Strategy so far is:

• obvious low-risk swing trades (e.g. APLT, LSTA, TECX- the latter I regret closing too early. I was hoping to get back cheaper but missed my chance to rebuy when it dipped back to around $18.5)

• own nano/small caps that had not participated in the rally + trading considerably below cash + promising pipeline + cash runway through next milestones ($ANTX a very good example- still own, other good trades ZNTL, FATE)(I have high hopes for BOLD, and hopefully NVNO, PLRX, KPRX too)

• buy/average-up when thesis strengthens (e.g. buying IPCS after funding news- position up +70% already despite the rally before buying)(added CADL on funding news, added SLDB on good offering- not sure how these too will do short term- both risky)

• I own a few degraders (I like the field) companies that I feel are still cheap ($CCCC, $PRLD, $NRIX and hoping to get back into $FHTX, $ARVN)(note that BOLD lead asset is also a degrader)

• Buy unreasonable dips (e.g. re-started a position in CRMD, ESPR, BHVN, SGMT). Not the best examples, as those are not as high conviction as the rest. All small positions and will probably average down eventually. I have been quite busy lately (so not much time to monitor recent dips in biotech)

• Avoid unecessary risks/gamble. I am still working on this (e.g. see bad GUTS and MNKD trades + and I probably shouldn’t own VTGN and EVAX right now) but big progress vs past habbits.

• Avoid chasing/ buying too early. Sometimes it makes sense to chase a running stock (see IPSC example above). But generally unless I am very confident on the thesis I now avoid this. I may let some run away but often I will get a chance to buy much cheaper. Always many opportunities in biotech (lack of time is the problem and being patient and selective-enough).

• have a decent cash position for new opportunities. I am trying to keep around 30%, but cash position keeps getting smaller %-wise as portfolio gains. Hopefully, I will raise some more if upcoming binaries work out.

• Sth I need to improve: Don’t sell too early when the thesis and upside remain strong. Sometimes I will lock-in profits early, hoping to get back cheaper. But this results in missing big opportunities (good examples are AMLX and TECX. both companies I have spent time on dd and liked but sold too early hoping to re-enter cheaper).

Of course performance in such a short time frame means nth (which is why I am not sharing actual performance numbers). I try to not get overconfident and give gains back quickly (I have done this mistake often). Portfolio hasn’t been through any binaries yet (which could easily result in big losses- hence positions are sized accordingly). Important binaries to expect:

• DMN ph3 interim readout by end of March

• SGNX interim in Q2

• QNRX progress in enrolment and topline by end of year

• DTIL (update in HBV program)

• AVIR ph3 readouts (I wouldn’t call it a “binary”. I think a positive outcome is already expected by market. Question is what happens next? Acquisition? Partnership? Risky commercialization by AVIR?)

• CADL updated data from prostate trial and FDA submission

Lots of things can go wrong in very unpredictable ways:

• macro or

• company-specific, e.g.

  • unexpected AEs,

  • unexpected delays

  • better data from competitors,

  • regulatory uncertainty (maybe better now with VP gone)

  • unexpected bad offerings

Introduction

When I first started investing I struggled deciding when it is a good time to buy a stock and when it is a good time to sell, either to lock in profits or to avoid further losses. The latter is especially important. It is very easy to make the mistake to keep adding to a losing position just to make up some of the losses. But averaging down makes sense only when the thesis remains intact. A stock going down should at the least make you revisit your thesis. Conversly, it may be a good idea to average up when a thesis strengthens and warrants further upside.

As they say “Let winners run and cut losers short“

Don’t follow blindly!

In my main introductory article on this substack I warn about something very important: “it is generally a bad idea to blindly follow without doing your own dd and understanding why you own a stock.” I know from personal experience. As an early investor I tried several strategies, including subscribing to paid services (e.g. in Seeking Alpha) to follow the experts. This didn’t work out well for me as I didn’t know how to manage my position (how to size, when to add, when to close the position, what catalysts to monitor and how to quickly react to news). Maybe the service I tried wasn’t the best (at least for early investors like me), but my point is that if you blindly own a stock you don’t understand you don’t know how to handle the position and you can’t react timely to news.

In my opinion the best use of such services is to exchange ideas and learn.

Have a thesis and a plan

You need to understand why you own a stock. For pre-commercial biotech (my typical choice) some important considerations (not an exhaustive list) are:

• Does the company have a good asset:

  • Does it address an unmet need?

  • What are the advantages vs current standard of care and competition under development. Often you see companies reporting “positive” results and then stock is going down, simply because results are not competitive and/or commercially attractive (see GUTS recent example) . Consider:

    • Efficacy

    • Safety

    • Convinience of administration (dosing frequency) and route of administration)

  • Is the Intellectual Property sufficient?

• What is the target market?

  • How many patients are estimated to be eligible for this treatment?

  • How many are estimated to actually be prescribed and take the treatment?

  • What is the treatment duration?

  • What is the estimated pricing (consider pricing of other products for same/similar indication, costs savings associated with the treatment, health benefits associated with the treatment)?

• Does the company have a good platform (this means potential to expand to multiple indications)?

• What are the catalysts you should monitor? e.g.

  • Study readouts. Monitoring readouts from competition is also very important!

  • Regulatory pathway clarifications

  • Outcome of submissions to FDA (or other regulatory body)

  • Cash raise

  • Partnership news/ milestones from partnered programs

• Can management deliver? Some red flags:

  • Repeated, distressed bad cash raises

  • Trial failures due to inappropriate design and/or inappropriate monitoring (e.g. see BIVI and APLT)

  • Selective reporting (emphasizing positive results, while at the same time hiding negative results)

  • Post-hoc analyses to salvage failed trials

  • Overemphasizing market potential (seeing a nano-cap claiming a multi-billion $ target market for their pipeline is ridiculous)

  • Repeated meaningless PRs, often recycling prior news and often followed by bad offerings.

• What is the timeline and stage of clinical development?

  • Preclinical data very often look great. But when you move to the clinic most often data are much worse. This is why I generally avoid preclinical biotechs with no clinical data, unless the mechanism of action, disease pathophysiology and available data are too convincing, and likely predictive of success in the clinic.

  • What is the timeline for reaching the clinic? Drug development can take several years. In the meantime pre-commercial biotechs will need to raise cash several times

  • What is the company’s plan?

    • Sell/partner assets: This is the safest approach, as establishing a commercial infrastructure and successful launch are very costly and risky.

    • Commercialize alone: This increases the risk. But if succesfully done it may result in much higher upside

• Does the company have enough cash runway to get through value-creating catalysts? Betting that cash will come just because the pipeline seems good often doesn’t work out. I have done this mistake too many times. A copmany running out of cash within 1-2 quarters is often forced to bad deals.

• Is further upside justifiably based on above factors and current valuation?

The TECX example

Tectonic Therapeutic’s lead asset is TX45, an Fc-relaxin fusion with glycocalyx engineering aiming to considerably improve pharmacokinetics/pharmacodynamics vs competition (e.g. LLY and AZN).

I owned TECX because:

• There is no good treatment for group 2 pulmonary hypertension and there is limited late-stage competition in development. So it adresses an unmet need.

• The commercial potential is large (>1$Β)

• The product is differentiated (see pk/pd advantages) enough and has delivered positive proof-of-concept hemodynamic data in early trials.

