Radar Report – 5.12.22

Michael Murphy
Uncategorized
2022-05-13
13
May 22

Dear New World Investor:

This is a difficult, miserable market with only a few bright spots. First, virtually everyone is bearish – “investor sentiment is so bearish, it’s bullish.” When everyone who is going to sell has sold, stocks go up.

Second, this drop – painful as it is – happens almost every year. The S&P 500 has returned 10% annualized since 1928 with an average intra-year drawdown of -16.3% (we’re at -17.5% this year). There’s no upside without downside, no reward without risk.

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Third, we can see what the sparks might be to turn the market around. A cease-fire in the Ukraine war could come anytime, especially if Putin parks a suitcase nuke in Kyiv, Kharkiv, and Odessa, and calls for talks or he’ll set off one a day.

Another possibility: Daily new COVID-19 cases in China are approaching zero, which will ease supply chain issues and increase demand for commodities:


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Another: Inflation has peaked, although it will fall slower than I expected. The April headline consumer price index reported yesterday was 8.3%, down from March’s 8.5% although above the 8.1% estimate. The core CPI was up 6.2%, also down from March’s 6.5% but also above the 6.0% estimate. As I expected, goods inflation is falling rapidly, but as I didn’t expect, services inflation is rising – and services are 5x goods in the computation of the CPI.

What this means is the Fed is not going to back off because inflation falls rapidly, but only when they perceive they’ve gone too far and caused or are about to cause a recession, possibly in an election year. My guess is that will require a weak payrolls report. The reporting schedule for the rest of this year is:

June 3 May payrolls
June 10 May CPI
June 15 Fed meeting

July 8 June payrolls
July 13 June CPI
July 27 Fed meeting

August 5 July payrolls
August 10 July CPI
September 2 August payrolls
September 13 August CPI
September 21 Fed meeting

October 7 September payrolls
October 13 September CPI
November 2 Fed Meeting

November 4 October payrolls
November 10 October CPI
December 2 November payrolls
December 13 November CPI
December 14 Fed meeting

We’re all but certain to get a weak payrolls report at some point, which the Fed can use as an excuse to back off. That would spark a substantial rally.

The S&P 500 lost 5.3% since last Thursday, posting its sixth straight weekly drop – the longest losing streak since June 2011. The Index is down 17.5% year-to-date.

The Nasdaq Composite lost 7.7% and is down 27.3% for the year. Only 16% of Nasdaq stocks are trading above their 200-day moving average. That’s getting close to levels of prior market bottoms in 2002, 2009, 2018, and 2020.

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The small-cap Russell 2000 dropped 7.0% and is down 22.5% in 2022.

The fractal dimension clearly signaled this drop has gone beyond a consolidation to a new downtrend, now six weeks old. There’s quite a ways to go to the 30 level signifying the downtrend is over. We could get there quickly with some more dramatic declines or more slowly (and more likely) with a month or two of mediocre weeks.

Top 5

Changes this week: Added VLD

Near-Term – chronological order
OIL iPath Pure Beta Crude Oil Exchange-Traded Note – crude should rise quickly
GBTC Grayscale Bitcoin Trust – Bitcoin should come out of one of its periodic sharp drops
FB Meta – Bounce from overdone selloff
VLD Velo3D – Rapid revenue growth; low market cap

Long-Term – alphabetical order
ARTH Arch Therapeutics – High-value wound care and hemostat for surgery
CWBR CohBar – mitochondria drugs and life extension
GRPH Graphic Bio – second-generation genetic editing
NVTA Invitae – the winner-take-most of genetic testing
FB Meta – a leader in the metaverse

Virus Update

Worldometers now shows 519,402,975 worldwide confirmed infections, of which 480,553,155 have run their course. Of those, 474,270,009 recovered and 6,283,146 died – the fourth week in a row at the new low case fatality rate of 1.3%.

In the US, there have been 83,953,371 confirmed infections, of which 82,133,060 have run their course. Of those, 81,107,296 recovered and 1,025,764 died, matching the all-time low case fatality rate of 1.2%.

Happily, the moving average case fatality rate is back under 1.0%.

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Hospitalizations are still trending up from the lows of mid-April.


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But daily deaths are the lowest they’ve been in over two years.


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

Monday, May 16
CDE – Coeur Mining – Unspec. – Canaccord Global Metals & Mining Conference
GRPH – Graphite Bio – 3:45pm – American Society of Gene and Cell Therapy Annual Meeting oral presentation
RKLB – Rocket Lab – 4:30pm – Earnings conference call
CWBR – CohBar – 5:00pm – Earnings conference call

Tuesday, May 17
AG – First Majestic – Through 5/18 – VIRC Show, Vancouver
AG – First Majestic – Through 5/19 – BofA Global Metals, Mining & Steel Conference
APTO – Aptose – 3:30pm – RBC Capital Markets Global Healthcare Conference fireside chat
BLPH – Bellerphon – 5:15pm – Poster presentation at American Thoracic Society conference
GRPH – Graphite Bio – 5:30pm – American Society of Gene and Cell Therapy Annual Meeting poster presentation
QUIK – QuickLogic – 5:30pm – Earnings conference call

Wednesday, May 18
CDE – Coeur Mining – Unspec. – Bank of America Global Metals, Mining & Steel Conference
GRPH – Graphite Bio – 11:30am – RBC Capital Markets Global Healthcare Conference

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 12 speculative biotechs might be a good way to start.

The market capitalizations of these recommendations typically are very low. At the same time, Initial Public Offering valuations have moved very high. We are seeing $750 million to $900 million valuations for a good preclinical/Phase 1 IPO, and even $300 million to $500 million for mediocre Phase 1s. I don’t see how investors make 5x to 10x in a reasonable, three- to four-year period. How many biotechs have moved north of $10 billion within 5 years after pricing an IPO in the $700 million to $900 million range? Hardly any. 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 much better 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.

