Revisiting my post "Why I am adding more (CLPT)"
Stock up more than 125%
On March 2nd, I wrote the post below about why I thought the market was wrong and why I was going to add to my position. The stock is now up over 125%. This rally is due to the FDA reversing its position on QURE, a CLPT partner.
Given the stock is up ~40% on the day and pending full FDA approval, I have trimmed a small portion of my shares to lock in some gains.
My post from March 2nd is below:
Some brief thoughts on why I am adding significantly to my position and I believe the market’s reaction is overdone.
CLPT Overview
ClearPoint Neuro is a company that enables precision neurosurgery and access to the nervous system. The core business can be viewed mainly as four pillars:
Biologics and Drug Delivery,
Neurosurgery Navigation,
Laser Therapy,
Cranial Irrigation and Aspiration (which allows CLPT to enter the substantial Intracranial Haemorrhage market).
It is a razor-and-blades type business model but the primary driver for my investment is the massive potential in commercial drug delivery. ClearPoint currently supports over 60 active biopharma partners, including nine programs under FDA expedited review and one approved commercial partner, PTC Therapeutics. PTC Therapeutics’ KEBILIDI, exclusively uses ClearPoint’s SmartFlow® Cannula and this establishes a clear, validated blueprint for the remaining 8-9 late-stage partners.
The partners with confirmed FDA expedited status and their relevant details are displayed in the table below.
These are important partners because they represent companies currently close to being at the commercial stage. If even 1 or 2 of these follow PTC Therapeutics into full FDA approval by 2027, then $CLPT's revenue will see a significant step function increase. Furthermore, the high-margin commercial revenue from these partners would cover all their operating costs and in my view would lead to a re-rating of the stock.
We already saw first-hand proof of this with QURE in September when they released strong data showing AMT-130 slowed disease progression by 75% compared to external controls. QURE stock went from ~$14 to >$70 and CLPT went from $10 to $30 in a few days. If they get several partners, that is a blue-sky scenario. Of course, we know that in November the FDA did a 180, stating that the “Phase I/II data compared to external controls were unlikely to be sufficient to support an application.” Subsequently to this, both stocks round-tripped that move.
Where we are now
That brings us to today whereby uniQure (QURE) fell by >35% after the FDA rejected its Phase I/II data for AMT-130. The FDA stated the current results are insufficient to support a marketing application for Huntington’s disease and have strongly recommended that the company conduct a randomised, sham-surgery-controlled Phase III study. This significantly extends the development timeline and overshadows the company’s Q4 earnings beat and 2029 cash runway projection.
Clearpoint Neuro is down 25% or so on this news. Whilst this is relevant and important, I do not believe it is warranted for 2 main reasons:
CLPT stock was not pricing in a QURE approval going into today. It had already round-tripped the 'QURE premium' from when the name first spiked from $14 to $30, and was actually trading back near $12 leading into this morning's news.
More importantly, ClearPoint has several other partners in the final stages of clinical development. While uniQure ($QURE) remains a key partner with a significant therapy, it is just one of several high-potential programs in the pipeline.
What I am doing with my CLPT Position
I have increased my CLPT position by >30% with adds in the 8’s and 9’s. (To track just review the live updates thread on Substack Chat or The Live Updates channels on Substack). Note this does not account for when I covered my cost basis during September. I will continue to add if the stock remains at these depressed levels. Please note given there are hurdles and challenges, I have sized it appropriately, it has ~3% weighting in my portfolio after the drop but more at cost. I will be adding more in coming days.
Regarding catalysts, a significant move could happen at any time, though it will likely stem from one of the other partners currently in the FDA approval pipeline. Since these milestones may be weeks or months away, I believe one can remain patient while building a position.
I will continue to trade around a core, whilst keeping my core position intact always.
Thank you for reading and see you for the next one!