Free Post: February Performance Update
2025 "No Trades" Portfolio so far: +1.80% vs. XBI: -6.24%.
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On December 18, 2024 I did a free post called My 2025 “No Trades” Model Portfolio. The goal of this post was to create a long-only portfolio and attempt to smash the benchmark XBI index over the course of 2025 without making one trade.
Now actually it would have been better to publish that post on New Year’s Eve night and publish this one on the last day of February for true monthly performance.
But no one reads posts on NYE night or on the last night of the month so here we are!
It has been 70 days since I hit publish, so, how am I doing? And why?
My performance: +1.80%
XBI performance: -6.24%
Dollar value increased from $999,988 to $1,017,944.
I’m really proud of this performance so far because if you look at some other benchmarks that focus on equal-weighting clinical stage biotech companies they show weakness in the market in the range of -15% to -20%. Being positive on the year in any way for this portfolio is a huge win.
So what worked and what didn’t?
Going in order of best performance to worst performance:
VRNA 0.00%↑ has been absolutely incredible as each piece of data so far points to an accelerating launch. As mentioned by many, COPD is so large that really only minimal share is needed for mega-blockbuster status. That said the current valuation is assuming over a billion dollars in peak sales. On the other hand, the near constant buying pressure has people thinking this could be a M&A target. It’s definitely not the cheapest thing I own but there is reason to believe it could go higher from here just because the launch is so early and there is no recent precedent for a new MOA in COPD. I heard someone speculate about discontinuations but so far the data shows absolutely no signs of that, although something to watch going forward.
Speaking of M&A, SWTX 0.00%↑ had a share price peak with M&A rumors and now has settled a bit as time has passed without a buyout. I think they are poised to rapidly grow revenues for the next couple years but the uptick in operating expenses this past quarter did concern me a little. Hopefully it was just a raft of one-time expenses. Interested to see how GOMEKLI does in its first partial quarter. I am a little worried the more time that goes by without an acquisition - if you were really excited by that possibility, you may want to consider de-risking by selling half. You are still sitting on a pretty nice gain if I do say so myself. But this is the No Trades portfolio so we continue on at a 10% position…
EOLS 0.00%↑ is a company that at this point I think I have covered to death in my paid articles on here. Definitely subscribe to the paid tier if you care about this company. But I really don’t know what to say…even with a 24+% run in the stock so far this year I think there is much upside ahead. I just have to wait to see if my thesis plays out. The approval of the first differentiated filler products this month was wonderful de-risking news that came sooner than my wildest imagination. Of course, the stock shrugged it off. ☺️ I continue to believe medical aesthetics will be a huge and growing area. I try to ask any woman my age or younger about it under the pretense of market research and it seems many use these products or are interested as a preventative measure. Plus, the last five years have brought on a wave of video calls, higher resolution cameras, and a greater availability of these products. Per the company, there are roughly 30,000 toxin injection providers in the U.S.! Lots of tailwinds.
DCTH 0.00%↑ is a company I haven’t talked much about at all in recent paid content. I’m waiting on earnings to give more information because there hasn’t been a lot of news to discuss. They are up to 15 treating centers now (which they were supposed to be at by the end of 2024) but at least they didn’t miss their guidance by much. Interesting to see during earnings how busy those centers were and when we can expect the next 10-15 centers to come online. Plus, granular guidance on the timing of the CHOPIN trial. Stock price has been coming down a bit so maybe this will get more attention from me in the future…
PODD 0.00%↑ is the one megacap company on the list and it continued to chug along with a solid earnings report on February 20. They are now going to be reliant on international Type 1 Diabetes patients and U.S. Type 2 Diabetes patients in order to continue growing revenues by 20% YoY. At some point the law of large numbers kicks in and it’s going to be hard - but, then again, there are so many U.S. type 2 patients out there using multiple insulin injections and this is really the best product profile on the market for them. Big lift for the sales force who has to learn how to get their message to resonate with primary care providers not just endocrinologists!
VYNE 0.00%↑ is in a holding period until data next quarter but the stock seems to have found a base after a rather sudden drop earlier in the month. The only thing that worries me, aside from a complete data fail, is how the stock will react to the need to finance after successful data. Right now they are sitting at a fully diluted market cap of $100 million or so - can’t really dilute a ton from there and have happy shareholders. But we also have seen partnerships get punished (like STOK) and early stage companies (like SLDB) needing to do financings at pre-data prices just to ensure they have cash runway. A placebo-controlled Phase 2b, if successful, should still move the stock up noticeably but I want to make sure I’m being paid suitably for the risk.
KNSA 0.00%↑ honestly is just kind of a boring company. With no near-term pipeline there is only four things to discuss every year: the Arcalyst revenue numbers. That’s it! The stock is still slightly undervalued here but compared to the screaming bargains elsewhere, I wouldn’t bother including it if I could do this over again. Note to self next year: no boring companies. 💤
CELC 0.00%↑ will become very non-boring extremely soon. Two huge Phase 3s readouts coming. The stock has been down hard the last two days mostly due to weakness in the biotech market and how illiquid it is…but I have to admit I’m nervous to own it in any size ahead of these binary readouts. I think conceptually it should work but that is all based on open-label Phase 1b data and some assumptions. However, again, I do think it will be successful commercially if they can repeat the best of that Phase 1b data in the Phase 3. Could be a really intriguing post-data buy, if it works out. I’m not sure I can recommend it before that though as it’s so risky. I’m actually scared a bit that I included it here and this is a mock portfolio for entertainment and research purposes only. (Required to point that out from time to time, especially in the free content.) I really do hope it works out - could be a tremendous advancement in oncology! I think it’s really weird absolutely no one is talking about this - maybe they think the data will slip again since it’s an event-based study. But if the data slips that means patients are living longer which favors a trial that has many more patients in the active arms than the SoC arms. Safety table will be huge here in determining what future this drug has in the real world…need to watch the Hyperglycemia Grade 3+ adverse events.
