March Report

• March drawdown driven by clinical trial failure at Opthea, tariff concerns driving volatility and liquidity drying up in a risk-off environment.
• The portfolio is 45% healthcare, 40% critical minerals, and 9% cash, with critical minerals positioned as winners in a global trade war (e.g. IperionX, Brazilian Rare Earths, MTM Critical Minerals).
• The healthcare outlook remains strong, with a focus on innovative small caps like Clarity Pharmaceuticals, which is developing promising prostate cancer diagnostics and therapy with takeover potential.

Top Holdings (alphabetically)

Brazilian Rare Earths Limited

Australia

Materials

Brazilian Rare Earths Ltd. operates as a mineral exploration company. It focuses on the discovery and development of mineral resources in Brazil. The company was founded on March 3, 2021 by Bernardo da Veiga and is headquartered in Sydney, Australia.

EBR Systems, Inc. Shs Chess Depository Interests R

Australia

Health Care

EBR Systems, Inc. engages in the development of implantable systems for wireless tissue stimulation. Its WiCS Wireless Cardiac Stimulation technology helps address the significant opportunity to eliminate cardiac pacing leads. The company was founded by Richard E. Riley and Debra Sheryl Echt in 2003 and is headquartered in Sunnyvale, CA.

Genetic Signatures Ltd.

Australia

Health Care

Genetic Signatures Ltd. is a research company, which engages in the identification and commercialization of individual genetic signatures for the diagnosis of infectious diseases. It is also involved in the sale of associated products into the diagnostic and research marketplaces. Its products include the treatment for gastrointestinal infections, respiratory, sexual health, anti-microbial resistance, meningitis, and tropical disease. It operates in the following geographical segments: Asia Pacific, Europe, Middle East, and Africa (EMEA), and Americas. The company was founded by Robert J. Birrell, Christopher M. Abbott, and Geoffrey Grigg on February 15, 2001 and is headquartered in Newtown, Australia.

Iperionx Ltd.

Australia

Materials

IperionX Ltd. engages in the development of low carbon titanium for advanced industries, including space, aerospace, electric vehicles and 3D printing. It produces titanium metal powders from titanium scrap at its operational pilot facility in Utah and intends to scale production at a Titanium Demonstration Facility in Virginia. The company was founded on May 5, 2017 and is headquartered in Charlotte, NC.

Iperionx Ltd. Sponsored ADR

United States

Materials

IperionX Limited focuses on sustainable mineral and material supply chains. The Company develops low carbon titanium for advanced industries including space, aerospace, electric vehicles, and 3D printing. IperionX serves customers worldwide.

The Fund faced a perfect storm in March, with major holding Opthea falling short in Phase 3 clinical trials, growing tariff concerns unsettling markets, and liquidity tightening across many smaller stocks. That said, volatility often brings opportunity, and we remain enthusiastic about the portfolio’s positioning and future prospects.

Positioning:
• Healthcare approximately 45%
• Critical mineral processing 40% – a key beneficiary of a global trade war
• Cash 9%

Critical minerals key holdings:
• IperionX – titanium producer ramping operations in the US. The US has no Titanium mineral or sponge (early stage metal) production. China and Russia account for 70% of world production.
• Brazilian Rare Earths – richest deposit globally (15% grade versus 6% at Lynas). China mines 70% of rare earth minerals and produces 90% of rare earth magnets.
• MTM Critical Minerals – recycles Gold from PCB boards, Gallium, Germanium and Indium all at high margins. China produces 100% of world’s Gallium, 70% of Indium and 60% of Germanium. China banned exports to the US last year.

Healthcare – 15 exciting small cap holdings with the largest listed below
• EBR System – cardiac synchronization therapy device. UDS300mln market cap. USD3.6bn market.
• Genetic Signatures – Molecular diagnostic company. Newly approved FDA test for 8 different gut pathogens. $100mln market cap. Gut bug market $500mln.
• Clarity Radiopharmaceutical – diagnostic and therapy for prostate cancer USD280mln. The prostate cancer diagnostic market is USD 3bn. Therapeutic $5bn.
• Two medical AI software companies.
• Other holdings include cancer immunotherapy, radiotherapy, fibrosis, kidney disease, and others.

Opthea had been developing a drug to treat Wet Aged Macular degeneration, the leading cause of blindness in the elderly. We were attracted to the investment due to the large USD 7-12bn market size, a large supportive phase2b study with 366 patients and a highly credible management team, principal investigators and board.

