This weekend I’m out in California for a birthday party. The weather is warm, the streets are crowded and the houses are insanely priced. And, for now, going higher. There is nothing going on here that suggest inflation is transitory or going to settle down any time soon.
As far as the market goes, stocks have recovered from the shock of the war in the Ukraine but are only now starting to factor in the longer term implications. The risks involved to global food sources and many of the raw materials that go into products are going to continue to drive prices higher.
Meanwhile the FED is going to begin tapering soon and rates have jumped dramatically. We are really setting the stage for an extended period of stagflation. The bounce from the success of the Ukrainian forces is over; the war appears likely to be far from its end.
The next move in the market is probably in a downward direction. Much like the stimulus led rally, as the FED drains liquidity, expect stocks to suffer. The bear market bounce is over folks.
One of the biggest impacts from the war is the end of globalization. The movement to offshore everything in an effort to lower costs was a 30-40 year trend. This move was showing cracks under Trump as NAFTA got rejiggered and a trade war with China started heating up. It’s now in full retreat.
This will have many implications, higher costs being the most obvious. From a US standpoint, we are going to see a tight labor market for quite a while. Labor here is expensive already, things look to get worse.
Perhaps a beneficiary of this is robotics? I wrote a few years back about ROBO, the Robo Global Robotics and Automation Index ETF. This ETF had a big run during the bull market but has pulled back the last few months. While growth in general would slow during stagflation, onshoring of business combined with a lack of labor suggests ROBO could be very well positioned.
This past week, Spectra7 (SPVNF) pre-released revenue numbers for Q1. They had indicated supply chain issues would impact these and that was certainly the case. That said, Q2 guidance was very solid and, with ongoing design wins, it appears the second half and next year are going to be quite strong.
Atomera (ATOM) published a new white paper on their technology this past week. I continue to believe adoption is inevitable and will be adding to this position soon enough at these levels.
TFF Pharma (TFFP) should have niclosamide data before the end of the month. Positive data would likely lead to UNION exercising their option to partner on this product (even if UNION passed for some unlikely reason, good data would likely bring in other interested parties).
With the selling from LTI behind them, TFF has been trading better lately. This data could be a very big catalyst for the stock.
I write often about INmune (INMB). This is not in an effort to pump up the stock 10% or whatever. That’s rather meaningless as I am a complete HODLer here and fully expect much higher returns. No, the point of my constant hammering here is to make sure everyone who reads this newsletter understands the scale of the opportunity here. I don’t want anyone reading this newsletter to sell and end up kicking themselves for years to come
For the broader investment community, there appears to be a complete lack of understanding of the role of TNF in CNS diseases. I’m not sure why the historic data that demonstrates the greatly reduced risk of Alzheimer’s Disease for patients on TNF inhibitors hasn’t caught on, but the Street seems really focused on the co-investment themes of 1) losing money on Amyloid and Tau plays, 2) saying that Alzheimer’s investments never work and walking away from the space.
It’s within this lack of attention to INmune and their next-generation TNF inhibitor, one that does not suppress the immune system, that opportunity lies. Biogen got $20B in market cap for an AD drug approval that was highly controversial and doesn’t really appear to work. Eli Lily got a similar amount for a phase 2 trial with rather meh! results. If INmune rings the bell in phase 2, a 2023 event most likely, one can only imagine the impact on the stock.
But, while the investment community overlooks INmune, the scientific community is slowly coming to the realization that of the importance of the role inflammation plays in CNS diseases. This movement is gathering more mainstream attention as demonstrated by Dr. Malu Tansey, the co-discoverer of XPro-1595, having a keynote presentation at last year’s AD Conference.
Do a Google search for keywords such as TNF, CNS and inflammation and the results are increasing. Last week this search would have found the following article, New Insights Into the Genetic Etiology of Alzheimer’s Disease and Related Dementias. Published in the respected journal Nature Genetics, this article is a massively deep dive into the genetics underlying AD and other CNS diseases. The article cites (I didn’t count them) around 100 contributing authors.
A two-stage genome-wide association study totaling 111,326 clinically diagnosed/‘proxy’ AD cases and 677,663 controls, this is an extensive study. It will garner significant attention; and some of the biggest takeaways indicate the importance of TNF as a key factor in these diseases.
Here is one of the most relevant passages from the text that are directly related to INmune and XPro. I’ve done the bolding myself.
«Interestingly, the TNF-α signaling pathway was also flagged by other genetic findings in our study (Supplementary Fig. 48). For example, ADAM17 (also known as TNF-α-converting enzyme) is of pivotal importance in the activation of TNF-α signaling32. For TNIP1, its gene product (TNF-α-induced protein 3-interacting protein 1) is involved in the inhibition of the TNF-α signaling pathway and nuclear factor κB activation/translocation33. Additional signal related to TNF-α is the one found at SPPL2A(one of the 33 confirmed loci). The protein encoded by SPPL2A is involved in noncanonical shedding of TNF-α34, and PGRN has been described as a TNF receptor ligand and an antagonist of TNF-α signaling35. Several lines of evidence had linked the inhibition of TNF-α signaling with reduction of both Aβ and tau pathologies in vivo36,37. Although a potential inflammatory connection has been suggested for TNF-α through the activation of NLRP3 inflammasome38, the TNF-α signaling pathway is also involved in many other brain physiological functions (e.g., synaptic plasticity in neurons) and pathophysiological processes (e.g., synapse loss) in the brain39. Furthermore, the involvement of the TNF-α signaling pathway and the LUBAC might be important in cell types other than microglia in AD. It is important to note that six of our prioritized (tier 1) genes (ICA1L, EGFR, RITA1, MYO15A, LIME1 and APP) are expressed at a low level in microglia (<10%, relative to the total expression summed across cell types; Supplementary Table 45), emphasizing that ADD results from complex crosstalk between different cell types in the brain23,40. It is also noteworthy that the EGFR pathway is known to interact with the TNF-α signaling pathway41, which suggests interplay between the two signaling pathways during the ADD development.«
When will the Street catch on to the importance of XPro and inhibiting inflammation, especially TNF which increasingly appears to be what RJ Tesi has said all along is «the master cytokine»? I have no idea. We are ahead of the curve here…the scientific community continues to move in the direction of INmune and eventually the Street will come around to us early investors.
* Disclaimer: DFC Advisory Services LLC, dba: Tailwinds Research, owns shares in companies mentioned in this report. For a full list of disclaimers and disclosures, please visit http://tailwindsresearch.com/disclaimer/.
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