SRRK 0.00%↑ continues to move forward and execute but won’t have a catalyst until Q2. I’m interested in their upcoming call to see how they start framing expectations around the add-on study to GLP-1s and also to hear about pre-launch readiness and expectation setting for their SMA medicine which will launch ostensibly in Q4, pending a smooth priority review. Stock is fairly bulletproof as it doesn’t go down much even in the biotech panic - I guess people realize what they have in SMA.
ARQT 0.00%↑ had their earnings call tonight as I write this and the reaction was good! But it should have been BETTER! This was an amazing quarter. I’m writing this in the after-hours session on Tuesday but I’m curious what the trading will be like at Wednesday’s open. By the time you open this email that has likely happened. I think there is a lot of long-term growth to come and only +8% in the AH session is kind of crazy. I realize the biotech tape sucks but this was a home run quarter. More to come in my earnings call recaps coming soon for paid subscribers. (Sorry, gotta put food on the table.) This will make’s March performance update better as well because I listed it at the price it closed at during the regular session. Some lessons here that are the same as Evolus: execution matters, people will pay to look and feel good, always be open to ideas that don’t fit the conventional biotech mold. Everyone thought topicals could never be a blockbuster product. I think across the ZORYVE line they will have blockbuster peak sales if you combine both formulations. Heck, I think the foam alone could be a blockbuster. Huge addressable markets. Safe, once-daily topical product. Why wouldn’t patients at least try it?
EWTX 0.00%↑ is trading at levels as low as it has been since they released Hypertrophic Cardiomyopathy (HCM) data last September. Every data update for this program is crucial as it supports the bulk of the $2.37 billion valuation here but, on the upside, the data is open-label and management seems confident. Three major catalysts remain for the year: two HCM data updates (one in H1 2025 and one in H2 2025) and an update on the regulatory path for Becker Muscular Dystrophy after the Phase 2 data and with their Phase 3 trial reaching full enrollment. Seemingly everyone has given up on the DMD potential now and that’s fine - there is still plenty of upside on the HCM program alone and good data in the Phase 2 28-day readout in oHCM and nHCM would be a major milestone event for the company.
NRIX 0.00%↑ is honestly another boring stock, although one with tantalizing potential as the only pure play in BTK degradation. The problem is they are probably just going to have one major data update this year and it will likely look the same as Beigene’s data which has a program in lockstep with theirs. I’m sorry I picked two boring 2025 companies! I would love for Nurix to give me a reason they can differentiate and a need to add on this weakness because it is beautiful science.
APLS 0.00%↑ is my baby lately but I really hope I don’t look like a fool when earnings come out on Friday. I think you could feel that love shine through in my most recent paid article.
I’m still thinking the geographic atrophy launch shocks people with their eventual peak sales and this is mis-priced for what they’ve accomplished so far. Would sure love to get some color on the regulatory submission for C3G and IC-MPGN on Friday’s earning call, as well. I think once they get a PDUFA data maybe then people will start checking it out? I don’t know.
AVDL 0.00%↑ is a company I kind of gave up on after an extremely rough commercial update to start the year. Still, it’s conservatively valued and they did make a new hire on the commercial side to right the ship. I can’t recommend it to anyone in good conscience but I’ll keep monitoring it for signs of a turnaround. They could probably turn it around and there would still be a buying window because it feels so many people have checked out on this name. This was an unconventional idea that unfortunately has not worked as well as the others. They are under pressure from an activist to sell so maybe this squeaks out a gain by year end. It’s probably a decent M&A target at the first sign of correction of their problems. The technology and patent life seem valuable. The legal battles and inability to understand their patients’ needs so to better keep them on drug has just killed their momentum. I think a sale here actually would be the right move if they could fetch a fair price.
CGEM 0.00%↑…all I can say is, I’m still a believer in CD19 T-Cell engagers for autoimmune disorders. This deserves its own post, it really does. I have until the end of September! I guess I can assume the stock will just keep going down until then? Most of the oncology assets are negative NPV until proven otherwise and they should sell the 50% ownership they have in the exon20 asset to Taiho who owns the other 50%. Management is smart so I hope they realize this. Cut bait from oncology if the autoimmune story works out immediately! If the autoimmune story doesn’t work out, it’s still possibly trading under liquidation value!
Well, I publish every Wednesday but I can’t help but think about this past Sunday when I started the outline for this post: my performance was +9.06% and the XBI was -1.98%. It’s been a rough couple days for biotech. But again, I’m thrilled this mock portfolio is positive! And there was great news this evening with the Arcutis earnings. I hope that positive guidance and commentary continues to other commercial names I follow. As always, thanks for reading whether you are a free or paid subscriber. If you are not a paid subscriber, hopefully I can win you over eventually!
-Matt