Post by
SPCEO1 on Nov 12, 2021 6:15pm
Weekly Report Card
Weekly Report Card - 11/12/21
Summary: THTX's stock was unchanged last week while the market fell slightly and the Biotech index sold off sharply. While THTX spent much of the week below the $3.50 level, where it seemed to have gotten stuck at previously, it still ended the week back at the $3.50 levelwith the help of a late Friday afternoon spurt higher. THTX did give a very well done presentation at the Credit Suisse Global Healthcare conference on Thursday but they were one of hundreds of companies presenting there and we suspect there were not many people other than current shareholders listening in. While THTX's stock price did not rise this week, we are still in a bit of a better mood since most other stocks fell and because of the good presentation at the Credit Suisse conference. However, one reason the presentation was good was because of an answer to a question where some meaningful info was shared. Had the question not been asked, the info likely would not have been shared and, it is really irritating that THTX would need to be asked to get this info out. They should be anxious to pass on good info from their phase 1a cancer trial! The best the Grumpy Grader can do this week is a "C".
We did learn that the departure of THTX's Investor Relations officer came about because of a family health issue that made it difficult for her to travel. Since travel was a requirement of the job and the pandemic restrictions on travel are basically over, she would not be able to perform the required tasks and this si what led to her departure. THTX is reportedly already in the process of looking for her replacement which, when combined with the need to replace the fired head of communications really gives THTX's CEO an opportunity to build out a communications staff of his own choosing. Communications is not an area that THTX has excelled at in the past so we are hopeful THTX will be able to make a quantum leap forward with these new hires.
Institutional investors have begun filing what is known as 13-F reports with the SEC wherein they divulge changes in their shareholdings during the third quarter ended 9/30/21. One of the institutions that participated in share offering early this year, AIGH, sold about 553,000 THTX shares during the third quarter but continued to hold over 3 million shares (as well as a lot of warrants). A long time shareholder from Quebec, the state pension fund Caisse De Depot sold 1.6 million shares in the third quarter and now holds 402,000. So far there have been a smattering of other buys and sells reported but nothing all that significant. All the institutions will file by next Tuesday so it will be interesting to see what other buys and sells took place in the third quarter and we will report on those next week. We will be particularly interested to see any changes that may have occurred in the holdings of Soleus Capital, a cancer investing expert that is currently the largest shareholder who added to their already large stake in the second quarter.
Once again, despite our general grumpiness in handing out these weekly grades, which will undoubtedly persist at least until the stock hits a price greater than the $11.25 it hit in late May 2018, we do still think we should give credit where credit is due. Some of the issues raised here (and elsewhere too) in the past have been addressed to varying degrees of success and we note them below:
1. A new board member with capital markets experience was added (but he unfortunately does not have US capital markets experience)
2. The corporate presentation is very well done
3. There was a major upgrade to the company’s website
4. Allowing non-analysts to ask questions at the quarterly conference calls was a major positive (but taking on one question from this source in Q3 was a mistake)
5. There has been at least some insider buying of the stock (and no insider selling)
6. There has been increasing institutional interest in the stock
7. THTX's stock price has greatly outperformed the Biotech Index in 2021 (but it peaked near the middle of the year and has fallen back a bit since then
8. Adding Dr. Rothenberg, Recently retired Pfizer CMO, as a Scientific Advisor was fantastic
The biggest potential upside catalyst for THTX's stock price is its cancer program. If the results of the phase 1a trial, currently scheduled to be released sometime between now and January depending on how quickly the trial begins to see patients having side-effects from getting too much of TH-1902 in their system, basically confirm what THTX saw in its pre-clinical work on mice, then the stock should really explode higher as it will back up previous claims by THTX management that TH-1902 could transform the way a number of cancers are treated. At the Credit Suisse conference, THTX revealed some additional info that highlighted the phase 1a trial is moving in line with what they saw in the pre-clinical work, which is a very positive development. The minimal safety