Radar Report – 5.11.23

Michael Murphy
Uncategorized
2023-05-12
12
May 23

Dear New World Investor:

Nonfarm payrolls rose by 253,000 in April with the unemployment rate falling to 3.4%. Economists expected 185,000 jobs last month with the unemployment rate ticking marginally higher to 3.6%. April was even stronger than March’s +236,000 – maybe. But is the jobs market really that strong?

February’s +326,000 payrolls number was revised down a whopping 23.9% or 78,000 jobs to +248,000. March’s +236,000 was revised down 30.0% or 71,000 jobs to +165,000. WTF, Bureau of Labor Statistics? The BLS reports an important number that moves markets and then revises it by 25% to 30% a couple of months later? Give me a break! Either economists have gotten really terrible at forecasting payroll growth or many more downward revisions are coming.

Click for larger graphic h/t @donnelly_brent

Withheld Employment Taxes from the Treasury Department is a different, maybe better gauge for the health of jobs. It’s not looking very good. Of course, Withheld Employment Taxes also reflects the level of income lost, not just the jobs lost, so it may be a better indicator of purchasing power.

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Yesterday’s Consumer Price Index headline number was 4.9% year-over-year, just under March’s 5.0% and the slowest since April 2021. The CPI increased 0.4% from March.

Core inflation, excluding food and energy, increased 5.5% year-over-year and 0.4% month-over-month, in line with expectations. But the shelter index, which everyone knows is a very lagging indicator that reflects conditions six to nine months ago, increased 8.1% from last year and accounted for over 60% of the total increase in core inflation.

This morning’s Producer Price Index for April came in cooler than economists expected. Prices rose 0.2% on a monthly basis and 2.3% on a yearly basis. Economists had expected producer prices to rise 0.3% in April on a monthly basis and 2.5% on a yearly basis. The May 26 Personal Consumption Expenditures Index now is expected to be just +0.31% month-over-month and +4.6% year-over-year. The May Consumer Price Index coming on June 13, the day before the next Fed decision, is expected to be +0.23% to +0.38% month-over-month and +4.5% to +4.7% year-over-year.

The bottom line is that this is good news for the Fed, but they will want to see more. I expert them to pause rate increases at their June 14 meeting and make no more changes through the end of the year. They won’t cut rates anytime this year. They won’t hesitate to raise rates again if inflation and the labor market data surprise strongly to the upside, but that’s not going to happen. We’re most likely to see a shallow recession with slow growth in 2024 that s-l-o-w-l-y brings inflation down to the Fed’s 2% goal. Powell will be declared a hero.

Market Outlook

The S&P 500 added 1.7% since last Thursday. With March quarter earnings season nearly over, results have been strong. Of the 425 S&P companies reporting, 78.5% have beaten estimates, reversing a two-year decline in the beat rate. The average beat was 6.72%.


Click for larger graphic h/t @NDR_Research

The Index is up 7.6% year-to-date. The Nasdaq Composite gained 3.0% as Big Tech recovered after reporting good March quarter earnings. It is up 17.8% for the year. The small-cap Russell 2000 lagged again, rising 1.5%. It’s still down 0.9% in 2023.

The fractal dimension has stalled before signaling a new trend is underway. We’ll just have to wait to see what happens.

Top 5

Changes this week: None.

Near-Term – chronological order
EQT EQT –natural gas price rebound
OIL iPath Pure Beta Crude Oil Exchange-Traded Note – crude should rise quickly
BLPH Phase 3 results mid-2023
VLD Velo3D – Rapid revenue growth; low market cap

Long-Term – alphabetical order
EQT EQT – largest US natural gas company
NVTA Invitae – the winner-take-most of genetic testing
META Meta – a (the?) leader in the metaverse
RKLB Rocket Lab – #2 to SpaceX in space
VLD Velo3D – Return manufacturing to the US
GBTC Grayscale Bitcoin Trust – Bitcoin is headed for $100,000

Economy

The Atlanta Fed’s GDPNow model forecast for June quarter real Gross Domestic Product growth is unchanged at +2.7%.


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Coming Events
All times below are ET, and most presentations and slides are archived on the companies’ websites so you can listen to them.

Friday, May 12
CDE – Coeur Mining – Unspec – Canaccord Global Metals & Mining Conference

Tuesday, May 16
FCX- Freeport McMoRan – 3:30am – BofA Global Metals, Mining & Steel Conference
INO – Inovio – 9:00am – Annual meeting
GILD – Gilead Sciences – 11:00am – RBC Global Healthcare Conference
QUIK – QuickLogic – 5:30pm – Earnings conference call

Wednesday, May 17
CDE – Coeur Mining – Unspec – BofA Global Metals, Mining & Steel Conference
APTO – Aptose Therapeutics – 8:00am – RBC Global Healthcare Conference fireside chat
QUIK – QuickLogic – 1:00pm – Annual meeting

Big Tech: The Biotech & Digital Dominators MegaShift
There are at least four ways to make money in the stocks of these large, growing, dominant companies. You can:
* * Buy a stock and hold it
* * Buy a stock and write a call option against it
* * With a Level IV options account, write an out-of-the-money put option
* * With a Level IV options account, write an out-of-the-money put option and use part of the premium to buy an out-of-the-money call option

Apple (AAPL – $173.75) will move forward with 3-nanometer chip technology for the iPhone 15 and M3 system-on-a-chip for iMacs, both due in September. Advanced Micro Devices and Nvidia both have postponed the move to 3-nanometer due to the decline in PC sales. Apple will have a cost advantage that we are more likely to see as increased profit margins than as price cuts, but it will give them some wiggle room on pricing against Samsung in phones and the major producers of PCs.

