My Favorite Biotech Ideas For 2024 (And Portfolio Updates)
Hi all!
Hope you had a wonderful holiday season. Just a quick check-in because I have been busy on Twitter detailing some of my favorite biotech companies for 2024. Lately I have evolved my investing strategy to focus more on commercial names or late-stage clinical names because that’s where I feel the value is at currently.
My favorite commercial stage names are ARQT, AVDL, CHRS, PHAT, and VRNA.
My favorite clinical stage names are ALPN, CGEM, FUSN, GOSS, and LYRA.
I also have two favorite “longshot” (highly risky) names: FULC and GLYC.
I created a tracking sheet with the companies, market capitalization, price on 1/1/24, current price, and investment return for future updates.
In my personal portfolio, I’m consider sizing the longshots at a half position size but for simplicity sake here I’m considering everything equal weight. That way I don’t have to do extra math.
I’ve done this style of tracking spreadsheet before for other portfolios and I have updates on those at the bottom of this post. I think there are some valuable lessons to be learned but I understand reading about someone’s investing epiphanies always come across as a little twee and boring. I’ll keep it short, I promise.
Company-Specific Reading
Before that, though, if you are interested in any of these companies:
My Twitter thread on ARQT is here. (10 tweets.)
My Twitter thread on AVDL is here. (10 tweets.)
My Twitter thread on CHRS is here. (8 tweets.)
My Twitter thread on PHAT is here. (7 tweets.)
My Twitter thread on VRNA is here. (9 tweets.)
My Twitter thread on ALPN is here. (9 tweets.)
My Twitter thread on CGEM is here. (8 tweets.)
My Twitter thread on FUSN is here. (10 tweets.)
My Twitter thread on GOSS is here. (9 tweets.)
My Twitter thread on LYRA is here. (9 tweets.)
My Twitter thread on FULC is here. (9 tweets.)
My Twitter thread on GLYC is here. (8 tweets.)
I also did threads on DCTH and EOLS but I’m less confident in those than I am in these others and I’m trying not to spread myself too thin. Feel free to read those if you want to get up to speed but I’m in watch and wait mode for now.
I could have posted all the text from all the threads into this email but it proved to be way too much. I think clicking on each makes for more palatable reading, personally.
The only downside is it may require having a basic Twitter account, which sucks because you have to support Elon indirectly, but I feel Twitter is still an indispensable resource when it comes to up-to-the-minute Biotech news so just make a burner account if need be.
Update On Previous Portfolio: My Book “Biotech Investing For Massive Growth” published 10/17/22
In the past I’ve done these tracking spreadsheets so I figured end of the year would be a good time to look at the ones from the past and figure out what went right and what went wrong.
First up, I wrote a book in 2022 (still available on Amazon for $10 which I keep $7 if you feel inclined) when biotech first experienced its bear market. I tried to identify some biotech companies with long-term growth potential. The book mostly focused on 14 companies with one chapter for each company. Here’s an update on performance since the publishing date of October 17, 2022:
(Borders around a box means company was acquired.)
I’m happy with the outperformance here, although a lot of it was driven by CBAY, KALV, and AUTL which I did *not* expect. It also shows how a few big winners can overcome some stinkers. I look back and shake my head and ask what I was thinking with EIGR and STSA but I guess it’s all so obvious in hindsight. Still - ugh. I’m surprised ALDX isn’t lower to be honest. I have learned more about LIFE and I’m not as excited about their prospects now but it could still work out at this bargain basement valuation. PNT was a nice acquisition. MIST is having trouble with regulatory submission and even though the data were sold as “good” it seems investors don’t seem to care at all currently.
The final verdict is still to be written on LYRA, TRVI, FULC, VRNA, and RCKT. Obviously, LYRA, FULC and VRNA appear above so I’m still interested in those companies over a year later. TRVI and RCKT I’m less interested now just because I am more excited about other opportunities but those aren’t bad per se. I might circle back on TRVI next year but they move so slow. RCKT is at a premium valuation now and I just prefer investments under $2 billion market capitalization.
Update On Previous Substack Post: “15 Biotech Catalysts I Like Happening In The Next Nine Months” sent out pre-market 9/28/23
This portfolio is barely outperforming the XBI which I personally consider a mild failure so let’s dig in to what happened.
Let’s just start with the losers because that is most cathartic for me. On ACRS, I think was just a case of me trying too hard to make the evidence work when in reality the entire thesis was built around a small 15 patient Phase 2a with barely any placebo patients and some big leaps of faith. The drug was a complete dud. On REPL and AADI both had numerous suspicious delays and goalpost moving from management that I should have been more critical of…it made me so uneasy beyond publication date that I ended up selling before data but I still wrote about them and feel stupid to associate my name with them. So I have to own that and here I do. If companies delay data multiple times to add patients to the sample size or lengthen the duration until the primary endpoint…just sell. Lessons learned, painfully.
CHRS, FUSN, CGEM, GLYC, and LYRA are covered in the 2024 picks so still very interested. PNT was covered in the book update above. FDMT, LBPH, LRMR, and ATXS have data incoming still but they just feel too early compared to the companies I’m interested in now. BBIO is a $7 billion company currently, too rich for my blood. KNSA possibly has more upside ahead but I think I found more exciting opportunities. I might circle back after data in Q1 and assess.
So that’s what I learned thus far and where I’m heading. I feel really good about the 12 companies I’m basing my 2024 investing around. I really encourage you to read the threads on each company and see what you think. This email is only a 6 minute read but the links should keep you entertained for over an hour or so on this New Year’s holiday.
I will update this post a year from now and give my best picks for 2025. You have my word. So long as I am alive, healthy, and not retired. :-)
I’m curious to see where the biotech index heads in 2024. Obviously this end of year rally has been great but I feel I’m set up to outperform no matter which way XBI heads: up, down, or sideways.
Thanks for reading and being subscribed.
All the best,
Matt