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Three “Unequivocally Bullish” Impacts On Shipping From The Ukraine/Russia Conflict

Three "Unequivocally Bullish" Impacts On Shipping From The Ukraine/Russia Conflict

Submitted by QTR’s Fringe Finance

This is part 2 an exclusive Fringe…

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Three "Unequivocally Bullish" Impacts On Shipping From The Ukraine/Russia Conflict

Submitted by QTR's Fringe Finance

This is part 2 an exclusive Fringe Finance interview with shipping analyst (and friend of mine) J Mintzmyer, where we discuss the state of the Russian invasion of Ukraine and its effect on markets and shipping stocks. Part 1 of this interview, where J identifies two shippers he owns and why some shipping stocks could 2x to 10x higher, is here

J is a renowned maritime shipping analyst and investor who directs the Value Investor's Edge ("VIE") research platform on Seeking Alpha.  You can follow him on Twitter @mintzmyer. J is a frequent speaker at industry conferences, is regularly quoted in trade journals, and hosts a popular podcast featuring shipping industry executives.

J has earned a BS in Economics from the Air Force Academy, an MA in Public Policy from the University of Maryland, and is a PhD Candidate at Harvard University, where he researches global trade flows and security policy.

Part 1 of this interview talked about how the invasion changed the outlook for shipping, unnoticed names in the sector and best and worst case potential outcomes.

Q: J, explain the impact of the invasion, and everything we talked about in Part 1, on commodities and consumer goods - which will suffer more because of the conflict?

It’s still unclear exactly what the medium- and longer-term impact will be for most Western and Asian consumers. At this short-term stage, energy prices are clearly exploding higher, but the futures curves are also at near-record levels of backwardation (i.e. the markets are predicting rapid price recoveries). Until these futures curves flatten out or even shift to contango, it’s not clear that the ‘doom and gloom’ economic wreckage argument has much credibility yet.

If oil futures price $120-$150+ oil for 2-3 years outward, then I’m more concerned. 

Consumer goods obviously have lots of commodity inputs across the entire supply chain and shipping costs have also been a key factor driving up final prices. So whatever the impact ends up being for commodities, we can add a delay-factor, but similar net impact to consumer goods. 

Do you see any scenario where shipping rates or stocks move lower?

Short-term rates can be very volatile and can produce head-fakes.

For instance, if flooding occurs in Australia (disrupting iron and coal exports), we often see a near-term dip in rates due to demand cancellation, but the longer-term impacts often lead to far high rates down the road as flows comes back online, ports are congested, and end-users have higher catch-up demand. We saw this with COVID-19. Container shipping rates plunged for a couple months before ripping into a multi-year bull market due to residual congestion and catch-up demand. I’ve seen weird moves in stocks before, so if there is some rate volatility, the market might misinterpret the situation in the near-term. 

As of July 2021

Additionally, if the broad overall stock market is terrible, shipping stocks might also not perform well, or they might not gain as much as they should otherwise. We saw this in 2020, where shipping rates were skyrocketing, but the broad market was skeptical and valuations didn’t move much. This head-in-sand by the generalists allowed us to build a model portfolio (long only, no options or leverage) at Value Investor’s Edge which returned 136% in 2021.

We have been adroit so far in 2022, returning 26.1% YTD as of 4 March, while the rest of the market is down about 10%; however, on most days when the market is crashing, shipping stocks are still at least slightly impacted.

I’ve talked about the longer-term (multi-year fallout risk) a few times above. In that scenario, it’s doubtful that shipping stocks do very well. If that’s the scenario you expect, then SPY and QQQ puts probably are the best bet here. 

I know you are still very bullish on shipping given the conflict. What's your brief pitch on why any investor may want to consider shipping exposure right now (not financial advice, of course). Key risks/caveats?

I am a research provider and a personal investor, so I cannot give direct investment advice. In a more general sense, there are two clear ‘winners’ (and I hate to use that word given the humanitarian crisis we face) of the current situation: energy and shipping.

I believe most already understand the bull case for energy and its pretty remarkable for Elon Musk to even be calling for more U.S. oil production!