information released previously also indicates the trial is headed in the right direction. But the range of possible outcomes from the phase 1a trial remains reasonably wide with many potential pathways to increased investor interest in THTX as a result of the trial data. Based on upbeat management characterizations of the trial, which were again on display at the Credit Suisse conference, and other hints we can identify, we are optimistic the phase 1a trial results will be positive on some level. If even one patient showed tumor regression or other convincing evidence that TH-1902 was having a favorable impact on the cancer patient's health, that would be an important finding. If several patients showed evidence of the drug working, it would likely be perceived as a very big deal. So far, however, they have not dosed that many patients so the opportunities to find out if the drug is shrinking tumors is not great. In the end, however, we need to see the actual data to determine the path forward for THTX in cancer. It should not be too long before now we see that data and can start to make better guesses at the scale of the cancer opportunity THTX has in front of it. THTX stated at the Credit Suisse conference that they are somewhat overwhelmed by the numerous potential strategic options in cancer and that they have already begun to receive "inbound interest", which we believe is a code word for contacts from larger pharmaceutical companies looking to partner with THTX. Still, phase 1a data cannot tell us too much since such trials target safety rather than efficacy but we are hopeful we will get some preliminary efficacy signals and become more hopeful every day since the amount of chemo THTX is now delivering to the patient's cancer cells as this dose escalation trial comes to its close is pretty enormous. Since the trial is still ongoing the drug has obviously been shown to be safe so far (it would have been shut down already if it had become unsafe) and since so much chemo is likely being deposited in the cancerous cells at this point, many of those cells should be being killed off. But until we see the actual data, those are just educated guesses. They disclosed the trial is currently at the point where twice the normal dose of Docetaxel is being administered to the trial participants. If it is working like it is supposed to, this means actually much more than just twice the normal amount of Docetaxel is getting into the cancerous cells. Because the amount of Docetaxel is so large now, we should expect more Dose Limiting Toxicities (DLT's) to occur sometime soon and, therefore, perhaps the Maximum Tolerable Dose (MTD) to be identified soon. Finding the MTD is the main objective of the phase 1a trial and we will hear more data about the trial after it is reached.
Another potential favorable catalyst for THTX's share price in the short term is either a partnership deal that quickly crystalizes the value of their NASH program for investors or some form of alternative financing (I am not really sure what THTX means by this however) to finance its NASH phase III trial. Given the huge size of the potential NASH market, the legitimate opportunity THTX has to be successful with its phase III NASH trial and the relatively low cost of $50 million to get results on the first 400 patients in that phase III NASH trial (the full NASH trial will cost $160 million), there should be a partner who would be interested, but I am no longer hopeful THTX will actually be able to find someone to partner with. Interest in NASH from potential partners has dried up quite considerably due to the many failures other NASH companies have experienced. If they do find a partner, the terms to which they agree upon will be key to observe to see if this could be something that would move the share price. They have indicated they are having some discussions with potential partners but I do not get the sense these are at a critical phase. At the Credit Suisse conference, THTX indicated it would be helpful if another NASH stock would achieve some success in one of their studies (I suspect they were referring to MDGL's study which will report out some results soon) so that larger pharmaceutical companies would once again get interested in NASH if that happened. THTX's CEO has indicated he will start this trial at the beginning of 2022 one way or another, and if they do not find a partner, they will find a way to finance it that is "responsible" toward current shareholders like ourselves. Hopefully, we all agree what "responsible" means! The risk is the ATM is being utilized right now to raise the money to pay for the NASH trial and I do not think many shareholders would view that as a responsible way of financing this trial. From what we heard at the Credit Suisse conference, the ATM does not seem to be a consideration and I suspect they may be looking to fund the trial by slowly borrowing against their accounts receivable, but that is just a guess based on how they phrased what they said.
