Another Biotech Lottery Ticket

Getting In For Less Than The Insiders

Back in July, we bought a lottery ticket on a tiny biotech, based on a post by a scientist-investor whose work I follow.

That one didn’t work out: the catalyst there was an FDA decision, following which the stock ended up plummeting over 80%, and our options on it expired worthless. As I noted in a comment there, that sort of thing happens with early stage biotechs, and guy who came up with the idea seemed sharp, so I planned to give him another shot.

I did just that in the post below.

Sometimes asymmetric bets make sense. https://t.co/YqPKALmJrr

— Portfolio Armor (@PortfolioArmor) August 19, 2023

We made 350% on half of that trade, and 0% on the other half, for a combined gain of 175%. That scientist has a new biotech he likes now.

The New Biotech Lottery Ticket

This company treats a rare genetic disorder called ENPP1 (ectonucleotide pyrophosphatase/phosphodiesterase) deficiency. This condition causes calcium to build up in soft tissues, such as organs and arteries, and not in hard tissue where it belongs (bone). Currently, there are no approved treatments for this condition, but this biotech company’s treatment has worked well in both animal and human trials so far, and is scheduled to complete its Phase 2 trial this month. That may not be a major catalyst, but more data is expected in Q1 of next year.

Insiders Have Been Buying

Checking Chartmill for recent insider transactions, we find this.

Not only have insiders been buying, those open market purchases at the end of July were at prices ~20% higher than where the stock is now.

Our trade is going to be a bet on this biotech trading higher in the Q1 of next year, by which time more clinical data and two earnings reports should be priced in to the stock. If you'd like a heads up when we place that trade (depending on market conditions, possibly as soon as today), feel free to subscribe to our trading Substack/occasional email list below. 

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