The shipping side is more nuanced. I alluded to the three big impacts in your first question:

1) Disruptions will go up, reducing supply (less supply available).

2) Trade will be rerouted in less efficient ways (more ton-miles -> more demand).

3) Higher oil prices will promote slower steaming (takes longer to complete routes -> less supply).

All three of these impacts are unequivocally bullish for shipping rates. 

We have discussed the risk/caveat to this in the above questions, which is that if oil prices surge so significantly that it causes a global slowdown, or worse a global recession, then shipping is unlikely to do well. I believe we need to consider two things here before getting super alarmed about current oil prices.

First, oil futures curves are currently massively backwardated. Oil might be quoted at $115+ today, but the longer-term contracts are still at much lower levels. Show me a curve which has $120-$150+ oil for years and I’m genuinely worried.

Second, oil around $100 did little to slow or even dent the global economy in late-2007 or again fromin 2011-2014. Not only has inflation added to these numbers, but the global economy, and particularly the U.S. economy, is significantly less energy intensive today, in 2022, than it was in 2007. 

If you want to compare near-$100/bbl oil in 2007 today, taking into effect inflation alone gets you to nearly $140/bbl. By the time we adjust for energy intensity (i.e. how much energy costs relate to GDP), $100/bbl oil in 2007 is roughly equivalent to $180/bbl oil today.

Back in 2007, and also in 2014, the futures curves were primarily in contango (i.e. future prices were higher than current prices). The opposite is true today. $100 has a psychological appeal and there are a lot of ‘Chicken Littles’ running around talking about the perils of $100 oil, but again, if you benchmark 2007’s $100/bbl oil, to have a correct comp, you need to see $150+, closer to $180+ oil, and it needs to be in the futures curves for years to come. We just aren’t anywhere remotely close.  

You mentioned Global Ship Lease (GSL) and Textainer Group (TGH) as two of your favorites with lower risk and strong upside. What are some higher risk plays with more spot exposure?

Our latest research and top picks (14 in the shipping industry) is exclusive for Value Investor’s Edge members, but I can share one other firm which has more direct potential for significant gains from the ongoing situation. This is Eagle Bulk (EGLE), which is a midsize dry bulk pureplay.

The midsize dry bulk markets have already been very strong and stable (lower volatility in rates) for the past 18 months, but the current situation might propel these rates even higher. Midsize bulkers are the most impacted by the Ukraine conflict as these ships are active in the global grain trades, whereas the larger ships are more focused on iron ore and coal.

EGLE also benefits from a high percentage of eco-design ships which will provide additional profits in the high oil price environment and most of their ships also have scrubbers installed, which enable them to burn lower cost bunker fuel. The spread between lower cost dirtier bunker fuel and clear VLSFO fuel is hitting near-record highs, further adding to EGLE’s profit advantage versus peers.  

--

Part 1 of this interview, where J identifies two shippers he owns and why some shipping stocks could 2x to 10x higher, is here


Disclosure: J is long EGLE, GSL and TGH. J and I may have positions in other names mentioned in this interview. J is a podcast Patreon of mine and has been donating to my podcast monthly (as listeners already likely know from my constant shout-outs), though that is not why I seek his expertise. I have known J and have been reading his work for almost a decade now on Seeking Alpha and have met him numerous times in person. He’s a top class person - and analyst - in my opinion.

I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. I may hedge in any way. None of this is a solicitation to buy or sell securities. Please do not attempt these trades at home. These positions can change immediately as soon as I publish this, with or without notice. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I get shit wrong a lot. 

 

Tyler Durden Wed, 03/09/2022 - 17:40

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Government

40,000 National Guard Troops Face Unemployment As Vaccine Deadline Imminent

40,000 National Guard Troops Face Unemployment As Vaccine Deadline Imminent

Up to 40,000 Army National Guard troops – around 13% of the force…

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40,000 National Guard Troops Face Unemployment As Vaccine Deadline Imminent

Up to 40,000 Army National Guard troops - around 13% of the force - could be fired for not getting the mandated COVID-19 vaccine (which has limited efficacy against Omicron, doesn't stop transmission, has been linked to elevated heart problems, and has been mandated for a healthy demographic that rarely dies of the disease).