• There is potential to expand TX45 to additional blockbuster indications

• TECX has a promising discovery platform

• TECX is co-founded by Timothy Springer (e.g. see Moderna co-founder)

• Major readout from ph2 is expected this year

• Cash runway into Q4 2028

I also knew that AZN was evaluating an Fc-relaxin fusion asset. So an important catalyst to monitor was the outcome of AZN’s trial. I knew that if something went wrong with AZN’s trial TECX stock price would react badly. I knew because the exact same thing has happend already 2 times on bad news from LLY. Every time stock has rebounded from the dip, so the plan was to buy such a dip.

So here’s what happened. I learned that AZN is discnontinuing their trial due to lack of efficacy. I was lucky enough to get the news early which gave me the chance to close my position at decent profit at $23 during overnight trading. Knowing what would happened next I also shorted the stock ($23—> $18.8) and then bought the dip ($15.5 average to $20.7). The latter 2 swing trades alone contribuded +2% to the portfolio within a few hours. Selling at $20.7 may prove to be a mistake (given my bullish long-term view of the stock) but based on the way the stock has traded in the past, potential further correction in XBI and unclear timing for ph2 readout I hope for another chance to get back in TECX cheaper.

Note that most part of above trading activity happened during overnight and premarket hours. As emphasized in my introductory article “I often trade outside market hours (overnight, premarket, afterhours)”. This is very useful for the type of stocks I am trading. So keep this in mind when following my trades.

I will start with an example. When I first invested in CDTX (Cidara Therapeutics) market cap was around $50M if I recall correctly. I knew since then CDTX would eventually reach a multi-$B valuation. And I was right. Merck acquired CDTX for $9.2B. So I naively thought the upside potential was >100x! But my upside was just around 15x. What did I miss? DILUTION of course!

Early stage biotechs need cash to advance their pipeline. And without any commercial assets sources of cash are:

• Dilutive:

  • Public offerings

  • Private placements

  • ATMs

• Non-dilutive:

  • Upfront payments/milestones through partnerships

  • Government funding

  • Debt

    • Convertible debt can be dilutive

“Dilutive” means new shares are being issued!! So your ownership gets diluted and upside potential too!

Note that “non-dilutive” (no new shares) cash, like debt, can also affect the valuation of a stock and upside potential!

How to calculate dilution?

This is a part I surprisingly struggled to grasp at first. I was naively trying to understand what the effect of dilution is on the stock price (taking into account pricing of new shares).

But it is simple. Just look at how many shares are being issued vs shares outstanding before that.

A simplified example:

• IPSC had 87,405,311 shares before a private placement

• 92,030,595 common shares were issued at the placement

This means share count increased by +105%. In other words shares almost doubled, i.e market cap doubles (assuming same stock price), which directly affects future upside potential.

Of course you need to take account other sources of dilutions, like preferred shares, prefunded warrants, other warrants, options etc, and estimate the fully-diluted share count. I suggest taking a look at my other article for this and specific example on IPSC.

So what is the effect of dilution on stock price?

Dilution is NOT always bad! See IPSC example. A good cash raise can cause an increase in stock price. A bad cash raise the opposite.

Some simple (oversimplified) rules:

• New shares pricing at a premium to stock price = Good

• No warrants = Good

• Pricing of stocks/warrants at a discount = Bad

• Bad warrants’ terms (more on that in another article) = Bad

• Repeated small offerings/placements extending runway by 1-2 quarters = Bad

• Large offering/placement meaningfully extending cash runway to big catalysts or profitability = Good

• Is there still upside potential in stock value taking into account fully diluted share count?

Context matters a lot. Good cash raises usually follow good news (e.g. positive readout significantly de-risking further development of an asset). A bad cash raise following a “positive” readout usually means something is wrong.

Dilution is inevitable in early biotech.
What matters is whether it funds value creation — or just delays failure.

Market cap is reported based on currently outstanding common shares ! True upside depends on the fully diluted share structure, not just current shares outstanding. So the goal is to estimate the fully diluted share count under realistic scenarios.

So what to look for:

• Core equity

  • Outstanding common shares

  • Shares issuable from preferred stock (as-converted)

• Near-certain dilution

  • Pre-funded warrants

  • In-the-money warrants

  • Shares from recent PIPEs / direct offerings not yet settled

• Structural / event-driven dilution

  • Convertible debt

  • ATMs (active shelf programs)

  • Earnout shares / milestone shares

  Compensation dilution

  • Options

  • RSUs

  • ESPP

Where to find these info:

• Start at the last 10Q/K

• Then review the recent:

  • S-1 / S-3

  • 424B5 prospectus

  • 8-K announcing financing

Financing filings usually include: pro-forma share counts, warrant terms, option/RSU totals pre- and post-offering.

LLMs (e.g. ChatGPT, Gemini) can help quickly summarize filings, but they’re frequently wrong on recent financings or complex warrant structures — always verify in the primary documents.

In my notes/posts I often have an “Equity structure” section.

Also check another relevant article:

enVVeno Medical ($NVNO) is developing enVVe, a next-generation, non-surgical, transcatheter-based replacement venous valve for the treatment of chronic venous insufficiency (CVI). NVNO is currently trading at a market cap of just ~$7M with a guided runway into 2027. The reason NVNO is trading this low is recent FDA rejection of its lead product, VenoValve, a surgically-placed replacement venous valve, with no meaningful regulatory path forward. Nevertheless, in my opinion, the real value of NVNO has always been in enVVe. Despite market pessimism and need to raise cash to further develop enVVe I believe current valuation of NVNO represents a good buying opportunity.

Main risks in my thesis are a bad cash raise and eventual enVVe failure. However, I believe that available data justify a long investment thesis in NVNO, which should help ensure a decent cash raise. As always, invest only what you can afford to lose.

CVI and prior venous valve replacement attempts

The rationale for restoring a functional venous valve is well-explained in a recent publication (check 1st image in that publication for a nice illustration of the pathophysiology): "Venous valves ensure the correct blood flow direction in the lower limbs. Venous valves are present in the venous system of the lower limbs, which open in response to the blood pressure gradient provided by the calf muscles and the heart and close to prevent venous reflux. Thus, a unidirectional physiologic direction of blood flow is maintained, from the superficial veins to the deep veins and from the distal to the proximal of the heart… Patients with CVI often exhibit varying degrees of lower extremity venous valve insufficiency: (1) relative valve closure insufficiency due to venous lumen dilatation; (2) short valves or agenesis; and (3) decreased valve flexibility. Venous reflux and hypertension are caused by valve insufficiency, which in turn causes luminal dilatation and decreases valvular elasticity. As a result of this vicious cycle, valve function declines over time and produces a variety of CVI clinical symptoms."

Therefore, aiming to restore functional venous valve seems like a very reasonable approach to treat CVI. Various approaches have been tried (reviewed in above-mentioned publication: replacement with autologous femoral or axillary veins, allogeneic venous valves, and prosthetic venous valves. Surgical approaches are complex and with adverse effects. Furthermore, practical difficulties limit the potential of allogeneic approaches (scarce donor source, preservation difficulty, rejection responses, and low patency rates). Therefore, a transcatheter approach (such as enVVe) would be ideal.

