Back in the Saddle

Last week I took off from publishing as I was meant to be skiing out west. Well, not exactly skiing in the traditional sense of having nice rides up the mountain and smooth sailing down groomed trails. The version my son was taking me on involved strapping skins to the bottom of the skis, schlepping up the hill for hours, for a quick run down through conditions that are best referred to as “corn snow”; there are many other more colorful words that come to mind when I think about my experience.

But, spring skiing on the volcanoes of the Cascades isn’t like mountain biking in CA in May. The weather can be unpredictable and conditions may disintegrate rapidly. Our scheduled journey up Mount St. Helens, Mount Lassen and Mount McGloughlin was derailed by a combination of snow, rain and overall miserable conditions.

Thwarted from plan A, we went to Plan B which consisted of skinning up Mt. Rainier in a blizzard. Sounds like fun right? Well it got better. You see, the funny thing about blizzards is you can get sunburned in them. Who knew?!?

So, it was on to Plan C, a rapid drive down to Santa Cruz where the weather is always great this time of year and the mountain biking is sublime. It was not the trip we had imagined but it turned into an epic journey in spite of everything that had been thrown at us. We not only survived, but had a great time.

While this was happening, the stock market trended a little higher. The S&P over the two weeks since the last newsletter was up 2% and the Russell gained 1%. Sounds like I missed out on a rather benign market, right?

Dig into the TW universe over the last two weeks and that’s not the case at all. While the average TW stock was up 3.6% over that time-period, the performance of the individual names was about as disparate as one can imagine. Most stocks suffered a beatdown versus the market while only three were up. Overall, it was anything but “all quiet on the western front.”

For example, the moves from Spectra7 (SPVNF) and IN8bio (INAB), which were up 46% and 39% respectively, were spectaluar. These two stocks crushed the markets and look like they are poised to continue trading higher. They are also two positions in which  I had added substantially of late. This is not a coincidence. (At least I think not…)

I have been pushing the point that this is a trading market for quite some time. And, like aborting our ski trip to shift to mountain biking, it pays to be in the stocks upon which the sun is shining.

Both INAB and SPVNF had been beaten down to what once were inconceivable levels, even trading well below where insiders had just added to their positions. The market had gotten to the point where anything positive was going to have to move the stocks. They had all but priced in a miserable future; good news was destined to move them higher. And, good news is what I hope to see from both companies in the near future.

In the last newsletter I covered upcoming catalysts for the TW universe, including those pending for INAB and SPVNF. Since this is a trader’s market, it makes a lot of sense to pay attention to those events and position in front of them. If you’re looking for current returns in the market, you could do worse than looking at beaten down companies with positive catalysts coming in the near future.

But, the investment thesis behind each company that enters into TW’s coverage universe is far greater than simply having near-term catalysts. The logic behind following these companies is that each one of them has the potential for a very bright future over the next few years. And, I mean a massively bright future. One where the weekly gains and losses we see become irrelevant. It’s positioning for that future that matters the most to me and I want to make sure that, when a stock decides to make its big move, I’m there in a big way.

So this week, let’s look at THE BIG IF. Here are the truly key focal points for each stock I cover. Questions that, if they get answered favorably, can result in any one of these companies paying off massively for investors. Remember, at the end of the day, this is Public Venture Capital, and we all know that venture investors need just one or two hits for the whole portfolio to be a big winner.

Anixa (ANIX): if either program is clinically successful and partnered off, the party is on. For the vaccine program, we are well on our way. I suspect a partnership happens in 2024, assuming the data continues apace. For CER-T, enrollment is picking up in real time and we could see meaningful results before the end of the year. The first successful ovarian immunotherapy would make this a big winner. Either way, I’m convinced that we’ll know the outcome for Anixa shareholders in the next 12-18 months. With two shots on goal and the stock having backed down, the risk/reward feels outstanding.

Atomera (ATOM): if MST gets adopted broadly, the stock will soar. With the first commercial license, we are getting closer to this happening. The second will start investors dreaming. That could happen this year.

IN8bio (INAB): if CEO William Ho can land a partner for their programs, the stock will fly. Clinically, everything is going great for INAB. With every new data point, I’m increasingly convinced that the science here is outstanding. Frankly, I think the stock will do well regardless of a partnership as the programs continue to, in the words of one investor, “keep the dead walking”. However, a partnership would not only endorse the science but solve balance sheet issues. That’s the stated target for the company and one that I think they achieve this year. As such, I remain wildly optimistic about INAB here and now.

INmune Bio (INMB): the biggest question for INmune to answer is, “is TNF the master cytokine?” We are all learning the importance of inflammation in CNS diseases. That science is being proven by many studies done by multiple companies. However, there are numerous pathways to attacking inflammation. Can INMB demonstrate that blocking TNF is the key to stopping neuroinflammation? Lots of science shows this could well be the case. By the end of 2024, INmune should be wrapping up their phase 2 AD study and answering this question for all investors. It’s a huge question and the answer, if positive, will be mind-boggling for investors. Biggest upside in the portfolio and, in my opinion, best risk/reward as their work done so far gives me many reasons to believe the final result will be quite favorable.

Lantern Pharma (LTRN): will LP-184 be a blockbuster drug? Lantern has a unique platform with their AI engine, but there’s only one way (in my opinion) that this achieves home-run potential and that’s with their unique compound turning into a billion dollar drug. The science looks promising but, sadly, we are a long ways from getting an answer to the biggest question mark here.

Movano (MOVE): will Movano be able to continually monitor glucose levels from their wearable device? The team here is excellent, the progress made to date outstanding, and the trial that determines this outcome has started. 2023 will be the year where we learn if MOVE has accomplished what every other wearable maker has strived to achieve.

enVVeno (NVNO): will positive results in the ongoing trial of the VenoValve result in a partnership or outright acquisition? enVVeno continues to fly under the radar screen in a unique combination of a well-funded company with great science. Trials have enrolled a little slower than expected, but the short-term nature of this market is what weighs upon this company. Results should be out in early 2024 and I intend to be there in a big way when they come. I remain convinced that Dr. Glickman’s science will lead to a very positive outcome for investors. Meanwhile, trading near cash, it’s not a bad place to sit and wait.

Quest Resource Holding (QRHC): when will the chairman decide to exit this investment? Fundamentally, this story is solid. They are funded, generating cash, growing nicely and have a great niche in a big industry. The largest shareholder is their chairman, Dan Friedberg, who is a PE guy by background. My belief is that, to maximize shareholder value, he will eventually sell the company. Peers have traded at levels much higher than where QRHC trades. I’m quite happy with the investment as a standalone entity, but, to really ring the bell, this needs to be sold. Someday that will likely happen.

Spectra7 (SPVNF): will Spectra7 finally break into the US datacenter market? It’s a simple question and one that will be answered in the second half of 2023. As the subtitle from their recent earnings report reads, New 800G/1.6TB Datacenter Products Expected to Begin Generating Revenue in Second Half of 2023, the company obviously believes this is going to happen. I’m positioned for it.

TFF Pharma (TFFP): in a company full of many questions, the biggest one for TFF to answer is whether or not this platform technology will take off. The technology, with a recent endorsement from DARPA, has always appeared to be highly effective. Ongoing trials should provide a couple nice catalysts for the company to leverage into strengthening their balance sheet later this year. But, for investors to really reap rewards, we need to see broader adoption. Fingers crossed on that…