The biggest risk for THTX's stock right now is the CEO and board forcing another low-priced, irresponsible share offering down the market's throat to fund the NASH trial prior to the announcement of the cancer data. Following last year's poorly conceived share offering, another such offering would likely have even greater negative consequences for management and the board. The CEO has stated flatly that he is going to find some way to get the NASH trial started by early 2022 but how he does that will make all the difference. We have suggested a partial spinout of the company's NASH program in order to crystallize it value, raise the needed funds, gain better analyst coverage for the stock and reduce the risk of the trial's potential failure. NASH was recently a hot commodity among investors but the recent spate of NASH drug failures has cooled that enthusiasm considerably, which would likely make a spin-off challenging even if there is obvious value in THTX's NASH operation. Perhaps THTX has a better idea but if they fall back on a low-priced share offering to finance it, or using the ATM at the current low price level, that will further undermine the management and board's reputation to the detriment of the stock over the short and long term. Post the comments at the Credit Suisse conference on this subject, we think another low priced share offering is not likely, thankfully!
Another big risk to THTX's share price at the moment would be that the results of the cancer phase 1a trial turn out to be uninspiring. Given what THTX revealed about the safety situation so far in the phase 1a it is hard to see a scenario where the cancer program would not move forward to phase 1b, which is encouraging. But if the phase 1a just shows the drug is safe with little preliminary evidence of effectiveness, that would still be disappointing as it means another wait until the phase 1b shows efficacy or not, which would likely occur at the earliest in the Spring of 2022 after patients in this trial had received several rounds of TH-1902. The phase 1b portion of the trial is likely to begin in early 2022 and it would be more focused on efficacy versus safety focus of the phase 1a. THTX's hiring efforts also indicate they are attempting to expand their pre-clinical work into other aspects of cancer. The ultimate opportunity in cancer for THTX could be enormous, probably larger than they can handle, which could set them up for being taken over by a larger pharmaceutical company.
The other big risk for THTX's stock price is a big decline in share prices generally, which given the market's bubble mode at this time, is a bigger risk than normal. In the latter half of October, the bubble conditions returned with a vengeance so this risk remains a considerable one. And just because THTX has not been swept up in the favorable upside moves during the bubble does not mean it will not get caught up in any general sell-off in the market.
THTX investors are especially irritated by the fact that other similar companies are getting much more highly valued than THTX during the bubble. The valuations noted below for these other stocks are hard for THTX shareholders to stomach when it is obvious that THTX has more going on than any of these companies. Here is a list of these comparable stock's market caps that show they are obtaining very significantly higher valuations despite having far less to offer than THTX, which has a phase III ready NASH program, two legacy drugs generating about $65-$70 million in annual sales and an extremely intriguing early stage cancer program:
Taimed (THTX's partner in Trogarzo and nothing else) $604 million
CytoDyn (A possible Trogarzo competitor but a joke company with no sales) $812 million
Akero (A NASH company with good results in phase 2b, nothing else) $884 million
IVA (A NASH company with good results that just started phase 3, nothing else) $564 million
PRLD (A phase 1a precision cancer stock with nothing else) $765 million
THTX (Cancer, NASH and $65-$70 million in annual revenues) $332 million
It begs the question of what THTX is doing wrong to be valued so lowly relative to these other stocks which offer, at best, only a portion of what THTX offers investors. This seems like something that should be the focus of management and the Board of Directors, especially since a fund raising is on the horizon. It is just not fair to shareholders to allow this situation to persist.
Stock Price:
Last Week YTD 1 Year Since THTX Hit its Peak (5/25/18)
THTX 0.0% 40.0% 57.0% -68.5%
S&P Biotech Index -3.6% -10.1% 2.4% 34.9%
The table above summarizes THTX’s better than index performance over the YTD and the last year. THTX’s stock price, is however, still 68.5% below the high of $11.25 it reached in late May, 2018 whereas the S&P Biotech Index is up 34.9% during that same time period, highlighting the company’s inability to get investors interested in their cancer and NASH opportunities as they transitioned away from disappointing sales for Trogarzo. Given how significant the NASH and cancer opportunities are and in light of the new CEO, as well as money spent on investor relations consultants and a new Investor Relations officer, all within a backdrop of a big bull market where stocks with far less than what THTX has to offer investors are performing much better, THTX’s longer term stock price performance has been quite disappointing. But the very good performance so far in 2021 seems to indicate a new, more positive trend has begun. We hope developments in their cancer and NASH programs will propel the stock significantly higher, supported by an improved effort to reach investors with their very intriguing story, particularly regarding THTX’s cancer drug, TH-1902, or more appropriately, its Sort1+ technology platform, of which TH-1902 is the first part and which could ultimately prove to be an enormous business opportunity.
