Premium Subscriber Update, May 8, 2024

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A few things to discuss today…

Aaron Fletcher of BIOS Partners will be joining us on Thursday to not only discuss several of his (and some of our) favorite stocks, but also to go over several of the larger themes in that should drive biotech over the next couple years. That Zoom call (link here) is at 1pm EDT on Thursday the 9th. It should hopefully be a very interesting and informative call.

While I frequently talk about many stocks, and am providing an update on several here, I think it’s important to stress to readers that my two largest positions, and highest confidence names, remain INmune Bio (INMB) and enVVeno (NVNO). This is where I have focused the majority of my monies dedicated to small cap investing and where I think we stand the best chance to make great returns.

Two weeks ago, I provided an update on INmune, saying that I thought the financing would be a good catalyst for the stock, hopefully changing the tenor around the company. Almost immediately after that note, INmune raised an additional $10 million dollars. While not changing the thesis around INMB, that was really the icing on the cake.

INmune is now funded through key data plus has a nice runway. Additionally, the stock is now a lock for the Russell 2000 rebalance, which happens at the end of June.

Shares of INMB have rallied significantly since the financing on large volume. My guess is that was positioning for the Russell than short covering but, with the short interest still very large, there are now two pools of potential buyers of the stock over the rest of the second quarter.

And, once we move through Q2 and into the back half of the year, other catalysts await. There’s full enrollment for the Alzheimer’s program; this could be announced at any time and will really drive home the point that we are about 6 months from top-line data. Also in Q3, I expect to see INKmune results and some open label AD data. In short, INmune is poised for a very big second half and I’m content to sit on my massive position and await the future.

enVVeno shares the prospect for a big second half of 2024 with INmune but this stock has been a laggard. While I strongly believe the company will be acquired in 2025, the stock remains a value play. Investors are not that excited about medical devices in general and, despite being the “holy grail” for CVI, NVNO continues to trade only modestly over their cash per share.

I see the 2nd half unfolding very positively here and the stock feels like it has bottomed recently. Now is a great time to be loading up if you aren’t here already. Things are going well and there’s a potential upside surprise of an early FDA submission, something I feel is likely but the market ignores. Bottom line on NVNO, I’m not sure when the dam breaks, but it will and when it does, the stock will be gone.

Those are my two largest holdings and highest confidence names. They account for well over 50% of my portfolio…I can’t stress that enough.

That said, I do own other stocks and they have been, for the most part, frustrating at best and disappointing at worst.

This morning I had a conversation with Aeluma (ALMU). The stock has been flat since I first got involved and there is concern about a potential upcoming capital raise. This is a real concern but I believe there’s a very good chance a strategic leads the financing, which would be very positive for the stock.

Additionally, their business with government and defense contractors continues to grow. They are in the running for several contracts that are significantly larger than those won recently. If they land these, which I expect to happen, the company will be on track for cash flow positive sometime near year-end.

Aeluma is an early stage company but the indications are that it’s poised for success. It’s a classic example of public venture capital and if they are successful, the stock, with only 12 million shares outstanding, has lots of upside potential.

I left today’s call with the ALMU’s CEO highly encouraged for the future here.

Quest Resource Holding (QRHC) is one I’ve recommended for quite a while. They are firing on all cylinders and I hope no one has made the mistake I made of playing market timer and taking some off the table. The stock is likely going to continue this run through the R2K inclusion in June.

Perma-Fix Environmental Services (PESI) is another stock I’ve mentioned recently that is set up for a nice run. They are reporting earnings on May 9th and there could be some positive developments in regards to their PFAS solution. If you’re not familiar with this stock, I suggest you watch the recent Zoom we had with them. It’s a great overview of a compelling opportunity.

TFF Pharma (TFFP), a stock for which I had high hopes heading into a pivotal year, has been the worst stock in my coverage universe and the biggest disappointment of the year. The data here has been excellent…the capital markets side a complete disaster.

At $2.20 per share, the market cap of TFFP is around $10M. A pittance relative to the potential value of their lead program alone. TFF-TAC has demonstrated great efficacy and, maybe more importantly, outstanding safety. This drug has the potential to do billions of sales in lung transplant alone, much less in other indications that are likely to follow.

Why does the stock continue to go down? The company has completely botched the financing side here. Using HC Wainwright, only getting structured (not fundamental) investors and shutting out those who would be good investors. It’s a recipe for one down round after another.

TFFP is very similar to the old NVNO, back when each successive financing came at lower levels. Until enVVeno got a real investor in Perceptive, it was spiraling.

I suspect TFFP can land a good investor if the FDA greenlights their pivotal trial. They should be getting news from the FDA here in Q2, which will be a very important catalyst indeed. If positive, they enter phase 3. More importantly, funds will start buying into the thesis that Thin Film Freezing is an approvable delivery technology. I think it could be game-changing for TFFP.

From a trading point of view, I think TFFP stands a good chance of bouncing here and maybe making a nice spike if they get positive feedback from the FDA. This could happen in June. Were it to spike, I’d take that trade off the table as a real financing still looms.

I would look to participate in a financing post data but only if they raise at least $20M and it comes from quality investors. Until they break the cycle of down rounds with structured investment players participating in a small way, the stock will continue to suffer.

Atomera (ATOM) has also been under significant pressure. Investors are get increasingly frustrated with the slow progress in getting new partners signed up.

The upside and downside to Atomera were both evident on the last quarterly call in which they discussed sending out a record number of contract proposals in the last three months (a big positive) but also detailed how ST Micro sat on the product for three years before finally pulling the trigger. MST is very likely going to be a big time product at some point. Unfortunately, the timeframe for adoption is painfully slow.

What to do with ATOM? They have done a good job of offsetting the burn with their ATM, so money is not an issue here. They have enough to get through to production with STM, which is a big catalyst. In the meantime, there’s a wild card of getting more JDAs signed.

My game plan, as it has been for a long time now, is to hold my stock and wait for clear signs of adoption before buying more. I believe in the eventuality of MST. Wish I had more clarity into the timing thereof.

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