The studies compared patients who received the standard treatment of Eylea or Lucentis on their own with patients who received Eylea or Lucentis combined with Opthea’s drug OPT-302. Eylea on its own showed an average improvement in vision of 13.8 letters on an eye chart over 12 months, while Lucentis showed 14.3. By comparison, patients who received the combination therapy with Opthea improved by only 13.2 and 13.3 letters, respectively, which is slightly worse, which is surprising given the positive phase 2 data.

Secondly, the results are surprising because Eylea and Lucentis alone performed much better than in all prior studies of those drugs, including their registration studies, where they typically delivered an improvement of only 8 to 10 letters. In the case of Eylea, there is an inexplicable 60% improvement, as can be seen from the slide below. Most analysts and industry commentators are perplexed.

We have written the investment down from 60 cents to 2 cents and reopened the Fund for applications and redemptions. The company has USD100mln of cash, but it is unclear what claim the funding partners for the phase 3 studies may have on this and what the restructuring charges will be. As a result, the shares remain suspended until these questions are resolved.

Australian radiotherapy developer Clarity Pharmaceutical fell 40% despite broker Barrenjoey initiating coverage with a lengthy buy rated report with an $8.7/share target compared to the current $1.63. The shares peaked at $8.65 in September last year. We sold much of our holding into that rally but have rebuilt the position with the recent weakness. The prostate cancer radio diagnostic market is USD 2bn and growing – dominated by Telix and Lantheus. We believe the company will receive approval by late 2026 and take at least a 10% market share.

Telix and Lantheus dominate the prostate cancer diagnostic market and have market values of AUD $9bn and $11bn, respectively, making Clarity’s valuation at $530mln attractive.

Professor Louise Emmet, a key opinion leader in prostate cancer field who has published 80 papers, based St Vincent’s hospital in Sydney, is running a diagnostic study comparing Gallium-68 (a generic version of Telix’ Illucix) with Clarity. Although only a small study with 50 patients and non-randomised, we believe it will be of great interest. Clarity has previously shown it can detect smaller lesions than G-68. If more lesions are detected, they can be removed surgically or with external beam radiation. The aim of this study is to assess whether a Clarity scan would change the patient treatment plan compared to a G-68 scan. If the study can demonstrate that more than 20-30% of patients have changed their treatment plans, that would be significant. In a recent interview, she suggests Clarity could potentially garner a high market share if successful (minute 22 for two minutes is useful). CEO Alan Taylor also gave a great interview last week.

In addition, the company’s SECURE prostate cancer therapy study is enrolling another 24 patients. Results so far look very interesting and could be a major driver of value over the next year. A recent lull in radiopharmaceutical deals has occurred after several transactions earlier in 2024. However, we still see the company as a likely takeover target.

Titanium metal producer IperionX fell 19% despite winning an impressive $47mln grant from the Department of Defense the prior month. On the 1st of April the company also announced the approval of an USD11mln loan from the government owned EXIM Bank, another validation by the US government of the company and its technology.

MTM Critical Metals fell 25% despite announcing a Memorandum of Understanding with Indian listed Vedanta, one of the world’s largest aluminium producers to process red mud, a bioproduct of bauxite mining which is a major global environmental issue. Red mud is not processable due to its high iron content but still contains valuable aluminium, titanium and rare earths.

MTM’s process allows the extraction of these elements and the safe storage of the waste. Although at an early stage we see this agreement as having interesting optionality along with the recycling of gallium and germanium waste and PCB boards which contain high amounts of gold, copper and tin. Lower cost processing of rare earths and lithium are also being explored.

In April the company has made two very exciting announcements about processing used PCB boards which are rich in gold. They estimate a market size of $40bn and have already secured 1100 tons of material for processing at high margins and very low capex. More on that next month but with a market value of just A$73mln this could emerge as one of the most exciting gold plays on the ASX. The company held a presentation on the 14th of April with details of the new business.

Pancreatic cancer treatment developer Oncosil fell 25% on little news as did molecular testing company Genetic Signatures down 10%. Many other smaller positions fell 5-20% on little news, similarly impacted by risk off sentiment ahead of the US tariff announcements.

On the positive side cardiac pacing company EBR Systems rose 13.6% as it approaches potential FDA approval on the 13th of April, while Greatland Gold rose with the gold price.