It’s tough to read too much into a small sample size but the first week of July’s stock performance has me thinking that my call last week, “June may have been the turning point for the TW universe”, is looking spot on. For one week at least…
The average stock in TW’s universe was up 12% in the last five days and the performance was very broad-based with only one stock down on the week. I don’t think the broader market is about to launch into an extended rally but valuations in our stocks suggest we could see substantial gains and significant outperformance in the coming weeks.
For last week, leading the charge higher were Parkervision (PRKR) and enVVeno (NVNO), up 38% and 29% respectively. Both companies reported modestly positive news and yet the stocks made nice gains. This shows the oversold nature of micro-caps in general and is a good sign for all our stocks as we head into what is a catalyst rich 2nd half of 2022. The days of sell on news are definitely in the rear view mirror.
There is a lot of news coming in the next few months and, in the bottom part of this note, I’ll go through each company and what to look for fundamentally in the 2nd half of this year. But, before going into details on each stock, I’d like to highlight five potential catalysts that the market seems to be discounting but I believe have a greater than 50% chance of happening.
This list of five potential catalysts are the ones that, in my opinion, can have the biggest impact on the stocks in the portfolio. They are also the catalysts that carry the most uncertainty from the investment community, which is why their impact can be larger. If these events transpire as I think they will, we should see some fireworks.
- TFF Pharma (TFFP) inks a deal with a major pharma partner. We have seen Pfizer added to their presentation and data was published recently on a program with Glaxo. The number of shots on goal continues to increase and they have yet to miss; instead the pucks seem to slide slowly towards the net. One of them getting over the goal line and it’s game over. I believe this will happen in the second half of 2022.
- INmune Bio (INMB) gets FDA approval to commence their AD trial and starts dosing patients. Frankly, I don’t think this will be a major surprise but I do believe the market has deeply discounted the best AD drug in development and moving into phase 2 will attract a lot of eyeballs from institutions and we could see a major rally as a result.
- Atomera (ATOM) enters into a production contract with a major foundry partner. We’ve been waiting for this for a while and all signs suggest it’s inevitable. However, the market has beaten up ATOM during the overall downturn as uncertainty has led to this being easy to use as a source of cash. One major deal and this stock reverses big time. I believe this happens in the next six months.
- Spectra7 (SPVNF) closes on financing. We all know the potential Spectra7 has and that their business is very strong, they just need time to get through the current supply chain issues. The overhang from their debt that is coming due is weighing on the stock and once this gets resolved, investors will start looking towards the future. 2023 and beyond look great and shares will adjust to expected future sales once the balance sheet is firmed up.
- Anixa (ANIX) lands a partner for their breast cancer vaccine program. Admittedly, this catalyst might slide into early 2023, but it’s potentially a year-end 2022 event. And, it’s very likely to occur as the data from the open label trial remains pristine. Once phase 1 is complete, partners will certainly be interested and Anixa will likely have several options available. The stock reflects none of this, however, and when they do announce a partner expect real fireworks here.
That’s the wrap on the five potential catalysts that I think stand a better than 50% chance of happening and that carry the most potential to spark large market gains for the companies. If I’m right, the second half of 2022 will be a great year for TW.
Even if those don’t transpire as hoped, the potential for a big second half exists from the myriad of other catalysts awaiting our portfolio. Here’s a rundown on each company and what we should expect in the coming months.
Anixa (ANIX): as Dr. Kumar reminds me every time we speak, Anixa has four programs and only one needs to be successful for the stock to be a home run. The next six months should help investors learn whether any (or all?) of the three most advanced will be a hit or not.
Starting with the breast cancer vaccine, the phase 1 trial is ongoing. As the Company has been very vocal in saying, they are seeing an immune response across all patients. This includes those at the lowest dosage, a great signal of efficacy. At the same time, they have yet to see anything resembling a significant side effect. Basically, the vaccine program has exceeded all expectations to date.
Q4 will see Anixa releasing the results of the trial, likely at the San Antonio Breast Cancer Conference in December. This data, if it continues to be as positive as it has so far, should be enough to drive a partnership. The type of deal one could see Anixa signing might have over $50M in upfront fees plus milestones in the hundreds of millions…all this in addition to an ongoing royalty.