The company is steadily shrinking their outstanding shares.

Click for larger graphic h/t @donnelly_brent

Many companies trumpet buybacks but then give generous stock option grants that partly or entirely offset the buybacks, so the number of shares outstanding keeps rising. They do this because increasing salaries reduces earnings, but Wall Street doesn’t deduct stock-based compensation (SBC) expense in pro forma earnings (it still is deducted for Generally Accepted Accounting Principles – GAAP – earnings).

AAPL is a Buy under $150 for new iPhone rollouts and augmented/virtual reality products.

Gilead Sciences (GILD – $78.70) presented at the BofA Healthcare Conference (AUDIO HERE). They said the HIV treatment market is growing about 3% a year, while the HIV prevention market is growing rapidly. Gilead has 40% of the prevention market and has Phase 3 trials underway for long-acting, twice a year subcutaneous injections that solve the patient compliance problem with daily pills. The pills are 99.9% effective in preventing HIV transmission only if the patient takes them every day and never misses.

In oncology, Trodelvy is doing extremely well in breast cancer and they’ll launch in Europe later this year. They’ll have more data coming this year in many other solid tumor cancers. Trodelvy will move from a third-line treatment to second-line and then first-line over the next few years.

The Kite subsidiary is growing rapidly in hematological cancers and has decades of growth ahead of it. Gilead also is doing some work in CAR-T therapies for solid tumors, although that is many years away.

This week, Gilead acquired XinThera, a San Diego-based biotech with a portfolio of small molecule inhibitors for oncology and inflammatory diseases that could enter clinical trials later this year. They target the DNA damage repair pathway in treating cancer and direct the body’s immune response in inflammatory diseases.

As I expected, the company won the jury verdict in their patent battle with the US government over HIV therapy. The CDC sued them in 2019 claiming patent infringement. The jury found that the government’s patent claims on the HIV prevention therapy known as pre-exposure prophylaxis (PrEP) were invalid. Gilead said they “always had the rights to make Truvada and Descovy for PrEP available to all who need it.” GILD is a Long-Term Buy under $80 for a first target of $120.

Meta Platforms (META – $235.79) is changing their payout model for Reels creators to base payouts on performance and engagement instead of the earnings on ads. They’re going to test a similar program on Instagram. Creators can focus on creating engaging content while Meta optimizes the ad experience for advertisers and viewers.

In a new blog post, Understanding the Economic Potential of the Metaverse, they said new research reports show the benefits to the global economy could reach up to $3.6 trillion per year in additional GDP by 2035.


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META is a Buy under $150 for a $400 target in 2024.

SoftBank (SFTBY – $18.97) reported March quarter revenues up 5.6% from last year to $48.86 billion with GAAP earnings of $4.93 per share. On the conference call (VIDEOS HERE and SLIDES HERE), management said that since the end of the quarter they have raised $4.1 billion by selling forward contracts on the last of their Alibaba stake.

ARM plc said revenues grew 5.7% in their March fiscal year to a record $2.8 billion. SoftBank expects to take them public this year at as much as a $60 billion valuation. Goldman Sachs, JP Morgan, Barclays and Mizuho are the bankers. SFTBY is a Buy under $25 for a first target of $50 in the next two years.

Small Tech

Fastly (FSLY – $13.14) repurchased $236.4 million of its 0% Convertible Senior Notes due in 2026 for $195.0 million. That leaves $477.4 million of the notes outstanding. FSLY is a Buy up to $20 for a 2- to 5-year hold to $80+ as Compute@Edge drives customer acquisition and revenue growth.
Primary Risk:Content and applications delivery networks are a competitive area.

QuickLogic (QUIK – $5.20) reports earnings next Tuesday after the close. Analysts are looking for sales growth of only 5.0% to $4.3 million with a six-cent loss. QUIK is a Buy up to $10 for my $40 target as their sensor hub is widely adopted in smartphones, tablets and wearables.
Primary Risk: New sensor hub competitor emerges.

Rocket Lab USA (RKLB – $4.10) reported March quarter revenues up 34.9% from last year to $54.89 million, nicely ahead of the $52.85 million estimate. They had three Electron launches totaling $35.3 million compared to $39.8 million last year. Space Systems revenue increased 63.3% from $12.0 million last year to $19.6 million this year. They ended the quarter with a $494.2 million backlog.

On the conference call (SLIDES HERE and TRANSCRIPT HERE), management said they are seeing an increase in launch bookings for Electron launches in 2023 and beyond from both new and returning customers across both government and commercial sectors. They hit milestones for two Photon spacecraft, one to support NASA’s ESCAPADE mission to Mars, and the other is the first of four for a Varda Space Industries’ mission to manufacture high-value pharmaceuticals in zero gravity. Both Photon programs include Rocket Lab star trackers, reaction wheels, solar panels, flight software, and radios.

They are the only US commercial small launch provider to successfully deliver satellites to orbit in 2023. As a consequence, they signed multiple new launch contracts on Electron for 2023 for undisclosed commercial satellite customers previously manifested on another small launch vehicle – a major competitive win.

They also signed a deal to launch NASA’s Starling mission in the September quarter, a four-CubeSat mission to test and demonstrate autonomous swarm technologies, as well as automated space traffic management for groups of spacecraft in low-Earth orbit. Spacecraft swarms refer to multiple spacecraft autonomously coordinating their activities. Rocket Lab will deliver the satellites to space within three months of the contract signing.

