Month: October 2020

ThumbTack Fund Report 3 – Aftermath Of Avenue Therapeutics (ATXI)

It’s only been 3 weeks since the last report (, but TTF has been owning the markets so numbers have changed rather drastically. Plus I thought I’d share my updated thoughts on ATXI after their complete response letter carnage.

TTF fund cumulative money weighted return since inception in Feb 2020: +39.96%, YTD returns: +40.26%

Total deposits: USD 184,230.93

Current NAV: USD 231,017.94

Quantum gain: USD 46,787.01

MTD returns of +8.92% means that Oct 2020 has been 1 of the best months that I can remember. A +40.26% gain since inception in Feb 2020 also means that the almost -50% drop then is now a distant memory.

It’s interesting to note that that’s what we can expect with a highly concentrated portfolio. Win or lose, make or break, go high or go home kinda portfolio, every move is a high conviction one, with little of the dulling effects of diversification.

Negative cash levels in Sep has now reverted to a positive level, as I took on some cash margin to support my position in MELI.

MELI has since been divested, and cash levels went back into positive territory.

I don’t quite pay much attention to these, but IB puts them in the report. I guess it’s also good to have a bird’s eye view of which sector I’m putting funds to work, but since I’m more of a bottom up stock picker than a top down one, this doesn’t have much of a relevance to my thought process.

LOL what a ride.

From the dark days of -48.47% to the current +39.96%, this is like a typical Hollywood action movie, where the odds are initially stacked heavily against our protagonist… but u just know it’d have a happy ending.

This is what I pay the most attention to actually. Investing is always relative. As long as I can beat my benchmarks over the long run, I won’t do too badly. And these benchmarks are monsters. (Except for STI, that’s just there for the geographic relevance. LOL)


SPY has returned +8.69%

VT has returned +5.64%

STI has returned -19.83%

TTF has returned +39.96%.

Looking at the chart, Sept and Oct have been particularly good months. It’s not just the cumulative returns, but the gradient of the line in the chart. Particularly in Sept, where the blue line continued upwards while indices dipped. In Oct, the blue line continued raging upwards while the other indices rose modestly.

In my last report, TTF’s top 5 general list looked like this:

  1. Broadcom (AVGO)
  2. Bausch Health Companies (BHC)
  3. Frontage Holdings (HK listed)
  4. Mercadolibre Inc (MELI)
  5. Bed Bath & Beyond Inc (BBBY)

Currently, the list looks like this:

  1. Broadcom (AVGO)
  2. GameStop (GME)
  3. Bausch Health Companies (BHC)
  4. Frontage Holdings (HK listed – 1521)
  5. ??????

Having taken profit on MELI and BBBY, I’ve since channeled the funds to building a long position in GME. The list is position weighted, meaning AVGO remains my largest core holding, and that GME has announced it’s arrival in the list by jumping straight up to number 2.

I’ve high conviction in these 4 ideas, and nothing in my continuous due diligence has made me waver. AVGO will just keep chugging along, it’s kinda crazy to think that my average purchase price is ard USD 260 only.

BHC has jumped strongly in the past month, and I continue to hold my positions. There’s a lot a lot of upside from even current levels, and I’m just waiting for the divestment/div in specie of their eyecare segment.

Of the 4 positions, Frontage Holdings is the only 1 still currently in the red. I’m using the opportunity to continue to add though, as I think their next earnings release will provide a surprise to the markets. The company’s balance sheet is rock solid, earnings is poised to rise, FCF is and always has been positive, and management is executing on their expansion plans. The nearest catalyst I can think of would be the next earnings release, but that’s slated to be sometime in late March 2021, so it’s still some time away.

On a different note… effort really does produce results. I say this because my main fund’s performance, albeit still pretty respectable, is nowhere as satisfying as the 5 name concentrated TTF. This is because I’ve basically done absolutely nothing there, concentrating only on TTF.


