Russell 2000 & Real Estate Sector Rule As Markets Swing To Positive This Week

It was certainly an interesting week where we saw the overall markets swing back to the positive for the first time in four weeks. The little guys of the Russell 2000 realized an outsized 4.4% weekly gain to lead all. It was a somewhat refreshing zen-like break from the overall recent beat down in the broad markets until Friday. Friday’s negative market session saw uncertainty sneak back into investors minds when news that President Trump & the First Lady had contracted the coronavirus surfaced & the NFL’s postponement of a couple of games further set in.

However, overall this week the markets were positive this week as investors seemed to be positively reacting to the further reopening steps being taken by US businesses and municipalities as we remain in a ultra low interest rate environment. There was also the growing belief that a $2 trillion plus stimulus package possibly could be approved sometime soon. We also received a number of overall improving macroeconomic reports that continued to come forth while managing to shrug off the ridiculous charade of a presidential debate & the current job market woes. 

On the macroeconomic side of the coin the schedule produced a mix of reports as follows: On Tuesday, we received the Conference Board’s Consumer Confidence Index report which rose to 101.8 in September. The S&P Case-Shiller Home Price Index report also showed a rise by 3.9% in July. The advance international trade in goods report showed a deficit that totaled $82.9B in August. The advance wholesale inventories report confirmed a rise by .5% in August while the advance retail inventories report showed a rise of .9%.  On Wednesday, we received the third estimate for Q2 GDP which revealed an upward revision to -31.4% qtr/qtr annualized. The GDP Price Deflator was also revised up to -1.8%. The ADP Employment Change report for September estimated that 749k jobs were added to private-sector payrolls. The Chicago PMI report for September jumped to 62.4%. Pending home sales rose 8.8% in August while the weekly MBA Mortgage Applications decreased by 4.8%. On Thursday, we received the ISM Manufacturing Index report for September which came in at a recovering 55.4%. The Initial claims report for the week ending September 26 showed a decrease by 36k to 837k as continuing claims for the week ending September 19 confirmed a significant drop of 980k at 11.767M. However, personal income also decreased by 2.7% month/month in August & personal spending rose by 1%. The PCE Price Index & Core PCE Price Index respectively bumped up by .3% month/month. The total construction spending report confirmed arise by 1.4% month/month in August and is now up 2.5% yr/yr. However, on Friday, the September employment report was relatively disappointing even though it dropped to  7.9% but only as the labor force participation rate fell to 61.4%. September nonfarm payrolls rose by 661k. The final University of Michigan Index of Consumer Sentiment for September climbed to 80.4. The Factory orders report in August confirmed a rise by .7% month/month.

MARKET RESULTS & MARKET LEADERS

The leading sectors for the week came in accordingly: real estate led by moving up 4.9%, financials moved up 3.3%, utilities moved up 3.3%, & consumer discretionary sector closed up a respectable 2.5%.

The Russell 2000 led all indices as it closed at 1,539.30 moving up sharply by 4.4% week over week, but still remains down 7.7% YTD. Interestingly it dropped 4% during the previous week.  

The tech-heavy Nasdaq Composite dropped 2.22% on Friday, but closed up 1.5% week over week to close at 11,075.02 and is now back up 23.4% YTD. The highly weighted FAANG’s helped the Nasdaq’s cause for the most part ending as follows:  Facebook (FB) closed at $259.94/share, -2.51% Friday ($254.82/share a week ago), Apple (AAPL) closed down 3.23% on Friday at $113.02/share but up from $112.28/share a week ago. Amazon (AMZN) closed at $3,125/share, -2.99% Friday ($3,095.13/share a week ago), Netflix (NFLX) closed at $503.06/share, -4.63% Friday, ($482.88/share a week ago), & Alphabet (GOOG) closed at $1,458.42/share, -2.13% Friday, ($1,444.96/share a week ago.)

