2024: Chen Leads With Biotech After Picking 2023's Top Stock

Asset manager Chen Lin was very happy with his picks from 2023, which were documented quarterly on Streetwise Reports.

A fourth-quarter pick, Soleno Therapeutics Inc. (SLNO:NASDAQ), went on to be the top gainer of the year as determined by Dow Jones Market Data. Soleno jumped 1,900% as it announced in the fall positive results for its diazoxide choline extended-release tablets to treat Prader-Willi syndrome.

"Last year I had a good year even in a very difficult market," Chen told Streetwise Reports. "I picked the number one stock in America."

Prader-Willi syndrome is a rare genetic condition that can cause intellectual disability and obesity.

Silver was Chen's pick throughout 2023, but with his success with Soleno, it's no surprise that he may be shifting his top focus in 2024 to biotech companies.

So, for this year, Chen is leading off with two biotech picks, but he still thinks this will be a good year for silver (and gold) and didn't leave those companies out. An energy company rounds out the pack.

"There are so many biotechs right now, even biotechs trading below cash," Chen said. "I think this area can have a spectacular year ahead of us."

Chen said he also has heard rumors that the "M&A departments of Wall Street have been very busy on the holiday, with bankers working 80 hours a week because there's so much activity coming."

Aldeyra Therapeutics

One that has definitely caught Chen's eye is Aldeyra Therapeutics Inc. (ALDX:NASDAQ), which is in the process of getting its dry eye drug reproxalap approved.

The company signed an agreement with Big Pharma giant AbbVie last year to acquire a co-exclusive license to develop, manufacture, and commercialize the drug in the U.S. and an exclusive license outside of the country, Morningstar reported.

A generic version of AbbVie's own dry-eye treatment, Restasis, was approved in 2022. Aldeyra's share price went up 50% on the news of the agreement with AbbView over reproxalap last November.

Chen said he expects reproxalap to be approved soon.

"That's one of the opportunities I'm looking at it in biotech," he said.

According to Reuters, the company is 61% owned by institutions and 2% owned by strategic investors. The rest, about 37%, is retail.

Top investors include Perceptive Advisors LLC with 14.09%, Knoll Capital Management LLC with 6.11%, The Vanguard Group Inc. with 5.4%, State Street Global Advisors (US) with 5.21%, and BlackRock Institutional Trust Co. with 5.2%.

It has a market cap of about US$197 million with 58.82 million shares outstanding. It trades in a 52-week range of US$11.97 and US$1.42.

Reviva Pharmaceuticals Holdings Inc.

The other biotech Chen is watching closely is Reviva Pharmaceuticals Holdings Inc. (RVPH: NASDAQ), which recently released results from its phase 3 RECOVER study of its antipsychotic brilaroxazine for schizophrenia that shows a 50-milligram dose beats placebo on the primary endpoint.

The 15-milligram dose was numerically superior to placebo, but did not reach the same significance, according to Seeking Alpha.

"We believe these advances reinforce the broad potential of brilaroxazine to be a safe and effective therapy for major neuropsychiatric and inflammatory indications caused by a dysfunctional serotonin-dopamine system," company founder, President, and Chief Executive Officer Laxminarayan Bhat said in a release.

"Importantly, our recent progress brings us closer than ever to fulfilling our mission of reviving the full promise of patients’ lives with treatment paradigm-changing drugs targeting neurotransmitter-driven diseases," Bhat said.

The stock is "a great opportunity," Chen said. "People will realize this is a good value."

Ram Selvaraju, an analyst with H.C. Wainwright & Co., has rated the stock a Buy with a per-share target price of US$20.

Tip Ranks on Market Insider noted on Dec. 26 that the rating may have been influenced by other recent events in the sector on Wall Street.

"Recent high-profile acquisitions by Bristol-Myers Squibb and AbbVie highlight the significant interest in neurological treatments and suggest a fertile environment for Reviva’s shares, given its modest market capitalization," the website noted. "This activity suggests that Reviva could be an attractive target for acquisition or partnership."

According to Reuters, Reviva is about 10% held by institutions, and 18% by strategic entities. The rest, 72%, is retail.

Major shareholders include the CEO Bhat with 8.9%, Vedanta Partners LLC with 5.12%, Parag Saxena with 3.12%, The Vanguard Group Inc. with 2.21%, and Armistice Capital LLC with 2.15%.

Its market cap is US$124.58 million with 27.92 million shares outstanding. It trades in a 52-week range of US$9.2499 and US$3.50.