About 1.5yrs ago, in May 2019, I wrote up an investing thesis on ATXI:

In my last post, just before PDUFA, I’ve updated that I’ve sold out my position completely:

That proven to be an inspired, albeit admittedly lucky, move as the company received a CRL instead of the much awaited FDA approval. It’s been a couple of weeks, and I’ve since had time to update my analysis on the latest developments.

The reasons given for the rejection are:

” The CRL stated that IV tramadol, intended to treat patients in acute pain who require an opioid, is not safe for the intended patient population. Specifically, if a patient requires an analgesic between the first dose of IV tramadol and the onset of analgesia, a rescue analgesic would be needed. The likely choice would be another opioid, which would result in opioid “stacking” and increase the likelihood of opioid-related adverse effects. Other than this potential safety concern, the FDA did not identify a safety signal in Avenue’s clinical development program. In addition, the CRL stated that the FDA requires an adequate terminal sterilization validation prior to NDA approval, which is planned for later this quarter.”

We’d set the terminal sterilization validation requirement aside, since that has more to do with CMC (Chemistry Manufacturing and Controls) and should be relatively easily resolved.

Hence, the main concern that FDA has is that when IV tramadol is administered, BEFORE analgesia kicks in, the clinician may end up having to give another analgesic that acts more rapidly, and this would likely be another opioid and hence, result in the patient taking more than 1 opioids (Tramadol is not exactly a full opioid, but yeah, it “stacks” with other opioids)

In other words, FDA’s main gripes are:

  1. The lag time between administration of IV Tramadol and the onset of analgesia
  2. Because of this delayed onset, there’s a need for another drug which would result in stacking. To paraphrase it, it means IV Tramadol is not suitable as a MONOTHERAPY for the given patient population in ATXI’s submission. Aka more than 1 drug is needed.

WELL, WELL……….. hate to be a smart alec but…. I TOLD YOU SO!

This is my email correspondence with Dr Lucy Lu from April 2019, and in fact, I’ve included that in my initial investing thesis (

Note that beside Dr Lucy Lu, board members Joseph Vazzano and Jaclyn Jaffe from parent company Fortress Biotech were also cc-ed in the correspondence.

Literally, all my concerns brought up, are the exact reasons stated by FDA in the CRL.

In my 1st question, I compared ATXI’s IV Tramadol submission to Recro Pharma’s IV Meloxicam rejection, and questioned the 30min onset of analgesia as a possible cause of concern.

My 2nd question was related to onset of analgesia as well, based on IV Tramadol studies on animal models.

My 3rd question was the suitability of IV Tramadol as a monotherapy in pain management, given these characteristics.

So what next?

Companies tend to be very tight lipped when it comes to announcing what’s in the CRLs, so as to not give away too much. My personal guess is that ATXI’s submitted patient population and indications for IV Tramadol are for those in the moderate – severe pain categories. This means that onset of analgesia is important.

This also means that there are still some levers for ATXI to pull to get this approved. They could run another study with different end points, they could resubmit with different indications, they could do a sub-analysis of the data from the 2 earlier clinical trials etc.

Therein lies the problem. As an investment, this was supposed to bank on Cipla’s buyout offer. But the buyout offer is contingent on a few conditions being met. 1 of which is the timeline. Now that ATXI has received a CRL, they must go through the appeal process and gain approval by April 2021. That’s a mere 6months from now, which would render new clinical trials out of the question if they were to meet this deadline. On top of that, another of the closing condition of the buyout offer includes IV Tramadol being approved for the indications that were submitted i.e. patients with moderate to severe pain. Both these closing conditions now look increasingly unlikely to be fulfilled in it’s current form.

Cipla has 2 choices: 1) Stop throwing good money after bad, and give up, aka let this offer lapse. They have already bought 1/3 of ATXI at a cost of USD6 per share in the 1st stage of the closing. This initial stake cost USD 35million, but would now be worth around half of that (based on the current share price). Still, USD 35mil is really pocket change for a company as big as Cipla, so I’d think this is still a very real possibility.

2) Try to push this through. This would involve extending deadlines, and most probably, accepting a narrower range of indications, certain restrictive wording in the labeling and perhaps, even more funding to support further studies.

