My Top 10 Ideas As Of End of September 2024
Disclaimer: Not investment advice. Do your own research. For informational purposes only. I reserve the right to change positions after publishing as events change.
A day late, a dollar short! I panicked two nights ago realizing I hadn’t started this post yet. But here I am, sticking with the only recurring feature I have for the ninth straight month even if I published it one day later than usual.
I truly do want to write more and have more to say but I haven’t found the time yet. With earnings call season coming up in roughly three weeks I will at least be able to do my novel-length post summarizing earnings season with my reaction to the calls so that’s good. :-)
In the meantime here’s a list of things of online webcast presentations I watched in the last month that I liked - as of this writing I believe they are still online (but act quickly before they get taken down!):
KNSA at Wells Fargo Investment Conference, 9/4/2024
ARQT at Morgan Stanley Investment Conference, 9/5/2024
EOLS Investor Day, 9/12/2024 (Must watch if interested in story, even if long)
VYNE at Stifel Immunology Day, 9/17/2024
EWTX Data Call, 9/18/2024 (I assume any EWTX investor watched but just sayin’!)
PODD at Baird Investment Conference, 9/30/2024
Top 10 Holdings, By Position Size
Position sizes accurate as of market close 9/30/2024.
Evolus (EOLS)
Arcutis (ARQT)
scPharmaceuticals (SCPH)
Edgewise Therapeutics (EWTX)
Kiniksa Pharmaceuticals (KNSA)
Delcath (DCTH)
Insulet (PODD)
Nurix (NRIX)
Celcuity (CELC)
Perspective Therapeutics (CATX)
Other Stocks Of Interest: VYNE, CGEM, CMRX, JSPR, MDWD, AVDL, PLRX, SLN, TRVI.
This Simpsons moment accurately describe a mixed September for me. On the bad side, Corbus and Fulcrum from last month had pretty spectacular failures and even though I had cut my position by more than half before each data set (and I knew the data would be extremely binary) it still kinda sucked, I can’t lie.
On the good side, Edgewise continues to execute exactly as they said they would and that stock was up ~50% on excellent (but very early) oHCM data. Also I realized very early that rough tolerability data from CLDX would harm JSPR in the near term and I was able to dump nearly all my position at a nice profit before it took an intraday nose dive.
But still - CRBP and FULC are stuck in my mind. I asked myself why even take binary risk? Especially because I feel certain commercial names are so undervalued. And that’s why 6 of my top 7 names are commercial-stage biotechs.
Although, I do think SCPH is going to be demoted to the bottom half of the Top 10 because that stock just hasn’t been working at all for me lately and they really a need “show me” revenue number on the next call to turn the narrative. Until then it probably drifts down but that reversal could happen as soon as four weeks from now. (I obviously hope it does - I think anything over $11m in quarterly revenue would be a great sign and is very achievable from past management commentary. Let’s see if they are trustworthy.)
Also, DCTH might get a slight demotion in the rankings if they can’t get some more centers activated in the near term, I think investors are somewhat losing their patience there and until they hit $10 million/quarter of domestic revenue I don’t think there will be an incremental buyer. And for stocks to go up you do need an incremental buyer! I still like the company a lot: it seems the results in the real world meet or exceed the clinical trial data, I think any competitive threat from emerging therapies is overblown, and think there is a chance to show real synergy and survival benefit combined with immunotherapy. But getting new sites activated is apparently extremely complicated and you do need new sites to grow revenue!
KNSA is added this month because I got multiple DMs about them and even with the 50/50 profit split with REGN I think I underestimated their TAM, lack of competition, and IP strength in the past. I wish it was a tad bit cheaper but still think it will outperform if they can really find 14,000 RP patients at peak. (The annual cost is over $250,000 and the LoE is likely 2038 so even with the 50/50 profit split pretty easy to make the numbers work at a $1.75b valuation.)
On PODD I recognize my own biases because the product has been so good for my son and I acknowledge the market cap is already pretty large especially compared to every other company on the list. But also - the insulin pump market is about to get really large IMO based solely on Omnipod essentially innovating the “patch pump” market. Their infrastructure and value proposition is amazing. They are 3 to 5 years ahead of the competition. Approval in U.S. Type 2 patients is transformative and there are so many T1D patients globally to be tapped as well. They are able to get very strong pricing due to the outcomes they deliver. I continue to believe they can grow at a 30%+ revenue clip going forward for many years. The numbers get pretty wild - aside from R&D to maintain their lead I have no idea how they will spend the money aside from shareholder distribution. (Buyback now, please!) Also why would this not continue to demand a 30 P/E ratio if they grow the top line at 30%? That’s obviously not the company’s official guidance but there are 11 million+ eligible patients globally. The U.S. list price is $7,381 per year. Globally blended net price will be less but the TAM is insane. And the product is more like a consumer electronics product rather than a medical technology product. There is tremendous user trust and lock-in to the “Omnipod” brand. I say all this to justify owning a company that is over 10x larger than any other company on the list!
Also, while it deserves its own standalone post, I thought the AMGN data was relatively bullish for CGEM. Too long to explain why but I also realize the popular narrative being spread by fund managers with a bigger platform than me is the exact opposite so I’m not going to try to swim upstream/fight gravity/insert your analogy of choosing. I do think CGEM is a buy before they have any company-sponsored data but when will that be? Late 2025? They haven’t committed. It’s probably dead money until then? So I just hold an extremely minuscule position while I wait. But did want to add that for posterity sake. Thankfully, they have a lot of cash. I wouldn’t mind if they sold all the oncology assets at this point. Burn the boats, go all in on autoimmune disorders. The exon20 program is fine but if they can sell their remaining 50% ownership for a couple hundred million I say do it. Not that they care about my opinion.
Looking ahead: I expect VYNE will enter the Top 10 next month. Possibly JSPR if their safety data looks better than CLDX I could see people rushing back in that one as fast as they rushed out. Perhaps AVDL if they ever get good news on the litigation front. Maybe TRVI in a few months if they get good news on their Human Abuse Potential study and their IPF cough study does need to be sample sized up on the interim look. I’m not sure if CELC will stay in the Top 10 because I’m so adverse to binary readouts and everything we know about their drug is based on single arm studies but the upside is ridiculously high if it works well so I’m a little bit torn there.
And that’s where my head is at. Sorry to anyone who emailed or DM’d in the last month and I haven’t responded promptly. I will get back to you. I have been focused on dealing with health issues for myself and my son so haven’t really been as focused on my work as I wish I could. Also it’s been hot as hell in Arizona (it was over 100 degrees for 100 straight days) and I think it’s really affecting my mood and happiness. So on a side note, if any readers live in Los Angeles and want to give me their honest feedback on it, I’m open to connecting. :-)
Thanks for reading to the very end,
Matt