Initial attempts of prosthetic venous valves have failed due to low biocompatibility, resulting in thrombosis and endothelial proliferation. Thus long-term patency has been an issue. With progress in materials used this no longer seems to be a major issue. Another issue is that blood flow turbulence and stagnation in the “dead” spaces behind the valve leaflets may increase risk for thrombosis long-term. New designs take this into account. Although a bileaflet valve design seems to be preferred, enVVe has a single-leaflet design. Considering prior failures with bileaflet valves, enVVe may be right. Single-leaflet desing has manufacturing advantages, prevents sticking of the valve to the side wall (see Cook Medical below) and may even have hemodynamic advantages with regards to thrombosis risk (see enVVe patent).

Most notable recent failures

A major failure, that probably weighs negatively against NVNO, is failure of a transcatheter venous valve replacement by Cook Medical, a successful medical device company much larger than NVNO. Cook Medical started a trial in April 2023 which was prematurely discontinued after enrolling only 4 patients due to lack of correlation between valve function and observed clinical improvement. As explained by the CEO “patients were reporting that they were feeling better” but “duration of their improvement significantly outlasted the functioning of the valves”. Specifically, based on a recent presentation in VEITH symposium, valve leaflets were “fixed to the side wall”. In other words the valve was stuck open and was not functioning. This means 2 things:

1. The valve failed mechanically. Specifically, functionality of the valves was not preserved after placement because the leaflets of the valve got stuck to the side of the wall. Notably, enVVe’s monocupsid design (see paragraph 0039 in patent link) prevents this issue.

2. Observed clinical benefit could not be attributed to the valve. Potential explanations for the observed benefit is the well-known placebo effect and the “study effect”. The latter means that patients enrolled in a trial may get better care, and thus observed improvement is attributable to better care rather than to the intervention.

The 2nd point makes it clear why FDA has rejected NVNO’s application for VenoValve. Beyond safety risks (topical complications associated with the surgical procedure) there was no way to prove that the observed clinical benefit was attributable to the valve. Of note, the stainless-steel frame of VenoValve made imaging of blood flow through the valve impossible. Thus there was no path forward for NVNO to prove that observed clinical benefit in VenoValve-treated patients was attributable to the valve rather than better standard of care in trial participants.

Another approach was Intervene’s Blue Leaf System. Similar to VenoVavle (albeit for different reasons) it was not possible to measure the hemodynamic impact of the valve. Thus there was no regulatory path forward.

The regulatory pathway forward

In contrast to pharmaceutical products trials, a placebo-controlled trial is not possible when it comes to medical devices. A sham-controlled trial is an alternative, but likely not feasible/unethical in case of surgical procedures (like VenoValve). A sham-controlled trial also likely doesn’t make sense for enVVe either, as inserting a sham-device would be unethical. An alternative would be to do the procedure (which is simple) but not insert the device. However, it would be impossible to ensure blinding as it is easy to confirm whether a valve has been placed with imaging .

Therefore the only reasonable path forward is a trial that demonstrates correlation of clinical improvement with valve function. In contrast to VenoValve (stainless-steel frame made valve function assessment impossible) the acoustic transparency of enVVe allows ultrasound assessment of valve function. More details on the regulatory pathway should be made public soon.

Why Envve may succeed despite prior failures

• The Transcatheter Advantage: enVVe is delivered percutaneously. This eliminates the surgical incision entirely, thereby removing the primary source of Adverse Events (AEs) cited by the FDA for VenoValve

• Hemodynamic transparency: In contrast to VenoValve, the acoustic transparency of enVVe allows evaluation of the valve function. Proving the valve works (in combination with improved clinical outcomes) is the missing piece for regulatory approval. What halted notable recent attempts was either inability to evaluate valve function (VenoValve, BlueLeaf) or a non-working valve (Cook Medical valve leaflets were stuck open).

Note that proof-of-concept data for enVVe are expected as early as late 2026.

Financials

NVNO ended September 2025 with $31.5 million in cash and investments. Considering a quarterly cash burn of $4 to $5 million a quarter the company has reasonably guided a runway into 2027. This should be sufficient to deliver first-in-human data for enVVe but a cash raise before that is highly likely.

Importantly, there is no debt overhang or large warrant liability.

Risks factors

The major short-term risk is that NVNO needs cash to run a pivotal trial for enVVe. Although, as explained in detail above, I believe there are good reasons to invest in enVVe, a bad cash raise is a big risks. Management may fail to convince investors of enVVe potential, or I may have missed something in my research on the topic. In my opinion, NVNO should be able to do a decent cash raise following initial proof-of-concept data, which should be available within current cash runway.

Longer term risks are the following:

• Chronic venous insufficiency is complex. As Cook Medical CEO has stated “part of the struggle with this trial was that it was hard to find patients with singular pathologies with venous valve malfunction. Identifying the target population was much more difficult than expected. Most patients with venous disease have multiple comorbidities confounding the clinical benefit of an implantable venous valve, thereby limiting the target patient population. We realized that venous disease was far more complex than what a valve alone can fix, and we couldn’t enlarge the scope of the trial to cover it all”. Nevertheless, what went wrong with Cook Medical’s device is that the valve failed (leaflets stuck open at follow up). Therefore, I don’t believe that failure of Cook Medical disproves potential benefit from a functional valve.

• Long-term functionality and safety of enVVe will have to be demonstrated.

Conclusion

I think market pessimism against NVNO (and as a result the nano-cap valuation) is unjustified. Although NVNO will need to raise cash, there are good reasons why enVVe may work out great. NVNO will soon share more details on business plans and the regulatory pathway. Furthermore, first in-human data should be available within cash runway, although I wouldn’t rule out an offering before this. Clarity on the regulatory pathway, a good cash raise and good human proof-of-concept data could spark a big rally in NVNO’s stock price (especially considering ultra-low float and nano-cap valuation). Of course, an investement in NVNO is associated with major risks as well. NVNO needs cash. Although I wouldn’t rule out non-dilutive cash (e.g. partnership) a big dilution should be expected. The impact of a potential offering on the stock price will depend on the details (e.g. pricing, warrants etc).

Note that I started my investing journey in late 2021. At first I tried a lot of things (copy-trading in e-toro, P2P- several platforms, SeekingAlpha subscription services, Motley Fool subscription). Eventually, I realised what works best for me is biotech investing based on my own dd. Therefore, since 2024 I invest only in biotech. Hence, just a couple years performance history below.

Also note that I won’t take big risks (large % investments in single stocks). So don’t expect extreme annual portfolio gains.

The platform I use is InteractiveBrokers (I have access to every stock I am interested, and can trade beyond normal market hours).

Below % returns are independent of contributions/withdrawls.

2024: +68% (vs XBI +1%)

2025: +140% (vs XBI +33%)

Below (for full disclosure) my performance in InteractiveBrokers platform since I started using it in late 2022 (as noted this became a biotech portfolio later on):

vs XBI and SPY same period:

2026 winners

• Small percentage gains but on large (20-30% of porfolio) positions (both acquisition-CVR plays, both predictable low-risk trades hence the high positition sizing)

  • APLT (contributed about +7% to the portfolio within 30 days)

  • LSTA (contributed about +2.5% to the portfolio within 5 days)

2026 losers

• Bad day-trade in GUTS post REMAIN-1.

Biggest (>5x gains) winners so far:

• CDTX (held from around $13+ to $215)

• CAPR ($3 to $20+)

• EVAX ($2+ to $10+)

• LYRA ($5 to $30, but I gave back some of these gains when I foolishly bought back at $11)

Buyouts so far (don’t expect many buyouts as I generally focus on early-stage biotech):

• MOR

• CDTX

Obviously I had big (%-wise) losers too (like $VTGN). This is to expected when trading though binaries in small biotechs. The goal is for the winners to be enough to outweigh loses.