While the company is fairly certain the vaccine program will ring the bell in Q4, Anixa will also release data on their CAR-T program sometime around the month of December. Expect to hear that the first patient has been dosed sometime soon, possibly this month. Then, Anixa hopes to dose additional patients monthly such that, by December, they will have a handful of patients on whom they can present data.
Finally, Anixa’s covid program should be deciding upon a final development candidate this summer and launching into IND enabling studies. Based on the pre-clinical work, if they can get this closer to the IND phase, it’s very possible they will have a partner before year-end.
Atomera (ATOM): with two JDA’s now in place the question is, when will ATOM enter the production phase with a customer? Based on this comment from CEO Scott Bibaud on the most recent update call, “if we’re successful on this JDA, we believe the customer will move expeditiously towards commercialization because the all the legal and contract delays should be behind us”, I’m optimistic that this occurs in the second half of 2022.
That said, ATOM remains a crapshoot and there are no known catalysts coming, just the unknowns of if/when production will occur. Thus, ATOM remains my HODL stock where, as long as the technology continues to progress, I’m content to wait for the inevitable.
enVVeno (NVNO): NVNO continues to be one of my favorite ideas in terms of risk/reward. The Venovalve program is well underway and, according to all sources, going great. Initial results from this program are expected sometime either late in 2022 or in early 2023. This is the big catalyst that should get investors excited for a sale of the product, assuming the data is strong.
NVNO has also said that their next-generation product, one that has management very excited, will be revealed this summer. At this discounted valuation, this could be a good catalyst for a rally in the August timeframe.
Fortress Bio (FBIO): As a reminder, Fortress is an incubator and has positions in a lot of subsidiaries. Thus, there are a lot of catalysts with varying economics that flow back to FBIO.
Cyprium Therapeutics is developing CUTX 101 for Menkes disease and has a rolling NDA submission ongoing which should be completed very soon. This will start a 6 month FDA review once the FDA accepts it. This is big news as it would be the first FDA approval for a Fortress company. They own 70% of Cyprium and approval comes with a Priority Review Voucher worth around $100M. FBIO is likely already in discussions to sell the drug.
Checkpoint Therapeutics will file a BLA submission on Cosibelumab later this year. This is a nice catalyst as it kicks off a standard FDA review during which they will actively be looking to sell the company.
Mustang Bio (MBIO) anticipates dosing first patient in gene therapy (MB107) prior to end of year.
Journey Medical (ticker DERM) will likely report record revenue numbers as they have been doing. The bigger catalyst for Journey is expected top line data for DFD29, but this is in the first half of 2023. DFD29 could potentially triple the company’s revenues if approved, but we are a ways off from that. Fortress still owns 52% of Journey.
All in all, Fortress’ catalysts will be showing continued progress but the really big ones of selling a drug or a subsidiary are likely 2023 events.
INmune Bio (INMB): with two programs that have suffered delays, INmune is primed for a big second half as the programs gather momentum.
Starting with their Alzheimer’s trial, expect the questions around manufacturing to be resolved and for the FDA to grant approval to start dosing patients in AD, removing a large overhang from the market. I am hopeful this happens as early as September, but it definitely should be a 2022 event.
Approval in AD will also lead to approval and starting dosing of patients in Treatment Resistant Depression. This will also likely happen in 2022. Starting of these two trials should reset the valuation of INMB significantly.
On the INKmune (NK Cell) cancer platform, we should also start seeing positive trends in enrollment in the UK now that they have a second site open and have expanded the indication to AML. Data from this INKmune’s newest patients should start coming late in Q3 or in Q4.
Also in the second half, INMB plans to submit an IND to the FDA for INKmune in a solid tumor indication. While this IND will likely not get approved until early 2023 (possible before year-end, but not probable), any positive traction to getting an INKmune trial going in the US will be positive for the stock; clinical trials in the UK have been that difficult to deal with.
Lantern Pharma (LTRN): with numerous products in the queue, Lantern is poised for a second half filled with milestones that will mark their progress, however the really big ones are more in the 2023 timeframe.