Aptose Biosciences (APTO – $1.01) reported a March quarter loss of $11.5 million or 12¢ per share, a bit better than the -14¢ expectation. On the conference call (TRANSCRIPT HERE), CEO Bill Rice repeated that they have seen six complete remissions and one partial response in acute myeloid leukemia patients treated with HM43239, particularly in those with highly adverse mutations that typically are difficult to treat. They will be presenting all available data on June 10 at the European Hematology Association meeting, with a Key Opinion Leaders and corporate update on June 2 that will include data on the new formulation of luxeptinib.

In the second half of the year, Aptose will present a selected expansion dose of HM43239 along with the safety and efficacy packages to the FDA and request allowance to initiate the expansion trials. If data from those trials are sufficiently compelling, they will request an accelerated registrational pathway that could give them an approved drug a year earlier than my 2025 estimate.

Aptose finished the quarter with $69.5 million in cash, enough to carry them into the December 2023 quarter. APTO is a Buy under $4 for a $45 target in a buyout.
Primary Risk: Either drug fails in clinical trials.
   Clinical stage of lead product: Phase 1a
   Probable time of first FDA approval: 2025
   Probable time of next financing: Mid-2023

Bellerophon Therapeutics (BLPH – $0.87) reported a March quarter loss of $5.6 million or 59¢ per share, four cents worse than the -55C estimate. Management said that now that the pandemic is winding down, enrollment is progressing in their pivotal Phase 3 trial for fibrotic interstitial lung disease. They will enroll 300 patients in total.

After the positive top-line results from the Phase 2 proof-of-concept study of INOpulse in pulmonary hypertension associated with sarcoidosis, they are designing a follow-up Phase 2 chronic treatment trial to evaluate the long-term benefits of INOpulse. They will discuss this potential study shortly with the FDA.

Bellerphon finished the quarter with $20.0 million in cash, Buy BLPH under $11 for a $30 target in the next 12 months and $300 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 March quarter
   Probable time of first FDA approval: 2021
   Probable time of next financing: September 2022 quarter

CohBar (CWBR – $0.19) said they got a 180-day extension from Nasdaq until November 7 to get their share price over $1. At the June 15 annual meeting they have a proposal to allow a reverse stock split up to a 1-for-30 ratio. I’ll recommend a “No” vote, but it will pass. They are reporting March quarter results on Monday. CWBR is a Hold for the human trials of CB5138-3.
Primary Risk: Their drugs fail in the clinic.
   Clinical stage of lead product: Phase 1
   Probable time of first FDA approval: 2025
   Probable time of next financing: March 2022 quarter

Compass Pathways (CMPS – $7.06) reported a March quarter loss of $21.17 million or 50¢ per share, much better than the -69¢ expectation. On the conference call (SLIDES HERE and TRANSCRIPT HERE), management said they had a good end-of-Phase-2 meeting with the FDA and are finalizing a Phase 3 trial using the 25-milligram dose in treatment-resistant depression to be filed in the second half. The drug has Breakthrough Therapy designation. There are 100 million treatment-resistant depression cases in the US:

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COMP360 is about to enter Phase 2 for PTSD. It is being used in numerous investigator-initiated studies:

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Compass had $243.7 million at the end of the quarter, enough to carry them into 2024. CMPS is a Buy under $36 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: 2024
   Probable time of next financing: Late 2023

Graphite Bio (GRPH – $2.28) did a fireside chat at the BofA Healthcare Conference (AUDIO HERE and UPDATED INVESTOR PRESENTATION HERE). CEO Josh Lehrer said their focus is on the efficiency of their multi-gene correction technology, because they know it works. The pandemic did slow enrollment at the GRPH101 sickle cell clinical trial sites, but that now is over. They are on track to dose the first patient in the second half of this year with first data in 2023.

They are looking for the optimal number of cells per dose and the optimal number of doses so they can know the optimal number of cells to create for each patient. They think it will only take 40 patients to get the data the FDA needs to move the therapy forward. Their focus will be on treating young people who have not yet suffered irreversible organ damage that requires a bone marrow transplant. GRPH is a Buy under $26 for a $50 target in 2022, $100 in 2023, and then higher.
Primary Risk: Their drugs fail in the clinic.
   Clinical stage of lead product: Phase 1
   Probable time of first FDA approval: 2025
   Probable time of next financing: 2023 or 2024

Inovio (INO – $1.88) reported a pro forma loss of $79.1 million or 36¢ per share, just under the -34¢ estimate. But they pivoted the INO-4800 program from a vaccine to a heterologous booster – a meaningless change when you think about it – and, more importantly, changed CEOs. Dr. Kim is out and Dr. Jacqueline Shea, formerly Chief Operating Officer, is the new CEO. Even more important, the FDA said their Phase 3 results of INO-3100 for HPV-linked cervical high-grade squamous intraepithelial lesions so far were not strong enough to support a Biologics License Application for approval. The trial will continue but there will have to be one or two additional trials.

On the conference call (TRANSCRIPT HERE and UPDATED PRESENTATION HERE), Dr. Shea said because INO-4800 has the ability to generate functional T-cell as well antibody immune responses, has no anti-vector response, is highly tolerable for re-administration, and has superior temperature stability for transport, storage and distribution, it is an ideal booster. She cited the emerging global data that indicate a lower incidence of severe COVID-19 cases, which would necessitate an increase in trial size and costs for the now-canceled Phase 3 trial. In contrast, the heterologous booster market offers greater opportunities as we enter the endemic phase of COVID-19.

Looking back, when President Trump appointed Moncef Slaoui, a Moderna Board member, to head Operation Warp Speed, I should have realized the fix was in. There was nothing he could do to slow Pfizer or Johnson & Johnson – they’re too big – but small companies like Novavax and Inovio had regulatory blocks that slowed them down enough to let Moderna win the race. The complete BS questioning of Inovio’s Cellectra device was one obvious tactic.