Stocks are listed based on position sizing (largest first). Generally, 2-5% per stock (most at the lower range of this, and many lower). Do not expect me to post exact size of every position.

Also read “How to use this substack”

01 September 2026

Below is the list of currently open positions (average price, % of portfolio):

CMMB ($1.79, 9.8%), BHVN ($10.55, 6.1%), PLRX ($1.12, 5.0%), NVNO ($10.50, 4.6%), WVE ($5.72, 4.1%), DMAC ($6.51, 3.7%), XLO ($8.22, 3.1%), IPSC ($1.61, 3.1%), PRLD ($4.37, 3.0%), ALDX ($1.54, 2.9%), KPRX ($2.21, 2.8%), ENGN ($1.75, 2.7%), BCYC ($5.42, 2.6%), MDNAF ($0.2922, 2.6%), CCCC ($2.49, 2.5%), CNTX ($0.5515, 2.3%), EVAX ($3.19, 2.3%), LSTA ($1.45, 2.1%), MCRB ($5.97, 1.8%), NCNA ($1.41, 1.7%), MREO ($0.2956, 1.4%), GUTS ($0.7043, 1.3%), TENX ($1.84, 1.0%), VTGN ($0.2599, 0.8%), KPTI ($1.86, 0.7%), MGX ($1.39, 0.7%), CVKD ($1.48, 0.5%), MBIO ($0.5573, 0.5%)

Cash position: 24.6%

Performance YTD: +84.9%

14 August 2026

Below is the list of currently open positions (average price, % of portfolio):

CMMB ($1.79, 7.3%), PLRX ($1.12, 5.2%), NVNO ($10.54, 4.3%), BHVN ($9.09, 4.2%), WVE ($5.88, 3.9%), XLO ($8.22, 3.5%), PRLD ($4.37, 3.2%), IPSC ($1.61, 3.2%), BIOA ($9.48, 3.1%), LSTA ($1.05, 3.1%), KPRX ($2.21, 3.1%), CCCC ($2.49, 3.1%), CNTX ($0.6056, 2.8%), ENGN ($1.75, 2.7%), MDNAF ($0.2922, 2.6%), BCYC ($5.42, 2.7%), MPLT ($11.86, 2.5%), EVAX ($3.42, 2.2%), NCNA ($1.41, 2.0%), NEUP ($3.55, 1.9%), MREO ($0.2956, 1.8%), RCKT ($3.51, 1.7%), MCRB ($5.97, 1.7%), SCYX ($5.42, 1.7%), PMVP ($1.06, 1.7%), TENX ($1.49, 1.7%), GUTS ($0.7043, 1.3%), MGX ($1.39, 0.7%), VTGN ($0.2631, 0.7%), OLMA ($10.57, 0.6%)

Cash position: 19.5%

Performance ytd +71%
XBI ytd +29%

I decided to admit defeat in QNRX and close the position. I am sure they have data from the ph1/2 trials in Netherton yet they only presented data on 6 patients on the expanded access programs. No news on the design of the pivotal Netherton trial. No cash to get there (runway into 2027).

29 June 2026

I haven’t updated this post for a while now as I have been posting positions in the chat. But here is the update:

CMMB, NVNO, BHVN, FHTX, PLRX, XLO, IPSC, WVE, KPRX, ENGN, PRLD, VTGN, BCYC, CCCC, NCNA, NEUP, QNRX, MDNAF, CNTX, MCRB, RCKT, PMVP, EVAX, SCYX, ACET, MGX, OMLA.

Cash position 27%

Performance ytd +64%
XBI ytd +28%

CMMB largest position currently (5.7% of portfolio) but already down -20%. Rationale for CMMB here. I believe it should reprice when S4 is released. Main risk here is if the deal fails to close.

I have been trading NEUP successfully so far. I feel market is undervaluing the deal with Scancell and should reprice closer to the PIPE price.

Still holding lots of positions with market valuations below cash (PLRX, XLO, KPRX, ENGN, VTGN, BCYC, NCNA, PMVP, SCYX, ACET, MGX). I feel this provides some downside cushion in this market with potential for significant upside.

Still holding a few degraders companies (FHTX, PRLD, CCCC) and hoping for a dip to get back in NRIX and ARVN at some point. FHTX risky right now with LLY update expected in August.

BHVN and WVE really like their pipelines and tech. Both trading well above cash (esp BHVN has a short runway). So lots of downside if sth goes wrong. But there is too much going on with their pipeline.

QNRX has been irritating with very slow progress. I feel it has a lot of potential but running low on cahs and huge warrants overhang.

MDNAF like the pipeline. Bad cash raise though and still short runway. Risky. Hoping for some decent updates later this year.

MCRB: regretting this one. I think there is a lot of potential with their asset. But have doubts whether management can secure the needed cash in a way that is good for current investors.

I am trying to monitor news daily for low-risk swing trades (latest example PMN yesterday), but don’t have much time to do so.

27 May 2026

BOLD, NVNO, KPRX, CCCC, ENGN (new), XLO, RGNX (new), BHVN, DTIL, AVIR, ARVN (new), FHTX (new), PMN, IPSC, BCYC, NGEN, QNRX, PRLD, PLRX (new), GUTS, MAIA, IVVD, WVE (new), RCKT, LRMR, EVAX, LXEO, AQST, SCYX (new), MGX, VTGN

Cash position 10% (dangerously low… I amhoping to close a few positions soon to raise some cash).

It’s been a while since my last update

• Bought ENGN, RGNX, WVE, SCYX and NGEN on dips that I feel were somewhat unreasonable

  • ENGN: very dissapointing and non-competitive data update. Next cohort may prove much better and currently trading considerably below cash (and will still be trading below cash by the end of 2026).

  • RGNX: overreaction to BLA submission delays and regulatory concerns. Data worthy of AA pathway. ph3 readout in wet AMD later this year. Will need to raise cash soon. If AA pathway for DMD doesnt work out it will probably go lower

  • WVE: AATD data seem worse vs BEAM, but I feel they will still be useful (efficacy good enough for anyone who won’t opt for a gene therapy). Obesity update later this year.

  • NGEN bought the dip on offering. Common shares at a discount. Warrants more reasonably priced. Now funded to proceed with the ph3, aiming for study completion mid 2027 and topline early 2028. Multi-billion $ market if they succeed. Very promising data from prior small RCT. Risky one

• Bought back ARVN, FHTX and PLRX (lower from where I had previously sold).

• Closed MDNAF at a loss. The cash raise they did was very disappointing.

• Closed SGMO and IMUX (both at profit, both too early, as both went higher subsequently)

Good update by DTIL providing 1st PoC data that their treatment may eradicate cccDNA.

02 May 2026

BOLD, ACHV, NVNO*, KPRX*, XLO, QNRX*, BCYC*, IPSC, DTIL, PMN (new), CCCC, AVIR, BHVN, MDNAF (new), GUTS, RCKT*, IMUX**, MAIA, AQST, FHTX (new), SGMO (new), LXEO (new),

Cash position: 31%

I know nth about macro and I won’t try to predict what will happen. But with a huge XBI rally since April 2025 I feel better with a good cash position. Investing shouldn’t be stressful!