Trading Volume: Last week there was another decrease in the number of shares traded versus the previous week. Volume rose meaningfully to 500,000 from 313,000 but averaging 100,000 shares traded a day is not impressive in this market environment and particularly after making a good presentation at a major broker's conference. This low trading volume is quite disappointing and again reflects the failure of the investor relations effort at THTX. Between insider buying and the rapidly approaching phase 1a cancer results, you would think it would not be hard to draw attention to THTX and get some investors interested in taking a position in it. Given the backdrop of a stock market bubble, gaining investor's attention and increasing the trading interest in THTX should be about as easy as it ever is going to be right now yet just the opposite seems to be the case. It certainly seems to indicate that THTX has thus far failed to line up potential new investors to invest in the stock as the cancer data becomes available. Institutions simply are not paying any attention to the good message THTX's CEO is trying to communicate to them but retail investors do seem willing to listen. THTX got a gift with what happened several weeks ago when a financial advisor mentioned THTX's stock as a potential big winner on the Fox Business channel - let's hope they let that experience help them shape their future communications strategy in a positive way. So far, however, THTX continues to inexplicably ignore the substantial opportunity staring them in the face from the very vibrant retail investor market while pursuing institutional investors who cannot buy their stock even if they wanted to due mostly to its low price and small market cap. Hopefully, a new Investor Relations officer will help get this situation turned around but it is not clear how long it might take to get someone in this role.
A year ago 321,000 THTX shares traded during this week. Two years ago during the same week, THTX traded only 210,000 shares. If the company hopes to continue to improve on the trading volume in its stock, it will need to pick up the pace of effective engagements with investors who are best positioned to listen and respond to their message. This Fall should give them ample opportunity to do that via both numerous conferences and, most importantly, the release of the phase 1a cancer data which hold the potential to completely alter the trajectory of THTX’s future prospects. THTX needs to have in place a good plan to capitalize on this release of this important data, presuming it is good news. THTX should already know a lot about the phase 1a cancer test results and if they know they have a positive story to tell about it, they need to work very hard to build investor anticipation for those results. THTX's press release about the cancer phase 1a results will be key to attracting interest to the stock since analysts currently covering the stock will not likely respond appropriately to the news and drive interest in it. THTX should also have a plan to spread any good news via various media and social media platforms. Hopefully, new US based cancer analysts will also be ready to quickly pick up coverage of THTX if the cancer results are good as this will be key to getting new investors to buy it and push the share price higher. Little we have seen so far, however gives us much confidence that such plans might be in place - hopefully, they are just out of our sight right now. The low trading volume in the stock indicates any plans they are working to put in place are not leading to investors showing more interest in the stock. With the investor relations position now temporarily empty, the challenge is going to be even greater for the company to get any good word on cancer out to investors.
Options Trading: There are currently 1,656 call option contracts in place (versus 1,358 last week) and just 4 put options contracts open versus 3 last week. Clearly, option speculators are currently betting much more heavily that THTX's share price will rise in the months to come as seems reasonable given the proximity to news on the phase 1a trial. But the number of both calls and puts traded over the last week was insignificant and also highlights the general lack of interest in THTX. It is particularly odd given the prospect for cancer results causing volatility in the stock, which is normally something options investors are attracted to. With the stock stuck at the $3.50 level at the moment, however, that is not appealing to options traders.
Presentations to Investors: THTX presented at the Credit Suisse Global Healthcare conference this week and the presentation was a well done. Since I have commented on it elsewhere, I will not address this here other than to say it seemed very apparent from the tone of the presentation that some sort of good news is likely on the cancer front and that it may not be too long before THTX is running both a phase 1b trial in cancer and a phase III NASH trial.