The Dow ended the week at 27,682.81 up 1.9% and remains down 3% YTD. Around the Dow 30, Johnson & Johnson (JNJ) closed at $146.24/share up from last week’s close of $145.66. Shares of Coca-Cola (KO) closed at $49.36/share up from last Friday’s close of $48.72/share. Shares of Disney (DIS) closed at $122.55/share down again from last Friday’s close of $124/share as they announced the lay of 28k employees amid the coronavirus pandemic. Shares of Nike (NKE) closed at $126.64/share up from $124.23/share last Friday. Sportwear giant NIKE, Inc. (NIKE) recently released its Q1 earnings performing above market estimates as digital sales surged and lockdown measures eased, allowing the brand to open stores worldwid

Deere (DE) closed at $224.79/share up from last week’s close of $219.25/share. Pharmaceutical giant Merck (MRK) closed at $80.80/share down from last Friday’s close of $82.93/share, energy giant Chevron (CVX) closed at $71.19 slightly down from last Friday’s close of $71.83/share after recently shareholder approval for its $4.B acquisition of Noble Energy that was originally valued at $5B, Caterpillar (CAT) closed at $149.94/share up from last Friday’s close of $145.91/share while Walmart (WMT) closed at $140.50/share up from last Friday’s close of $137.27/share. Shares of Microsoft (MSFT) closed at $206.19/share down from last Friday’s close of $207.82/share.

Financials jumped 3.3% this week as shares of Goldman Sachs (GS) closed trading at $199.90/share up from last Friday’s close of $194.95/share, American Express (AXP) closed at $101.61/share up from the $96.26/share close last Friday, Visa (V) closed trading at $201.46/share up from the $197.25/share last Friday & shares of Morgan Stanley (MS) closed at $47.97/share ticking down from last Friday’s close of $47.04/share as they received regulatory approval to acquire E*Trade.

The S&P 500 closed at 3,348.42 gaining 1.5% wk/wk and is back up 3.6% YTD. 

Elon Musk’s Tesla (TSLA) closed at $415.09/share down 7.38% on Friday, but up from $407.34/share last Friday. 

COMMODITY MOVES

Gold prices closed at $1,899/oz. up from $1,861/0z. last Friday & silver prices closed at $23.83/oz. up from $22.97/oz. last Friday. North American silver and gold producer Hecla Mining Company (HL) ended the week at $5.08/share up from last Friday’s close of $4.92/share after recently establishing a new 52-week high of $6.79. Recently, Hecla reported 24% higher revenues on higher production and prices in Q2 2020. 

The energy sector fell 2.9% again this week now 11.5% in the last two weeks as oil prices ended at $37.05/bbl down a 8 points this week. Midstream player, Enterprise Products Partners (EPD), closed trading at $16.04/share up from $15.51/share last Friday and currently sports at an attractive $1.78/share dividend or 11.36%. USA Corporation Partners, LP. (USAC), one of the nation’s largest independent providers of natural gas compression services, closed at $10.44/share up from $10.12/share last Friday and currently sports a juicy $2.10/share (20.98%) dividend.

MONEY UPDATE

The U.S. Dollar Index weakened to end the week at 93.84 down .9% from 94.59 last week.

The 2-yr Treasury yield closed even again w/w closing at .13%, the 10-yr yield closed rose 3 basis points ending at .70 while the 30-yr yield ended at 1.488% up from 1.404% last Friday.

NEXT WEEK

We will be back with another full week of trading.

NEXT WEEK’S KEY MACROECONOMIC DATA

• The ISM services index report on Monday
• The JOLTS job openings report on Tuesday
• The September Fed meeting minutes on Wednesday

We will also have the following “stocks in view” throughout the week:

STOCKS IN VIEW NEXT WEEK

• Shares of Atossa Therapeutics (ATOS) closed at $2.40/share slightly down from $2.42 last Friday. 

