Strong Gains Amid Capital Raises and Key Partnerships

The Fund rose a very pleasing 17% during May and is now up 71% over twelve months.

• Clarity Pharmaceutical rose 81% after announcing a significant clinical response in a cancer patient post-capital raise, demonstrating strong clinical promise.
• IperionX increased 14.6% following a new partnership with Vegas Fasteners and a solid capital raise, highlighting market confidence.
• Magnite surged 36.4% after being selected by Netflix for ad-serving, indicating robust future revenue growth, while Brazilian Rare Earths rose 8.7% with the addition of an experienced director.

Top Holdings (alphabetically)

Brazilian Rare Earths Ltd.

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.

Clarity Pharmaceuticals Ltd

Australia

Health Care

Clarity Pharmaceuticals Limited operates as a radio-pharmaceutical company. The Company focuses on the developing targeted therapies for the treatment of cancer and other serious diseases. Clarity Pharmaceuticals serves customers worldwide.

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.

All major holdings in the portfolio have used the last two months to strengthen their balance sheets by raising capital, which we have supported including Clarity Pharmaceutical, IperionX, Brazilian Rare Earths, Genetic Signatures, Immutep, and Opthea. This has weighed on performance in the first few weeks of June (18th at the time of writing) with the Fund down 6.4%. We would highlight however that Clarity, which was the first to raise capital on the 8th of April at $2.55, is now trading at $5.22. Although we cannot expect such short term performance from other holdings, capital raises do absorb short term demand for shares in these companies, which depresses their share prices temporarily.

We should also highlight that inflation has remained stubbornly high in many countries with interest rate cuts not materializing as fast as hoped. US and French elections are now also starting to weigh on markets. Tensions over Ukraine and Taiwan persist. Despite these concerns, we remain excited about the prospects for our investments over the next year with high exposure to healthcare and companies that will benefit from geopolitical tensions.

Only one holding, representing 2.5% of the Fund, has any debt. Although many holdings are burning cash they now have sufficient funds to either reach breakeven or to back value creation events such as the read-out of major clinical study results.

Clarity Pharmaceutical rose 81% after reporting a patient with metastatic castrate-resistant prostate cancer (mCRPC) who had undergone many other treatments with other drugs, had been completely cleared of the disease with two doses of Clarity’s radiation therapy using an 8GBq dose (Giga Becquerel is a measure of radioactivity). The patient had few side effects. Although this is a great result, complete responses do occur in some cancer studies in a small percentage of patients, so the share price reaction was surprisingly positive, however, it came just three weeks after the company completed a capital raising which had temporarily suppressed the share price. The company continues to increase the dose of the drug in the ongoing SECURE study with more data likely in the next two months from the latest cohort of 3 patients receiving two doses of 12GBq (up from 8GBq in the patient with the complete response).

Titanium metal producer IperionX rose 14.6% after announcing a partnership with Vegas Fastners. Vegas Fastener is a global leader in the development and manufacturing of high-performance fasteners including precision nuts and bolts. The company serves a diverse array of customers in the defense, marine, power generation, oil & gas, nuclear, chemical, and water infrastructure sectors. Vegas Fastener develops and manufactures precision high-performance fasteners using specialized alloys including titanium to meet demanding quality specifications. Nuts and bolts may not sound exciting but they offer a huge potential market given the high price of titanium metal and its alloys. The company also completed an AUD50mln capital raise which the Fund participated in. Chairman Todd Hannigan is contributing $6mln which is a great vote of confidence in the company.

US advertising technology company Magnite rose 36.4% after Netflix announced it will use the company’s technology to serve advertisements on its new lower cost tier that requires subscribers to watch a limited number of advertisements. Netflix had previously used a solution from a company acquired by Microsoft last year called Xandr but it seems Magnite’s superior technology ultimately triumphed. The company now serves most major streaming and free to air television companies, facing real competition from only one company, Freewheel, a subsidiary of Comcast. We expect strong growth in streaming TV advertising in the coming years as consumers move away from analogue and cable TV. Netflix will likely become the largest customer of the company over the next few years and should boost revenue substantially.

Brazilian Rare Earths rose 8.7% after announcing that highly experienced rare earth industry executive Mr Eric Noyrez was appointed as a Non-Executive Director. He brings over twenty years of senior executive and board experience across the global rare earths industry and is currently the Lead Director of Neo Performance Materials Inc, a manufacturer of advanced industrial materials including magnetic powders and magnets, specialty chemicals, metals, and alloys. Previously, Mr Noyrez was the Chief Executive Officer of Serra Verde Mineracao, a leading Brazilian rare earths company, from 2018 to 2021 which is backed by former Glencore CEO Sir Mick Davis. From 2010 to 2014, Mr Noyrez held a range of senior roles at Lynas Corporation, including Chief Operating Officer, Managing Director, and Chief Executive Officer. We view his addition as bringing a huge amount of commercial experience to the company. The company also raised capital in June, which the Fund supported. We expect further drilling results over the months, which will allow the company to prove its world-leading resource.

On the negative side, the main detractor was ophthalmic drug developer Opthea, which fell 18% ahead of a capital raising that occurred in June. The Fund supported the capital raising. The company expects to read out results from its two major phase 3 studies, which are now fully recruited and funded, likely in Q2 and Q3 of next calendar year.