THTX’s CEO has shown he can do a very good job in investor presentations and the Chief Medical Officer has also demonstrated similarly good presentation skills. I don’t imagine we will hear from their medical advisor, Dr. Beliveau too often, but he also did an excellent job on his part of the June cancer webinar. Drs.Loomba, Harrison and Grinspoon all did a good job presenting their material in the NASH KOL. New Scientific Advisor Dr. Rothenberg no doubt also has excellent presentation skills or he would have never have made it to be Pfizer's CMO. THTX does not lack for effective and notable communicators but for communication opportunities in front of the right audiences, as we saw with the clip on the Fox Business channel this week. The more such presentations they are able to do in front of varied audiences, the better. THTX has a n intriguing history of creating value from next to nothing in both cancer and NASH and has the people who can communicate those stories well. They now just need the right audiences to present to, something LSA is trying to help them with. LSA seemed to bring a good audience for the cancer KOL but was clearly unable to do so for the NASH KOL. Additionally, with the new website, anyone can now easily access any past THTX presentation anytime they want, which is very helpful for new investors considering investing in THTX. But they need to be out pressing the flesh with investors more often and with a narrative that they have created remarkable shareholder value while expending minimal shareholder resources in NASH and cancer in order to generate sustained interest in the stock prior to the release of the all-important cancer data in the fourth quarter.
THTX has proven they can present their intriguing case to investors well. Success will ultimately be found when they finally find a way to get the right audience to actually hear the very good things they have to say.
Analyst Reports/Comments: There were no analysts' reports this week on THTX as the analysts covering the stock generally do not comment on presentations made at competing broker conferences. Plus, the analysts that cover THTX are not really paying very close attention to it at this time.
The analysts covering the stock just are not doing a good job and rarely have ever done so. This is a seemingly never-ending crisis for shareholders and management has failed to fix it over a very, very long time. While it is admittedly not easy to fix since THTX management do not have direct control over the analysts, more can be done and desperately needs to be done.
Cantor’s analyst may produce a new report on THTX at some point but there may be securities regulations that limit Cantor’s ability to research the company actively while in the midst of a share offering they are leading. If a report is produced, we suspect it will be biased towards a positive conclusion, include some value for both the NASH and cancer programs and that may provide some limited support for the stock in the short term. While THTX apparently has no interest in selling shares through the ATM at this time or price (though it is always a risk they will do so given their expressed interest in pushing their NASH phase III forward), technically, there is an open share offering that Cantor is leading and we have not been able to get to the bottom of whether that restricts Cantor from writing up a report on THTX. Nevertheless, they can speak to their clients about the stock and encourage them to buy it. From Cantor’s perspective, they are incentivized to push THTX’s share price higher as that increases the odds THTX will issue shares thru the ATM thereby earning Cantor some healthy fees. In the end, however, I do not view the Cantor analyst as one who will likely create a lot of institutional interest in the stock given that analyst’s apparent focus on generating fees for her firm based on getting deals versus by generating consistent research coverage that gains the respect of institutional investors. So the analyst situation with THTX, which has been a long-standing problem for the company, remains really bad. We suspect only good cancer results will lead to an improvement in this situation as the current finance team has never been able to achieve lasting and worthwhile analyst coverage for the stock.
Appropriate Analyst Expectations: The analysts were once again all too high in their forecasts for Q3 sales and earnings. I guess I should not be shocked to see that Bloomberg indicates the analysts are expecting sales of THTX's two legacy drugs to be significantly higher than I think is likely in THTX's fourth quarter. These analysts are really so bad and simply do not learn from their past mistakes. It is hard to believe they actually keep thinking THTX's sales will be better than is reasonable to assume based on the past trends, the competitive situation and data available on sales of the drugs from Bloomberg as the quarter develops. But we did see a nice pop higher in Trogarzo sales in two of the last three weeks, as estimated by the always suspicious Bloomberg data and perhaps there will be a late quarter jump in sales in Europe since Italy is now ready to sell Trogarzo.