Michigan Army National Guard Sgt. Mark Abbott administers a COVID-19 vaccine

Guard soldiers have until Thursday to get the jab, according to the Associated Press, which notes that between 20% and 30% of Guard soldiers in six states remain unvaccinated.

"We’re going to give every soldier every opportunity to get vaccinated and continue their military career. Every soldier that is pending an exemption, we will continue to support them through their process," Lt. Gen. Jon Jensen, director of the Army National Guard, told AP. "We’re not giving up on anybody until the separation paperwork is signed and completed. There’s still time."

Last year, Defense Secretary Lloyd Austin ordered all service members to get the vaccine, with different branches maintaining different deadlines for the jab. The Army National Guard was given the maximum amount of time, largely because its roughly 330,000 soldiers are scattered throughout the country, including remote locations.

The Army Guard’s vaccine percentage is the lowest among the U.S. military — with all the active-duty Army, Navy, Air Force and Marine Corps at 97% or greater and the Air Guard at about 94%. The Army reported Friday that 90% of Army Reserve forces were partially or completely vaccinated.

The Pentagon has said that after June 30, Guard members won’t be paid by the federal government when they are activated on federal status, which includes their monthly drill weekends and their two-week annual training period. Guard troops mobilized on federal status and assigned to the southern border or on COVID-19 missions in various states also would have to be vaccinated or they would not be allowed to participate or be paid. -AP

Complicating matters is a rule that Guard soldiers deployed on state active duty may not require a vaccination, depending on state-level mandates. 

According to the report, at least seven governors have asked Austin to reconsider, or drop, the vaccine mandate for National Guard members - with some having filed or joined lawsuits to that end.

Austin, apparently following his own special brand of science, told them to pound sand, saying that Covid-19 "takes our service members out of the fight, temporarily or permanently, and jeopardizes our ability to meet mission requirements," adding that troops will either need to get vaccinated or lose their Guard status.

"When you’re looking at, 40,000 soldiers that potentially are in that unvaccinated category, absolutely there’s readiness implications on that and concerns associated with that," said Jenson, adding "That's a significant chunk." 

AP reports that around 85% of Army Guard soldiers are fully vaccinated, while 87% are at least partially vaccinated.

Tyler Durden Sun, 06/26/2022 - 18:00

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Government

CDC Confirmed Post-Vaxx Death From Blood-Clotting Two Weeks Before Alerting Public: Emails

CDC Confirmed Post-Vaxx Death From Blood-Clotting Two Weeks Before Alerting Public: Emails

Authored by Zachary Stieber via The Epoch Times…

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CDC Confirmed Post-Vaxx Death From Blood-Clotting Two Weeks Before Alerting Public: Emails

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The Centers for Disease Control and Prevention (CDC) confirmed in late 2021 that a person died from blood clotting after receiving a COVID-19 vaccine that had been linked with an increased risk of blood clotting, but did not alert the public for two weeks, newly obtained emails show.

A general view of the Centers for Disease Control headquarters in Atlanta, Ga., on April 23, 2020. (Tami Chappell/AFP via Getty Images)

Dr. Tom Shimabukuro, a CDC official, told colleagues at the CDC and the Food and Drug Administration (FDA) on Dec. 2, 2021, “We have confirmed a 9th TTS death following Janssen vaccination,” according to emails obtained by The Epoch Times through a Freedom of Information Act request.

TTS refers to thrombosis with thrombocytopenia syndrome, a condition that features low platelet levels combined with blood clots.

Officials had recommended a nationwide pause on the administration of the vaccine, produced by Johnson & Johnson (J&J) subsidiary Janssen, in April 2021 after six women experienced TTS after J&J vaccination and three died. But they lifted the pause after determining the vaccine remained safe and effective.

The condition was not discussed much in the ensuing months, despite the CDC later reporting that five additional deaths occurred before Aug. 31, 2021. Shimabukuro gave a single update, in mid-October 2021, saying five total deaths had been reported.

That was until December 2021. Twelve days after Shimabukuro alerted colleagues of the ninth death, the FDA urged healthcare workers not to administer the vaccine to people with certain conditions because of the TTS risk. Two days after that, Dr. Isaac See, another CDC official, informed the public during a meeting that nine deaths had occurred post-vaccination.

