The Life Sciences Report: Steve, you are a co-organizer of the annual AlphaNorth Capital Conference, which is attended by about 40 small-cap companies and major investors. How do you select the companies you invite?
Steve Palmer: We like to have some diversification among the companies that are there. It's a non-resource conference. We didn't want it to turn into a cannabis show or a crypto conference or anything like that. We tried to select some of the better companies from each category and have a wide variety at the conference. One of the key things I look for in an investment is a company that has something that is proprietary and a strong growth profile.
TLSR: Do you focus exclusively on Canadian equities?
SP: Mostly Canadian. There are several thousand junior Canadian companies, so there are more than enough opportunities to pick from on the Canadian side. We do have a couple U.S.-listed companies in the portfolios. We don't go looking for companies in other countries, but if opportunities are presented that make sense, we don't exclude those.
TLSR: Would you tell us about a couple of the companies that you're really excited about?
"3D Signatures' timeline to have a commercial product is much shorter than a traditional biotech company developing a new drug."
SP: 3D Signatures Inc. (DXD:TSX.V; TDSGF:OTCQB; 3D0:FSE) is one. It has a platform technology that looks at a component of a person's DNA and is potentially able to predict the outcome of various medical treatments. It just announced some results from a Hodgkin's lymphoma study. It has also done work on prostate cancer, Alzheimer's, etc.
I think it's relatively low risk. On the previous work that it has done, it has shown very strong results and predictive ability. It is currently doing a much larger confirmatory trial in Hodgkin's lymphoma. I like the fact that it's a platform. It has applications for various diseases and medical conditions. The timeline to have a commercial product is much shorter than a traditional biotech company developing a new drug.
TLSR: What is another company you like?
SP: Another one on the healthcare side is Antibe Therapeutics Inc. (ATE:TSX.V; ATBPG:OTCQX), which is developing a pain medication. It's doing a Phase 2 trial right now which will hopefully demonstrate equivalent or better efficacy but with greatly reduced negative side effects. The results are expected on that within several weeks.
I like 3D Signatures and Antibe because they each have a short-term potential catalyst that we view as having relatively high odds of success.
The pain market is huge. There's a lot of talk in the press about opioid use, etc. The existing drugs for osteoarthritis cause a high frequency of stomach ulcers and other side effects such as high blood pressure. Antibe is trying to show that its product has many fewer side effects but the same or better efficacy.
The company also owns a subsidiary that sells products for bone grafts in the dental area. Those products are expected to do roughly $10 million this year in revenue. So it's good that it has a base business. It's not an all-or-nothing-type situation like many biotech companies.
TLSR: Would you tell us about one more company?
SP: There's a company called ClearBlue Technologies Inc. that's going public shortly. It recently had a very good response by investors at our conference. It has products for what it calls smart off-grid solutions. It uses solar and wind energy to manage things like streetlights and security and broadcast Internet, etc. It has revenue, which is expected to more than double in 2018 from around $4 million in 2017. it's a high-growth business. It is the leader in the space. It has a huge sales funnel. I really like the CEO, Miriam Tuerk. She used to be in a senior role at BCE Emergis. I'm pretty excited about the prospects for that company.
The company is in the process of doing a reverse takeover. The shares should be trading in March on the TSX Venture exchange.
TLSR: Thanks, Steve, for sharing these with us.
The AlphaNorth Capital Conference is one of seven annual conferences produced by Vancouver-based Capital Event Management (CEM); the conference mandate is to connect capital with opportunity. In addition to the AlphaNorth Bahamas event, CEM conferences include stops in Whistler, BC; Scottsdale, AZ; Montreal, QC; Kelowna, BC; Muskoka, ON and Palm Beach, FL. In each case issuers from all sectors meet and establish relationships with top investors in the field, leading to financings and after market support. Full details at www.capitalevent.ca.
Steve Palmer is a founding partner, president and chief investment officer of AlphaNorth Asset Management and currently manages the award-winning AlphaNorth Partners Fund, AlphaNorth Growth Fund and AlphaNorth Resource Fund. Prior to founding AlphaNorth in 2007, Palmer was employed as vice president at one of the world's largest financial institutions, where he managed equity assets of approximately CA$350M. Palmer managed a pooled fund, which focused on Canadian small-capitalization companies, from its inception to August 2007, achieving returns of 35.8% annualized over a nine-year period, which ranked it No. 1 in performance by a major fund ranking service in its small-cap, pooled-fund category. Palmer earned a bachelor's degree in economics from the University of Western Ontario and is a Chartered Financial Analyst.
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1) Patrice Fusillo conducted this interview for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
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3) Steve Palmer: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I, or members of my immediate household or family, are paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this interview: None. AlphaNorth funds hold shares of the following companies mentioned in this article: All. I determined which companies would be included in this article based on my research and understanding of the sector. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
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