Keep Looking Forward

Many people commented that I took a good week to be on vacation, what with the market (especially in micro-cap growth) being decimated. Nothing could be further from the truth.

The reality is, despite being a long-term investor, I spent far too much of my vacation glued to the screen. They say that everyone likes to watch a train wreck and this week certainly resembled that around TW’s universe.

Thus ends February; what started out as a promising month turned into a very disappointing 0% return. Sometimes being flat feels great…not, however, when you had close to 20% returns just two short weeks ago.

The market turning was, in hindsight, quite predictable. With all the recent chatter about inflation, there was bound to be a rate scare. And those are never good for stocks.

I have been warning about this for a while as valuations got stretched and the quality of the rally diminished to the point of watching stocks I wouldn’t touch in 10 years double or triple seemingly overnight. The bloom is now off that bouquet of roses…and I don’t think it’s coming back anytime soon.

Here’s how our stocks faired in February.

In general, the average TW stock outperformed our portfolio. This is what happens when you are a long term investor sometimes. The great performance of ATOM, INMB and TFFP over the last year has caused them to be a large part of the portfolio and to have an outsized impact on performance. Frankly, being unchanged on the month with all three trading lower is reason to feel somewhat better.

But, despite the distraction of the market, my vacation still was quite wonderful. The weather was warm and we took a trip to the Everglades. Here’s a picture our guide sent of our airboat trip through them…

She titled this picture, “Keep Looking Forward“, which seems very apropos for this week’s newsletter. The last couple weeks were not much fun with interest rate scares hitting growth stocks. But, March is just around the corner and should be much more rewarding.

Despite last week’s selloff, I don’t think the bull market is necessarily over. What we saw was a shot across the bow, but rates still remain historically low and more stimulus money is coming. Money will remain easy and there will continue to be people looking for opportunities in the market. Getting cautious is fine, but I’m not selling my high-conviction names.

What specifically in TW’s universe are we looking forward to in March? For starters, it is now earnings season for the smaller companies of the world. Most all of our companies will be hosting conference calls over the next three weeks to provide updates to investors. Across the board, I’m happy with how they are operating and expecting positive sentiment to be reflected across the board.

(as an aside, if anyone can explain how multi-billion dollar companies can get their audits done in weeks, why does it take months for pre-revenue companies to publish their numbers???) 

Beyond the general updates, there are a number of key catalysts coming in March that I expect to drive our portfolio. Here’s a list of hoped for events.

  • Anixa (ANIX) should be filing their IND for an ovarian cancer CAR-T.
  • Hancock Jaffe (HJLI) is expected to file their IDE for the VenoValve.
  • INmune (INMB) will likely release additional data from their Alzheimer’s trial on their earnings call this coming Thursday.
  • ParkerVision (PRKR) stands a good chance of settling one of their smaller cases here in March.
  • TFF Pharma (TFFP) has many potential catalysts that could come in March. One that I’m sure happens is the data release from the asthma cohort of their Voriconazole trial.

Fortress Bio (FBIO) had two pieces of news out this week. The news was significant, the stock was down with the market. Frankly, I don’t think investors paid Fortress much attention with the overall macro-environment taking up a lot of focus. Which means there’s a buying opportunity here.

The bigger piece of news was the sale of CUTX-101 to Sentynl. CUTX-101 is a drug for Menkes disease being developed by Fortress’ partner company, Cyprium. Fortress owns 72% of Cyprium, with Cyrpium’s management owning most the balance.

In the sale, Cyprium gets $20M in upfront and milestone payments, with the last payment taking place upon approval of the drug. This is expected to take place in under a year, as rolling submission starts in Q3.

After approval, two things happen. Cyprium will receive a Priority Review Voucher from the FDA. This is worth around $100M and can be monetized very quickly.

Secondly, Cyprium will start receiving up to $255M in payments based upon sales milestones. These payments are in addition to royalties the company expects to receive. Those royalties are paid annually and staggered as follows:

  • 6% on sales up to $75M
  • 17.5% on sales between $75M and $100M
  • 25% on sales over $100M
Menkes disease is a rare disease that affects roughly 100 new patients each year. However, there is a belief that additional screening could triple the new patient population. As such, there’s the potential for this drug to achieve annual sales of around $500M or more!
Adding that all up, you’re looking at a payment forecast on Fortress’ 72% ownership of Cyprium that looks something like this (in rough figures).
  • $8 million in 2021 and $6M in 2022 from milestone payments.
  • $72 million in 2022 from sale of a PRV
  • $184 million over 2023-2027 (a guess on the dates) from sales milestones
  • $75 million per annum in royalties that start quite small in 2022 and ramp up to that large total over 5 years or so.