It’s unclear when the CDC learned of the sixth, seventh, and eighth deaths.

The CDC takes reports made to the Vaccine Adverse Event Reporting System and attempts to confirm the reports, including post-vaccination deaths. A higher number of post-vaccination TTS deaths have been reported to the system than the number the CDC has verified.

One day after Shimabukuro confirmed the ninth death, his message was forwarded by Dr. Amanda Cohn, another CDC official, to CDC Director Dr. Rochelle Walensky.

“See below, information on a 9th completely tragic death from TTS,” Cohn wrote.

Many thanks for letting us know … any tragic case,” Walensky responded.

The emails were partially redacted; one was fully redacted.

Read more here...

Tyler Durden Sun, 06/26/2022 - 15:30

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Innovation Pharmaceuticals Inc (OTCMKTS: IPIX) Breaking Out as Biotech Reports Brilacidin Inhibits Omicron, Delta, Gamma and Alpha SARS-CoV-2 Variants Based on In Vitro Testing

Innovation Pharmaceuticals Inc (OTCMKTS: IPIX) is moving steadily northbound with power after the Company reported Brilacidin, its defensin-mimetic drug…

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Innovation Pharmaceuticals Inc (OTCMKTS: IPIX) is moving steadily northbound with power after the Company reported Brilacidin, its defensin-mimetic drug candidate exhibiting broad-spectrum antiviral activity, inhibited the Omicron and Delta variants of SARS-CoV-2 based on in vitro testing conducted in collaboration with (NIH) and (NIAID) scientists. Researchers at Rutgers University have also shown Brilacidin inhibited in vitro the Gamma and Alpha variants of SARS-CoV-2. Brilacidin has now been tested in vitro in seven SARS-CoV-2 strains (Omicron, Delta, Gamma, Alpha, Italian, Washington, Wuhan) and three human coronavirus (H-CoV) strains (OC43, 229E, and NL63), in addition to MERS-CoV and SARS-CoV-1. Brilacidin has consistently inhibited all coronaviruses tested, independent of cell type, at generally attainable systemic concentrations (based on established human pharmacokinetics of IV-administered Brilacidin).  

Emerging SARS-CoV-2 variants, and increasingly their sub-variants, contain immunity-evading mutations. These mutations alter key parts of the SARS-CoV-2 spike protein that attach to human cells, making the virus more transmissible and potentially more virulent. Unlike other antivirals, such as monoclonal antibodies, and most vaccines, Brilacidin has been shown not to target the Spike S1 and Spike RBD regions of SARS-CoV-2, acting instead through dual-acting neutralizing and blocking antiviral properties, able to target virus and host. These antiviral traits support Brilacidin’s ability to maintain its anti-coronavirus activity and suggest Brilacidin would be less subject to resistance. Taken together, the results from NIH/NIAID testing of Brilacidin are supportive of previously completed research and give the Company confidence in the compound’s antiviral potential. The Company remains active in pursuing additional government-based funding opportunities, as well as licensing partnerships, to advance Brilacidin in the highly attractive area of developing novel broad-spectrum medicines for treating viral diseases. Microcapdaily has been reporting on IPIX for a long time and we were there when the stock (then trading as CTIX) made a legendary run skyrocketing to $4.93 per share. 

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Innovation Pharmaceuticals Inc (OTCMKTS: IPIX) is a clinical stage pharmaceutical company developing innovative therapies with anti-infective, oncology, anti-inflammatory and dermatology applications. The Company owns the rights to Brilacidin, its lead drug in a new class of compounds called defensin-mimetics, and Kevetrin (thioureidobutyronitrile), its anti-cancer compound. Brilacidin is being studied by the Company, as well as other independent researchers, as a potential broad-spectrum antiviral therapeutic for the treatment of viruses including the novel coronavirus (SARS-CoV-2), which is responsible for COVID-19. 