Later this year, we will get data for INO-4500 for Lassa fever, INO-4700 for MERS, and INO-4201 as a booster against Ebola. At the end of the quarter, Inovio had $360.4 million in cash. INO is a Buy under $21 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: 2022
   Probable time of next financing: Not needed

Medicenna (MDNA – $0.96) presented new MDNA11 Phase 1/2 trial data at the 2022 Frontiers in Cancer Immunotherapy meeting. It showed that MDNA11 doubled the lymphocyte population without inducing significant increases in eosinophils (associated with toxicity). It selectively increased a sub-population of anti-tumor ICOS+ CD8 T cells without enhancing proliferation of highly immune-suppressive pro-tumor ICOS+ Treg cells. It showed a dose-dependent tripling of immune cells expressing granulysin, a peptide known to target tumor cell killing. Buy MDNA under $4 for a first target of $40, then maybe $80.
Primary Risk: Their drugs fail in the clinic.
   Clinical stage of lead product: Entering Phase 3
   Probable time of first FDA approval: 2023
   Probable time of next financing: mid-2022

ScyNexis (SCYX – $1.87) reported a March quarter GAAP loss of 17¢ per share and a pro forma loss of 51¢, better than the 74¢ loss estimate. Brexafemme prescriptions grew from 1,070 in January to 1,328 in February and 1,579 in March, for a total of 3,977 scripts. That generated $687,000 in revenue, or $172.74 per Rx. They said they expect their net selling price to grow throughout this year.

It was prescribed by over 1,800 unique healthcare professionals in the March quarter, and 55% of these doctors expanded their use and prescribed the treatment to multiple patients during this period, up from 40% in the December quarter. As of April, Brexafemme was covered by commercial insurance plans representing 93 million women, or 55% of commercially insured lives.

On the conference call (TRANSCRIPT HERE), management said they are methodically creating an antifungal franchise with the potential to generate $700 million to $800 million a year in net sales in the US alone. They are starting digital and social media advertising to patients.

The company will file to expand the label to include the prevention of recurrent vulvovaginal candidiasis by June 30 and expects approval by the end of this year.

ScyNexis finished the quarter with $95.2 million in cash and raised $42 million in April, giving them a cash runway into the March 2024 quarter. CEO Marco Taglietti bought 75,000 shares for $225,000. But they now have 54 million shares outstanding, about double the amount when I set the target prices, so I am cutting those prices in half. Buy SCYX under $12 for a first target price of $27 now that Brexafemme is approved and a buyout at $85.
Primary Risk: Ibrexafungerp fails to sell.
   Clinical stage of lead product: Approved
   Probable time of next FDA approval: mid-2022
   Probable time of next financing: 2023 or never

Biotech MegaShift

Akebia Therapeutics (AKBA- $0.41) reported March quarter revenues up 18.0% from last year to $61.7 million, clobbering the $44.22 million estimate. Auryxia revenues grew 36% to $41.4 million. But the GAAP loss of $64.2 million or 35¢ per share was six cents worse than the -29¢ consensus forecast.

On the conference call (TRANSCRIPT HERE), management said after the Complete Response Letter from the FDA for vadadustat, they “plan to focus on Auryxia commercial success while exploring our earlier stage assets and pursuing other value-creating business opportunities.” That means growing Auryxia with existing cash resources and ongoing cash from operations, supporting their partners in selling and seeking regulatory approval for vadadustat globally, including a potential EMA approval and European launch, and investing in their pipeline of internal programs while assessing other strategic growth opportunities – probably in-licensing.

If that sounds like giving the bird to the FDA – maybe. They haven’t requested an end of review meeting with the FDA yet, but they will. If they decide something else is afoot, like maybe an FDA reviewer just qualified for a cushy job at Amgen, they may give up on US approval.

They guided for 2022 full-year Auryxia revenues of $165 million to $175 million. They had a 42% layoff in April and cut a number of management positions in May. The reduction in force will result in approximately a $60 million to $65 million reduction in cash required for operating activities through the end of 2023. Akebia finished the quarter with $174.6 million in cash, enough to carry them for at least a year. AKBA is a Hold for the FDA meeting on vadadustat.
Primary Risk: Vadadustat not approved.
   Clinical stage of lead product: Approved
   Probable time of next FDA approval: ?
   Probable time of next financing: December quarter of 2022

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

Gilead Sciences‘ (GILD – $62.48) Chief Financial Officer gave a fireside chat presentation at the Bank of America Healthcare Conference (AUDIO HERE). He said a recent SEC change requires them to recognize about $300 million a year in expenses that used to be capitalized, but that doesn’t change the way they run the business. About 31% of Gilead’s revenue comes from overseas sales, so the strength in the US dollar is affecting their revenues, particularly in April. Again, this doesn’t change the way they run the business, but it is an accounting headwind. On the positive side, remdesivir sales are strong in Eastern Europe and Asia.

They expect to pay down $1.5 billion in debt this year. GILD is a Long-Term Buy under $105 for a first target of $130.

SoftBank (SFTBY – $17.05) reported March fiscal year results. On revenues of $48.6 billion they lost $7.95 a share due to writedowns in Vision Fund 1 & 2 technology investments. On the conference call (Conversation with CEO Masayoshi Son HERE and SLIDES HERE and TRANSCRIPT HERE), Son-san said he is playing defense with stricter investment criteria and continued monetization of assets like ARM Holdings. He said SoftBank will keep a majority stake in ARM after it has an initial public offering planned in the next 10 months.

His main issue, and our opportunity, is that the public holdings of SoftBank are worth $151 billion, but the total market capitalization of the company is only $75 billion. As long as this 50% discount continues, Son will buy back as much stock as he can.