They guided June quarter revenues to $60 million to $63 million, a tad below the $65.09 million consensus. They expect Launch Systems revenue of $23 million and Space Systems revenue of $37 million to $40 million. The company ended the quarter with $450 million in cash. RKLB is a Buy up to $13 for my $30+ target as low earth orbit satellites and space exploration grow.
Primary Risk: A new competitor emerges.

Velo3D (VLD – $1.88) partnered with PWR Advanced Cooling Technology to qualify Aheadd CP1, an aluminum-zirconium-iron alloy that is specially designed for laser powder bed fusion printers, for use in Sapphire printers. PWR will use the alloy to manufacture highly efficient, compact, and lightweight heat exchangers for Formula 1 race cars. Fédération Internationale de l’Automobile (FIA), the governing body over Formula 1 and other global motorsports, recently approved the Aheadd CP1 alloy for use in Formula 1 cars beginning in the 2024 season.

In addition to the standard 50-micron layer thickness that all of Velo3D’s printers use, Aheadd CP1 is also being qualified to print in 100-micron layers, providing customers with a balance between finished part performance and system throughput. Velo3D can engineer customized material development for customer applications.

Before Velo3D, additive manufacturing (AM) or 3D printing was greatly limited in its capabilities since its invention almost 30 years ago. This prevented the technology from being used to create the most valuable and impactful parts. Velo3D overcame these limitations so engineers can design and print the parts they want. Since their first shipment in 2018, Velo3D printers have been used in space exploration, aviation, power generation, energy, and semiconductor manufacturing by customers like SpaceX, Honeywell, Honda, Chromalloy, and Lam Research. VLD is a Buy up to $6 for my $50 target as Velo3D’s high-tolerance metal parts printing business grows.
Primary Risk:A new 3D metal printing competitor emerges.

Biotech MegaShift: The $20-For-$1 Stocks

Say you put $2,000 into a stock that goes from 50¢ a share to $10. The $2,000 turns into $40,000. Then you put the $40,000 into another stock that goes from 50¢ to $10. That turns the $40,000 into $800,000. You did it with two stocks and never risked going negative more than $2,000. (Not that you won’t be mad at me if the first one works and then the second one doesn’t, taking your $40,000 to Money Heaven.)

If you can afford it – and it would not be too big a position in your portfolio – putting $2,000 into each of these speculative biotechs might be a good way to start. Buying these out-of-favor, fallen, or forgotten companies that can get important products through the FDA at very low market capitalizations seems like a good strategy to me.

Risks

Development-stage biotechs are subject to investor sentiment swings from wildly optimistic to excessively pessimistic – mostly the latter recently. After the Primary Risk for each company, I’ve added the clinical stage of their lead product, the probable time of their first FDA approval, and the probable time of their next financing.

As always, you need to think about an appropriate position size. You could buy a full position upfront and then just hold on, or buy some upfront and leave room to add more on the inevitable financings, transient clinical trial setbacks, and the like.

Akebia Therapeutics (AKBA- $1.06) reported March quarter revenue down 35.0% from last year to $40.13 million, badly missing the $46.68 million estimate. But strong cost controls kept the GAAP loss to $26.2 million or 14¢ per share, a penny better than the 15¢ loss estimate. They slashed operating expenses almost 50% from last year – headcount is down 55% – and almost 30% from the December quarter.

And we won! The reverse split proposal failed. On the conference call (TRANSCRIPT HERE), management said they expect a a response to their Formal Dispute Resolution from the FDA within the next 30 days. If vadadustat is approved for dialysis patients as it should be the stock easily will trade back over $1 with no reverse split necessary.

Management said: “The positive outcome is that the appeal is granted. Remember, this isn’t an approval – it’s an appeal process. So, if the appeal is granted, then we refile the NDA and the division has either two or six months, depending on whether they make it a Type 1 or 2 submission, to review the product again and then that leads to the approval. With a granted appeal, your likelihood of success is extraordinarily high.”

Auryxia net product revenue of $34.8 million in the quarter was a run rate of only $139.2 million, but they continued to guide for full year revenues of $175 million to $180 million. They said Auryxia revenue was impacted by a $5 million reduction in the volume of channel inventory from year-end, which may mean they stuffed the channel to make their December quarter revenues of $55.2 million. They said at the time that the December quarter included an inventory build of approximately $3 million year-over-year.

Now that they have EU approval, they said they are working in “a very active process” to complete a partnership to launch Vafseo (vadadustat) in Europe this year. They also expects regulatory opinions on vadadustat in the United Kingdom, Switzerland, and Australia over the course of this year. The CEO said: “I think the important thing is the indication is in dialysis and dialysis is a complicated market. And so, finding a partner who really understands that market opportunity and again — I mean it’s European approval, but every one of those European markets is different and dialysis is different within each one. So that expertise is really and we’re weighing that heavily as we weigh between the options that we think we have for partnership. So again, it’s a kind of thing we want to move quickly because we want to launch the product as quickly as possible and we’re anticipating that before the end of the year. But we want to be very deliberate and pick the right person who’s going to maximize the value in the long term.”

