Amp Core Q2 '19 Report


Q2 2019 Amp Core™ Quarterly Report

Published 4/17/19

OVERVIEW

We were looking for a rebound in small/mid ("smid") cap biopharma stocks in Q1 as laid out in our Q1 '19 Report, and thankfully we got it. As we suggested in our Q1 report, there were a series of acquisitions in this space timed around the JP Morgan Healthcare conference (JPM) at the beginning of the year, that catapulted smid cap biopharma stocks. Our Amp funds were up between 18% and 21% in Q1. Our Amp Core fund was up 21% in Q1. Due the Q1 '19 runup we decreased some positions through the quarter and have almost 30% cash currently in our Amp Core fund. Over the first few weeks of Q2 we are seeing a pullback of around 5% in healthcare/biopharma.

Amp Core subscribers see our current portfolio positions and see our Amp Core fund trades on the day of the trade. CLICK HERE for more details on how to sign up for immediate access.

Q2 2019 SPOTLIGHT COMPANY

Our 2019 Q1 Spotlight company, CARA Therapeutics, was up around 50% in Q1, exceeding our expectations. It has pulled back around 10% early in Q2. We continue to be bullish on CARA for this year and this quarter with further substantial upside possible at its current market cap of around $750M, with further increases possible with positive phase 3 readouts and especially around the higher risk/reward oral Korsuva readout by the end of 2019. With significantly more upside potential for this quarter and year, CARA is our 2019 Q2 Spotlight company as well. See our updated 1 pager on CARA linked below.

HIGHEST CONVICTION PORTFOLIO COMPANIES

Below are our highest conviction companies for our Amp Core™ portfolio (i.e. companies that make up at least 5% of the portfolio). These companies share certain characteristics that we feel provide an attractive risk/reward as of the date of this report. For example, one characteristic is that they have a significantly derisked late-stage clinical asset that has consistently shown positive results for an indication with a high unmet need. We arrive at these companies based on our review of over 150 biopharma companies that are between $50 million and $5 billion of market cap using a proprietary system that we have developed over years of biopharma stock research. Please see our Amp Core subscriber portfolios positions page for the current percent positions for each of these companies, brief reports on each core company, as well as seeing all other companies in our Amp Core fund.

Since Q1, 2019, we pulled back our position in ZGNX so that it is less than 5% of the portfolio and added HRTX. We pulled back our position in ZGNX because at about $1.6B market cap it is close to fairly valued and it recently had an unexpected and avoidable setback in the FDA that will delay its first approval by 18 months, putting them further behind GWPH in this space. We added to our position in HRTX such that it is now a core position because we like the risk reward going into its FDA approval PDUFA deadline at the end of this month for HTX-011, its non-opioid pain therapy that has consistently shown good efficacy and safety. At $1.8B HRTX trades below its valuation before a number of positive clinical readouts and appears undervalued currently.

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CARA THERAPEUTICS (CARA)

LEAD ASSET

Korsuva (CAR845)

INDICATION(S)

Pruritis (chronic severe itching) in chronic kidney disease and other diseases

CLINICAL STAGE

Phase 3 readouts in 2019 of intravenous (IV) Korsuva for pruritis in chronic kidney disease patients on dialysis readout in Q2 and Q4 ’19;

Phase 3 readout of oral Krosuva for pruritis in chronic kidney disease patients not on dialysis interim by mid-2019 and final by end ‘19

Phase 1 readout of oral Krosuva for pruritis in chronic liver disease patients

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HERON THERAPEUTICS (HRTX)

LEAD ASSET

HTX-011

INDICATION(S)

Post-surgical pain

CLINICAL STAGE

Likely approved for commercialization by the FDA in Q2 2019.

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AIMMUNE THERAPEUTICS (AIMT)

LEAD ASSET

AR101 (oral peanut protein food additive powder)

INDICATION(S)

Peanut allergy partial desensitization

CLINICAL STAGE

Early 2020, likely the first peanut allergy desensitization product approved in the U.S.

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GLOBAL BLOOD THERAPEUTICS (GBT)

LEAD ASSET

Voxelotor

INDICATION(S)

Sickle cell disease

CLINICAL STAGE

Additional Ph3 data later in Q2 2019

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ESPERION (ESPR)

LEAD ASSET

Bempadoic Acid (alone or in combination with ezetimibe)

INDICATION(S)

Cardiovascular disease (LDL-C and hsCRP lowering)

CLINICAL STAGE

Filed for US and EP approval in 2019 likely decided in Q1 2020

Ongoing long-term MACE study to read out in 2022 for full regulatory approval

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Disclaimer:

This material has been prepared by AMP Biotech Research, LLC (“AMP Research”). This document is for information and illustrative purposes only and does not purport to show actual results. It is not, and should not be regarded as investment or legal advice or as a recommendation regarding any particular security or course of action. Investment opinions expressed herein are current opinions as of the date appearing in this material only and are subject to change without notice. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not prove to be true, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No representation is being made that any account, product, or strategy will or is likely to achieve profits, losses, or results similar to those discussed, if any.

No part of this document may be reproduced in any manner, in whole or in part, without the prior written permission of AMP Research. This information is provided with the understanding that with respect to the material provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. AMP Research does not purport to and does not, in any fashion, provide tax, accounting, actuarial, record keeping, legal, broker/dealer or any related services. You should consult your advisers with respect to these areas before making any investment decisions.

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