at least year as shares closed at $117.61/share, down .4%. 

This week’s macroeconomic schedule brought forth evidence of continued, but incomplete reopening measures as real estate showed better than expected advances, but the recent rollback measures of a few states became clearer too as the job claims report for the week ending July 18 showed an increase. On Monday & Tuesday, we did not receive any reports however, on Wednesday, we received the existing home sales report which jumped 20.7% month/month in June to a seasonally adjusted annual rate of 4.72 million as the inventory of existing homes continues to be tight. The FHFA Housing Price Index report for July dropped .3%. The weekly MBA Mortgage Applications Index rose 4.1%. On Thursday, the initial jobless claims report for the week ending July 18 confirmed a jump of 109k to 1.416 million while continuing claims for the week ending July 11 showed a drop by 1,107M to 16.197M. The Conference Board’s Leading Economic Index report also confirmed a rise of 2% month/month in June to 102. On Friday, the new home sales report confirmed a jump of 13.8% month/month in June to a seasonally adjusted annual rate of 776k above expectations while on a year/year basis new home sales have also risen 13.7%.

MARKET RESULTS & MARKET LEADERS

The Dow ended the week at 26469.89 representing a weekly loss of .8% and is now down 7.2% YTD. The Russell 2000 closed at 1467.55 representing a weekly loss of .4% and is now down 12% YTD. The S&P 500 closed at 3215.63 losing .3% and is now down on .5% YTD. The Nasdaq Composite closed at 10363.18 pulled back this week by .1.3% but remains up 15.5% YTD. 

The energy sector moved up 2.1% the financials sector moved up 1.3%, and the consumer discretionary moved up 1.3% to lead all sectors.

From the financials sector, we saw a bit of a rebound again as it moved up 1.3%. Around the sector, shares of Goldman Sachs (GS) closed trading at $201.47/share down from the $241.41/share last Friday while it managed to settle its 1MDB case for $3.9B, American Express (AXP) closed at $95.33/share up from the $95.18/share last Friday as it reported a mixed quarter pointing to the reduced use of credit cards in the COVID-19 riddled quarter, Visa (V) closed trading at $195.15/share up from the $195.09/share last Friday & shares of Morgan Stanley (MS) closed at $50,18/share down from last Friday’s close of $52.41/share.

Overall it was a down week in the healthcare sector as it dropped .7% but Pfizer (PFE) in partnership with BioNTech (BNTX) also received a $1.95B vaccine supply agreement with the US upon an FDA approval so it was not all bad. The S&P 500 healthcare sector closed down at 1,224.52 down from 1,233.67 last Friday. The Ishares Nasdaq Biotechnology ETF (IBB) moved a lower again this week closing at $136.41 vs. last Friday’s close of $143.96. The 52-wk range is $92.15 – $144.54. The NYSE Arca Biotech Index (^BTK) closed at 5,769.80 down from the 6,040.61 level last week. The new 52-week high is 6066.14. Johnson & Johnson (JNJ) closed at $148.12/share down from $149.35.

The information technology sector lost 1.5%, the communication services sector lost 1.1% while the FAANG’s pulled back overall again as follows: Facebook (FB) closed at $230.71/share, -.81% Friday ($242.03/share a week ago), Apple (AAPL) closed at $370.46/share, -.25% on Friday,($385.31/share a week ago), Amazon (AMZN) closed at $3008.91/share, +.75% Friday ($2,961.97/share a week ago), Netflix (NFLX) closed at $480.45/share, +.6% Friday, ($492.99/share a week ago) after recently missing earnings expectations and offering a soft outlook, & Alphabet (GOOG) closed at $1,511.87/share, -.35% Friday, ($1,515.55/share a week ago.)

COMMODITY MOVES

Gold prices closed at $1,902/oz. surging up from $1,810/0z. last Friday & silver prices closed at $22.98/oz. up sharply again from $19.65/oz. last Friday. North American silver and gold producer Hecla Mining Company (HL) ended the week at $5.20/share up from last Friday’s close of $4.57/share while establishing a new 52-week high on Friday of $5.46. Last Friday, Hecla announced that they are experiencing “Strong Production and Cash Generation.” 