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SFTBY is a Buy under $30 for a first target of $60 in the next two years.

Other Tech

Fastly (FSLY – $10.75) postponed their Investor Day scheduled for today due to “the current volatility in the overall markets coupled with the CEO transition announced last week.” The CEO transition is a relevant reason, although I would have advised them to go ahead anyway. They said the postponement is not related to any change in the company’s operations or financial results. FSLY is a Buy up to $45 for a 2- to 5-year hold to $150+ as Compute@Edge drives customer acquisition and revenue growth.
Primary Risk:Content and applications delivery networks are a competitive area.
   Probable time of next financing: None needed

Velo3D (VLD – $2.67) reported March quarter revenues up 916.7% from last year – not a misprint – and up 17% from the December quarter to $12.2 million with a 13¢ loss per share. They shipped eight systems in the quarter and have a record backlog of $55 million, up 80% from last year and mostly the new Sapphire XC. First-quarter revenues plus the backlog account for 75% of their 2022 revenue guidance for $89 million (225% growth from 2021). That includes $11 million in recurring revenue.

On the conference call (SLIDES HERE and TRANSCRIPT HERE), management said they are expecting to book and ship 47 to 49 systems, double last year, with 23 to 25 new customers. The CEO said there’s a lot of new customers that are close to closing. Velo3D has a “land and expand” strategy – get one system in a new customer and more will follow as they see what it can do.

Velo3D ended the quarter with $186 million in cash. The leading additive manufacturing technology company for mission-critical metal parts is going to be a huge winner, and the current $490 million market capitalization is ridiculously low. VLD is a Buy up to $11 for my $50 target as Velo3D’s high-tolerance metal parts printing business grows.
Primary Risk:A new 3D metal printing competitor emerges.
   Probable time of next financing: None needed

Inflation MegaShift

Gold ($1821.00) posted its fourth down week in a row on fears of a more aggressive Fed, closing under the 38.2% retracement level of the first quarter rally. It was so consolidated that the fractal dimension has not tagged this as a downtrend yet, but another couple of down weeks might do that. With Russia moving to back the ruble with gold, probably followed quickly by China backing the digital yuan with gold, we should be close to a bottom.

Miners & Related

First Majestic (AG – $7.43) reported March quarter revenues up 56.0% from last year to $156.8 million. But the pro forma loss of two cents a share was well under the positive three cents expected, and the stock hit a 52-week low. Silver equivalent production rose 59% from last year to 7.2 million ounces, consisting of 2.6 million ounces of silver and 58,891 ounces of gold. Cash costs were $14.94 an ounce, but all-in sustaining costs hit $20.87. They were hurt by omicron-related absenteeism at the mines.

First Majestic finished the quarter with $192.8 million in cash. AG is a Buy under $15 for a $23 next target price as production increases and the price of silver rises.
Primary Risk: Prices of precious metals fall due to US dollar strength.

Sandstorm Gold (SAND – $5.94) March quarter revenues increased 14.2% from last year to a record $35.4 million, just above the consensus expectation of $34.92 million. They sold record attributable gold equivalent ounces of 18,741 ounces, up 7.4% from last year. Their average cash cost per attributable gold equivalent ounce was $28,3 resulting in cash operating margins of $1,604 per ounce.

On the conference call (TRANSCRIPT HERE), CEO Nolan Watson said that due to the two huge acquisitions I covered last week, they now are expecting new revenue and cash flow records going forward for years to come.

Nolan said that Sandstorm will have a portfolio with the highest quality assets underlying their streams and royalties in terms of how low cost the underlying mines can produce their primary product for. 64% of Sandstorm’s production will be coming from assets that produce in the bottom quartile of total all-in sustaining costs. Their portfolio is the most diversified in the entire industry with only 38% of their net asset value coming from their top five assets. The majors average 65% of their NAV coming from only five assets. And they have the highest amount of growth built into that portfolio in terms of future production increases. By 2025, their cash flow will exceed $180 million per year even if gold prices don’t go up – which they will. 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 – $35.16) reported March quarter revenues up 17.2% to $32.26 million and 26¢ earnings per share. On the conference call (SLIDES HERE and TRANSCRIPT HERE), they said net fund sales matched the $1.4 billion record high set in 2021’s March quarter, and equity fund sales improved and turned modestly positive.

Assets under management have steadily grown:

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They plan multiple new product launches in 2022 to keep Assets Under Management growing. Buy SII under $22 for a $52 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 – $29,765.75) fell below $30,000 after the Terra/Luna “stablecoin” collapsed, dragging most cryptos down with it. This is just a sideshow to the inevitable trend to digital currencies.

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Morgan Stanley made an interesting point: “Retail investors are no longer the dominant crypto trader. .. the increased involvement of institutions, which are sensitive to the availability of capital and therefore interest rates, has contributed in part to the high correlation between bitcoin and equities.”


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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- $18.31) reportedly is in talks with the SEC to convert to an exchange-traded fund. GBTC is a Buy under net asset value.
Primary Risk:Bitcoin falls due to over-regulation or is surpassed by another cryptocurrency.

International & Other Recommendations
It is important to hold some non-US assets, especially in China.

Acreage Holdings (ACRDF – $1.24) reported last Thursday, as I covered in last week’s Radar Report. On Friday’s conference call (SLIDES HERE and TRANSCRIPT HERE), management said that in the past, the company pursued over-expansion without achieving sufficient scale, but now has a focused strategy on their highly attractive core market footprint. In the past they had an undisciplined operational approach, while today they have strong operational and financial disciplines. Perhaps most important, in the past they had liquidity issues, but today they have a very strong balance sheet.

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They plan to accelerate growth throughout 2022 with new dispensary openings, new product launches, and cultivation expansion projects to continue expand their wholesale business. They also will explore potential partnership and accretive acquisitions. They launched adult-use sales in New Jersey on April 21 and are getting ready to launch in New York and Connecticut.