To try to make sense of what possibly might happen going forward, I’d list out Recro Pharma’s experience with IV Meloxicam, just as a very loose guidance.

24/05/2018 – 1st Complete Response Letter. FDA’s interpretation of the data differs from Recro Pharma’s.

July 2018 – Dispute resolution meeting with FDA

September 2018 – Company resubmitted IV Meloxicam NDA. Changes in the revised submission include “incorporation of revised language relating to the product label and additional information relating to extractable and leachable items”

24/03/2019 – New PDUFA date

March 2019 – 2nd CRL received. Reasons in this 2nd CRL are given as the delayed onset and duration of IV Meloxicam. “Delayed onset fails to meet the prescriber expectations for IV drugs”. “Regulatory concerns about the role of IV Meloxicam as a monotherapy in acute pain management”

31/10/2019 – FDA suddenly grants approval to company’s appeal of the 2nd CRL, on the condition that company “must provide sufficient evidence of effectiveness and safety to support the NDA”. Company must also “agree upon labeling language”.

November 2019 – Acute care business was spun off from Recro Pharma into a separate entity

Too bad Recro Pharma did not reveal exactly how they managed to appeal the 2nd CRL. Still, we can see that it took 7 months (March 2019 to Oct 2019) before they were successful. This was taking into account that there was no new clinical trials done. Also, it is clear to me that they had to accept narrower indications, and perhaps, even certain language warning of the limitations of IV Meloxicam.

Both the increased timeline and the limited indications are going to be bugbears in closing the Cipla deal for ATXI. It also does not help ATXI’s cause that in the midst of the pandemic, I am almost certain that most of FDA’s resources would be diverted to emergency authorizations of Covid related drugs.

On top of that, there is also 1 key difference: Meloxicam is an NSAID whilst Tramadol is a schedule II, part-opioid drug. With the sensitivities around the opioid crisis, stacking becomes a big issue whilst it is less of an issue with Meloxicam. That is, the problem with Meloxicam lies in the clinician’s expectations of it’s efficacy, which is easier to resolve.

I’ve been asked in a couple of emails, (Which I haven’t really replied adequately cos like I said, I have only just recently completed updating my analysis of ATXI in the light of the recent developments), whether I will be buying back my shares again now, seeing that the share price has absolutely cratered (-68%)

Well, looking at the situation, my answer is an obvious no. I don’t think the shares are investable right now, until more information comes out. At the bare minimum, I’d need to see Cipla come back with continued support. Perhaps extend the timeline, and even then, that’s really weak support. Until that happens, the company could be embroiled in a multi months or even years battle to get approval, and even after approval, the entire thesis of a viable and concrete exit in the form of Cipla’s buyout, would no longer be valid.

I’d keep myself updated on the proceedings of ATXI, if anything, just to gain an insight on the entire ups and downs of the NDA process.

Alright, that’s the end of this post and my thoughts on the developments surrounding ATXI.


ThumbTack Fund Report 2 – Dancing Between The Raindrops

That’s exactly what I’ve been doing in September.

S&P weakened considerably since the inaugural TTF’s 1st report on the 28th Aug:

I’ve managed to dance between the raindrops in the past mth or so, as TTF continued to grow strongly, largely on the backs of just a couple of nicely timed positions.

1 of which is to enter into long positions in BBBY just the week before earnings release:

Time for some numbers:

TTF fund cumulative money weighted return since inception in Feb 2020: +25.66%, YTD returns: +25.45%

Total deposits: USD 165,913.77

Current NAV: USD 194,405.75

Quantum gain: USD 28,491.98

This compares favorably with the 3 benchmarks I use:

I’m pleased with how TTF managed to dance between the raindrops, bucking the trend and adding further gains in a volatile September, from a YTD return of +15.46% to the current +25.45%, adding 9.99% to the returns in September alone.

Since the last report about a mth ago (, SPY has dropped 2.32%, reflecting the correction in tech in September. VT has dropped 1.3% YTD, tracking the decline in S&P.