Oil prices ended at $41.08/bbl up from last Friday’s $40.56/bbl. Energy giant Chevron (CVX) moved higher this week to close at $90.13/share ($87.19, last wk) and Exxon (XOM) moved down closing at $43.43/share ($43.52, last wk.) Occidental Petroleum Corporation (OXY) closed at $16.74 up from $16.28/share last Friday. Midstream player, Enterprise Products Partners (EPD), closed trading at $18.14 down from $18.17/share last Friday and currently sports at an attractive $1.78/share dividend or 9.75%. USA Corporation Partners, LP. (USAC), one of the nation’s largest independent providers of natural gas compression services, closed at $12.31/share down 3.07% while offering a $2.10/share (16.54%) dividend.

MONEY UPDATE

The U.S. Dollar Index weakened again to end the week at 94.40 down from 95.95 last week.

The 2-yr Treasury yield closed flat w/w at .14%, the 10-yr yield closed at .58 down 4 basis points on the week while the 30-yr yield ended at 1.232% down from 1.33% last Friday.    

NEXT WEEK

We will be back to a full week of trading sessions again next week with ~40% of S&P 500 companies reporting Q2 earnings.  

We will also be seeking the following macroeconomic reports and “stocks in view” throughout the week:

MACROECONOMIC DATA

• The consumer confidence report on Tuesday,
• The Federal Reserve’s interest rate decision on Wednesday
• The preliminary second-quarter GDP on Thursday

STOCKS IN VIEW

• Shares of Atossa Therapeutics (ATOS) closed at $3.99 on Friday down from $4.24 last Friday. 

  • Interest continues to swell around their breast cancer treatment programs and their COVID-19 drug candidates the trading volatility to the upside this year up from $.76/share and this week achieved a new 52-week high of $4.69/share.

  • Last week, Atossa announced that it had successful results from in vitro testing of AT-301, Atossa’s proprietary COVID-19 nasal spray drug candidate. The preliminary study results showed that AT-301 inhibits SARS-CoV-2 infectivity of VERO cells in a laboratory culture, which is the standard disease model used for the initial screening of COVID-19 drug candidates.  AT-301 is being developed with a nasal spray delivery mechanism because many COVID-19 patients are infected via the nasal passage. Collectively, the components of AT-301 are believed to help maintain a protective mucosal like layer within the nasal cavity with both anti-viral properties and protective mucosal like barrier that may lead to lower infectivity and reduced symptoms in COVID-19 patients due to their interference with the spike protein of the virus in the nasal cavity and upper respiratory tract.  Atossa’s nasal spray formulation AT-301 is being designed to contain ingredients that can potentially block SARS-CoV-2 viral entry gene proteins in nasal epithelial cells by interfering with spike protein activation by host proteases, by masking receptor binding domains (RBD) via electrostatic mechanisms, and by providing a generalized mucoadhesive epithelial barrier.

• • Atossa also recently announced that it has contracted with Avance Clinical Pty Ltd to conduct a clinical study of Atossa’s proprietary drug candidate AT-301, to be administered by nasal spray. Avance is a leading Australian clinical research organization and has successfully completed multiple clinical studies of Atossa’s proprietary Endoxifen.

• • The Maxim Group’s Analyst Jason McCarthy, Ph.D. updated his research on Atossa Therapeutics recently stating “Factoring in COVID-19 Candidates, awaiting HOPE Study Initiation as Pandemic Continues – Raising Price Target to $8 from $4″.

• • ATOS has hired key personnel in clinical, regulatory, and chemistry manufacturing and controls (CMC). The new hires include Heather Fraser, Ph.D., as vice president of clinical, regulatory, and CMC; Natalie Farris, MS, as senior director of CMC; and Devon Payne as director of clinical operations. “Hiring of these talented and accomplished individuals will help accelerate the advancement of our development pipeline, which includes programs in breast cancer and COVID-19. We welcome Heather, Natalie, and Devon to Atossa and look forward to their important contributions as we execute on our value-creation strategy,” commented Steven Quay, M.D., Ph.D., president, and CEO of Atossa.

• • Dr. Quay was recently interviewed on FOX 26 Houston this week and the show was titled “Company developing nasal spray to treat COVID-19.” Again as I mentioned yesterday, I believe it is worth the time for all to view this story here as it sheds a great deal of light on the 4 stages of COVID-19 and their potential treatments.

• • He has also recently published the following book “Your COVID-19 Survival Manual: A Physician’s Guide to Keep You and Your Family Healthy During the Pandemic and Beyond,” in paperback and eBook format on his website, www.DrQuay.com. Proceeds from the book will go to military veterans performing COVID-19 relief work in their communities.  You may order it here.