They ended the quarter with $57 million in cash, enough for at least the next 12 months. AKBA is a Hold for the results of the FDA appeal on vadadustat.
Primary Risk: Vadadustat not approved.
   Clinical stage of lead product: Vadadustat NDA filed; CRL
   Probable time of next FDA approval: Unknown
   Probable time of next financing: Unknown

Aptose Biosciences (APTO – $0.50) reported a March quarter loss of $13.7 million or 15¢ per share, bigger than the 12¢ loss estimate. On the conference call (TRANSCRIPT HERE), management said the Phase 1/2 clinical trial of tuspetinib dose escalation and exploration arms are complete, with more than 70 relapsed or refractory acute myeloid leukemia (AML) patients receiving once daily oral tuspetinib over a dosage range of 20 milligrams to 200 milligrams. There were no drug-induced myelosuppressions upon prolonged dosing in responding patients. They saw only mild adverse events, no drug discontinuations from drug-related toxicities, and no dose-limiting toxicities up to the dosage of 160 milligrams per day. They’ve selected 80 milligrams as the planned Phase 2 dose.

They recently began dosing a doublet combination treatment arm of tuspetinib with venetoclax in the APTIVATE Phase 1/2 clinical trial. It has been well tolerated during the early weeks of dosing, and early blast reductions have been observed.

At the same time, patients were accrued rapidly to the APTIVATE monotherapy arm, which was designed to confirm tuspetinib activity in specific mutationally defined AML populations. They expect to enroll up to 100 patients in the APTIVATE trial.

Here is the key to Aptose: In this dose escalation and exploration phase, tuspetinib was able to achieve complete remissions in a very ill, relapsed or refractory AML patient population while also being safe and well tolerated. These are extremely difficult patients to treat with highly adverse genetic and epigenetic alterations expressed by their disease. Tuspetinib typically is their third-line, fourth-line, or beyond attempt at a cure. These patients have been failed by the best available approved therapies and, in many cases, also failed by various investigational drugs and prior hematopoietic stem cell transplants. Tuspetinib works and it’s safe. I predict approval off the Phase 2 data – no need for Phase 3.

Their expected milestones are:

* * June Quarter: End of Phase 1 meeting with the FDA to ensure agreement on tuspetinib clinical study parameters and next steps
* * June: European Hematology Association (EHA) 2023 Congress to present tuspetinib dose escalation/exploration findings and early/preliminary findings in patients dosed with monotherapy and doublet in the APTIVATE trial
* * October: European School of Haematology (ESH) Meeting to present more mature tuspetinib clinical data set.
* * December: American Society of Hematology (ASH) Annual Meeting to present more robust clinical data set with tuspetinib. Many acquisitions and partnerships happen at this meeting.
* * Year-end – Plan to discuss strategies for potential future monotherapy accelerated development, doublet Phase 2 development, and triplet pilot development.

CEO Bill Rice said: “We continue to pursue partnering activities that can provide strategic support to our programs and we expect to say more about these topics in the coming days.” CMO Rafael Bejar said: “Tuspetinib with its proven breadth of activity and superior safety profile is looking like a Big Pharma drug that can address the most sizable markets in AML, and we’re developing it as such…We mentioned in our last call that pharmaceutical companies have begun to take notice and that interest in tuspetinib is growing. We continue to engage these productive discussions.”

Aptose had $35.7 million in cash on March 31, enough to carry them through the March 2024 quarter.APTO is a Buy under $2.50 for a $30 target in a buyout.
Primary Risk: Either drug fails in clinical trials.
   Clinical stage of lead product: Phase 2
   Probable time of first FDA approval: 2025
   Probable time of next financing: Mid- to late-2023

Bellerophon Therapeutics (BLPH – $8.84) said that the last patient has completed blinded treatment in the Phase 3 trial of INOpulse for the treatment of fibrotic interstitial lung disease. They will report top-line results in mid-2023. BLPH is a Near-Term Buy for these results. Buy BLPH under $5 for a $30 first target and $100 someday.
Primary Risk: The Phase 2b PH-ILD trial fails or the FDA turns down the INOpulse.
   Clinical stage of lead product: Phase 2 transitioning to Phase 3 in the March quarter
   Probable time of first FDA approval: 2024
   Probable time of next financing: September 2023 quarter

Compass Pathways (CMPS – $8.52) reported a March quarter GAAP loss of 57¢ per share, less than the 69¢C loss analysts expected. On the conference call (AUDIO HERE), management said both Phase 3 trials in treatment-resistant depression have treated patients across numerous sites.

The COMP 005 trial is a single dose monotherapy in 255 patients. Top line data is expected in the summer of 2024. The COMP 006 trial is a fixed repeat dose monotherapy in 568 patients. Top line data is expected in mid-2025.

They guided for June quarter net cash usage of $22 million to $30 million, with the full year cash burn in a wide range from $85 million to $110 million. The company finished the quarter with $117.1 million in cash and has raised another $26.9 million in the second quarter through their At-The-Market program. CMPS is a Buy under $20 for a very long-term hold to a 10x.
Primary Risk: Their drugs fail in the clinic.
   Clinical stage of lead product: Phase 2
   Probable time of first FDA approval: 2025
   Probable time of next financing: Late 2023

Inovio (INO – $0.78) reported a March quarter GAAP loss of $40.6 million or 16¢ per share, two cents worse than the consensus estimate.

On the conference call (SLIDES HERE and TRANSCRIPT HERE), management said they are analyzing the clinical characteristics of the biomarker population in REVEAL2, the second Phase 3 trial for VGX-3100 as a treatment for cervical high-grade squamous intraepithelial lesions. Although the trial results achieved statistical significance in the all-participants population, for some reason they did not meet the primary endpoint in the biomarker-selected population. They are looking at factors that may have had an impact on response to treatment, such as stage of disease, infection with other HPV types, clinical site location, age, and smoking status. They also are working to better understand why some patients who exhibited a clinical response were not positive for the biomarker. They’ll update us in the September quarter.