STI has remained fairly “resilient” by dropping only 0.43% in September, but then again, a -20.85% YTD return is scant comfort. I guess GOT wisdom applies here: “What is dead, may never die!”

TTF’s top 5 generals is a highly coveted list… and truth be told, I’m surprised that I’ve made changes to the 5 names more frequently than I expected to when I started in Feb.


  1. Visa (V)
  2. Broadcom (AVGO)
  3. Bausch Health (BHC)
  4. Tencent (0700)
  5. Agilent Techologies (A)

In TTF Report 1:

  1. Broadcom

2. Bausch Health Companies

3. Frontage Holdings (HK listed)


  1. Broadcom (AVGO)
  2. Bausch Health Companies (BHC)
  3. Frontage Holdings (HK listed)
  4. Mercadolibre Inc (MELI)
  5. Bed Bath & Beyond Inc (BBBY)

This list is highly likely to change again in the coming months, as I’m currently toying with the idea of replacing the newest entrant: BBBY.

With the recent jump in the share price, I’m considering taking profit and replacing it with another heavily knocked down, but displaying strong FCF generation, value play. The DD would take a bit more time though, all this work is messing up my sleep recently.

Of the 5 generals, AVGO, MELI and BBBY are all in the green. BHC and Frontage are still currently net losing positions.

I’ve also started employing some leverage in September, as cash levels dip into negative category. Main reason for that is the MELI position. Based on my entry of USD 1,030 or so, a mere 100 share position would cost USD 103k. I forsee that the leverage would be chipped away though, over the coming months as I churn the premiums on options. Hopefully. Either that or when I divest MELI fully.

Peak to Trough, it’s been a christening experience for my new TTF fund, from a near death experience of almost -50% to the current outperformance of +25%

I’m actually starting to toy with the idea of looking into SG markets for the next general. US is likely to experience greater swings and volatility as we approach the elections. In contrast, SG has already dropped significantly, and perhaps there’d be some value emerging. I haven’t really looked into it, just toying with the idea. 1 minor bug bear is that since I can’t buy SG equities with my IB account, tracking returns would not be automated so that’s making me hesitate.

Finally, I’d end off by giving an update on a previously discussed company: Avenue Therapeutics (ATXI)

I’ve written extensively about the company back in May 2019:

Here we are, 17 months on. ATXI’s share price has appreciated from USD 4.50+ back then, to the current USD 11 or so, which is a massive return for 1.5yrs.

PDUFA date is set at 10th October, which is less than a week away. For the uninitiated, this is the date whereby FDA has to give a reply regarding ATXI’s new drug application (Tramadol given by IV route)

In other words, the investing thesis comes to a head within a week. Sort of anyway (there are several other scenarios that can play out)

I’ve just divested the remaining stake I own at USD 11 and USD 11.15 on Thurs and Fri.

My ATXI stake was mainly held in the main fund, not this new TTF, so it really have much of an impact on the performance of the fund, although yes, TTF did own a small stake of a few thousand shares at 1 point.

If FDA gives the full approval within this coming week, ATXI’s share price is likely to spike up to the takeover price of USD 13.92, which represents a very cool +26.5% gain from the current share price, in a mere 1 week. And since the take over offer includes additional CVS, the share price could even spike yet higher than USD 13.92.

So why divest right now, given that I’ve written extensively about ATXI, and remains pretty confident that IV Tramadol would likely get approval eventually?

Maybe there’s something about a -50% return (back in March/April) that changes your psyche and makes one less willing to make calculated bets. If ATXI doesn’t get approval, the share price would almost certainly tank. It could be a -20%, it could be -30%, it could even be -50%. It depends on the reasons stated in the CRL (the complete response letter is a nice letter FDA sends to the company if they reject the application, detailing the reasons why)

At my divested price, I’ve already collected an over +100% gain (ballpark figures of around 120% or so). It just doesn’t feel right to stick around for a potential 26.5% return. Long time readers would know that I always like to leave something on the table, and leave the party early.

