2023 has been surprising for most market participants. Sentiment was in the toilet to close out 2022. And the first two weeks of this year saw all-time record put option buying across the market. And those flows were coming from both retail and institutional players. Everyone came in hating H1 ’23, and hating was would be in store when Q4 ’22 earnings prints hit the tape.
But that’s the thing about markets: when everyone is leaning the same way, the game theory landscape slopes inevitably toward delivering the maximum amount of pain to the maximum number of participants.
Hence, the big rally.
But it may be more than just shorts getting squeezed and long-only fund managers panicking about falling behind their benchmarks with record cash levels in portfolios.
What if it’s about vindication for “Team Transitory?” What if the inflation picture really is just an artifact of coming out of the first global pandemic in 100 years – and when global supply chains and logistics have become far more finely tuned and coordinated and real-time than ever before?
When you shut that engine down and give everyone lots of stimulus checks, you’re going to have an economics 101 mismatch. No supply, lots of demand. That equals higher prices.
What if the market is starting to flirt with the idea that the “lowflation” dynamic that has been in place for the past 20 years due to demographics and technology is still the main structural trend in place? And what if the Fed is about to start seeing evidence of that reality during H1 2023?
Given the strong econ data we have been seeing – paired with falling CPI prints – that ramps up the odds of a “soft landing”. And a soft landing, while everyone is in cash and puts, is a powderkeg on the bull side.
So, maybe that version of reality is correct. And maybe it’s not.
Investors need to start planning for both of those universes. In the first universe – back to lowflation, pandemic re-openings are difficult – the best place to send capital is “long duration small and mid-cap innovators”.
That means AI, genomics, biotech, robotics, and the like. Of all of these, biotech may be the most interesting given valuations and upside potential through monetizing therapeutics.
Sifting through the rubble in the biotech space, one stock is worth mentioning here, because it hits right at that point of being 1) extremely cheap, and 2) getting ready to probably announce the start of its first-ever Phase 2 clinical research for its flagship molecule, Pritumumab (“PTB”).
The stock is Nascent Biotech Inc. (OTCMKTS:NBIO).
Past is Prologue
The R&D journey for Pritumumab began in 1982 in Japan. Pritumumab (PTB) is a natural human antibody that binds to cell surface Vimentin (also referred to as ectodomain vimentin), which is a protein expressed on the surface of epithelial cancers.
PTB is used as a targeted immunotherapy that “seeks out” cancer cells while leaving normal, healthy cells unharmed.
There wasn’t much follow-up to initial research on PTB back in the day. But Nascent Biotech moved in and reengineered the compound, particularly by mapping production through the Chinese Hamster Ovary (CHO) cell line platform for monoclonal antibodies to streamline the cost side of the equation.
This was followed up by the company’s move to file an IND request with the FDA in late 2018. That was granted, but the pandemic delayed the start of active clinical research.
By March 2021, the project was fully underway and NBIO was subsequently given permission by the FDA to enter human clinical trials for Primary and Metastatic Brain cancer.
Flash Forward
NBIO is now just coming to the end of its Phase 1 trial testing PTB in the brain cancer space. According to all information we have from the company, the trial appears to have gone off without a hitch.
The company most recently announced the completion of the dosing period for that trial.
According to the release, the completion of dosing for the fifth and final Phase I cohort completes safety and dose escalation. The Company will now prepare to submit data and the Phase II Clinical Protocol to the United States Food and Drug Administration (the “FDA”) for evaluation.
As the trial remains open for all active and follow-up participants enrolled, the company looks forward to providing more data on the safety and tolerability of Pritumumab.
That said, the trial is clearly winding down. And a stock in this space at this pricing in a possible bourgeoning bull market could display some fireworks when news hits about the coming launch of Phase 2 research, which is historically when acquisition potential starts to come into focus.
One to watch.
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