According to Premier Miton Fund Manager Nick Ford in a recent
CNBC’s “Squawk Box Europe” interviewi, U.S. small cap stocks are
set to outperform the S&P 500 in the uncertain aftermath of the
coronavirus crisis. This is big news for small investors who
normally shy away from more expensive stocks like Tesla, AutoZone,
Alphabet (Google), Amazon, and Cable One, all of which trade well
in excess of $1,000.00 per share, making it almost impossible for
the average investor to become a shareholder.
Taking it one step further, investors also might
want to consider Micro Cap stocks. Micro Cap stocks are often
defined as the smallest public companies in the U.S. equity market.
The Russell Micro Cap Index is basically the bottom half of the
Russell 2000 Index and includes some other eligible stocks with as
little as a $30 million market cap. Most Micro Caps are not as
liquid as their larger peers, so larger investors tend to stay away
from them. This is actually a benefit for the smaller investor,
since little, or no, institutional ownership means a stock could be
a huge winner as the big guys pile in. Companies mentioned in
today's commentary include: Novavax (NASDAQ: NVAX); Nabriva
Therapeutics (NASDAQ: NBRV); Ehave, Inc. (OTC: EHVVF); and Allena
Pharmaceuticals (NASDAQ: ALNA).
The Covid-19 pandemic has been one of the main
catalysts for big gains in the stock market, as people around the
globe have made major changes to the way they live and work. We
believe this trend will continue and look for leadership from cloud
computing companies like NVIDIA, Microsoft, and Alibaba;
teleconferencing companies like Zoom Video Communications, Slack
Technologies, and RingCentral; electronic payments companies like
MasterCard and Global Payments; Ecommerce companies like Baozun,
MercadoLibre, and Shopify; and streaming, gaming and video content
platform companies like Netflix, Electronic Arts, Take-Two
Interactive Software, Nintendo, and NetEase.
Other areas of interest to Micro Cap investors
are mental health and psychedelic medicine companies, as well as
biotech companies working on a vaccine for Covid 19. In the biotech
industry speculation has been swirling for months regarding a
vaccine for Covid 19.
Novavax (NASDAQ: NVAX) is why
investors invest in Micro Cap stocks. It is not classified as a
Micro Cap any longer, but it is certainly worthy of mention here.
The Company won a $1.6 billion contract from the US Government to
make a coronavirus vaccine, which was the Trump administration’s
largest vaccine contract. According to a recent report in the Wall
Street Journal by Gregory Zeckerman, Novavax was trading at $0.36 a
share a little over a year ago.ii Even after a 1 for 20 reverse
split, the stock was down 39% for the year. However, in June
Novavax received a $200 million investment from RA Capital. Right
after the $200 million investment, the Company announced it was
working on a COVID-19 vaccine and the government contract. Now,
Novavax is up 2,300% for the year. According to Mr. Zeckerman's
article, RA Capital is up $255 million in less than four weeks from
their June investment in Novavax. That, my friends, is the reason
investors speculate with Micro Cap stocks.
Nabriva Therapeutics (NASDAQ:
NBRV) is a Dublin, Ireland based biopharmaceutical company
engaged in the commercialization and development of innovative
anti-infective agents to treat serious infections. Nabriva received
U.S. Food and Drug Administration approval for XENLETA™ (lefamulin
injection, lefamulin tablets), the first systemic pleuromutilin
antibiotic for community-acquired bacterial pneumonia (CABP).
Xenleta is the first IV and oral antibiotic monotherapy treatment
option approved by the FDA for adults with CABP in nearly two
decades. Nabriva Therapeutics is also developing CONTEPO
(fosfomycin) for injection, a potential first-in-class epoxide
antibiotic for complicated urinary tract infections (cUTIs),
including acute pyelonephritis.
Nabriva Therapeutics plc recently announced an
exclusive agreement to sell and distribute Cubist Pharmaceuticals'
anti-bacterial medicine Sivextro (tedizolid phosphate) in the
United States and across its certain territories. Cubist
Pharmaceuticals is a wholly owned subsidiary of Merck. Sivextro is
used to treat acute bacterial skin infections and was approved by
the FDA. The financial terms of the agreement were not disclosed,
but Nabriva will be exclusively responsible for marketing, sales
and distribution of Sivextro in the United States until Dec 31,
2023 with renewable three-year extensions. Shares of Nabriva were
up more than 50% following the announcement of the deal with Merck,
but still trade 70% off of their 52-week high of $2.77.
Psychedelic Medicine is an area of the market
that has caught the attention of billionaire investors,
celebrities, and successful business executives as they endorse the
psychedelic medicine market by joining strategic advisory boards or
making sizable investments. Data Bridge Market Research expects the
psychedelic drugs market to grow at a CAGR of 16.3% over the next
eight years to reach $6.85 billion by 2027.iii Total annual
spending on mental healthcare in America tops $195
billion.iv The Covid 19 pandemic has made matters worse as
many individuals become depressed as they suffer from growing
feelings of isolation. Currently, in the United States, magic
mushrooms are still illegal in all 50 states. Denver, Colorado and
Oakland, California have both signed legislation to decriminalize
magic mushrooms opening the door for researchers to explore
potential medical benefits. Additionally, voters in Oregon are
expected to see a measure to legalize the use of psilocybin in
therapeutic settings on the ballot this fall.