Management said they received positive initial feedback from the FDA on their proposed Phase 3 trial of INO-3107 for recurrent respiratory papillomatosis. A major reason we’re invested in Inovio is their broad, advanced pipeline:


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There are several milestones coming:


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Inovio ended the quarter with $223.8 million in cash, enough to get through 2024 nto the March 2025 quarter. INO is a Buy under $7 for a very long-term hold.
Primary Risk: Their drugs fail in the clinic.
   Clinical stage of lead product: Phase 3
   Probable time of first FDA approval: 2023
   Probable time of next financing: Mid-2024

Invitae (NVTA – $1.48) reported March quarter results with small beats on the top and bottom lines. Revenues dipped 5.1% from last year to $117.36 million due to discontinued lines of business, just above the $116.57 million estimate. The pro forma loss of 37¢ per share was better than the 40¢ expected loss. Revenue per patient rose to $463 from $416 last year. They’ve now served 3.9 million patients with over 63% available for data sharing.

On the conference call (SLIDES HERE and TRANSCRIPT HERE), management emphasized their Personalized Cancer Monitoring assay for minimal residual disease. There were two publications in Nature:


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They reiterated 2023 guidance for revenues over $500 million – the Street is at $501.03 million. They had a non-GAAP gross profit margin of 47.9% in the quarter, up from 36.6% last year, and said they continue to expect 48% to 50% for the full year.


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They finished the quarter with $388.7 million in cash after completely repaying their $135 million term loan. Their 2023 cash burn guidance is unchanged at $250 million to $275 million. They are doing an excellent job here.

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Buy NVTA under $10 for a first target of $50 and eventually $100+ when they become the Amazon of genetic testing.
Primary Risk: A competitor starts taking significant market share.
   Clinical stage of lead product: NM
   Probable time of first FDA approval: NM
   Probable time of next financing: Not needed

ScyNexis (SCYX – $2.75) reported March quarter results. They had $1.13 million of Brexafemme revenue even though they aren’t marketing it and lost 71¢ per share.

They said enrollment is complete in the FURI and CARES Phase 3 trials evaluating ibrexafungerp as salvage therapy in refractory invasive fungal infections, including candidiasis. It also is complete for the SCYNERGIA Phase 2 study evaluating the safety and efficacy of ibrexafungerp co-administered with voriconazole in patients with invasive pulmonary aspergillosis.

And enrollment is complete for the VANQUISH Phase 3b open-label trial evaluating the safety and efficacy of ibrexafungerp in patients with complicated vulvovaginal candidiasis who failed to respond to treatment with fluconazole. Glaxo SmithKline has marketing rights to all of these.

They ended the quarter with $54.8 million in cash. That plus the first milestone payment of $90 million from Glaxo SmithKline will carry them for more than two years. By then, royalties will be rolling in.Buy SCYX under $2.50 for a first target price of $20 after ibrexafungerp is approved for hospital use and a buyout at $50.
Primary Risk: Ibrexafungerp fails to sell.
   Clinical stage of lead product: Approved
   Probable time of next FDA approval: 2023/2024
   Probable time of next financing: Never

TG Therapeutics (TGTX – $33.71) presented at the BofA Healthcare Conference (AUDIO HERE). CEO Michael Weiss launched a brutal attack on the shortsellers and seemed to pick on the analyst interviewing him for having a financial model that didn’t make any sense. I highly recommend listening, if only for laughs.

He added that TG is about a year away from positive cash flow and they may do another small offering. He expects to be acquired but he’s not in any rush. Hold TGTX for a target price in a buyout of $25 or more now that the MS drug is approved.
Primary Risk:Briumvi, the MS drug, fails to sell.
   Clinical stage of lead product: Approved
   Probable time of next FDA approval: NM
   Probable time of next financing: Second half of 2023

Inflation MegaShift

Gold ($2,020.50) is building a little base in the $2,020 to $2,040 range. The fractal dimension stalled this week, but the uptrend signal still is in effect.

According to the latest report from the World Gold Council, central bank gold buying is off to a record-breaking start in 2023 – 228 tonnes, led by Singapore at 69 tonnes:


Click for larger graphic h/t ZeroHedge

Since the Great Financial Crisis in 2008/2009, they’ve been buying gold. Here’s the last 30 years of central bank gold demand:

Click for larger graphic h/t @VisualCap

Miners & Related

Coeur Mining (CDE – $3.44) reported March quarter revenues of $187.3 million, down 0.6% from last year but easily beating the $165.67 million. The pro forma loss of 11¢ was a penny better than the 12¢ lost estimate.

On the conference call (SLIDES HERE and TRANSCRIPT HERE), management said the Rochester mine expansion is 82% complete and will be finished by midyear..

They said they’ve had significant exploration success at Silvertip and Kensington and reaffirmed guidance for 2023 production of 100,000 to 112,500 ounces of gold and 6.5 million to 7.5 million ounces of silver.

The company ended the quarter with $67 million of cash, $300 million left on its revolving credit line, and $15 million of marketable securities.CDE is a Buy under $5 for a $20 target as gold goes higher.
Primary Risk: Prices of precious metals fall due to US dollar strength.

Sandstorm Gold (SAND – $5.75) reported March quarter revenues up 24.3% from last year to $44.0 million, below the $48.84 million estimate. They sold record attributable gold equivalent ounces of 28,368 ounces and had record cash flows from operating activities of $42.7 million. Their average cash cost per attributable gold equivalent ounce was $230 resulting in cash operating margins of $1,652 per ounce.