After getting the greenlight from the FDA on LP-300 harmonic trial protocol, Lantern is now starting their phase 2 starting. This trial covers 4 sites all of which are high utility cancer centers, results from which should be known in roughly 12 months. As they await that data, the company is looking to partner this drug outside the US in the high-risk areas of Asia/Europe.
Another molecule, LP-284, is being accelerated into the clinic. Lantern is hoping to launch a phase 1 LP-284 trial around year-end simultaneous with starting the phase 1 on LP-184. There’s a cost saving for launching in parallel and getting both programs into the clinic will be a big milestone for LTRN. Meanwhile, both programs have ongoing research collaborations and data from these efforts should be coming in the second half of this year.
Speaking of collaborations, Lantern is actively seeking partners for both their ADC program and with RADR, their AI product. RADR should exceed 25 billion data points by year-end and the company has hired a biz-dev person to seek partnerships.
All in all, LTRN has a lot going on and, with the company trading just about cash value, cash which should last them at least four years, it’s well positioned to move up with good news.
Movano (MOVE): this company continues to give very limited guidance to the public markets in terms of upcoming catalysts. We do know, however, that the big thing to look forward to here is the beta launch of their product which should happen sometime in Q3.
Beyond the beta product, they are conducting numerous studies of patient monitoring in various ways and we might be seeing more results later this year. In particular, success in glucose monitoring would be key.
The wild card for Movano would be announcing a key strategic partner. We know they are in early negotiations with this in mind so, fingers crossed, we might get something in 2022.
Parkervision (PRKR): now for the very binary story of PRKR where it all comes down the the Intel trial in Texas this October.
This trial is shaping up as possibly the last shot for this company. All signs point towards a likely win, including the splitting of the trial into two parts and very large wins in the Markman Rulings. Time will tell, however, and PRKR has certainly had its share of disappointments…
Quest Resource Holding (QRHC): I won’t spend a lot of time here as Quest is a very catalyst-light story. They continue to execute and earnings are going to keep driving the stock. I think they will beat street numbers every quarter and it’s possible we see another accretive acquisition along the way. This is a long-term buy it and forget it. Love what they’re doing.
Spectra7 (SPVNF): perhaps the nearest term catalyst in the portfolio is Spectra7’s debt that needs to be refinanced this month. Business has been strong but challenged by supply chain issues. That said, it should be sufficient to allow the company to replace the only $8M in debt with some better financing and I expect we’ll see that accomplished soon.
Looking beyond July, SPVNF needs its parts-suppliers to increase volumes. The company continues to win business and would likely be running at a cash-flow positive pace if not constrained. Look for sales to continue to increase and, post refinancing, any guidance towards an easing of supply chain issues would cause the stock to run.
TFF Pharma (TFFP): last alphabetically but certainly not least in terms of catalysts in the second half of 2022 is TFF Pharma. With a platform technology, TFF isn’t short on programs that will have events to discuss with the market. And, with a valuation that deeply discounts success, the back half of 2022 could be very big for TFFP.
The first expected catalyst for TFF is on their internal program of inhaled niclosamide. UNION Therapeutics has an option to acquire the drug and, based on the excellent data, it’s quite likely UNION will exercise the option sometime in the next month or two. This will be a massive event for TFF as it will not only enhance their balance sheet but would help validate the numerous other programs taking place.
Next up are the two phase 2 trial results for their other internal programs, Voriconazole and Tacrolimus. Both of these studies are due to report results around the end of September. With the studies being open label, management’s confidence in the programs is very telling and it’s highly likely both trials hit their targets, in which case partnering activity would really pick up; it’s also possible we see one, or even both, of the programs sold off this year but more likely early in 2023.
Beyond the internal programs, CEO Mattes has been guiding to two external partnering programs to be consummated during 2022. This has been a constant bone of contention among shareholders as the company failed to deliver on such promises last year. That said, I’d suggest there is very little in current valuation based on this potential and if Glenn gets it done, something that seems highly likely based on the interest in the platform, the stock could go ballistic.
The interest in the platform has never been stronger. This is causing the company to open a third testing lab in Texas, a catalyst that might catch some investors’ eyes when it opens in the next few months.
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