The company is close to cash flow breakeven. They ended the quarter with $32.6 million in cash. They have another $25 million available on their credit line to December 31, when an additional $50 million become available.ACRDF is a buy under $4.49 for a hold for the Canopy Growth merger and beyond.
Primary Risk: Canopy Growth does not acquire the company.

Oil – $106.86

Fuel prices are at record highs. AAA’s new data shows the average gasoline price at the pump hit $4.374 a gallon and the retail price of diesel hit a new record of $5.50. Those who shorted oil thinking China’s COVID-19 outbreak would cut demand scrambled to cover this week.

As near as we can tell, crude oil storage increased last week with the release from the Strategic Petroleum Reserve, but distillates fell. Gasoline storage was down 3.607 million barrels and the summer driving season is still three weeks away. Distillate fuel inventories are now 23% below the five-year average for this time of year.

Energy is massively capital intensive. Supply shows up with a substantial lag after spending—lots of spending. There has been almost no increase in capital spending. The lack of spending today will impact supply for years into the future.

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Today, President Biden canceled the Alaskan Oil & Gas Lease sale that would have given companies the opportunity to drill for oil in Cook Inlet, Alaska, an area spanning one million acres. The Department of the Interior said that there was a “lack of industry interest in leasing in the area.” The American Petroleum Institute called the decision “another example of the administration’s lack of commitment to oil and gas development in the U.S.”

The July 2026 Crude Oil Futures (CLN26.NYM – $53.16) are a Buy under $55 for a $200+ target.

The iPath Pure Beta Crude Oil Exchange-Traded Note (OIL – $33.92) is a Buy under $24 for an $80+ target.

* * * * *

Jonathan Winters, Robin Williams, & Sam Kinison

* * * * *

Your 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.

$20-for-$1
  Aptose Biosciences (APTO – $1.01) – Buy under $4, ultimate target $45
  Arch Therapeutics (ARTH – $0.08) – Buy under $0.70, first target $2, then $7
  Bellerophon Therapeutics (BLPH – $0.87) – Buy under $11, first target $30, then $300
  Compass Pathways (CMPS – $7.06) – Buy under $36, hold a long time for a 10x return
  Graphite Bio (GRPH – $2.28) – Buy under $26, hold a long time
  Inovio (INO – $1.88) – Buy under $21, hold a long time
  Invitae (NVTA – $3.76) – Buy under $50, first target $100, then $200+
  Medicenna (MDNA – $0.96) – Buy under $4, first target $40, then maybe $80
  ScyNexis (SCYX – $1.87) – Buy under $12, target price $27, then $85

Other Biotech
  TG Therapeutics (TGTX – $6.04) – Buy under $7, target price $25+

Tech Dominators
  Corning (GLW – $35.21) – Buy under $33, target price $60
  Meta (FB – $191.24) – Buy under $320, target price $400
  Gilead Sciences (GILD – $62.48) – Buy under $105, target price $130
  SoftBank (SFTBY – $17.05) – Buy under $30, target price $60

Other Tech
  First Trust NASDAQ Cybersecurity ETF (CIBR – $40.09) – Buy under $32; 3- to 5-year hold
  Fastly (FSLY – $10.75) – Buy under $45; 2- to 5-year hold to $150+
  PagerDuty (PD – $23.52) – Buy under $40; 2- to 5-year hold
  QuickLogic (QUIK – $5.42) – Buy under $10, target price $60
  Liberty Media Acquisition Corporation (LMACA – $9.77) – Buy under $10.50, target price $20 to $30
  Rocket Lab (RKLB – $5.19) – Buy under $13, target price $30+
  Velo3D (VLD – $2.67) – Buy under $11, target price $50

Inflation
  A Short-Sale or REO House – $375,300 – Buy while fixed mortgage rates are low
  Bag of Junk Silver – $20.65 – hold through silver bull market
  Sprott Gold Miners ETF (SGDM – $26.47) – Buy under $25, target price $50
  Sprott Junior Gold Miners ETF (SGDJ – $32.42) – Buy under $39, target price $100
  Sprott Physical Gold and Silver Trust (CEF – $17.15) – Buy under $15, target price $30
  Global X Silver Miners ETF (SIL – $27.68) – Buy under $30, target price $50
  Coeur Mining (CDE – $3.10) – Buy under $10, target price $20
  First Majestic Mining (AG – $7.43) – Buy under $15, next target price $23
  Paramount Gold Nevada (PZG – $0.49) – Buy under $5, first target price $10
  Sandstorm Gold (SAND – $5.94) – Buy under $10, target price $25
  Sprott Inc. (SII – $35.16) – Buy under $30, target price $70

Cryptocurrencies
  Bitcoin (BTC-USD – $29,765.75) – Buy
  Grayscale Bitcoin Trust (GBTC – $18.31) – Buy
  Ethereum (ETH-USD – $2,088.08) – Buy
  Grayscale Ethereum Trust (ETHE – $12.72 – Buy

International & Other Recommendations
  EMQQ Emerging Markets Internet & Ecommerce ETF (EMQQ – $26.62) – Buy under $38 for a $66 target in 12 to 18 months
  KraneShares Bosera MSCI China A Share Fund (KBA – $32.56) – Buy under $34 for a three- to five-year hold
  Morgan Stanley China A-Shares Fund (CAF – $14.44) – Buy under $24 for a three- to five-year hold
  KraneShares CSI China Internet ETF (KWEB – $24.48) – Buy under $50 for a double over the next three years
  Acreage Holdings (ACRDF – $1.24) – Buy under $4.49 for the Canopy Growth merger
  Mongolia Growth Group (MNGGF – $1.17) – Buy under $1.25; long-term hold