Brilacidin is Innovation Pharma’s lead drug candidate in its Host Defense Protein (HDP)-mimetic franchise. Brilacidin has been granted Fast Track designation by the FDA and currently is being evaluated in a randomized, placebo-controlled Phase 2 clinical trial in hospitalized COVID-19 patients (see NCT04784897). Two independent Machine Learning (AI) studies also identified Brilacidin as one of the most promising inhibitors of SARS-CoV-2, the virus responsible for COVID-19, based on Brilacidin’s molecular properties. Modeled after HDPs, the “front-line” of defense in the body’s innate immune system, it is a synthetic, non-peptidic small molecule that kills pathogens swiftly, significantly reducing the likelihood of drug resistance developing. Just as importantly, Brilacidin functions in a robust immunomodulatory capacity, lessening inflammation and promoting healing. 

Kevetrin is a small molecule that has demonstrated the potential of becoming a breakthrough cancer treatment by inducing activation of p53, a protein frequently referred to as the “Guardian of the Genome” due to its critical role in controlling cell mutations. In most cancers, regardless of origin, type, and location, the p53 pathway becomes inactivated (dysfunctional), thus preventing the body from performing its natural anti-tumor functions. The TP53 gene is the most studied gene of all time. Conducted at the Dana-Farber Cancer Institute and at Beth Israel Deaconess Medical Center, a Phase 1 clinical trial evaluating Kevetrin in treating Advanced Solid Tumors has been successfully completed, with patients showing good toleration and encouraging signs of potential therapeutic response. The Company has concluded its open-label, dose-escalation Phase 2a trial of Kevetrin in Platinum-Resistant/Refractory Ovarian Cancer. Highly encouraging preliminary data from the first patients treated in the trial showed modulation of the p53 protein in response to administration of Kevetrin. With a promising bioavailability profile, and to leverage its short half-life (the drug exits the body in approximately 8 to 10 hours), efforts are underway to develop Kevetrin as an oral anti-cancer agent (tablet or capsule) that can be administered daily, potentially even multiple times per day. The FDA has awarded Kevetrin Orphan Drug status for Ovarian Cancer, Pancreatic Cancer, and Retinoblastoma, qualifying it for developmental incentives and an extra 7 years of market exclusivity upon drug approval. The FDA also has granted Kevetrin Rare Pediatric Disease designation for childhood Retinoblastoma. 

Microcapdaily has been covering IPIX for years starting with CTIX back in 2015 reporting on the stocks legendary run to $4.93 per share. We stated on CTIX back in the day: “As anyone in the industry knows, regulating the p53 pathway has long been the holy grail of cancer research and big pharma has spent hundreds of millions of dollars researching ways to achieve this with no success thus far. It seems Kevetrin(TM) has accomplished this; extensive preclinical research on Kevetrin shows the re-activation of p53 across a wide spectrum of cancer lines including colon, lung, breast and pancreatic cancers. The market potential for Kevetrin in treating drug-resistant cancers is worth $5 billion a year. Other cancers could easily represent an additional $5 billion annually, he adds.”

IPIX has established a valuable intellectual property portfolio: 

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IPIX

On June 23 IPIX reported Brilacidin, the Company’s defensin-mimetic drug candidate exhibiting broad-spectrum antiviral activity, inhibited the Omicron (B.1.1.529) and Delta (B.1.617.2) variants of SARS-CoV-2 based on in vitro testing conducted in collaboration with National Institutes of Health (NIH) National Institute of Allergy and Infectious Diseases (NIAID) scientists. Researchers at Rutgers University have also shown Brilacidin inhibited in vitro the Gamma (P.1) and Alpha (B.1.1.7) variants of SARS-CoV-2. Brilacidin has now been tested in vitro in seven SARS-CoV-2 strains (Omicron, Delta, Gamma, Alpha, Italian, Washington, Wuhan) and three human coronavirus (H-CoV) strains (OC43, 229E, and NL63), in addition to MERS-CoV and SARS-CoV-1. Brilacidin has consistently inhibited all coronaviruses tested, independent of cell type, at generally attainable systemic concentrations (based on established human pharmacokinetics of IV-administered Brilacidin). Identifying COVID-19 countermeasures with novel mechanisms of action is vital. SARS-CoV-2 continues to evolve at an accelerated pace, raising questions as to what the dominant variant (or sub-variant) may be this fall and winter, when infections often spike — and if today’s COVID-19 vaccines and therapeutics can maintain their effectiveness. 