• SGNX fail. Interim analysis not only was not positive but trial was halted for futility. A very unexpected outcome given blinded response rates much higher than historical placebo. Interesting to follow to understand what went wrong but I am no longer invested. I took my loss here. Costed around -2% to the portfolio.

• Closed a few positions/ trades to increase cash position (incl ANTX, PRLD, IMUX, LEGN, NRIX, CRMD, ESPR, CUE- very unlucky timing about the last 2 as they both spiked the next day on good news). I hope to get back into many of those names if I get a chance at cheaper prices.

• I started a position in PMN. An interesting player in amyloid targeting. Their antibody appears to be the most specific for the toxil oligomers. This means: (1) no sinking by binding to the amyloid monomers which are normal and do not cause disease (this also means they need much lower dose to achieve elimination of amyloid oligomers + no need for carriers to increase CNS penetration), (2) Zero ARIA expected by completely avoiding targeting plaques. Interim readout in Q3, topline early 2027 (if positive triggers 30d deadline for warrants exercise at $14.4).

• I also started a position in MDNAF. Their conditionally activating PD1-Il2 asset is pretty interesting. Also their IL2 has shown promising early results. They need cash now. So news very soon. Risky one. If they manage a good cash raise it should go up. A bad cash raise and it could go down a lot.

• Few other new small positions:

  • SGMO lotto position (very risky one. zero or hero situation with bankruptcy a very possible outcome).

  • FHTX one of the degraders companies I am following. I feel their SMARCA2 will fail given prior failures using the same target, which is what keeping me from adding more (I am hoping to buy cheaper). But good PIPE (with warrants priced at high premiums) and interesting pipeline, including LLY partnership.

  • LXEO. I think their capsid has important advantages over other biotechs developing gene therapies for cardiac indications. But I think I will get a chance to add cheaper.

*Small adds in these names

**Closed a swing trade with decent profits. I re-entered cheaper. Very small position for now

Important reminder: Be careful about position sizing. Picks that I am wrong about do terribly (see SNGX, DMN recent examples). But I don’t have to be right all the time. I don’t even have to be right most of the times. Goal is gains >> losses. All I need is a few big winners (see ANTX) + several succesful swing trades (small short-term gains with limited time invested. these compound well over time).

Portfolio performance YTD +48% (vs XBI +7.3%).

19 Apr 2026

BOLD, XLO (added), NVNO, IPSC, DTIL, FATE, SNGX, QNRX, CCCC, LEGN (new), BHVN, AVIR, KPRX, BCYC, PLRX, PLRD, NRIX, ANTX, GUTS, CRMD, MAIA (new), AQST, RCKT, EVAX, ESPR, DMN, VTGN (very tiny lotto)

Cash position 30.7%

Main news/changes in the portfolio:

• BOLD terminated the large lease liability resulting in rerating of the stock. I think their much more upside left. I trimmed the +30% profits and keeping the original position size.

• KPRX announced an interesting PIPE. I added some. I will add more if it dips from here.

• CCCC announced new Roche partnership on DAC platform.

• As expected ACHV announced they expect a CRL from FDA. Expecting a cash raise I unfortunately closed the position at breakeven. Nevertheless, ACHV announced a decent cash raise the next day, which at least gave me the chance to do a good swing trade. Funding de-risks ACHV a lot, although I don’t like the very cheap pricing of the warrants. I am hoping to get back if it ever dips again (hopefully when the CRL is officially announced).

• I also closed CRLD, ACET, NEUP, SGMT, and FHTX trade to raise some more cash. I am not good with macro but considering the large move by XBI I feel better with a good cash position. I still like all the above and may re-enter in case of unreasonable dips.

• I started a position in LEGN based on comments on X from biotech investors that have a proven track record. Not much personal dd, but seems cheap and a speculation on potential acquisition by JNJ makes sense.

• Started a small position in MAIA. They recently got funded through ph3 readout. Interesting asset and data. Risky one.

• I increased XLO position. Trading below cash and with a decent (albeit early) pipeline. Major issue with XLO is large number of warrants. But their pipeline is very interesting to me.

Portfolio +50% ytd (vs XBI +14% ytd).

07 Apr 2026

BOLD, NVNO, IPSC, CADL, CCCC, QNRX, AVIR, FATE, DTIL, SNGX, BHVN, XLO, PLRX, BCYC, KPRX, NEUP, NRIX, PRLD, ACHV, GUTS, CRMD, SGMT, AQST, RCKT, MGX, EVAX, DMN*

Cash position around 25%

The main change is that I significantly trimmed QNRX position based on regulatory pathway updates which means Series H warrants are not being triggered and all the timeline gets delayed. Their guided timeline for completing a ph3 seems overoptimistic. Still, topline from the whole-body baseline-controlled trials should be within runway. But company will have to raise cash this year.

I also restarted small positions in ACHV (for a potential run-up to PDUFA. High risk of CRL for CMC issues though), AQST (seems de-risked, but you never know with FDA) and RCKT (FDA approval means PVR sale of at least $150M which somewhat derisks RCKT financally. Much upside if they succeed in Danon, but pretty risky due to toxicity from their gene therapy requiring high capsid dose).

I closed a few positions (e.g. IMRX, ARNV, ESPR, VTGN) to keep cash at 25% .

*Binary loss in Diamyd Medical (fortunately small position- position sizing very important when going through such binaries). Very unexpected worst case scenario in the interim readout.

19 Mar 2026

BOLD (7%), DTIL (5%), QNRX (5%), NVNO, IPSC, AVIR, CCCC, CADL, SNGX, ESPR, FATE, PLRX, BCYC, NEUP, KPRX, XLO, NRIX, PRLD, BHVN, GUTS, CRMD, SGMT, DMN, IMRX, VTGN, ARNV, EVAX

Cash position around 25%

DTIL has become my 2nd largest position following recent price movement.

New positions/changes:

• restarted a position in BHVN (small for now and plan to average down if it goes lower).

• started a position in IMRX (I have posted in chat). It trading much lower compared to Sep PIPE and I believe market overreacted to Jan update.

• increased FATE

• closed ANTX. Hard decision because I believe there is much more upside. But I feel it is going lower first and I wanted to raise some cash

Porfolio still outperforming XBI and having a good year so far, even though last few days have been quite red.

11 Mar 2026

BOLD (5.5%), QNRX, IPSC, NVNO, DTIL, CCCC, ANTX, CADL, AVIR, SNGX, PLRX, KPRX, NEUP, ESPR, PRLD, GUTS, BHVN, XLO, SGMT, CRMD, BCYC, VTGN, DMN, EVAX

Portfolio keeps vastly outperforming XBI ytd. Last week portfolio had a big win (ΑΝΤΧ from $1.05 average- I have trimmed at $2 and $5 and keeping the rest of the position, which is now around 3.7% of the portfolio)

Lots of the stock of the portfolio also have a good momentum lately (e.g. IPSC, DTIL, AVIR, CCCC, PRLD, PLRX, NEUP).

ESPR, BHVN and CRMD are new positions, on what I believe were unreasonable dips. But not high conviction at current valuation, hence small positions with plan to average down if thesis remains intact.

I have also increased BOLD to my top position (5.5% of the portfolio- note that positions sizing %-wise has gotten smaller due to recent gains in the porfolio). I think it very unfairly valued right now. Trading at 1/4 of cash with a promising (albeit early stage) pipeline. Market will eventually have to give some credit to the pipeline + I actually believe there is high probability of success based on the mechanism of action and available preclinical data (this is always a risky assumption of course). And downside should be limited.