Energy
  Crude Oil Futures – July 2026 (CLN26.NYM – $53.16) – Buy under $55, $200+ target
  iPath Pure Beta Crude Oil Exchange-Traded Note (OIL – $33.92) – Buy under $24, $80+ target
  Energy Fuels (UUUU – $5.24) – Buy under $11, $30 target

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.
  Algernon Pharmaceuticals (AGNPF – $3.83) – Hold for chronic cough results
  CohBar (CWBR – $0.19) – Hold for human trials of CB5138-3
  Akebia Biotherapeutics (AKBA – $0.41) – Hold for FDA meeting
  Apple Computer (AAPL – $142.56) – Hold for 5G iPhones

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MM – question: with BLPH under $1.00 and your target being $30 in 12 months, why wouldn’t this stock be in the Top 5 list? Also regarding the GRPH target price of $50, do you still believe we will get there in 2022? How much conviction do you have in these target price points and timetables?

But are there still catalysts in 2022 that will drive the share price of both up or are these now both 2023 plays?

MM

Does the term “Back up the truck” you used with NVTA, last week have the same strength today as it had back in the days when readers could listen to your report via phone?Thanks

Larry,I know mm hasn’t answered your question but I feel he thinks it’s even a better deal at the current price,I added more,have a nice day

Sean George needs to focus on reducing the constant losses ,and pay attention to shareholder value,com on sean…nvta

Please read my post on genetic testing at the bottom of the previous page, as well as my prior discussion for breast and lung cancer. I gave a common example of how it is vastly over-rated, typically by financial analysts who don’t know medical reality. Shareholder value is meaningless if you understand reality.

Don’t be condescending. I have more medical expertise than all or most of the analysts you get ideas from. If any of your sources are involved in active clinical practice, seek their views on the subject. But armchair doctors who are now self proclaimed experts/analysts are spinning your head with the BS fluff you just posted.

Do you grasp my tutorial on MTHFR and homocysteine I presented on the previous page?

I must be dreaming,nvta closed in the green today!!!wow

@Michael Murphy, another outstanding Radar, Having sat on quite a few peer reviews of great ideas in the medical and behavioral health arenas, I had to admit I never completely understood “uncertainty”: statistics. Your many Radars has me hooked on your assessment of fractals. And here we are, in terms of asset value dynamics in an economy that has something like infinity of money being printed(just kidding) The reason I jest is that I wonder how good our federal reserve estimate of the amount of money in circulation is accurate anymore. An interesting question was raised on CNBC yesterday when a Crypto currency expert, specifically Bitcoin, tried to show the emerging understanding of Federal Reserve tightening and Bitcoin prices, She saw a direct link Between the two and hence performance of Bitcoin and Powell policies having a closer relationship than folks estimate, which gives cause for concern since Powell seems a little too political for me (eg adding climate change policies to the Fed agenda) I hope I am wrong, given your acknowledgement of the inane federal cancel of those leases.. I will stay in with NVTA,as your confidence remains high.
GLTA for more than a dead cat bounce this AM

Last edited 12 days ago by Donald Galamaga

Why do you think Powell is political He was appointed by a Republican and kept by a democrat.

@Don Bennet. Mostly the size of the balance sheet, his observation about Climate Change, which he didn’t mention when Trump was there. and now he promises getting down to a 2 % inflation rate. Getting a bit soft, IMHO. Now he wants to stop guaranteeing bonds. . Getting tough on us geezers, I guess.

Last edited 11 days ago by Donald Galamaga

MM–could you please evaluate DM, a competitor to VLD? YMB poster Lazerator says that VLD is definitely more high end niche than DM, but DM has a more diversified list of customers, and VLD is highly dependent on Space X. Financials look better for DM, which has a lower price/sales and price/book. I’ll change my negativity on VLD when the chart stops plunging and levels out.

Thanks.

SCYX is up 6.5%

SCYX is up 8%

Not so fast. Remember, don’t fight the FED works both ways. VLD is unprofitable and bear markets hate that.

This is just a bear market rally.

We won’t know if this is a bear market rally or the end of this correction/bear market until the days/weeks ahead. However, after yesterday’s close two powerful indicators of a market bottom (or near a market bottom) were in extremely bearish territory: the fear and greed index was at 6 and the put to call ratio was just over 2. Historically, those are contrarian signals.

Good observation on Desktop Metals. They look like a winner to me with the productivity they can deliver on just about anything. Velo 3D has also hooked in on an area which will be a big mover over the next several years and we will have an edge, even though we are sharing pretty widely on our space advocacy groups. One example is the Mars Society, where I’ve been a member since it’s origin Their next convention will be in Phoenix, AZ, with a membership that looks like a mini UN. If interested, just go to Marssociety.com. We have some great programs for high school participation besides many higher ed outfits. Let’s see your design on habitat on the red planet.

If VLD products have better margins than those of DM, why is VLD’s price/sales and especially price/book much higher than DM?

Just a one day bounce, so far. Even with today’s bounce, NWI stocks have been hit far more than the averages. Quality bounces like a tennis ball, but poor quality stocks NOT.

Arth just reported Q1 after the close on a Friday afternoon; so you know it will be bad; looks like sales were $3,130 (no 000’s) with a net loss from operations of $1,750,866 for the quarter.
And, of course, “substantial doubt about the Company’s ability to continue as a going concern”.

I told everybody about ARTH’s expected minimal sales a day or so ago.

MM–abandon any thoughts of more bio recommendations. Your forecasts are mostly completely off base and out of touch with reality. Stop daydreaming, and go back to your original expertise in established tech leaders.

Post by Shirley on YMB tonight–“@SundanceKid ha ha – you are entertaining. early stage Pharma? You can’t be serious? You must be one of TN’s cronies who along with TN has been milking this for at least 7 years. Revenue of $3100 in the quarter? A teen with a lawn mower generates more revenue than that.”