Ehave, Inc. (OTC: EHVVF)
planted its feet smack dab in the middle of the Psychedelic
Medicine industry by acquiring PsychedeliTech, a division of Israel
based Israel Cannabis Limited ("iCAN"). PsychedeliTech is the
parent of PsyTech, which had originally planned to host an
inaugural PsyTech Summit last March at the Hilton Hotel, on the
Mediterranean Sea in Tel Aviv, Israel. The event was cancelled as a
result of the Covid 19 pandemic, but Ehave and PsyTech have hosted
a successful series of PsyTech Virtual Summits, which have been
held online. These Psychedelic Industry Webinars have featured
distinguished players in the Psychedelic Medicine industry such as
Rick Doblin, Executive Director of Multidisciplinary Association
for Psychedelic Studies (MAPS); Todd Shapiro, CEO of Red Light
Holland; Bruce Linton, Founder and Former Chairman and Co-CEO of
Canopy Growth; Saul Kaye, Founder CEO, can: Israel Cannabis; Shlomi
Raz, Chairman/Founder, Eleusis; JR Rahn, Co-Founder/Director,
MindMed; Matthew Johnson, PhD., Professor of Psychiatry and
Behavior, Johns Hopkins; Tyler Bryden, Founder Speak Ai &
Sessions; Sarah Hashkes, CEO of Radix Motion; Christian Angermayer,
Founder, ATAI Life Sciences; Dr. Rosalid Watts, Clinical
Psychologist at the Psychedelic Research Group at Imperial College
London; and James Stephens, Chief Science Office and Co-Founder of
Aurelius Data. The next webinar presented by Ehave and PsyTech will
be July 29, 2020 at 12:00 PM Eastern Time. The webinar is titled
Mystical Experience, Religion, and Psychedelics. Interested
investors can sign up here for free
https://www.psytech.biz/psytech-mystical-experience-july-29th/
The company believes that its Dash platform will
play a crucial role in the global advancement of psychedelic
research. As a HIPAA and GDPR compliant platform, Dash is secure
and compliant with some of the world's strictest privacy laws. It's
an optimal way to compile psychedelic research and results to
provide easy access for scientists globally. Ehave recently
acquired 51% of MDLink, a Jamaican Telemedicine provider. MDLink is
licensed for all CARICOM Countries which include Antigua and
Barbuda, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica,
Montserrat, Saint Kitts, Nevis, Saint Lucia, Saint Vincent, Rhe
Grenadines, Suriname and Trinidad and Tobago. MDLink currently has
over 10,000 patients. Ehave plans to develop a platform for MDLink
Mental Health Therapy. Additionally, MDLink has entered into a
technical cooperation agreement with the Inter-American Development
Bank IDB Lab to design and test a digital screening solution for
COVID-19 on the MDLink platform. The digital screening solution
will allow vulnerable patients, such as those with pre-existing
conditions and the elderly, to connect virtually from their homes
with licensed physicians.
Psychedelics are quickly picking up steam among
both researchers and investors. As the market opens up,
forward-thinking companies are building an early presence in the
space before it grows into a large and mainstream industry. Micro
Cap investors may want to consider building a position in some of
these companies given the similarities.
Allena Pharmaceuticals
(NASDAQ: ALNA) is a late-stage clinical
biopharmaceutical company dedicated to developing and
commercializing first in-class, oral enzyme therapeutics to treat
patients with rare and severe metabolic and kidney disorders. The
company is focused on metabolic disorders that result in excess
accumulation of certain metabolites, such as oxalate and urate,
which can cause kidney stones, damage the kidney, and potentially
lead to chronic kidney disease, or CKD, and end-stage renal
disease. Reloxaliase is an orally administered enzyme designed for
the treatment of enteric hyperoxaluria (EH) currently being
evaluated in the second pivotal Phase 3 study with the FDA.
H.C. Wainwright analyst Edward White covers
Allena Pharmaceuticals with a Buy rating and a price target of
$10.00. The analyst commented, "Reloxaliase, an orally administered
enzyme, is in development for the treatment of enteric
hyperoxaluria (EH) in the Phase 3 URIROX-2 study that comes on the
heels of the Phase 3 URIROX-1 trial. We are unaware of any other
companies that trade at a market cap of under $50M that are in the
second of two Phase 3 studies that could lead to an FDA filing in
2022. While there is a financial overhang on the stock due to the
need for a capital raise to progress to Phase 3 completion, we
believe the promise of a commercially successful drug for EH
outweighs the risks."
The potential size of the EH population in the
U.S. is around 250,000 people. As a result, White expects the
product to launch at the end of 2023, with sales landing at $18
million in 2023 and $350 million in 2028.
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material in this release is intended to be strictly informational
and is never to be construed or interpreted as research material.
All readers are strongly urged to perform research and due
diligence on their own and consult a licensed financial
professional before considering any level of investing in stocks.
All material included herein is republished content and details
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OTC Stock ReviewDavid Kugelman(866) 692-6847
i
https://www.cnbc.com/2020/07/10/miton-us-small-cap-stocks-are-poised-to-outperform-during-the-recovery.htmlii
https://www.wsj.com/articles/vaccine-stock-soars-rewarding-investors-big-bet-11594294901?mod=markets_lead_pos2iii
https://www.openpr.com/news/2068844/psychedelic-drugs-market-2020-to-grow-at-16-3-cagr-by-2027iv
https://www.openminds.com/intelligence-report/u-s-mental-health-market-195-6-billion-spending-2015/
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