Following last trades cash position is at around 31%.

Anyone interested check my recent post on Portfolio strategy

03 Mar 2026

QNRX, BOLD, CCC, NVNO, IPSC, CADL, DTIL, SNGX, AVIR, ANTX, PLRX, NEUP, NRIX, GUTS, BCYC, KPRX, CDXS, XLO, PRLD, SLDB, VTGN, DMN, BIVI, EVAX

Re-started a small position in CDXS yesterday.

As already shared in chat:

• I locked-in profits from BCRX and LXEO.

• I closed ACOG at break-even.

• I closed LYRA following Sec filing suggesting there is no deal coming for their lease (very small position, small loss).

23 Feb 2026

QNRX, NVNO, IPSC, CADL (increased position)*, DTIL, CCCC, SGNX, AVIR, PLRX, FATE, ANTX, BOLD, NEUP, NRIX, BCRX, RCKT, GUTS, XLO, KPRX, BCYC, ACOG, SLDB, VTGN, LXEO, LYRA, DMN, EVAX, BIVI

*now relatively well-funded, with new data soon, Lancet Oncology publication to be announced anytime and hopefully a succesful BLA (new FDA being the main risk).

Monitoring IMUX and SGMO (RS likely in both, may get cheaper by then).

I am still waiting for TECX to get cheaper but may miss it.

I have increased PLRX, ANTX and BOLD positions (I want to eventually add more to the latter but hoping for cheaper). All trading well below cash with decent/interesting pipelines.

17 Feb 2026

QNRX (6.7%), NVNO, IPSC, DTIL, AVIR, SNGX, CCCC, NEUP, FATE, NRIX, PLRX, BCRX, XLO, KPRX, RCKT, IMUX (2%), GUTS, BCYC, BOLD, SLDB, CADL, ACOG, PRLD, VTGN, SGMO, ANTX, DMN (0.7%), BIVI (0.7%)

Around 30% cash

Wrote a note on DMN (Diamyd Medical). Risky binary (ph3 readout end of March).

Still watching TECX for a potential re-entry.

I am back in IMUX after a good trade on Friday. I think the PIPE involving good biotech funds is quite bullish for the ph3 readouts later this year. Plan is to average down if it goes lower.

I closed KPTI (maybe a bit too early). Outcome of ph3 readout too unpredictable. Could be a good trading opportunity when news are announced.

11 Feb, 2026

QNRX (6.2% weight), NVNO, IPSC, DTIL, AVIR, CCCC, SNGX (2.9% weight)(ph3 interim readout in Q2), NRIX, NEUP, KPTI (ph3 readout in March!), KPRX, FATE, BCRX, PLRX, GUTS, XLO, RCKT, SLDB, BOLD (2%), ACOG, BCYC, CADL, PRLD, VTGN, ANTX, SGMO, EVAX, BIVI (0.65% weight)

around 35% cash

Portfolio YTD +7.48% (vs XBI +3.14%)

Hoping to get back into TECX

Check IPSC coverage in SA

07 Feb, 2026

QNRX (5.9% weight), NVNO, TECX, IPSC, DTIL, AVIR, CCCC, SNGX, NRIX, NEUP, FATE, KPRX, PLRX, BCRX, XLO, GUTS, RCKT, BOLD (new), SLDB, ACOG, BCYC, CADL, KPTI, PRLD, SGMO, ANTX (new), VTGN, EVAX, BIVI (0.65% weight)

30% cash

Closed positions I was less confident about to raise cash (LGVN- at a loss, MGX- break-even, AZTR- small loss, KURA-small profit, ACET- small loss, SGMT- +40% in few days, CDXS-small profit, ARVN- +90% profit)

Got back in BOLD at $1.06 (I had previouslt sold at around $1.24). Too low marker cap vs cash (and runway to 2H 2028). Also $ANTX. On I have been following (and trading) for a while. Trading at half cash with great runway.

Check updated notes in $QNRX, $IPSC, $SNGX, $BOLD.

02 Feb, 2026

NVNO, QNRX, TECX, IPSC, DTIL, CCCC, AVIR, NRIX, NEUP, FATE, SNGX, KPRX, LGVN, ARVN, BCRX, RCKT, PLRX, GUTS (new), XLO, BCYC, SLDB, ACOG, CADL, KPTI, PRLD, KURA, SGMT*, CDXS*, VTGN, ACET, EVAX, BIVI, AZTR (re-entered with a small lotto position)

24% cash

GUTS is a new position. Risky one. But I think market is too pessimistic following the 6-month data. Good catalysts in 2026. I am publishing a more detailed coverage in SA.

*Re-entered after seemingly unreasonable dips. Not much personal dd (hence I did not share in the chat).

As of Jan 26, 2026

$LSTA, $QNRX, $IPSC, $NVNO, $TECX, $DTIL, $CCCC, $AVIR, $NRIX, $NEUP, $SGNX, $LGVN, $FATE, $PLRX, $XLO, $RCKT, $BCRX, $APLT, $KPRX, $ARVN, $BCYC, $ACOG, $SLDB, $CADL, $CADL, $KPTI, $PRLD, $SGMO, $VTGN, $ACET, $EVAX, $BIVI.

Around 18% cash

I plan to eventually write a more detailed article on my experience with biotech investing, my current strategy and common mistakes to avoid (I have already made every mistake in the book in my first couple of years and still learning). But here is a short summary.

My actual job is being an academically active clinician in a public University Hospital. So this (along with 3 young kids) takes most of my time. Biotech investing is a profitable "hobby" (although so far I've been making much more from stocks than from my job). Considering the above don't expect many detailed articles, or me following every field in biotech investing.

My background in medicine (both clinically and academically) allows me a good understanding of the science and prospects of biotech companies. Of course, as learnt through trial and error, there are many other factors beyond science (e.g. cash runway, management, commercial prospects etc) to consider when investing in biotech.

What to expect of this substack

• In this substack I plan to post short articles / notes on stocks I own/trade/follow.

• I am also sharing my trades real-time in the chat (you can get notifications whenever I post in the chat)

• Current holdings are also updated here

• Yearly updates on portfolio perfomance

• A series of articles on how to invest in biotech (listed at the end of this post)

Do not expect:

• Common detailed articles/reports

• Detailed updates on stocks

• Short ideas (I very rarely short)

I still may write full articles for SeekingAlpha (which are under paywall) whenever I have time (not often).

Do you need a paid subscription?

No. Everything in the substack is available freely. It's up to you whether you want to contribute with a paid subscription (sharing my ideas takes time and effort).

I may in the future restrict access to paid subscribers but I don't plan to do so anytime soon (if ever).

Important advice

• Although I am sharing my ideas and trades it is generally a bad idea to blindly follow without doing your own dd and understanding why you own a stock.

• Note that I often trade outside market hours (overnight, premarket, afterhours). This is especially important for some penny stocks / nano-caps which I own specifically for trading purposes. Spikes often happen outside trading hours and are short-lived.

• I generally buy asymetric risk/reward stocks. Those that I am wrong do terribly. So be very careful with position sizing. My general rule is up to 2.5-5% of protfolio per stock (most in the lower range of that), very rarely abobe 10%.
  