• • Dr. Quay will be presenting on July 30th at 8 am pacific via the Tribe Public Webinar Presentation and Q&A Event. Those interested should either visit the Tribe Public website www.tribepublic.com or send an email to research@tribepublic.com.

• Shares of INVO Bioscience (INVO) closed at $4.10/share up from $3.72/share last week. 

• • INVO’s mission is to increase access to care and expand infertility treatment across the globe with a goal of improving patient affordability and industry capacity. 

• • Industry forecasts suggest that only 1% to 2% of the estimated 150 million infertile couples worldwide are currently being treated

• • Recently, INVO announced that it took a key step forward as they have received product registration approval for INVOcell in Turkey, paving the way for commercialization efforts to begin in the country. “We are pleased to have achieved this important registration approval for Turkey which enables our distribution partner, Orcan Medical, to now begin commercialization efforts in the country. Similar to other regions around the world, the people of Turkey are faced with increased infertility rates and challenges to receiving treatment, including access to care and the cost of treatment. As the world’s only Intravaginal Culture System, INVOcell, a streamlined treatment solution, is uniquely positioned to address the challenges within the infertility industry,” stated Steve Shum, CEO of INVO Bioscience. READ the rest of the story.

• • During the period from Q4, 2019 to Q1 2020, after Steve Shum became the new CEO of INVO Bioscience, INVO signed up 6 distributors and/or Joint Venture relationships in the following countries: Turkey, Jordan, India, Nigeria, Ethiopia, Sudan, & Uganda. Per recent discussions with Steve Shum, the registration process in countries is typically in the 6-month range. As evidenced today INVO is making progress per the successful registration approval in Turkey that it is reasonable to assume that they may be making progress along the same lines in the other 5 countries signed during that period. I am also expecting the company to give us some updates on other countries that could be added to their growing distribution network. 

• • Recently, a spotlight report was published by Birmingham, Alabama-based America Institute of Reproductive Medicine (AIRM) highlighting the success achieved in their practice utilizing INVOcell. INVO’s INVOcell® is the world’s only in vivo Intravaginal Culture System. “The AIRM clinic became an early adopter and advocate for the use of INVOcell shortly after we received FDA-clearance. We appreciate their willingness to share their story of that successful implementation of INVOcell within their clinical practice, which highlights important aspects of our INVOcell technology solution,” stated Steve Shum, CEO of INVO Bioscience. You can review the report here. 

• • I am expecting to see the company push forward with new market supportive initiatives as they have recently been fueled up by financing that may result in further adoption in the US clinics and establishing new joint ventures, partners, and distributors throughout the world.

• • INVO has  ~7.89 million shares outstanding and with ~15% insider ownership the share float is tight and recently confirmed that the company raised ~$3.5M.

• North American silver and gold producer Hecla Mining Company (HL) ended the week near its newly minted 52-wk high $5.46/share closing at $5.20/share up from last Friday’s close.

• • Recently, Hecla announced that they are experiencing “Strong Production and Cash Generation.” 

• • If silver continues to hold above $19/oz or move higher it, not to mention if Gold continues to move higher like it has, then it would seem that Hecla could continue to become a break out stock this year. 

• Shares of Fate Therapeutics (FATE) closed at 34.40/share last Friday and this Friday closed lower at $31.90. Its new all-time & 52-week high is $38.52 and its 52-week low of $12.59.

• • Fate is a clinical-stage biopharmaceutical company dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders

• • July 14th, FATE announced that the Company entered into an exclusive license agreement with Baylor College of Medicine covering alloimmune defense receptors, a first-in-class approach that renders off-the-shelf allogeneic cell products resistant to host immune rejection. Preclinical studies published in the journal Nature Biotechnology (https://www.nature.com/articles/s41587-020-0601-5) demonstrate that allogeneic cells engineered with a novel alloimmune defense receptor (ADR) are protected from both T- and NK-cell mediated rejection, and provide proof-of-concept that ADR-expressing allogeneic cell therapies can durably persist in immunocompetent recipients.