• • Recently, Atossa announced a positive interim safety assessment from the second cohort of healthy participants in their Phase 1 clinical study using Atossa’s proprietary drug candidate AT-301 administered by nasal spray. This second group of eight participants received a single escalated dose of either AT-301A (placebo) or AT-301B (active drug). The blinded, positive assessment by the safety committee allows the study to now enroll the next cohort, which will be the third of a total of four cohorts and the first of two multi-dose, placebo-controlled cohorts. The ongoing Phase 1 study is a double-blinded, randomized, and placebo-controlled safety study of AT-301 nasal spray in 32 healthy adult subjects divided into two study groups. Part A consists of two single-dose cohorts receiving either active therapy, AT-301B, or the placebo comparator AT-301A at two different doses. Part B is a multiple-dose arm with cohorts receiving either AT-301A or AT-301B for 14 days at two different doses. The primary objective of the study is to evaluate the safety and tolerability of single and multiple doses of AT-301 administered via nasal instillation to healthy volunteers. Secondary objectives are to assess the incidence and severity of local irritation and bronchospasm following administration of AT-301 via nasal instillation. The study is being conducted in Australia. READ THE COMPLETE STORY!

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

• • Ascendiant Capital Markets’ Analyst Edward Woo, CFA initiated coverage recently with a BUY Rating and a $7.00 Target.

• • Dr. Steven Quay MD, Ph.D., Atossa’s founder, and CEO, recently published the following book “Stay Safe: 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.

• Shares of INVO Bioscience (INVO) closed at $3.80/share slightly up from $4.04/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 which presents and interesting opportunity. 

• • This week INVO announced a new joint venture as it has teamed up with Dr. Francisco Arredondo, MD, a respected and experienced board certified reproductive endocrinologist, and Dr. Ramiro Ramirez, MD, a physician and owner of several successful enterprises in Mexico, to establish a joint venture through its wholly-owned subsidiary INVO Centers, LLC, a Delaware limited liability company (“INVO Centers”), focusing on developing the Mexico market for INVOcell. The new jointly-owned operation, named Positib Fertility, S.A. de C.V. (“Positib Fertility”), is a Mexico registered company that will focus on establishing fertility centers dedicated to offering INVOcell, with the initial center to be located in the city of Monterrey, Mexico.

• • Recently, INVO Bioscience, Inc. (INVO), the developers of INVOcell®, the world’s only in vivo Intravaginal Culture System, announced the appointment of two seasoned executives, Barbara Ryan and Matthew Szot, to its board of directors, effective immediately. To make way for their appointments, Kathleen Karloff and Michael Campbell have both agreed to voluntarily step down from their board positions to assist the company in achieving an independent board majority. Mr. Campbell will remain as Chief Operating Officer and Vice President of Business Development, while Ms. Karloff intends to continue to advise the board and assist the operating team on a go-forward basis. Ms. Ryan founded Barbara Ryan Advisors, a capital markets and communications firm, in 2012 following a more than 30-year career on Wall Street as a sell-side research analyst covering the US Large Cap Pharmaceutical Industry. Previously, Ms. Ryan was a Managing Director at Deutsche Bank/Alex Brown and Head of the company’s Pharmaceutical Research Team for 19 years and began her research career covering the Pharmaceutical industry at Bear Stearns in 1982. Ms. Ryan has deep experience in equity and debt financings, valuation, SEC reporting, financial analysis, and corporate strategy across a broad range of life sciences companies. During Ms. Ryan’s career as an analyst, in addition to covering the large-cap pharmaceutical companies, Barbara also covered the drug wholesalers and PBMs and was the lead analyst on many high-profile IPO’s including Express Scripts, PSSI, Henry Schein, and Flamel Technologies. Ms. Ryan has extensive global buy-side, sell-side and financial media relationships, and has provided support and counsel on several of the highest-profile deals in the biopharma industry, including Shire/Abbvie, Shire/Baxalta, and Allergan/Valeant. Barbara led the IR/PR programs for Radius Health, the best performing IPO of 2014, for 4 years, Eloxx Pharmaceuticals for the past two years, and served on the Executive Team at both companies. Ms. Ryan has provided strategic communications counsel for Cardinal Health, Purdue, Zoetis, Radius Health, Eloxx Pharmaceuticals, Agenus, Centrexion, Esperion, ContraFect, Relypsa, Shire, Allergan, and Perrigo. Ms. Ryan’s opinions and expertise are widely sought; she is frequently quoted in the press and appears on CNBC. Ms. Ryan currently serves on Pharmaceutical Executive’s Editorial Advisory Board, the Executive Advisory Board for the Prix Galien Foundation is a member of the Life Sciences Council of Springboard Enterprises and is a member of the Board of Directors of Gilda’s Club NYC, and a Faculty member at the GLG Institute. Ms. Ryan Chaired the Board of Villa Maria School, a school for children with learning disabilities, for 8 years. Ms. Ryan is the Founder of Fabulous Pharma Females, a non-profit dedicated to the advancement of women in the biopharmaceutical industry.

