BioSci Rounds Report: The Bioscience Market Traded Lower While Arcus And Invitae Broke The Trend

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Includes: AMGN, BMY, IBB, NVTA, RCUS, XBI
by: BioSci Capital Partners
Summary

The broad bioscience market traded down significantly, as it can signal an oncoming recession.

Arcus Biosciences bucked the trend, as the stock traded higher for the day. The insiders also accumulated the significant amount of shares lately.

Another trend breaker is Invitae Corporation (a genetic testing lab) that recently witnessed substantial insider purchases.

The company that doesn't pioneer, doesn't take chances, and merely goes along with the crowd is liable to prove a rather mediocre investment in this highly competitive age. - The Father of Growth Investing (Philip Fisher)

Trading Analytics

Welcome to another edition of Integrated BioSci Rounds Report. As usual, we'll elucidate notable trading analytics for the day, recent insider transactions, and interesting market developments. Without further ado, we'll take a look at the overall market. Notably, the iShares NASDAQ Biotechnology Index (IBB) traded down by $4.22 at $102.5 (for -3.95% loss). Moreover, the SPDR Biotech (XBI) exchanged hands $3.88 lower at $83.85 (for -4.42% decline). It's likely that investors were trading with negative sentiment for the day. Regardless of the market's daily inclination, there are substantial prospects in the bioscience sector: one that delivers hope for patients while rewarding supporters with substantial wealth in the long haul. In terms of specific equity, Arcus Biosciences (RCUS), a newly formed cancer immunotherapies innovator, made our notable trade of the day.

Figure 1: Notable BioSci movers. (Source: StockCharts).

In the midst of a down market (where nearly all bioscience stocks traded south), Arcus managed to exchange hands $0.45 higher at $15.89 for +2.91% profit. The company was founded in 2015 by Juan Jaen and Terry Rosen. Corporate strategies centered around the development of cancer drugs based on known but under-exploited biology. Interestingly, President Jaen also started Flexus Biosciences - a firm that sold its preclinical IDO inhibitor asset to Bristol-Myers Squibb (BMY) for $800M in upfront and $450M in milestone payments. With the IPO of 8M shares at $15, the firm raised $138M cash on March 19 for the pipeline innovation.

That aside, Arcus experienced substantial insider purchases. On March 19, 2018, Mr. Jaen bought 66,666 shares for the total of $999,990 to bring his total ownership to 2.9M counts. Moreover, CEO Rosen accumulated the same amount to raise his total shares ownership to 4.0M. Furthermore, Director Kathryn Falberg acquired 30K shares for $450K and upped her stakes to 97K.

Insider Transactions

In monitoring insider transactions, one should analyze the data with the grain of salt. That being said, we wish to share with you the quotes from the Former Fidelity-Magellan Manager (Peter Lynch): "Insiders might sell their shares for any number of reasons, but they buy them for only one they think the price will rise." As shown in table 1, there were three interesting transactions from the genetic-testing company, Invitae Corporation (NVTA) that attracted our attention.

Company

Insider

Shares Traded

Date

Value

Shares Owned

Invitae Corp.

Randal Scott (Exec COB)

+44,444 (+1%)

04/02/2018

+$199,998

3,550,669

Invitae Corp.

Baker Bros. Advisors LP (10% owner)

+1,111,111 (+17%)

03/28/2018

+$5,000,000

7,553,553

Invitae Corp.

Randal Scott (Exec COB)

+66,666 (+2%)

11/22/2016

+$399,996

3,506,225

Table 1: Notable insider transactions. (Source: Dr. Tran BioSci)

On April 2, Executive Chairman of the Board (Randall Scott) bought 44.4K shares at $4.50 for $199K to raise his ownership to 3.5M shares. Mr. Scott also accumulated 66.6K shares for $399K back on Nov. 22, 2016. Back on March 28 this year, the 10% owner (Baker Brothers Advisors) acquired 1.1M shares for $5M to increase their ownership to 7.5M.

Bioscience Catalysts

On March 29, 2018, the FDA granted the expanded approval of blinatumomab (Blincyto) for the treatment of adults and children with B-cell precursor acute lymphoblastic leukemia ("ALL") who are in remission but still have a minimal residual disease ("MRD"). Indicative of the presence of cancer cells below a threshold undetectable under the microscope, MRD signifies a high risk of relapse. Innovated by Amgen Inc. (AMGN), Blincyto earned the priority review and orphan drug designation. And, it was approved under the accelerated approval pathway. The said pathway is granted for drugs with the side effects to clinical benefits being reasonable and are used for treating serious conditions with unmet needs.

Final Remarks

As the final note, the various companies that we featured (Arcus, Invitae, and Amgen) can be promising investments due to the significant insider purchases. Be that as it may, one should conduct further due diligence prior to committing to the purchasing of shares. Of note, there is a higher-level intelligence Round Report available published in advanced and exclusively to subscribers of Integrated BioSci Investing. In the said research, we provided specific guidance on how you can manage the potential oncoming recession as well as other investing strategies.

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