On the conference call (73 (!) SLIDES HERE and TRANSCRIPT HERE), management said SSR Mining, a leading diversified gold company, has reached an agreement to acquire up to a 40% interest in the Hod Maden gold-copper project in Turkey and assume operational control. SandStorm has a 2.0% net smelter returns royalty on 100% of Hod Maden.

They guided for 2023 attributable gold equivalent ounces between 90,000 and 100,000 ounces. They still expect to reach 125,000 attributable gold equivalent ounces within the next five years. For the first time, they said they expect a sustainable average annual production of 110,000 attributable gold equivalent ounces over the next 15 years.

They’ve updated their INVESTOR PRESENTATION and CEO Nolan Watson did a brief video presentation:

SAND is a Buy under $10 for a $25 target.
Primary Risk: Prices of precious metals fall due to US dollar strength.

Sprott Inc. (SII – $35.29) reported a great March quarter with pro forma earnings of 68¢ a share doubling the 34¢ estimate. Revenues grew 10.0% from last year to $35.5 million. Assets Under Management (AUM) increased $1.9 billion or 8% from the end of December to an all-time high $25.4 billion.


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On the conference call (AUDIO HERE, SLIDES HERE, and TRANSCRIPT HERE), management said: “During the quarter, we further expanded our energy transition product offerings with the launch of five new ETFs. Sprott now has eight different strategies in this growing category, offering investors both exchange-listed and actively managed investment options. Our team continues to develop new product offerings, and we expect to introduce additional strategies over the course of 2023.”

The head of asset management added: “…we are not seeing across the whole global industry massive return of inflows into the sector yet. So despite gold hitting record highs in a number of currencies, we still think there’s lots of room for capital to find its way into the sector.” I agree.

Their summary slide:

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They finished the quarter with $47 million in cash and $81 million in co-investments, far more than their $54 million of debt. Buy SII under $40 for a $70 target price.
Primary Risk: Prices of precious metals fall due to US dollar strength.

Cryptocurrencies

Cryptocurrencies are a diversifying asset that offer a unique opportunity to make (or lose!) a lot of money quickly. You can easily buy bitcoin and other cryptocurrencies at Coinbase, Block, or Robinhood.

Bitcoin (BTC-USD on Yahoo – $27,009.76) couldn’t hold the $28,000 level and may be in for one of its patented swoons, this time to somewhere in the $22,000 to $25,000 area. That would be just another buying opportunity for my $100,000 target – first target.

Click for larger graphic

BTC-USD, ETH-USD, GBTC, and ETHE are Strong Buys.
Primary Risk: Bitcoin falls due to over-regulation or is surpassed by another cryptocurrency.

Grayscale Bitcoin Trust (GBTC- $14.66) is at a 40.6% discount to the value of the bitcoin behind each share. Free money doesn’t last long on Wall Street – grab it while you can. GBTC is a Buy under net asset value.
Primary Risk: Bitcoin falls due to over-regulation or is surpassed by another cryptocurrency.

Commodities

Oil – $71.42

Oil is stuck around $70 ± $2 even though the signs of lower supply and higher demand are very clear.

Supply: Following big builds in the Big Four storage to start the year, we have seen a persistent downtrend since March.

Click for larger graphic h/t @HFI_Research

Specifically, gasoline storage is at the lowest level for this time of the year ahead of the summer driving season.

Click for larger graphic h/t @HFI_Research

The first 10 days of crude exports for May indicate OPEC+ is serious about cutting. Saudi is the swing factor and they need higher prices to balance their budget.

Demand: Yet US Big 3 implied demand is heading up towards 2019 levels with jet fuel and gasoline being the key variables.

Click for larger graphic h/t @HFI_Research

Global supply is not much better. Oil is headed much higher. Got OIL?

Click for larger graphic h/t @HFI_Research

The July 2026 Crude Oil Futures (CLN26.NYM – $62.81) are a Buy under $65 for a $200+ target. Only buy futures for all cash; do not use margin.

The iPath Pure Beta Crude Oil Exchange-Traded Note (OIL – $27.46) is a Buy under $36 for an $80+ target.

EQT (EQT – $31.90) got an extension on their 5.7% Senior Notes to extend the special mandatory redemption provision from June 30, 2023 to December 29, 2023, which ensures that the proceeds from the issuance of the Notes remain available through December 29, 2023 if the closing of EQT’s pending acquisition of THQ Appalachia I Midco, LLC and THQ-XcL Holdings I Midco, LLC occurs on or before such date. EQT is a buy under $35 for a first target of $70 and a long-term hold for much higher prices.
Primary Risk:Natural gas prices fall.

* * * * *

Free machine learning education! Many top universities publicly make their Machine Learning and Deep Learning programs available. All of this information is now online and free for everyone. Here are six of these programs. Pick one and get started!

Click for larger graphic h/t @abacusai

* * * * *

Your thinking AI might pick stocks Editor,

Michael Murphy CFA
Founding Editor
New World Investor

All Recommendations

Check out the complete Portfolio page HERE.

Buys
These are the stocks everyone needs to own because transformative events are happening over the next year or two, and I expect to hold them long-term.