• • Tiny Float – INVO has  ~7.89 million shares outstanding and with ~+15% insider ownership the share float is tight.

• North American silver and gold producer Hecla Mining Company (HL) ended the week at $5.08 up from $4.92/share last Friday.

• • Recently, Hecla announced that its Board of Directors is increasing the expected minimum quarterly dividend 50% to an annualized one and one-half cents per share and lowering the silver-linked dividend threshold price. If Hecla’s average realized silver price for a quarter is $25.00 per ounce, the new silver-linked quarterly dividend policy provides an annualized two cents per share, while at $30 and above, the realized silver-linked dividend per quarter is unchanged. Recently, Hecla reported 24% higher revenues on higher production and prices in Q2 2020.

• • Cantor Fitzgerald Analyst Mike Kozak also updated his coverage moving his Speculative Buy rating to a Buy rating and moving his target price to $7.25/share.

• Shares of Fate Therapeutics (FATE) closed at $38.90/share down from $37.80 last Friday after establishing a new all-time 52-wk high of $42.22 this week.

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

• • Aug. 19, Fate announced that Edward Dulac has been appointed Chief Financial Officer. Mr. Dulac comes to the Company from Celgene Corporation, where he most recently served as Vice President, Business Development & Strategy, and brings an extensive array of biopharmaceutical experience having served for over 20 years in positions in finance, business development, and product portfolio strategy.

• • On Aug. 5, Fate Reported Second Quarter 2020 Financial Results and Highlights Operational Progress ending the quarter with $533 Million in Cash & Short-term Investments. Scott Wolchko, President and Chief Executive Officer of Fate Therapeutics stated, “Early clinical data from our FT596 program are very encouraging, as we observed a partial response in a heavily-pretreated patient with refractory diffuse large B-cell lymphoma at the first dose level without any reported events of cytokine release syndrome, neurotoxicity or graft-versus-host disease. Additionally, the safety, tolerability, and immunogenicity data across our off-the-shelf NK cell programs continue to suggest that multiple doses of iPSC-derived NK cells can be administered to a patient without matching. We continue to be pleased with our pace of innovation, where the recent clearances of our IND applications by the FDA for FT538, the first-ever CRISPR-edited iPSC-derived cell therapy, and for FT819, the first-ever iPSC-derived CAR T-cell therapy, continue to demonstrate our unique ability to rapidly bring multiplexed engineered, off-the-shelf NK cell and T-cell cancer immunotherapies to patients. In addition, we successfully launched our Janssen collaboration with strong momentum, bringing together Janssen’s proprietary tumor-targeting antigen binders and our industry-leading iPSC product platform to develop novel off-the-shelf CAR NK and CAR T-cell immunotherapies for hematologic malignancies and solid tumors.”

• • 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 $7.32/share down from $7.60/share last Friday.  

• • NeuBase, a biotechnology company accelerating the genetic revolution using a new class of synthetic medicines,  announced that Dietrich A. Stephan, Ph.D., chief executive officer, is scheduled to present at the Myotonic Dystrophy Foundation 2020 Virtual Conference on September 25 between 4:00 p.m. and 4:45 p.m. ET. The conference will be held virtually on September 25-26, 2020 and is designed as an educational event for individuals and families living with myotonic dystrophy. The presentation will provide an overview of NeuBase’s PATrOL™ platform and the potential of its therapeutic approach for myotonic dystrophy type 1 (DM1).

  • RBC Capital Markets recently initiated coverage of NBSE today with an Outperform, Speculative Risk rating & a $16 price target.