Sharing my experience on common mistakes and what to look for when investing in biotech

I plan a series of articles on this, whenever I find more time. Find below links to these articles (to be updated as I add more articles):

$IPSC just announced a big PIPE to support development of CNTY-813, a potentially curative beta islet cell program for Type 1 diabetes. As you can imagine the commercial potential of a curative Type 1 diabetes treatment is large, with 9M patients worldwide. For some perspective, $SANA has a similar asset and quickly surpassed $1B valuation following proof-of-concept (POC) in a single ex-US patient. Similar to SANA, IPSC aims for an IND in 2026 with first data in 2027. Single-patient POC data delivered by SANA are very de-risking for both IPSC and SANA in my opinion. Both companies are developing iPSC-derived hypoimmune beta islet cells that may cure type I diabetes, without the need of life-long immunosupression (vs other curative approaches).

Notably, IPSC’s hypoimmune platform may even be better than SANA’s.

IPSC’s Allo-evasion 5.0 platform includes

• deletion of HLA-I and HLA-II (which protects from native T-cells),

• insertion of CD300a TARS (with protects from NK cells) and

• insertion of cell-surface enzeyme to degrade IgG antibodies (which protects from humoral immunity).

For comparison, SANA’s is based on

• disruption of HLA-I and II similar to IPSC

• overexpression of CD47 for protection against NK cells

Interestingly, IPSC’s approach from protection against NK cells seems more effective, at least preclinically, while SANA is lacking protection from humoral immunity. Whether this translates in the clinic is yet unclear.

From a financial standpoint, IPSC had $132.7 million cash, cash equivalents, and marketable securities as of September 30, 2025, and just raised $135M in a PIPE extending runway into 2029. For comparison, SANA ended September 2025 with $170.5 million pro forma cash balance and a runway into late 2026. Yet SANA currently trades at $1.2B valuation, while IPSC is trading at around $368M (including new common shares and pre-funded warrants, and considering a price of $1.8).

So to sum up:

• IPSC has more cash (pro-forma cash $267M vs $170.5M) and a runway into 2029 (vs late 2026)

• Has an at least as good (if not better) immune-evasion platform

• Both are at similar stage of clinical development for their most promising assets

• IPSC was just supported by a large PIPE including major healthcare institutions

Hence I believe the valuation gap between the 2 companies should close. Short-term, given the huge run by IPSC I can’t exclude a pull-back. Long-term there is large upside potential for both companies.

Both SANA and IPSC have additional pipeline but by far their most rewarding program is their type I diabetes cure.

Despite early proof-of-concept data there are still hurdles (e.g. manufacturing at scale and delivery of sufficient number of cells). A succesful IND will be a major catalyst for both companies. If succesful, upside potential for both companies is large and there is room for >1 products in the market (assuming same efficacy-safety-durability).

Despite promising clinical data and what I believe to be an active drug, APLT management failed to deliver. Misconduct of galactosemia trial, as well as a shorter than necessary SORD trial resulted in a CRL and APLT having no money to advance their products to new pivotal trials.

Cycle Pharma is now acquiring APLT for $0.088 per share, which is a big discount and represents a dissapointing all-time-low for the stock. What makes APLT very interesting at current stock price (<$0.12 at the time of writing) is the accompanying non-transferrable contingent value right (CVR) that provides payments based on the following milestones:

• Up to $0.10 per CVR in cash payable upon FDA approval of a new drug application for any galactosemia indication prior to the eighth anniversary of closing.

• Up to $0.10 per CVR in cash payable upon FDA approval of a new drug application for the CMT-SORD indication prior to the eighth anniversary of closing.

• Up to $0.20 per CVR in cash payable upon the first achievement of worldwide net sales of any product covered by the CVR by Cycle, its affiliates or licensees equal to or exceeding $200 million dollars in any four-quarter fiscal period prior to the tenth anniversary of closing.

• There is a also a Closing Cash Payment but is too small to justify an investment in APLT now (capped at $1.5 million).

Based on prior data I believe there is high probability of eventual approval for both galactosemia and SORD indications. Both represent large enough target markets (considering premium pricing of drugs for rare diseases) which means I expect easily reaching the $200M milestones within the 10-year time frame, assuming there are not extreme delays by Cycle Pharma. I believe that approval in even one of the indication could result in eventual triggering of a total payment of $0.3 per CVR. Of note, there still doesn’t appear to be any late stage competition based on ClinicalTrials.gov (galactosemia trials, SORD trials).

There are 2 ways to invest in APLT now:

(1) Trading: Buy now and sell any spike before the acquisition is complete. Considering above CVR (a total potential of +$0.4) vs current stock price (<$0.12) I doubt APLT will keep trading that low. I expect it to eventually rebound to at least $0.2.

(2) Long term bet: Buy now and hold for the CVR payment. However, note the associated risks:

• you may get nth if Cycle fails to get approval in either indications

• you will have to wait several years (conduct of new pivotal trials + regulatory delays + sales rump up)

Note also that the downside risk is capped to the $0.088 acquisition price.

• Vistagen Therapeutics (VTGN) is approaching the pivotal PALISADE-3 readout, a binary event with significant valuation implications.

• Positive PALISADE-3 results could unlock a multi-billion dollar market and validate VTGN’s broader pipeline.

• VTGN is funded into Q3 2026, but future capital raises are likely.

• Despite promising prior data, high risk remains due to prior trial failure and inherent psychiatric trial uncertainties.

Thesis overview

Vistagen Therapeutics (VTGN) is a clinical stage biotech developing pherines, i.e. synthetic neuroactive steroids that are delivered intranasally and act by engaging nasal chemoreceptors. VTGN’s lead candidate is fasedienol ((aka PH94B)) which is being developed for acute as needed use for social anxiety disorder ((SAD)). Fasedienol failed in VTGN’s first randomized controlled trial ((RCT)), PALISADE-1, which was however severely disrupted by the COVID-19 pandemic. On the contrary, the parallel PALISADE-2 was successful, meeting the primary and secondary endpoints with statistical significance despite premature termination of the trial. Fasedienol is currently being evaluated in 2 parallel, identical ph3 trials, PALISADE-3 and -4. Topline results of the former are expected by the end of 2025, while a readout for the latter is expected during 1H 2026.

Beyond fasedienol, VTGN is also developing other pherine products for several large target markets, including itruvone for major depressive disorder, PH80 for menopausal hot flashes and PH284 for cancer cachexia, all with promising ((but limited)) preliminary clinical data. These could provide considerable further upside potential beyond fasedienol. However, VTGN stock price short term will depend on the upcoming PALISADE 3 readout. Hence, this article will be focused on why I believe PALISADE-3 has a good probability of being positive.

Any potential investor should not underestimate the risk of holding through this binary event. Invest only what you can afford to lose.

Overview of VTGN’s pipeline (Company presentation)

Social anxiety disorder

SAD is a highly prevalent condition that can be debilitating in everyday social and performance situations. There is currently no FDA approved treatment. Off-label treatments for performance-only SAD include as-needed benzodiazepines and β-blockers, both with significant limitations and adverse effects. If proven to work, fasedienol will be used by SAD patients on an as-needed basis before predictable stressful occasions. The very fast action ((within minutes)) makes fasedienol ideal for this use. Furthermore, lack of systemic and central nervous system exposure means lack of systemic adverse events associated with other treatments.