In the end, however, it is THTX's responsibility to get these analysts in line and why they repeatedly fail to do that is truly incomprehensible. It is important for the stock's reputation with investors for the analysts to report the company met or beat their quarterly forecast but in 7 out of the last 8 quarters, THTX has trailed the analysts estimates, thereby sullying the stock's reputation for something that could have easily been sorted out such that THTX beat the analysts' expectations in 8 out of the last 8 quarters. It is what almost all respectable companies do and THTX's sales and earnings trends are not so volatile that they could not relatively easily give conservative guidance like almost all other companies do so that the stock develops a reputation for meeting or beating the analysts' estimates. I just cannot comprehend why THTX does not take this simple step to eliminate this problem. They should never complain about the analysts being bad as long as they are unwilling to take control of the situation by offering more sensible sales and earnings guidance.
Corporate Presentation: Disappointingly, THTX has not yet updated its corporate presentation on its website. The last update to the corporate presentation took place on 7/20/21. They used a new presentation when presenting at the Credit Suisse conference this week but have not yet posted that on the company's website, perhaps because it was not quite as comprehensive as the old corporate presentation that remains on the website. But it is silly to have an old presentation on the website at this point, so hopefully they get that fixed quickly.
THTX’s corporate presentation is now a very good one. The corporate presentation is now so much better than it was a couple of years ago and THTX deserves a lot of credit for getting it dramatically improved. That improvement is also the result in how the company’s fundamental situation has improved over that time in both NASH and cancer – they now have more to talk about. They can easily go into a meeting with US medically-trained analysts and gain their respect with the high quality of their current corporate presentation.
Press Releases: There were no press releases sent out by THTX this week.
On the issue of press releases, I would suggest that THTX stop piling various announcements into one press release. For example, the announcement of Dr. Rothenberg joining THTX as a Scientific Consultant was actually a pretty big deal but THTX buried it in the midst of their Q3 earnings result press release. Anything THTX can separate out and gain additional focus on is a good thing. Why not have a stand alone press release for Dr. Rothenberg's appointment as well as a conference call with him discussing his thoughts on TH-1902 and the whole Sort1+ cancer platform THTX is developing?
Increasingly, stocks trade based on computer algorithms that read press releases and react to them by placing trades depending upon whether the algorithm thinks the news is good or bad. If THTX issues no press releases, trading volume tends to fall.
LSA Activity: There were no new LSA-related events this week but LSA could have been active behind the scenes. LSA was the sponsor of the NASH KOL event and it seems clear from the non-reaction to the event that they were unable to provide interested listeners to the call. So, while they did well with the cancer KOL in June, we really cannot give them any credit for creating the right audience for the NASH KOL. However, as we already noted, LSA had a difficult job in creating interest in a NASH presentation with NASH in the dog house from the perspective of most investors following the failed drug trials of other prominent NASH players. As best we can tell, the LSA engagement has not been a great success for THTX so far.
The big question is whether LSA has the capability to consistently provide a whole new audience to hear THTX’s very intriguing cancer story and if that can drive investor interest in the stock. We suspect LSA does have such a capability and we saw indications of that at the cancer webinar. We have been told that LSA is a bit capacity constrained and does not accept all companies which would like LSA to represent them. If that is correct, it is a good sign that they were willing to take THTX on as a client. I would have hoped to have seen more of an obvious positive impact from LSA’s involvement by now but perhaps the increase in institutional investment seen in the second quarter is partly the result of LSA’s efforts. It was interesting to see how much more effective one financial advisor recommending THTX's stock on the Fox Business channel was than any of LSA's efforts so far. And, unlike LSA's consulting services, it was free too!
Retail Investor Engagement: There were no efforts to engage with retail investors last week.
Apparently, LSA’s job includes attracting high net worth, retail investors to THTX. But it is not evident that THTX has a sensible strategy in place to pursue retail investors or even desires to do so. With retail investors becoming a prime mover in so many stocks, particularly smaller ones like THTX, we are not sure why THTX seems to be largely ignoring this segment of investors. A crude measure of retail investor engagement with THTX is the number of “followers;” the stock has on Stocktwits. The number of THTX followers on Stocktwits fell by five to 937 this week, but this is a pitifully small number and highlights the company's foolish disdain for retail investors in the current environment and in light of THTX's small size. Many other companies with far lesser prospects than THTX’s have many thousands of investors following them on Stocktwits. For example, GALT, a company with less impressive cancer and NASH prospects than THTX, and with no approved drugs at all, has over 9,000 followers on Stocktwits – 10x the amount THTX has! THTX clearly has some work to do on this front but they have shown very little interest in doing it so far.