Also, in the midst of updating my DD as I was pondering whether to hold for this critical event or to sell out early, I’ve compared this situation to another similar opioid that got approved just recently:

“Olinvyk, which is approved in adults for the management of acute pain severe enough to require an intravenous opioid analgesic and for whom alternative treatments are inadequate, will be commercially available when the US Drug Enforcement Administration (DEA) issues its controlled substance schedule in around 90 days, the company noted.”

Trevena’s share price soared upon news of approval of Olinvyk. Note that this is a like for like comparison, as Olinvyk is an IV opioid and it’s pretty surprising to me that FDA would approve it in the midst of all the backlash from the opioid crisis in the US. So, on the surface of it, this seems favorable to ATXI’s IV Tramadol, as Tramadol is a schedule II DEA drug and is less addictive than Olinvyk, a full opioid.

In my mind, it’s senseless for FDA to approve Olinvyk (yes, it has other favorable characteristics over other currently used full opioids, which is why FDA approved it.) and not approve Tramadol eventually.

I keep using the word “eventually” cos that’s been playing in my mind. Trevena got the approval in August 2020, but that’s not after a setback in their initial application. When Trevena first applied, they got a rejection (aka CRL) from FDA back in late 2018:

The stated reasons in the CRL?

“Consistent with the discussion at the recent Advisory Committee meeting, FDA has requested additional clinical data on QT prolongation and indicated that the submitted safety database is not of adequate size for the proposed dosing. FDA also requested certain additional nonclinical data and validation reports.”

I’m just concerned that this may happen to ATXI too. I’ve seen and read and re-seen and re-read their clinical trials and published papers, and they don’t seem completely robust.

For example, Trevena submitted 2 RCTs (Randomized controlled trials) as part of it’s application:

1.) Benefit and Risk Evaluation of Biased μ-Receptor Agonist Oliceridine versus Morphine, by lead author Albert Dahan, M.D., Ph.D., Professor of Anesthesiology, Leiden University Medical Center.

2.) Evaluating the Incidence of Opioid-Induced Respiratory Depression Associated with Oliceridine and Morphine as Measured by the Frequency and Average Cumulative Duration of Dosing Interruption in Patients Treated for Acute Postoperative Pain, by lead author Sabry Ayad, M.D., Department of Anesthesiology at Cleveland Clinic.

Each study included a sample size of 790 patients, and yet in it’s CRL in 2018, FDA indicated that “the submitted safety database is not of adequate size for the proposed dosing”.

In contrast, ATXI too, submitted 2 RCTs, with a sample size of just 409 patients.

I’m not saying this is a 100% like for like comparison, as there are so many other factors at play here. For eg, the initial rejection for Trevena could be related to the higher IV dosing levels, and hence the need for a greater sample size. Tramadol also has a longer history, better track record and is more widely used (elsewhere in the world).

Yet, the risks just don’t seem to be able to entice me to wait another week till D day. If FDA asks for some additional information like a simple bioequivalence study to “top up” ATXI’s application, the share price would still tank cos I don’t think the markets understand such technicalities in that great a detail. The headlines would just be brutal.

Anyway, I’m happy with my returns here, and if FDA gives a full approval next week, and I miss out on a massive +26.5% gain, so be it.

I’ve made my bed and I’m gonna lie in it. It wouldn’t really upset me too much.

But if it tanks and I didn’t escape early enough despite doing all that DD and knowing what I know… yeah, that would upset me.

So there. As you can see, the past month has been 1 filled with lots of researching and tinkering around. Like I said, I’m doing a tap dance between the raindrops.

I’m trying to protect my returns from here. I’d be happy to end 2020 with a +25% return, which would be pretty stellar for any new fund’s 1st year. Plus it’s 2020 so anything can happen. Q4 is setting up to be highly volatile and crazy, and my main focus is on defence, not to try to find the next shooting star. (OK, poor analogy here. Shooting stars are falling meteorites so it comes down, not up).

Anyway, that’s all for TTF’s 2nd report. I’d be happy to share in greater detail, my updated ATXI research and/or other related comparisons if anyone wants it, just drop me a mail.

Stay safe.