Tech Dominators
  Apple Computer (AAPL – $173.75 ) – Buy under $150 for new iPhones
  Corning (GLW – $30.98) – Buy under $33, target price $60
  Gilead Sciences (GILD – $78.70) – Buy under $80, target price $120
  Meta (META – $235.79) – Buy under $250, target price $400
  SoftBank (SFTBY – $18.97) – Buy under $25, target price $50

Other Tech
  Enovix (ENVX – $12.73) – Buy under $13; 4-year hold to $100+
  First Trust NASDAQ Cybersecurity ETF (CIBR – $40.60) – Buy under $40; 3- to 5-year hold
  Fastly (FSLY – $13.14) – Buy under $20; 2- to 5-year hold to $80+
  PagerDuty (PD – $29.64) – Buy under $30; 2- to 5-year hold
  QuickLogic (QUIK – $5.20) – Buy under $10, target price $40
  Rocket Lab (RKLB – $4.10) – Buy under $13, target price $30+
  Velo3D (VLD – $1.88) – Buy under $6, target price $50

$20-for-$1
  Aptose Biosciences (APTO – $0.50) – Buy under $2.50, ultimate target $30
  Bellerophon Therapeutics (BLPH – $8.84) – Buy under $5, first target $30, then $100
  Compass Pathways (CMPS – $8.52) – Buy under $20, hold a long time for a 10x return
  Inovio (INO – $0.78) – Buy under $7, hold a long time
  Invitae (NVTA – $1.48) – Buy under $10, first target $50, then $100+
  Medicenna (MDNA – $0.74) – Buy under $3, first target $20, then maybe $40
  ScyNexis (SCYX – $2.75) – Buy under $2.50, target price $20, then $50

Inflation
  A Short-Sale or REO House – ($447,000) – Hold
  Bag of Junk Silver – ($24.36) – hold through silver bull market
  Sprott Gold Miners ETF (SGDM – $29.24) – Buy under $28, target price $50
  Sprott Junior Gold Miners ETF (SGDJ – $32.30) – Buy under $39, target price $100
  Sprott Physical Gold and Silver Trust (CEF – $19.22) – Buy under $18, target price $30
  Global X Silver Miners ETF (SIL – $29.05) – Buy under $30, target price $50
  Coeur Mining (CDE – $3.44) – Buy under $5, target price $20
  First Majestic Mining (AG – $6.36) – Buy under $11, next target price $23
  Paramount Gold Nevada (PZG – $0.31) – Buy under $1, first target price $10
  Sandstorm Gold (SAND – $6.11) – Buy under $10, target price $25
  Sprott Inc. (SII – $35.29) – Buy under $40, target price $70

Cryptocurrencies
  Bitcoin (BTC-USD – $27,009.76) – Buy
  Grayscale Bitcoin Trust (GBTC – $14.66) – Buy
  Ethereum (ETH-USD – $1,790.96) – Buy
  Grayscale Ethereum Trust (ETHE – $8.38) – Buy

Commodities
  Crude Oil Futures – July 2026 (CLN26.NYM – $62.81) – Buy under $65; $200+ target
  iPath Pure Beta Crude Oil Exchange-Traded Note (OIL – $27.46) – Buy under $36; $80+ target
  EQT (EQT – $31.90) – Buy under $35; $70 first target
  Energy Fuels (UUUU – $5.96) – Buy under $8; $30 target
  Freeport McMoRan (FCX – $34.54) – Buy under $44; $65 target within two years

International & Other Recommendations
  EMQQ Emerging Markets Internet & Ecommerce ETF (EMQQ – $29.98) – Buy under $38 for a $66 target in 12 to 18 months
  KraneShares Bosera MSCI China A Share Fund (KBA – $25.18) – Buy under $40 for a three- to five-year hold
  Morgan Stanley China A-Shares Fund (CAF – $13.63) – Buy under $18 for a three- to five-year hold
  KraneShares CSI China Internet ETF (KWEB – $27.56) – Buy under $40 for a double over the next three years
  Acreage Holdings (ACRDF – $0.54) – Buy under $2 for the Canopy Growth merger
  Mongolia Growth Group (MNGGF – $0.85) – Buy under $1.30; long-term hold

Holds
These are holds but not sells – yet. They could get moved back to one of the buy categories if their prices drop or outlook improves, or they could become sell recommendations in the future.
  Akebia Biotherapeutics (AKBA – $1.06) – Hold for FDA decision
  Arch Therapeutics (ARTH – $2.99) – Hold for buyout
  Graphite Bio (GRPH – $3.09) – Hold until they update their strategy
  TG Therapeutics (TGTX – $33.71) – Hold for buyout at $25+

Publisher: GwynRose LLC, 5348 Vegas Drive, Suite 868, Las Vegas, NV 89108

New World Investor does not act as a personal investment adviser or advocate the purchase or sale of any security or investment for any specific individual. The recommendations and analysis presented to members are for the exclusive use of members. Members should be aware that investment markets have inherent risks and there can be no guarantee of future profits. Likewise, past performance does not assure future results. Recommendations are subject to change at any time. Nothing in this presentation should be considered personalized investment advice. No communication to you by Michael Murphy or any of our employees or contractors should be deemed as personalized investment advice.

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We have a vote on the debt ceiling nightmare. Horray.

My comment was sarcasm. (Caught it from my 40 something son-in-law). Just more of the same crap from our central government. Of course they are going to raise the debt ceiling. What choice do they have? Thanks to the FED and outrageous spending and printing money out of thin air, our economy is sputtering. If they let the US default, we will be in bigger do do. So like the many times before, and for the foreseeable future ,debt ceilings will get raised and we will go deeper into the weeds of debt. Sad but true. We are stuck in government’s version of retail therapy. Also SMCI (SuperMicro) is firing on all cylinders recently. AI is HOT HOT. My $5k is now $15k.