Cerro de Pasco Resources Inc.

Cerro de Pasco Resources Inc. (CNSX:CDPR; OTCMKTS:GPPRF)

But the trader still hasn't lost his taste for precious metals, especially silver, which as the most conductive element in nature is important to the new clean economy as it is used to coat electrical contacts in computers, phones, cars, and appliances. It's also an important element in solar technology.

"We could have a very, very strong breakout year for gold, and silver as well," Chen said. "So even though, so far, the market is not cooperating at the beginning of the year, but there's a good buying opportunity."

A frequent pick in this sector for Chen returns, Cerro de Pasco Resources Inc. (CNSX:CDPR; OTCMKTS:GPPRF), which is developing the El Metalurgista mining concession in Peru and exploring the Quiulacocha Tailings Project at the site and its wholly owned Santander Mine. 

The company is awaiting a rare easement for the tailings project from the country. It has signed a memorandum of understanding with Volcan Compania Minera to collaborate in the first phase of exploring the project at the site. Glencore International Plc (GLNCY:OTCMKTS) is providing a US$2 million loan to cover the costs of the first phase of the project. Volcan will allow Cerro de Pasco rights to process materials through its processing plants.

About 23% of the country is held by insiders and management, about 18% is held by institutions, and the rest is retail.

Top shareholders include LH Financial Services Corp. with 16%, Gordaldo Ltd. with about 10%, Executive Chairman Steven Zadka with 7.66%, Executive Director and Chief Executive Officer Guy Goulet with 2.79%, and President and Director Manuel Rodriguez with 1.22%.

Its market cap is CA$28.19 million, with about 328 million shares outstanding. It trades in a 52-week range of CA$0.17 and CA$0.055.

Hecla Mining Co.

Chen moves into the majors and goes big for his other silver pick, with Hecla Mining Co. (HL:NYSE), America's largest silver miner, producing more than 45% of the precious metal in that country, and said it owns the "only primary silver producer in Canada."

It has operating mines in Alaska, Idaho, Quebec, and Yukon Territory. In the third quarter of 2023, the company completed the acquisition of ATAC Resources, adding more than 700 square miles of the Rackla and Connaught properties of territory in the Yukon.

"Hecla seems to be a solid, solid silver company," Chen said. With new acquisitions, it "should start picking up. They will have a very strong growth for the rest of the year."

The company noted it had sales of US$181.9 million in the third quarter of 2023, with 38% of that coming from silver, and 36% coming from gold.

"Hecla is the fastest-growing established silver producer, and we expect to produce up to 20 million ounces (Moz) of silver by 2025," Hecla President and Chief Executive Officer Phillips S. Baker Jr. said in a release. "Because silver is a key component in solar power generation, which is the fastest growing source of renewable energy, Hecla will be a direct contributor to the energy transition."

According to Reuters, about 62% of the company is owned by institutions, while strategic entities own about 7%. The rest, 31%, is retail.

Its market cap is US$2.71 billion with 618.23 million shares outstanding. It trades in a 52-week range of US$7 and US$3.55.

New Stratus Energy Inc.

Chen's energy pick is another company returning to his list: New Stratus Energy Inc. (NSE:TSX.V), a Canadian oil and gas company focused in Latin America.

On Jan. 2, New Stratus Energy announced it had consummated the acquisition of a 50% indirect interest in GoldPillar International Fund SPC Ltd. GoldPillar holds a 40% equity stake in the joint venture company, Petrolera Vencupet S.A. The latter possesses the rights to oil extraction in several fields situated in the Anzoategui and Monagas States in Eastern Venezuela.

These fields, christened as Adas, Lido, Limon, Leona, Oficina Norte, and Oficina Central, are currently under the 60% ownership of Corporacion Venezolana de Petroleo S.A., a subsidiary of the Venezuelan national oil company PDVSA.

"I'm quite excited. I think they should have a very exciting year ahead of them," Chen noted.

According to Reuters, about 2% of the company is owned by institutions, and 25% is owned by strategic entities.

Top shareholders include Victnico Investments LLC with 9.08%, Chief Executive Officer and Director Jose Francisco Arata with 4.99%, Independent Director Wuilian Mauco with 4.91%, Chief Geological Officer and Executive Director Marino Ostos with 4.18%, and U.S. Global Investors Inc. with 1.54%.

Its market cap is CA$77.44 million, with 122.91 million shares outstanding.

It trades in a 52-week range of CA$0.94 and CA$0.14.

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1. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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