Trade Alert: Another Biotech Lottery Ticket
We made 175% on the last one. This one looks promising.
Cheer up, you’re doing science.
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 trade alert below.
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 options trade is a bet on the stock trading higher in early 2024, after two more earnings reports (and, presumably, more clinical data) will have been priced in.
Our New Biotech Lottery Trade
Keep reading with a 7-day free trial
Subscribe to The Portfolio Armor Substack to keep reading this post and get 7 days of free access to the full post archives.