That’s a lot of money for a company with a current market cap of $350M. Basically, if this drug performs, it justifies the current valuation on its own.

This sale of CUTX-101 also provides additional validation of Fortress’ business model. The Company is looking to acquire or in-license many new drugs each year, to place in their development pipeline. CUTX-101 probably cost them less that $10M to acquire. The ROI on their programs is unreal.

In conversations with management, I asked if they PR all new products acquired. The answer was they only really announce them when they are ready for a coming out party. Which of course implies that there are many more products in the wings ready to be placed into partner companies at the appropriate time.

One of the other partner companies that hit the news last week was Aevitus, which announced the hiring of Markus Peters, Ph.D., M.Sc., as its new CEO. Aevitas is focused on the development of novel gene therapy approaches for complement-mediated diseases, which is a very exciting space that has garnered a lot of investor attention lately. With its proprietary platform designed to deliver engineered, fully functoonal, shortened complement factor H (CFH) via AAV, Aevitas has progressed to the point where Fortress is making moves to bring it out from under the umbrella.

I’m increasingly enthusiastic about what’s taking place at Fortress and think this Cyprium deal, along with the likely sale of Caelum in early 2022, are setting the Company on the path to significant cash flow generation. 

One of the best acting stocks this last week, around here at least, was Lantern Pharma (LTRN). Every time it sold off, there was a bid and it snapped back quickly. This certainly demonstrates the quality of the investors in their recent financing at $14, who are sticking around despite the market’s turmoil.

I touched base with the Company late this week and it appears they are progressing on all fronts and recently enhanced the AI team, a key differentiator for Lantern. After our call, I’m really looking forward to their 4Q and year-end earnings report and company update call in March. CEO Panna Sharma will also be Zooming with TW’s premium subscribers shortly thereafter.

The impressive data around TFF Pharma (TFFP)‘s inhaled version of remdesivir was published in the highly-regarded International Journal of Pharmaceutics: X over the weekend. This is a peer reviewed publication and, while this is not a high priority for TFF as Gilead controls the drug, it provides further proof of the increased efficacy at lower dosages that is the key differentiator of thin film freezing.

Some changes to the Tailwinds universe. We are adding coverage of Amryt Pharma (AMYT). Amryt is a company focused on rare diseases. With two currently marketed products in their portfolio, they are cash flow positive and will be earnings positive in 2021. A major catalyst awaits in expected approval of their potentially largest product later this year. Meanwhile, the valuation is very reasonable.

We are dropping coverage of Muscle Maker Grill (GRIL). While we like the company and the management team (it seems very well positioned for post-covid), it really doesn’t fit with the TW focus on the growth sectors of healthcare and technology.

Many people have asked about my stated performance and how it gets impacted when we pick up or drop coverage. It has zero impact.

The performance figures stated are the actual returns of assets under management, net of fees. Adding or dropping coverage will not impact returns. The only thing that matters on a daily/weekly/monthly/annual basis is what we currently own in the portfolio. That generally speaking resembles the companies under coverage, but could include some outside the universe (such as Hancock Jaffe (HJLI)) and doesn’t necessarily include those under coverage.

Premium subscribers have access to our holdings and receive updates every time we buy or sell a stock.

One last vacation item…if anyone is every looking to take a tour of the Everglades out of Miami, I highly recommend our tour group. We had a nature walk through a state park and then went into the Miccosukee Indian Reservation on an airboat with Fabian Redwing as our tour guide. It lasted about 5 hours, was very educational and the airboat was a throwback to sitting in cold New England winters watching Mutual of Omaha’s Wild Kingdom.

February is the best month for the trip. Not too hot, the wildlife was prolific and there was not one mosquito! Here’s their contact information in case anyone is curious.

On the trip, you do get close and personal with the gators. Here’s a picture of Fabian playing with one. After our trip, he still had all his appendages…I think some of mine get taken out by the market.

TW Research's Disclaimers & Disclosures: TW Research may have been compensated for writing this article. For a full list of disclaimers and disclosures, please visit


  1. Market is glad you are back from vacation. Let us know when you plan your next vacation so we can sell befor you leave.

  2. I’m excited about upcoming calls from INMB and TFFP. Your trip to Florida sounds like it was relaxing and fun. Post more pictures. I LOVE Florida! I usually go to St. Augustine every year.


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