Website Improvements: The recent website improvements have been very good and we hope the new and improved site will be well maintained and improved even further. The ability to find recent conference presentations and listen to them again is extremely helpful. We should also note the improvement to the quarterly meeting whereby investors other than the analysts covering the stock can now ask questions of management.
Insider Trading Activity: There was no additional insider buying this past week following some meaningful purchases in the previous two weeks.
One of the biggest negatives surrounding THTX has always been the low level of insider holdings and the lack of much buying activity in the stock. That has been true even when the stock was doing well. Ideally, we would see more frequent insider buying of the shares and that such purchases would be substantial from those board members who have the financial capacity to make larger purchases. But we would note that insiders have purchased over $700,000 worth of the stock over the last year. So, things are getting a bit better on that front.
Insider trading in THTX usually comes in spurts as the insiders are prevented from buying or selling most of the time. When a window for insiders to trade occasionally opens, there has only infrequently been much trading. Almost all the trading has been on the buy side when it has happened in recent years. With the former CEO and former board Chairman Paul Pommier now retired, two of the largest insider holdings are no longer present. Overall, insider holdings of THTX are low reflecting the fact that THTX is not a young company so the original insiders have been diluted over the decades. Also insiders have the opportunity to pick up cheap shares via options, which is more attractive to them than buying them on the open market. Still, it would be nice to see more insider buying. Our new CEO should be credited for picking up a sizable number of shares during his still short stint with the company even though he is entitled to receive a very large number of shares via options.
Changes in Institutional Investors Shareholdings: The third quarter regulatory filings are starting to come in and there have been some changes in holdings. Several smaller institutional investors slightly added to their holdings in THTX and some slightly reduced their holdings. Two larger shareholders, AIGH and Caisse de Depot, significantly reduced the number of shares they held at 9/30/21. AIGH sold about 553,000 shares and they now hold just over 3 million shares while Caisse De Depot sold about 1.6 million shares and now hold 402,000. This institution once was the largest holder of THTX shares but has been steadily reducing their holdings in recent years. More updates will come in between now and next Tuesday which is the deadline for filing and we will be better able to get a feel for what happened on the institutional investor front at that time. We are particularly interested in seeing what Soleus Capital Management might have done with their holdings during the third quarter as they are cancer investing specialists and we are sure they are in close communication with THTX regarding the phase 1a trial.
Most weeks there will not be new information on this item as filing requirements cause notifications of most changes in institutional holdings to be announced six weeks after the end of each quarter. Occasionally there are some other changes filed during the quarter and we will remain on the lookout for those.
Efforts to Highlight the Relative Undervaluation of TH's Stock: As noted several weeks ago week, in a major change, the CEO took the opportunity of the Canaccord Growth Stock conference to highlight the absurd undervaluation of THTX’s shares. Unfortunately, he has not mentioned it since that time. The undervaluation of their NASH assets is very apparent as THTX's NASH program is fairly similar to the programs both IVA and AKRO have ongoing and these two stocks have market caps of over $500 million and $800 million respectively while THTX's total market cap, which also includes two already approved drugs and its very intriguing cancer asset, is just $332 million. THTX's NASH program alone is likely worth more than $332 million on its own based on the valuations these other companies are getting and it would make a lot of sense if THTX's CEO highlighted this fact in any presentation he gives. It should be something they highlight on a chart in their presentation. It is just not reasonable for a CEO to not draw the market's attention to an asset worth as much as $500 million and which is being ignored by investors. I think things like this are covered in the first chapter in the book used in CEO 101 classes! And if THTX's NASH program is not worth as much as IVA's or AKRO's, then THTX's CEO should tell us why.
The message is very clear - whatever THTX is doing to connect with investors so that its stock price is valued like many other similarly positioned stock is not working anywhere near as well as whatever these other companies are doing. And this has been true for an unacceptably long period of time. Hopefully, an upgrade in the Investors Relations role will bring about some needed improvements.
Again, suggestions for improving this are welcome.