I still have some life energy left if I can get a laugh after being so disillusioned by this company and most of the NWI portfolio. I respect the hardworking teen in the street, but NOT the useless TN.

$3100 in sales???? I’m speechless. How is that even possible to be this low? How did ARTH lose $1.75 million in the quarter? Where did the money go?

why didn’t ARTH spend this money giving away free product to get doctors to try it, you’ll like it, and it works.

Love your comments and observations JGMD. TN, snatched the jaws of defeat from the wings of victory. Worst CEO I have ever encountered. His hire of the “sales manager” who obviously also failed when he was a teen with a lawn mower. Love that comment.

How poorly ARTH has been managed is mind boggling. WTF was the board of directors doing all of this time? The big investors who kept funding TN’s lifestyle and trips to the ATM, do they have more money than sense?

The fat lady is singing. ARTH is done. Sell it and take the capital loss. Definitely the biggest MM loser recommendation ever. Bankruptcy is pending. Really too bad as the technology and FDA approval looked so promising. The product didn’t fail us, TN did. Totally incompetent.

ARTH- I contributed perhaps 50 postings on this turd over the years and became very negative in 2018-2019 when stuff happened that should have convinced MM to, at a minimum, convert this from a BUY to a HOLD. In the second quarter of 2019 it became clear that no bidder surfaced from the dozens(?) of NDA books that had gone out to big Pharmas for a potential acquisition. I realize that hope springs eternal, but the last 3 years have been nothing but bullshit Pressers to paper over the fact that ARTH had morphed from a promising venture to “The Terry Norchi Employment Act of 2015”, or how to get closer to SS full retirement age on $400,000/year.
Take the loss and move on.

Other: it is a Bear Market out there so caveat emptor. Fed is hostile which is the biggest problem. Stuff that does well tends to be very large and have correspondingly large cash flows and earnings. So it is no wonder that MM’s picks, generally developing microcaps with no eps, are doing very poorly. ABBV, GDX, IPI, PSX, OXY, BMY, WEAT, UUUU, LAC, MP, TECK, WMB. Keep in mind that when Mr. Market panics even stuff that should be doing well like the above list, or Gold or uncorrelated assets like Cryptos, collapse in unison with everything else (correlation coefficient from zero to 1).

ARTH–that’s the way it is. But I am surprised today’s stock trading was stable, although probably it was halted 12:54 PM. The bomb drops tomorrow.

Major pharma companies are down 20% or so, but NWI bios are down 80-95%, from initial buy prices, nearly all of them. Almost as bad, big profits could have been taken on APTO, TGTX, but MM advised holding for pie-in-the-sky fantasies which are now losses.

MM – APTO: during 2021 you often expressed the opinion that you thought it was likely that Aptose would be acquired before the end of 2022. Those comments seem to have completely disappeared from your APTO updates once the calendar flipped to 2022 without you mentioning any change in that view. I take it you no longer think that an Aptose acquisition is likely this year?

Read the YMB posts by Carol J for a sobering damning assessment of APTO. Acquisition–what nonsense, when they have very little human clinical trial data. Early stage trials with minimal numbers of patients. Promising drug candidates being dropped.

Medical dark humor–the holy grail of cancer therapy is apoptosis (cancer cell death). We are seeing the apoptosis of the company, APTO.

Covid in China…not over yet..
Covid in North Korea gonna be really bad.

Is this perhaps more than merely a return of the old plague version?

AKBA thinks they can coerce Otsuka to remain a partner? AKBA, the beggar for an Otsuka buyout thinks it has clout? Otsuka is flushing AKBA down the toilet.

If there were any hope that AKBA could overturn the bad FDA rejection in the meeting in a few months, Otsuka must have decided that it is hopeless.

MM?

SCYX H.C. Wainwright cuts target price to $8 from $14 H.C. Wainwright cuts target price to $8 from $14

SCYX is selling at 2.18

Wainwright is an investment banker for these shitty companies. They get underwriting business from companies they promote. Their targets are those of shills, BS.

ARTH–it is baffling how the company has not had a PR when the latest SEC filing is there on YMB for anyone to see the lousy March Q revenue and the huge losses. Over 200 million shares outstanding, but only 49,000 traded today. Many of us own way more than 49,000 shares, so there is no way to exit.

MM–what’s going on?

Oil, oil , and less oil to be had while demand gets higher and higher. Gas in my neck of the woods is now $5.35 a gallon. A barrel of oil 42 gallons when refining ends is equal to 19-20 gallons of gas and 11–12 gallons of diesel. A loss of about 10 gallons in refining. Supply and demand. Supply is governed by rig count. In 2014 rig count was about 1600. It fell below 200 in 2020. Today it is 552 (about 1/3 of 2014 total) When China comes off of Covid lockdown and the demand for oil shoots up , so will oil. IMO. XLE is up 46 percent. Oil is up 72 percent over 12 months.

XLE seems like an easy play on oil, but Navellier recently said that ETF bid/ask spreads can be wide, so sellers get fleeced. Just play the major oil companies.

@ John Miller: Got my first shock with fuel. Put in 11 gallons of Premium in my old Buick which runs best on Premium for $66.20. OMG. there may be riots, I thought.

Only 31 more days like today and the Dow will be zero. Got cash?

Have you seen Matt McCall’s promotion of V-TOL, vertical take off and landing? Air taxis like uber for medium distances at 400 MPH. You seem to like these tech disruptors, but the history of Matt’s picks is that they go nowhere for years, then skyrocket if things go right. The purpose of these ground floor promotions is to goose the stocks for his subscribers who have already bought.

GRPH, in the SEC filing as of March 31st Graphite had 353 million in cash, securities and cash equivalents. It has 53 million shares outstanding and is trading at $2.40 a share today. Maybe this is the one that we should back up the truck for. It has $6.66 a share in liquid assets, and you can buy that for $2.40 a share today.