SAD is a highly prevalent disease (Company presentation)

Fasedienol vs current standard of care (Company presentation)

Overview of fasedienol benefits (Company presentation)

Mechanism of action

Admittedly, the first time I read about VTGN I passed because the mechanism of action seemed implausible to me. A medication delivered to the nose with no systemic penetration and no central nervous system penetration? I was very skeptical that this would work, let alone work in several different indications.

Nevertheless, doing some more research I realized there is convincing evidence of its biological activity. Specifically, it is hypothesized that fasedienol can regulate olfactory-amygdala circuits of fear and anxiety. For interested readers, a publication describing the mechanism of action of pherines is available here. A few points of interest from relevant publications (1, 2):

• Activation of nasal receptors by fasedienol results in decreased sympathetic tone, decreased heart and respiratory rate, decreased frequency of electrodermal activity events and electromyogram, increased body core temperature and induced specific and dose-dependent activation of brain areas.

• Changes in autonomic nervous system activity are consistent with a sympatholytic effect leading to physical calmness and relaxation. Notably, these changes occur within minutes, which is important for the intended use of fasedienol, i.e. right before stressful situations.

• The fasedienol dose used in clinical trials is very rational as nasal receptor activation peaks at around 3.2mg (figure 1 of the relevant publication). Furthermore, while earlier studies have suggested sexual dimorphism (greater effect in females), at the higher doses effect sizes are similar comparing males to females.

• Fasedienol is not detected in either plasma or the central nervous system after intranasal administration. This supports the proposed mechanism of action and also means lack of systemic adverse effects.

Overview of pherines’ characteristics (Company presentation)

Fasedienol’s mechanism of action (Company presentation)

Prior clinical data

Here is a summary of prior clinical data on fasedienol;

• In an early, small RCT, using a public speaking challenge ((similar to PALISADE trials)) fasedienol resulted in a significant reduction in SUDS vs placebo. Furthermore, a significantly higher proportion felt much or very much improved. A subsequent, also very small RCT (this time evaluating repeated self-administration before stressful situations) also demonstrated significant benefit over placebo. These are both small trials but their publication in good peer-reviewed journals is encouraging.

• In a recent study comparing fasedienol to control or various steroidal hormones “13 of 16 (81%) participants reported feeling more relaxed and less tense and nervous 20 min after fasedienol administration; no subjects reported similar behavioral changes after control or steroidal hormone administration”, suggesting an effect specific to the mechanism of action of fasedienol

• While VTGN’s first RCT, PALISADE-1, was a big fail, the parallel PALISADE-2 was very successful, meeting both the primary and secondary endpoints. Of note, PALISADE-2 was prematurely halted following PALISADE-1 readout and was never resumed due to financing limitations. Nevertheless, despite early termination, fasedienol outperformed placebo significantly in both the primary and secondary endpoints.

Of note, a red flag for me is that PALISADE-1 results are not mentioned at all in the company presentation. These results can be found in ClinicalTrials.gov and were clearly a failure. As explained below, the COVID-19 disruption seems like a reasonable explanation, but definitely makes the upcoming ph3 readout much riskier. Another red flag is baseline imbalances in PALISADE-2 ((also not reported in the company presentation)).

Primary endpoint met in PALISADE-2. Both statistically significant and clinically meaningful benefit. (Company presentation)

Clinically meaningful reduction of anxiety as assessed both by clinicians and patients (Company presentation)

Lower baseline SUDS in fasedienol group vs placebo (ClinicalTrials.gov)

Why did PALISADE-1 fail and why PALISADE-3 and -4 have a better probability of success?

According to VTGN conduct of PALISADE 1 was severely impaired by the COVID-19 pandemic (high site/CRO employee turnover, absenteeism, unpredictable and intermittent clinical site closures and patients postponing travel, mask wearing, potential effect of COVID-19 on olfactory system, insufficient training and monitoring of sites).

Improvements implemented in PALISADE-3 and -4 can be seen below:

Enhancement in PALISADE-3 and -4 trials (Company presentation)

Summary of reasons why I expect a positive ph3 readout

• Fast, rational and biologically plausible mechanism of action of fasedienol for SAD indication.

• Convincingly positive PALISADE-2 trial, despite above-mentioned limitations.

• Consistent prior RCT data published in peer-reviewed journals.

• Enhancement in conduct of PALISADE-3 and -4 based on lessons from prior trials.

Financials

VTGN ended Q3 with around $77M cash, cash equivalents, and marketable securities. Operating expenses in Q3 were around $20M (R&D $16M, G&A $4M). Assuming same cash burn going forward, VTGN is funded for at least 3 more quarters, i.e. into Q3 2026. This means a cash runway through both PALISADE-3 and -4 readouts.

Of note VTGN raised $27.9 ATM during Q3. This could be interpreted as management not having faith to PALISADE-3 readout. Personally, I wouldn’t read too much into it. Obviously, as explained above, PALISADE-3 is a risky readout. The cash raise simply allows VTGN to survive following a potentially negative PALISADE-3.

Note that as of Nov 12, VTGN had around 39.5M common shares outstanding. Furthermore, the following outstanding potentially dilutive securities should be considered:

• 2,788,620 pre-funded warrants

• 9,294,022 warrants (exercise price $5.38)

• 11,265,086 warrants (exercise price $8.87)

• 4,875,866 options as part of stock-based compensations

Therefore, assuming eventual exercise of all these shares (very likely in case of a positive PALISADE 3) the diluted share count will be close to 68M, corresponding to a valuation of around $300M (based on a stock price of around $4.5 as of the writing of this article).

Risk factors

The major risks to the thesis are:

1. Negative or underwhelming PALISADE-3 readout. This is a worst-case scenario which would drive the valuation of VTGN to much lower than cash. This is a very possible scenario, so invest only what you can afford to lose. There is a small chance for a rebound eventually (either due to an unexpectedly positive PALISADE-4 or the pipeline) but I wouldn’t want to be a VTGN investor in such a scenario.

2. VTGN will clearly need to raise cash soon. This shouldn’t be a problem if PALISADE-3 is positive. I can’t exclude a potential cash raise before the readout, although this seems very unlikely.

3. Even if PALISADE-3 is positive, VTGN will probably need PALISADE-4 to be positive as well. So a positive, but underwhelming PALISADE-3 readout may not move the stock as high I would like. Furthermore, even if both trials are positive there is still regulatory risk (although this is not a concern for now).

4. Company has guided a readout by the end of 2025. However, completion of enrollment was announced later than expected and I wouldn’t be surprised if the readout is actually announced in early 2026. This doesn’t really affect the thesis, but expect a dip in the stock price if a delay is announced.

5. The open label extension study may reveal previously unrecognized adverse events or suboptimal real-life efficacy.

Notably, VTGN’s pipelines originates from Pherin Pharmaceuticals, which was acquired by VTGN pretty cheaply. This is not very encouraging. However, to be fair, Pherin was acquired after failure of PALISADE-1 and before readout of PALISADE-2.

I also refer interested readers to a short thesis, for an opposing view.

Conclusion

VTGN is expected to report PALISADE-3 by the end of 2025. Based on prior studies, and despite failure of PALISADE-1, I believe there is a good probability of a positive readout. This would mean (1) potential approval in a multi-billion $ market and (2) would validate the pipeline, also targeting large markets. However, given a negative RCT and the risk associated with trials in psychiatric indications, the risk of holding through this binary is high.