• • On Aug. 13th, NBSE reported its financial results for the three and nine-month periods ended June 30, 2020. Dietrich A. Stephan, Ph.D., chief executive officer of NeuBase stated, “We are pleased with the continued execution of our development programs during 2020. This includes the announcement in late-March of compelling data that firmly validates our platform as a viable fully synthetic approach to genetic medicine. Notably, these data confirm that our therapies penetrate into the brain when administered systemically – overcoming one of the grand challenges of drug delivery. PATrOL-enabled compounds can also access tissues throughout the entire body, opening our platform up to unexplored indications that have not previously been accessible by genetic medicine technologies. These positive pharmacokinetic and pharmacodynamic data-position our unique technology to output a vast pipeline of therapeutics to resolve innumerable human diseases. We anticipate presenting additional new data with respect to our ongoing progress in the fourth calendar quarter of this year. A key objective for our company shortly after the March data announcement was to strengthen our balance sheet in order to fully advance our strategies in HD and DM1, and build out our pipeline. This was accomplished in April with the closing of our oversubscribed capital raise of approximately $33.3 million in net proceeds that was led by fundamental healthcare investors and significantly increased our institutional shareholder base. We expect this to support our R&D and general corporate expenses into the second calendar quarter of 2022.”.

• Shares of Aduro (ADRO) closed at $14.01/share after gaining shareholder approval for their merger and a 5 for 1 reverse stock split up significantly  week over week.

• • Aduro Biotech, Inc. (NASDAQ: ADURO), a clinical-stage biopharmaceutical company focused on developing therapies targeting the Stimulator of Interferon Genes (STING) and A Proliferation Inducing Ligand (APRIL) pathways for the treatment of cancer, autoimmune and inflammatory diseases, today announced the results for the three proposals considered and voted upon by its stockholders at its Special Meeting on October 1, 2020. The Company reported that the various proposals giving effect to the merger agreement between Aduro and Chinook Therapeutics were approved by approximately 55,168,606 of the outstanding shares of Aduro. All proposals were approved by the Aduro stockholders. A Form 8-K disclosing the full voting results will be filed with the Securities and Exchange Commission on October 1, 2020. Following stockholder approval, the Company announced a one-for-five reverse stock split. The Company’s common stock  went in to affect trading on a split-adjusted basis on The Nasdaq Global Select Market effective with the open of the market on Friday, October 2, 2020. The closing of the merger is anticipated to take place on or around October 5, 2020. Following closing of the merger, the combined company will be renamed Chinook Therapeutics and trade under the trading symbol “KDNY.” Chinook Therapeutics, Inc. is a clinical-stage biotechnology company developing precision medicines for kidney diseases. The company’s products are focused on rare, severe chronic kidney disorders with opportunities for well-defined and streamlined clinical pathways. Chinook’s lead program is atrasentan, an investigational phase 3-ready endothelin receptor antagonist in development for the treatment of IgA nephropathy and other primary glomerular diseases. Through the proposed Aduro merger, Chinook will also add BION-1301, an investigational anti-APRIL monoclonal antibody in a phase 1b trial for IgA nephropathy, to its pipeline. In addition, Chinook is advancing CHK-336, a preclinical development candidate for an undisclosed ultra-orphan kidney disease, as well as research programs for other rare, severe chronic kidney diseases, including polycystic kidney disease. Chinook seeks to build its pipeline by leveraging insights in kidney single cell RNA sequencing, human-derived organoids and new translational models, to discover and develop therapeutics with novel mechanisms of action against key kidney disease pathways. Chinook is backed by leading healthcare investors, Versant Ventures, Apple Tree Partners and Samsara BioCapital, and is based in Vancouver, British Columbia and Seattle, Washington. For more information visit www.chinooktx.com.

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. My thoughts and prayers also go out to all of those that are having to deal and fight the California wildfires. I hope the rain comes and the wind slows down so that all can get back to normal. 

I will leave you with an insightful quote to help form your investment thesis this week:

“Formal education will make you a living; self-education will make you a fortune.” – Jim Rohn