Hoping for Fireworks

As the market seems to be slowly settling into summer, volatility is dropping and news flow is getting sparse. Amazing to think this is the last newsletter before the 4th of July. The pandemic seemed to drag on forever but life is now speeding up once again. Everything seems to be returning to normal.

It should be a fun 4th of July after having a “socially distanced” one last year. Our family gathers for a BBQ and fireworks, an event that didn’t happen in 2020. I’m looking forward to that personally and am hopeful that the fireworks continues over into my stocks for the second half of the year. It’s going to be a catalyst filled six months for sure.

This week’s newsletter covers a lot of names but I’ll start with a comment TW’s portfolio performance. You may have noticed but I’ve now (by popular request) started providing performance for each stock from the date of coverage launch. This is more useful than YTD and can help y’all evaluate me better.

Performance of the portfolio is not an aggregation of all companies under coverage, as is generally assumed by many. It’s the actual returns of the assets I manage, net of fees. Meaning, real dollars. I don’t necessarily own every stock on the coverage list and holdings in each name vary greatly in size. Premium members have access to the daily holdings list with percentage weightings.

Looking at the returns since inception on covered companies, there are only three with losses. Some of this is due to changing coverage over time; I’ve dropped several companies that weren’t performing well. But, I’ve also stopped covering many companies with excellent performance. Overall, I’m quite pleased with the percentage of winners versus losers.

And, speaking of the three losers in the portfolio, I think there’s a great opportunity in each. When a company’s share price performance diverges from the fundamental performance of the business, there’s opportunity. Sometimes stocks get ahead of themselves and it’s a chance to take money off the table. Or, it’s a major buying opportunity.

I see buying opportunities in each of Amryt (AMYT), Hancock Jaffe (HJLI) and LexaGene (LXXGF) and cover those stocks a little later in this newsletter.

But meanwhile, back to the life returning to normal theme; I spent several days in Dallas with Lantern Pharma (LTRN) this last week on my first business trip since the start of the pandemic. While I can’t say that I missed business travel, the trip was very beneficial and there really is no substitute for face-to-face meetings.

During my visit with Lantern, I was fortunate enough to meet the whole team and spend a lot of time getting to know them while also gaining an in-depth understanding of their therapeutic programs. I came away more than impressed with the team and the opportunity for investors.

The quality of the talent that CEO Panna Sharma has assembled is very impressive. Brilliance abounds here from the C-suite on down. This, of course, stems from having perhaps the most intelligent CEO of any company I deal with. Panna is sharp as a tack and it takes similar intelligence to thrive in this organization.

But, at the end of the day, the team is nothing without quality products on which to execute. Lantern has a stable of opportunities coming together in their oncology drug programs. With LP-300 entering phase 2 later this year, LP-184 setting up for multiple phase 1 programs (this drug has massive potential) and an ADC program coming together rapidly, the next 18 months are going to be very exciting.

Having completed a major financing earlier this year, Lantern has the financial resources to advance their programs for several years and through major milestones. It’s likely they partner off at least one of them before the end of 2022.

One of three stocks down since inception is an “off the radar” screen name, Amryt (AMYT). The stock is very cheap, generating positive cash flow, growing revenues and rapidly approaching a PDUFA date on a potential blockbuster drug. This is a classic example of share price not reflecting the fundamental performance of the Company.

Meanwhile, Amryt’s merger with Chiasma (CHMA) is moving forward. This last week Cantor hosted a KOL call discussing the rollout of Chiasma’s MYCAPSSA product and how the merger should accelerate adoption. I believe Covid-related issues caused a slow launch of the product which enabled Amryt to acquire Chiasma at a very attractive price.

The share price of Chiasma is also attractive as it trades at a discount to the merger terms. Expect this arbitrage opportunity to close soon. If you’re looking to play Amryt, Chiasma is the better way to do so.

Rock Springs Capital seems to agree. They filed as a 5% holder of Chiasma this past week, sparking a 10% move in Amryt on Friday. A fundamentally driven biotech and healthcare investor, Rock Springs must be seeing the same value play that I am…

This week Anixa (ANIX) should have submitted their response to the FDA regarding their CAR-T IND. Recall that the FDA is requesting them to run assays prior to dosing patients in an effort to make sure that the CAR-T target, the follicle stimulating hormone receptor, still exists on the ovaries.