Emerging SARS-CoV-2 variants, and increasingly their sub-variants, contain immunity-evading mutations. These mutations alter key parts of the SARS-CoV-2 spike protein that attach to human cells, making the virus more transmissible and potentially more virulent. Unlike other antivirals, such as monoclonal antibodies, and most vaccines, Brilacidin has been shown not to target the Spike S1 and Spike RBD regions of SARS-CoV-2, acting instead through dual-acting neutralizing and blocking antiviral properties, able to target virus and host. These antiviral traits support Brilacidin’s ability to maintain its anti-coronavirus activity and suggest Brilacidin would be less subject to resistance. Related, results from new NIH/NIAID in vitro testing of Brilacidin in over 20 acutely infectious viruses, and from the Brilacidin Phase 2 COVID-19 clinical trial, are being prepared for publication. Findings from the Rutgers’ Brilacidin research can be accessed at the link below1 and build on earlier published Brilacidin research conducted by scientists at George Mason University and at University of Arizona and University of California-San Francisco. 

In 2021, the Company completed a Phase 2 clinical trial of Brilacidin (NCT04784897) for treatment of moderate-to-severe COVID-19 patients. While the trial did not meet its primary endpoint in reducing time to sustained recovery through day 29, certain patient subgroups did show treatment benefits of Brilacidin for that primary endpoint. For example, patients treated early from onset of symptoms achieved sustained recovery more quickly (Brilacidin 5-dose group vs pooled placebo, p=0.03). To date, only a modicum of success has been demonstrated by any company conducting clinical trials in moderate-to-severe hospitalized cases of COVID-19. A possible reason for this may be owing to frequent changes in the standard of care with patients receiving a cocktail of fluctuating concomitant medications, which complicates the interpretation of the clinical trial data and that of the new drug candidate being evaluated. Clinical observations of COVID-19 patients treated with Brilacidin further lead us to believe that higher and more frequent dosing of Brilacidin may be more appropriate to tackle this complex disease in the hospital setting. 

Taken together, the results from NIH/NIAID testing of Brilacidin are supportive of previously completed research and give the Company confidence in the compound’s antiviral potential. The Company remains active in pursuing additional government-based funding opportunities, as well as licensing partnerships, to advance Brilacidin in the highly attractive area of developing novel broad-spectrum medicines for treating viral diseases. 

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Currently trading at an $18 million market valuation IPIX has $8.7 million in the treasury, over $11 million in assets vs. $4.5 million in total liabilities. IPIX is CTIX reincarnated and this stock can move skyrocketing to $4.93 per share back in the day; a run we reported on from the beginning. IPIX is heating up and getting noticed by investors after the Company reported Brilacidin, its defensin-mimetic drug candidate exhibiting broad-spectrum antiviral activity, inhibited the Omicron and Delta variants of SARS-CoV-2 based on in vitro testing conducted in collaboration with (NIH) and (NIAID) scientists. Researchers at Rutgers University have also shown Brilacidin inhibited in vitro the Gamma and Alpha variants of SARS-CoV-2. Brilacidin has now been tested in vitro in seven SARS-CoV-2 strains (Omicron, Delta, Gamma, Alpha, Italian, Washington, Wuhan) and three human coronavirus (H-CoV) strains (OC43, 229E, and NL63), in addition to MERS-CoV and SARS-CoV-1. Brilacidin has consistently inhibited all coronaviruses tested, independent of cell type, at generally attainable systemic concentrations (based on established human pharmacokinetics of IV-administered Brilacidin). We will be updating on IPIX when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with IPIX.

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Disclosure: we hold no position in IPIX either long or short and we have not been compensated for this article.

The post Innovation Pharmaceuticals Inc (OTCMKTS: IPIX) Breaking Out as Biotech Reports Brilacidin Inhibits Omicron, Delta, Gamma and Alpha SARS-CoV-2 Variants Based on In Vitro Testing first appeared on Micro Cap Daily.

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