AI is crap in the medical field, and other areas where there is no substitute for clinical experience and judgment. Anybody can play Dr. Google. AI can play Super Dr. Google, but you go to a real doctor for his experience and hands on assessment. I have an ugly dark toenail lesion that was suspicious for melanoma. I studied all I could, but I didn’t have the experience and know-how of the university dermatologist I saw. He used his dermatoscope and saw the features of a hematoma, saying he was 100% certain that is the diagnosis. I didn’t remember any trauma to the foot, but respected his expertise. I doubt there are any online published pictures of the microscopic features of the hematoma. There are probably private, unpublished case studies that are not in the AI database–so much for AI.

Here’s another maddening example of the stupidity of AI. I recently got a lab report on a patient. I called his phone number listed on the report. But I got an AI message that I am not authorized to make any phone calls. I called other phone numbers–no problem. Something was wrong with the patient’s phone number. But instead of an informative message, such as the phone is not in service, or the line is busy, it gave me that exasperating garbage.

Elon Musk has been trying to get AI to work in his cars, but there are problems. He recently said that AI has the potential to destroy the world. The AI technocrat developers have the worst judgment. Things go wrong. I don’t trust any of them.

People used to talk about socially responsible investing, as in avoiding tobacco companies that kill people. AI is far worse.

MM–VLD has the best technology. I would say the primary risk is their financial status. When do they run out of money, dilute, etc.?

MM–please address the financials of VLD, thanks.

Thanks. So why the big drop in stock price today? What do you estimate the capital raise price would be in early 2024? The stock may be a great buy at $1 then.

I haven’t read MM’s Radar Report yet, but is anyone else thinking about lightening their stock holdings in case the US defaults, and the stock market tanks?

GRPH – They filed their 10-Q on Thursday but there’s no associated news release, conference call or any other discussion regarding Q1. What’s up with that?!

MM have you looked back at GERN recently?

No rush but yes you should – it looks like you were right about the future potential of inhibiting telomerase. a bit more diluted then it was but its going to market in a rolling submission and its whole owned.
old news
https://ir.geron.com/investors/press-releases/press-release-details/2023/Geron-Announces-Positive-Top-Line-Results-from-IMerge-Phase-3-Trial-of-Imetelstat-in-Lower-Risk-MDS/default.aspx

I think I was right about VICL dropping Electrophoresis and INO picking it up.

All in all thanks you MM for several 10+baggers

Last edited 10 months ago by MR. SAMUEL HOPKINS

MM – Regarding APTO, you’re now predicting FDA approval based on the Phase 2 data but show probable time of first FDA approval as 2025.

Are you predicting monotherapy approval, combo approval (doublet?, triplet?), all of the above after only phase 2?

Wouldn’t approval come in 2024 if the FDA approves based only on phase 2 data?

The problem is that if it’s hard to qualify for their trials, that suggests that if/when the drugs are approved, it will be hard to get insurance approval for the indications. Or, the market for these patients who have failed standard treatments will be small. This is a constant problem for all new drugs. For example, to get approval for Brexa, or even for it to be considered, the patient had to try standard cheap azoles first, fail, and then be considered for Brexa. That’s why Brexa was a money loser for VVC.

A related situation arises when dealing with a patient with knee pain. The proper evaluation is an MRI of the knee, which tells you much more than a routine Xray. But insurance won’t approve the MRI unless the Xray is done first. With common ligament/meniscus tears, the Xray is always normal, so doing an Xray is a total waste of money, even if it is a lot cheaper than an MRI.

The medical system and algorithms are broken. There is much waste and inefficiency. It is designed to piss off the patient and doctor who in many cases give up, in vain hopes that the patient will either die or magically get better and not need the tests. The answer is NOT to rely on medical directors and AI criteria, because none of these entities examine the patient and know much of anything, since only the patient knows the pain.

There is only one time in the history of the US when the US debt shrank to zero. In 1835 Andrew Jackson put the US out of debt. The rest of the bone head leaders went the other side of the coin. But on a lighter note the US net worth is $123.8 TRILLION. (with assets of $269.6 trillion and debts of $145.8 trillion. (according to google)

Most likely you are busy writing your book,very disappointed as we are experiencing nvta replacing arth as another worst pick,no comments what about vld..com on man m.m. we do pay for a little more communication from you than this,Don’t we

MM – I am also interested in your current assessment of VLD’s finances (especially considering that you previously reiterated that the company would have no need for additional financing).

All SEC Filings :: Arch Therapeutics, Inc. (ARTH)
So they aren’t able to file the quarterly report on time? I’m sure if the Sales were fantastic they would find a way.

MM Looks like NVTA lost patent lawsuit what is your take and what action if any should we Take???

Mm,with the price actions of vld and nvta are you considering them as the buys of a lifetime..

Seems to me that NVTA is a little more of a moonshot than VLD, which has a clearer path to profitability in the short term. Of course, I’d be tickled pick to see both succeed.

Last edited 10 months ago by Tony

NVTA
The greatest bargain of all time OR we are about to be blind sided by another of MM’s misses
Tell me buy under $10 for a pop to $50 doesn’t sound dellusional

Hedge funds most be selling this garbage stock called nvta,the volume of shares for sale..sad.sad.sad

At some flicking point someone might see value before it has to do a reverse split.nvta

NVTA Now $1.05
Michael, how about adding some color here
BTW I’m already black and blue

Over the last couple years revenue growth has declined significantly while shares outstanding has increased significantly. While they’ve cut costs, most of that is now baked in and they’ll still likely lose a minimum of $125M per quarter this year. I don’t see how this story ends well. They’ll be so many additional shares added in the next few years that even if they somehow manage to improve the financials they’ll be too many shares outstanding to hit the price targets.

I suggest reading through some of the write ups on Seeking Alpha for an alternative view of NVTA’s prospects.