• • On July 9 Fate announced that the U.S. Food and Drug Administration (FDA) cleared the Company’s Investigational New Drug (IND) application for FT819, an off-the-shelf allogeneic chimeric antigen receptor (CAR) T-cell therapy targeting CD19+ malignancies. FT819 is the first-ever CAR T-cell therapy derived from a clonal master induced pluripotent stem cell (iPSC) line and is engineered with several first-of-kind features designed to improve the safety and efficacy of CAR T-cell therapy. The Company plans to initiate a clinical investigation of FT819 for the treatment of patients with relapsed / refractory B-cell malignancies, including chronic lymphocytic leukemia (CLL), acute lymphoblastic leukemia (ALL), and non-Hodgkin lymphoma (NHL).

• • On June 11th, FATE announced that it had closed an underwritten public offering of 7,108,796 shares of its common stock, which included 927,324 shares that were issued pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $28.31 per share. Aggregate gross proceeds from this offering, including the exercise of the option, were approximately $201.3 million, prior to deducting underwriting discounts and commissions and estimated offering expenses. 

• Shares of Neubase Therapeutics (NBSE) closed trading at $7.46/share down from $7.88/share last Friday.  

• • We are following Neubase Therapeutics (NBSE) for a number of reasons including its development of a modular antisense peptide nucleic acid (PNA) platform with the capability to address rare genetic diseases caused by mutant proteins with a single, cohesive approach.

• • NBSE was added to the Russell 3000 recently.

• Shares of Aduro (ADRO) closed at $2.76/share down from $2.80/share last Friday after reaching a recent intraday high of $2.94/share.

• • On June 2nd, Aduro Biotech, Inc.(ADRO) and Chinook Therapeutics, Inc., a privately-held clinical-stage biotechnology company focused on the discovery, development, and commercialization of precision medicines for kidney diseases, today announced that the companies have entered into a definitive merger agreement pursuant to which Aduro will acquire all of the outstanding capital stock of Chinook in exchange for shares of Aduro common stock representing approximately 50 percent of Aduro’s outstanding common stock immediately following completion of the transaction.

• • The combined company is expected to have approximately $200 million in cash, cash equivalents, and marketable securities at closing, including $25 million in additional financing committed by Chinook’s existing investors.

• • Following closing, which is expected to occur in the second half of 2020, Aduro will be renamed Chinook Therapeutics, Inc., and is expected to trade on the Nasdaq Global Market under the ticker symbol “KDNY”.

• • Recently, ADRO announced that the first patient with IgA nephropathy has been dosed in a Phase 1 clinical trial of BION-1301, an investigational humanized IgG4 monoclonal antibody that blocks APRIL binding to both the BCMA and TACI receptors. “We are thrilled to have dosed the first patient with IgA nephropathy in the Phase 1 clinical study of our investigational anti-APRIL antibody, BION-1301,” said Dimitry S.A. Nuyten, M.D., Ph.D., chief medical officer of Aduro.

• • “The data Aduro recently presented from Parts 1 and 2 of this study in healthy volunteers at the 57th ERA-EDTA Virtual Congress indicated BION-1301 was well-tolerated, had a half-life of approximately 33 days, achieved over 90% target engagement with a single 450 mg dose of BION-1301 and demonstrated dose-dependent and durable reductions in IgA and IgM levels, and to a lesser extent, IgG levels. We look forward to hopefully replicating this effect in addition to exploring BION-1301’s disease-modifying potential in patients with IgA nephropathy in Part 3 of the ongoing Phase 1 clinical study.”

• TransEnterix (TRXC) closed trading at $.3745/share up from the $.34/share last Friday. 

• • TRXC is a medical device company that is digitizing the interface between the surgeon and the patient to improve minimally invasive surgery.

• • On Monday, July 6th TRXC announced the closing of $15M registered direct common share offering at $.35/share and came into focus on our radar as it is again “gassed up” for the time being.

• • TRXC shares swiftly came down from the $1 level prior to the deal that was priced at $.35/share (no warrants) as it would appear that shorting and/or a significant amount of selling took place prior to the closing of the funding.

• • TRXC shares have already bounced once post the recent funding from the $.30 cent range to above the $.42 cent level and if Friday’s stock performance is evidence then it could be at least heading back to the same level soon and if lucky could recover to predeal levels.

Thanks again for your attention this week. Please continue to share your thoughts, questions, & ideas as we move forward. 

In the meantime, please enjoy the balance of the weekly newsletter’s videos, quotes, updates. 

I will leave you with the insightful quote:

“Spend each day trying to be a little wiser than you were when you woke up.” – Charlie Munger