For Anixa’s program, the timing comes down to two possibilities. Either the FDA accepts their assays and they start dosing patients in Q3. Or, the Company is forced to validate the assays, in which case they start dosing in Q4. The important thing is, Anixa will most likely be dosing patients in a solid tumor CAR-T program this year.

Parkervision (PRKR) was supposed to have their Markman Ruling this week and I’m hearing it was only a partial ruling that took place. The court wasn’t ready to discuss all the terms on Thursday but expects to complete the Markman sometime in the next two weeks.

Meanwhile, the part that was conducted appears to have gone overwhelmingly in Parker’s favor. This obviously bodes well not only for the upcoming trial but greatly increases the likelihood of a settlement. Recall that the “winner” of a Markman ruling has a favorable outcome in court around 90+ percent of the time. At some point, one would think that eventually Intel stands a good chance of throwing in the towel.

I have not written about Hancock Jaffe (HJLI) in a while and get lots of questions as to why. Trust me when I say that I’m still holding all my stock and enamored with the opportunity, just a little bored by the lack of news and action in the stock; Hancock continues to languish about 25% below my initial purchase price despite achieving all their business goals of late.

it is also trading only slightly above cash value and they are about to start implanting their devices in patients, a major catalyst. I think the VenoValve program is compelling and will certainly be sold to a larger device company about a year from now. Most likely at multiples of the current market cap.

Trading volume in Hancock has started to really dwindle and the stock’s lows are most likely in place. In a market full of high valuations, this seems like a relatively safe place to invest and sit. Eventually fundamentals will drive the stock and I expect to make a very tidy return here over the next year or two.

Atomera (ATOM) posted a new blog piece that lists all their patents. Many have asked about these…now you can see them all if you’re so inclined.

The stock has been great lately. I remain in the camp that they will sign multiple JDAs prior to year-end. Fingers crossed…

The last stock in the down category since inception is LexaGene (LXXGF). The weakness here is related to the company’s delay in obtaining an FDA approval. This was hoped for a while ago and it’s understandable that investors weren’t pleased by the slow progress.

But, looking beyond the dashed hopes for a Covid-related approval, the Company has actually made significant progress on many fronts. They have really nailed down the manufacturing process and are likely to be bringing the product in front of the FDA later this year.

Probably more important in the near term, but certainly overlooked, is the progress they are making in the Veterinary space. They have increased the sales team and are starting to gain momentum, placing several machines with clinics over the last couple weeks. Revenue generation is starting now and will only accelerate.

The Company is also prepping to be traded on the Nasdaq exchange in the near future. The timing of that, which should roughly coincide with expected FDA progress, could provide a significant catalyst for the stock.

In a very strange day of trading, Quest Resource Holding (QRHC) got pummeled on Monday, trading down 15% or so right out of the starting gate. Like everyone else I spoke with, including the company, I was at a loss to understand the trading action.

It seems likely, as the stock slowly recovers, that some fund was a forced seller. The say that margin departments are the worst sellers (Archegos anyone?) and I can think of no other reason to explain the trading. Certainly created a nice buying opportunity, however. If you’ve never gotten on board, here’s your chance.

A couple names from the recent past. Sequans (SQNS) saw Wall Street estimates slashed for 2021 and 2022. Supply chain issues continue to plague them.

Aptose (APTO) remains down on the investor disappointment over the lack of a complete response at EHA two weeks ago. That said, I’m hearing things are progressing well and I think the stock is probably worth a shot here for those inclined. More data should be coming fairly soon…

A very informative podcast on Alzheimer’s Disease treatments, post approval of Aducanumab. Dr. RJ Tesi, CEO of INmune (INMB), features in the show.

I continue to bet heavily on INmune prior to their data release in August. This has the potential to be a multi-billion dollar market cap almost overnight. Recall that shares of Annovis (ANVS) and Cassava (SAVA) are each up over 1,000% this year based on their respective AD results. I think INmune’s will be even better and the stock has a lot of catching up to do.

I am removing coverage of Summit Wireless (WISA). I have long thought that their wireless standard is the best thing in surround sound but feel like adoption is taking far too long to happen. The platform is likely worth more than the current market price however it’s time for me to move on as I try to focus the portfolio on fewer, high-conviction names.

Greenbox POS (GBOX) seems to be a name that gets a lot of attention from micro-cap investors, so I mention it again this week. Last week I said I’m not comfortable with it, a comment that was quite timely as a short report attacked the stock this past week. I find the report rather disturbing and am personally on full avoid in this name.

On a separate note, what company has POS in their name? Some serious questions for the marketing/branding people there…