Asset manager Chen Lin’s picks for 2022’s last quarter include a whole stable of biotechs with some precious metals thrown in.
He cashed out of one position and doubled down on some others.
According to Zacks research, the biomedical and genetics industry has underperformed the S&P 500 Index and the medical sector so far in 2022, having declined 28.9% compared to 25% for both the medical sector and S&P.
But there is hope on the horizon. The sector carries a current Zacks industry rank of 77, which puts it in the top 31% of more than 251 industries Zacks tracks.
Biotech “bottomed around mid-year,” Chen said. “Now it is starting to rebound. I had a good year in biotech. I see continuing rebounds of my biotechs in the coming years.”
Tricida, Inc. (TCDA:NASDAQ) is developing Veverimer, which is designed to treat metabolic acidosis in patients with chronic kidney disease. It’s a return from Q3 on Chen’s list.
The U.S. Food and Drug Administration (FDA) did not approve the drug in 2020, but the company is awaiting the outcome of a new trial which will be “the most important data readout in its history,” Chen said.
“The chance of positive data (in the trial) is extremely high, in my opinion,” Chen said. “With the positive data, TCDA can file for approval next year. The stock has at least a 10-fold upside after approval.”
Top shareholders in the company include OrbiMed Advisors LLC at 18.47%, VR Adivser LLC at 17.14%, Sibling Capital Ventures LLC at 11.54%, and Steven A. Cohen at 5.9%, according to Reuters.
Tricida’s market cap is US$659.68 million, with 55.7 million shares outstanding, 51 million of them free-floating. It trades in a 52-week range of US$13.85 and US$4.10.
Another returning pick for Chen is Amyris, Inc. (AMRS:NASDAQ), a synthetic biotech company that “programs” cells to create sustainable ingredients.
The company has begun production at its new precision sugar fermentation plant in Brazil.
The plant consists of five precision fermentation “mini-factories” that can produce 13 of Amyris’ molecules, which are used in everything from health and beauty products to flavors and fragrances.
Amyris is a frontrunner for US$1 billion the U.S. Department of Defense will be investing in the bioindustrial domestic manufacturing infrastructure over the next five years.
It’s part of the US$2 billion the U.S. government plans to spend to boost biomanufacturing under an executive order announced last month.
“The decision could come in the next couple of months,” Chen said. “In addition, AMRS’ own lines of business are on fire . . . 2023 should be the year they turn cash positive.”
Amyris’ top shareholders include Foris Ventures LLC at 22.86%, Farallon Capital Management LLC at 6.56%, The Vanguard Group Inc. at 5.9%, Koninklijke DSM NV at 5.16%, and BlackRock Institutional Trust Co. N.A. who holds 3.68%.
Its market cap is US$846.26 million, and it has 323.4 million shares outstanding, 227.6 million of them free-floating. It trades in a 52-week range of US$15.12 and US$1.47.
A new pick for Chen is Synaptogenix Inc. (SNPX:NASDAQ), a biopharmaceutical company developing Bryostatin-1 for Alzheimer’s disease.
The company is just about to report data from its Phase 2 trials, which were partially funded by the National Institutes of Health.
“This trial, if successful, would open up a brand new approach to reverse Alzheimer's,” Chen said.
The stock is a “very high-risk play,” he said, but he owns “a small position here as a lottery ticket.”
Top shareholders include Intracoastal Capital LLC at 7.17%, Alpha Capital Aktiengesellschaft at 4.41%, George Weaver Haywood at 3.44%, The Vanguard Group at 3.17%, and Ikarian Capital LLC at 1.77%.
The company’s market cap is US$48.23 million, with 6.84 million shares outstanding, 5.76 million of them free-floating. It trades in a 52-week range of US$14.50 and US$3.79.
GoGold Resources Inc.
GoGold Resources Inc. (GGD:TSX) is a Nova Scotia-based silver and gold producer operating in Mexico. It operates the Parral Tailings mine in the state of Chihuahua and has the Los Ricos South and Los Ricos North exploration projects in the state of Jalisco.
Chen said he took advantage of a big dip in its price recently to load up on his position.
“GGD has . . . cash, a silver-producing mine, and a new discovery,” he said. “It looks very undervalued.”
Ownership includes Bradley H. Langille with 5.22%, Van Eck Associates Corp. with 4.41%, Franklin Advisers Inc. with 4.35%, Sprott Asset Management LP with 3.1%, and Mirae Asset Global Investments (USA) LLC with 2.7%.
It has a market cap of CA$461.3 million, with 295.6 million shares outstanding, 275.2 million of them free-floating. It trades in a 52-week range of CA$3.79 and CA$1.37.
He said he also likes other silver producers such as Guanajuato Silver Co. (OTCMKTS:GSVRF; TSX.V:GSVR) and Silver X Mining Corp. (AGX:TSX.V).
Chen Lin strongly recommends that investors load up on silver and silver miners for the coming tax loss selling season.
Axsome Therapeutics Inc.
Last quarter, Chen doubled down his top pick from Q2, Axsome Therapeutics Inc. (AXSM:NASDAQ), a biopharmaceutical company that focuses on therapies for central nervous system conditions.
The company had been waiting on decisions from the FDA on drug candidates for major depressive disorder and migraine.
The FDA has approved the major depressive disorder drug, Auvelity, and Chen said he sold out his position when it was at about US$70.
Axsome’s top shareholders include Antecip Capital LLC at 18.22%, The Vanguard Group Inc. at 6.95%, BlackRock Institutional Trust Co. N.A. at 4.99%, RTW Investments LP at 4.02%, and PFM Health Sciences LP at 3.38%.
It has a market cap of US$1.95 billion with 40.3 million shares outstanding, 32.3 million of them free-floating. It trades in a 52-week range of US$71.98 and US$20.63.
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