GRPH was recommended by MM less than 1 year ago at $25. Anyone who bought it then based on pie-in-the-sky hopes has lost over 90%. This is typical MM unrealistic assessment of the market for any of these spec bio products. GRPH targets rare diseases, and it is anyone’s wild guess as to how its technology will do in the marketplace. Approval isn’t expected until 2025, and after that we have the usual problem of marketing. Many NWI bios have lousy marketing as we have seen. GRPH could easily burn through $6.66 in liquid assets. At today’s price, it is a reasonable speculation only, not a back up the truck investment.

When the general market bottoms, buy blue chips on sale, not these spec stocks which are low priced for good reasons, like rising interest rates which will kill them.

Good Morning all. Morning economic data less than expected. Tech taking a beating and gold moving up. Inflation not looking better. As the talking heads are saying, the sentiment is worse now than the dot.com crash notably in CA.Playing Musk statement to the SEC that he is looking under th hood of Twitter and doesn’t like what he sees regarding the number of fake accounts and is thinking about re-negotiating. Also some talk on CNBC about getting rid of ESG Is recession coming sooner or at all? How’s that for gloom? Get some Gold, IMHO.

Last edited 6 days ago by Donald Galamaga

Heads Up NVTA new panel combining pharmacogenomics and mental health/illness. The issue here, IMHO, will be the exogenous issues and how you collect the data. Very interesting
Invitae – Invitae Launches Expanded Pharmacogenomics Panel and Specialized Mental Health Panel

Total BULLSHIT. Most doctors in general and psychiatrists in particular prescribe psych drugs based on DSM criteria of symptoms, with rigid protocols. They won’t pay attention to pharmacogenomics. They don’t practice individualized health care. They don’t do what is REALLY important and beneficial, such as implementing healthy diets and vitamin therapy. They don’t check thyroid function properly, merely checking TSH as a screen. They don’t do homocysteine levels, which relate to B-complex levels. Low B levels increase risks of addiction. Low vitamin D is correlated with depression.

@JGMD, allow me to disagree with your “Total” assessment. I have had some success in integrating mental health and addiction into a model practice that include the primary care doc and/or allied health professional. Annual physicals now include a mental health self-reported behavioral health questionnaire (stigma bogeyman still pervades about the “mystery and potential dangerousness linked to mental illness – that 10-person killing in the news now inferring that all mental illness is dangerous. Lot of pols buying it. In any event, I have been moderately happy with this trend to integrate, the toughest being legal liability for who is responsible for the overall health of the patient in an integrated setting (lawyers, one of my sons is a great one, medical malpractice defense specialty. Business is too much. I have contributed to DSM updates and coding issues. You are right. It’s tough to get people out of silos.
But where it is happening, we are seeing 10% reduction in administration costs of the business and, my feeling, a better patient outcome. That’s all. Lots more work to do. I brag in getting two Surgeons General to personally back the integration, with some bucks to do shrinks with primary care dinner parties and practice improvement trials. It is fun. Of course, the exogenous factors of illness cause are almost pure madness to document. Best wishes. BTW, I have been out of that stuff since the 1990’s.

The CEO of SCYX bot $75,000.00 of his stock

Donald,
I have no disagreements, but lots of admiration for your efforts as a layman to improve mental health care. But my “total BS” remark is meant as an indictment of the primitive level of understanding of the science of mental health by psychiatrists. They blindly employ symptom checklists in their treatment plan. Drugs are tailored to symptom lists. The reality is that drugs have specific effects, such as SSRI drugs which increase serotonin receptor sensitivity. But what are the CAUSES of low serotonin activity in depressed patients? The psychiatrist will merely tell the patient he/she has a chemical imbalance. That basically says nothing except that it is a technical correlate of the symptom. But the basic causes are not discussed by the MD’s or dealt with, such as inflammatory conditions like food sensitivities (unfortunately, mentally ill people usually have poor diets), vitamin and mineral deficiencies, heavy metal toxicities, etc. So the drugs merely treat symptoms. They have some benefit, but only an integrative medical approach will give the best benefit. One integrative psychiatrist I admire is James Greenblatt, MD in Mass. He is one of the few psychiatrists that discusses diet and nutrition with his patients. He does testing of common mutations, such as MTHFR that I mentioned, and lots of others. He does not accept insurance, and patients are expected to pay cash. Insurance doesn’t pay his fees for his excellent, comprehensive care. But nearly 100% of psych patients have lousy insurance, which limits the quality of care they get.

OK, let’s deal with the limited efficacy of drugs. Pharmacogenomics testing is a good way of increasing the efficacy of certain drugs. I learned about this a few years ago. One example is the drug Plavix (now generic clopidogrel) used for anti-platelet effects in cardiac stents. Plavix must be metabolized to the active form to get the benefit. Some people have genetic defects in the enzyme that does this conversion, so Plavix is ineffective in them, and another anti-platelet drug should be given. But I have never seen a cardiologist do the pharmaco testing, and almost all these people are taking Plavix. Nobody realizes that the drug is not doing anything in some of those patients.

My conclusion–pharmacogenetic testing is worthwhile, but few doctors are doing it. NVTA should engage in an important education program, but our lousy socialistic medical system is mostly about cost cutting. Quality suffers.

Does this sound familiar? ARTH has the best hemostatic and wound care product, but nobody is listening. Big Pharma is happy to continue to make lots of money with their inferior products. TN isn’t totally to blame. The system and its politics deserves lots of blame for the failure of ARTH.

Will anybody listen to NVTA? That is totally speculative.

Ca-Ching. I tendered my 6746 shares of ATRS today for $37,758.83. Up 178 percent. And $10,050.82 was in my tax free account. Just sayin. Thank you Mr. Michael Murphy.