Good morning,
Welcome to today's edition of The Armchair Analyst, a 5-minute daily update on the ASX life-sciences sector.
BREAKING NEWS….
The FDA has just called a meeting to decide whether or not to ‘unban’ a number of peptide products in the US:
Peptides are naturally occurring short chains of amino acids that have recently gained popularity for weight loss.
The most famous peptide is GLP-1 (also known as Ozempic).
But peptides have also been shown to be effective for muscle recovery, anti-aging, and longevity.
The unbanning of these substances would be a big win for the Precision Medicine movement.
Precision Medicine is a growing health trend in which prevention, diagnosis, and treatment are tailored to each patient's individual characteristics, rather than using a one-size-fits-all model.
Peptides are at the centre of this movement.
My first-ever Armchair stock pick, Tetratherix (ASX: TTX), is launching a Precision Medicine franchise with US-based Superpower Health.
(I own 16,250 escrowed TTX shares)
Peptides are generally administered via injection, but TTX, through its proprietary technology, has developed a nasal spray to deliver these compounds.
(Source: TTX Precision Medicine Preso)
If you think Precision Medicine is the next health trend to take off…
(and it is looking more likely if the FDA decides to unban these peptides)
Then TTX will be selling the pick-and-shovels.
This news comes at a time (over the last two days or so) when healthcare stocks have been running.
Immutep (IMM) up 84%. Genetic Signatures (GSS) up 72%.
… I also took a look at the Starpharma (SPL) share price, and it looks to be in breakout territory.
Dimerix (DXB) recovering. Orthocell (OCC) recovering. Avita (AVH) recovering.
The tough first quarter for healthcare stocks appears to be easing, and investors are starting to get “wins” again.
Today, I have a look at a couple of the big movers yesterday (Immutep and Genetic Signatures).
But first…
The Pulse Check
Radiopharm Theranostics (ASX: RAD) completes enrollment in its Phase 2b trial of RAD101 for detecting brain metastases.
🪑 Clinical trial readout expected in June. 🍿
Botanix Pharmaceuticals (ASX: BOT) signs term sheet with a new (alternative) API supplier for its Sofpironium Bromide product, potentially reducing cost of goods sold by 25-40%. (BOT)
🪑 Second cost-saving announcement in the last few weeks.
If you took in that last placement betting on a ‘turnaround’, it looks like it is starting to play out.
TruScreen (ASX: TRU) submits three proposals for UNITAID's cervical cancer program, targeting up to $18.4M revenue over three years. (TRU)
🪑 The results of the submission will be in November.
Cash Injection
BlinkLab (ASX: BB1) raises A$17.5M via oversubscribed share placement at A$0.65/share. (BB1)
🪑 This is a big raise. BB1 now moves from a microcap scratching around to develop some interesting science, to a company with serious financial backing, and now to develop a product.
Well done.
Patrys Limited (ASX: PAB) is in a trading halt for a capital raising. (PAB)
🪑 I met with the CEO, Samantha, in Perth earlier this week.
Great story - looking forward to telling it as part of my Biotech 165 Challenge.
Under the Microscope
When stocks go up by more than 50%, I pay attention.
Two big moves yesterday.
FIRST, Immutep (ASX: IMM)
Was up ~84% (it got over 8 cents at one point) on the back of what I thought was a run-of-the-mill announcement.
I was having a chat with my Dad last night (who was a stockbroker for 30 years) and he explained to me what was happening.
Dad’s take?
If you look at all of the “change in substantial shareholder” notices since the results of the failed results, there are a lot of complicated movements in shares.
Because of such a price shock, this was a significant unwinding of complex financial instruments held in both long and short positions in the company.
Also, it is possible that a number of large shareholders took out loans against their shares, and the margin call was triggered on the failed result.
(Margin call is when the bank forces you to sell the shares to pay back the loan amount)
This triggered massive forced selling in the stock (which is why you saw it well below its cash backing).
Here’s how it traded:
This move yesterday signalled that forced selling may be winding down and that the market can find a fair price for the stock based on the company’s value post-results.
🪑 Lesson: Pay attention to these sub-notices after a big failure. If the stock falls below the cash backing (which I had calculated to be between 4 and 5 cents), it’s worth trading.
NEXT, Genetic Signatures (ASX: GSS)
Another stock over 72% in one day off the back of a good (but not great) announcement.
This was another case of stock being oversold.
GSS was trading at a $20M market cap but with $29M in the bank as of the last quarter.
Again, there were a bunch of “change in substantial shareholder” notices, as large investors sold down stock in the company:
Why sell below cash backing?
For these institutions, liquidity (getting cash in the door) was more important than value.
This meant that GSS was trading under cash backing for nearly an entire month, as these larger positions exited the stock.
It was clear from this setup that once the sellers had cleared, any material news in the stock could cause a re-rate.
🪑 Lesson: Pay attention to stocks with cash backing. Any positive news could be a re-rate event.
Key takeaways from both GSS and IMM.
Companies that trade below cash can be good trades… particularly when institutional investors are all ‘out’.
Finding that point isn’t easy, but that’s the perfect time to buy.
See you all tomorrow,
The Armchair Analys
