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What Is a Recession? Definition, Causes & Warning Signs

What Is a Recession in Simple Terms?Just as corporations experience general phases of growth and contraction, known in sum as their business cycle, the…

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There's more to a recession than 2 quarters of negative GDP growth.

Trifonov_Evgeniy from Getty Images Pro; Canva

What Is a Recession in Simple Terms?

Just as corporations experience general phases of growth and contraction, known in sum as their business cycle, the economy also experiences peaks, categorized by expansion and high employment, and inevitable valleys, which are periods of decline known as recessions.

Simply put, a recession occurs when there is a reduction in economic activity. In the 1970s, economist Julius Shiskin gained acclaim for categorizing a recession as two consecutive quarters of declining GDP growth; however, today’s economists take many more factors into consideration, which we’ll discuss below. 

Who Declares a Recession?

The National Bureau of Economic Research (NBER) is considered the leading authority on U.S. economic issues. It determines whether the U.S. economy is in expansion or recession. It defines a recession as "a recurring period of decline in total output, income, employment, and trade, usually lasting from six months to a year, and marked by widespread contractions in many sectors of the economy." Using statistics, the NBER can calculate the precise start and end dates of recessions.

Glossary of Recession Terms

  • Recession: A period that experiences a significant GDP decline over months that also witnesses a decrease in personal income, employment, retail sales, and industrial production.
  • Expansion: This is defined as the “normal state” of the economy.
  • Peak: The month when economic indicators are at their height, followed by a decline.
  • Trough: The month when the economic indicators hit their lowest point before beginning to rise over a sustained period.
  • Gross Domestic Product (GDP): The measure of all of the goods and services that make up the economy, such as consumer goods, business investment, government inventories, and net exports. GDP is considered more reliable than GDI because it considers a broader—and timelier—set of data.
  • Gross Domestic Income (GDI): Another way of measuring the economy, GDI takes into account incomes earned and costs incurred in production. 

How Many Recessions Have There Been in Recent History?

Since 1971, there have been seven recessions, according to NBER.

What Causes a Recession? What Are Some Examples?

A healthy economy is a delicate ecosystem composed of ever-changing variables like consumer spending, consumer confidence, maximum employment, and minimum interest rates. The Federal Reserve tries to nurture this balance through careful monetary policies and targeted interest rates.

Inflation-Triggered Recessions

Recessions are notoriously difficult to predict. “It’s a myth that expansions die of old age,” former Fed Chair Janet Yellen famously quipped. Instead, a recession can be triggered by a combination of factors; for example, when demand outpaces supply and inflation rises, effectively overheating the economy. High interest rates, stagnant wages, and rising unemployment can also lead to recession.

One example of an inflation-triggered recession is the recession of 1960, which lasted for 10 months. After the Fed started raising interest rates in 1958, unemployment levels peaked at 6.9%, and GDP dropped by 2% from April 1960 to February 1961. When President John F. Kennedy introduced a stimulus spending plan in 1961, offering tax cuts and expanded unemployment and Social Security benefits, the economy staged a rebound.

Recessions Caused by Economic Shock

A recession can also be triggered by an unexpected, one-time event that effectively rattles the economy, such as the oil crisis in the 1970s, when OPEC cut off its oil supply to the United States. Another, more recent example is the COVID-19 outbreak in 2020, which sent shockwaves around the world as economies shut down in an attempt to curb disease transmission. In the United States alone, a record 16 million people filed for unemployment benefits in April of 2020, totaling nearly 10% of the workforce.

Recessions Caused by Asset Bubbles

In the stock market, a bubble is formed when stock prices rapidly rise out of proportion to their fundamental value. The same can happen with entire sectors and industries in the economy—and what goes up and up often must come down. The inflated asset is met with panicked selling, and the market can crash as a result, triggering a recession.

The Tech Boom of the late 1990s had turned bust by 2000, as selloffs caused the tech-heavy NASDAQ to lose more than 75% of its value. Many internet companies declared bankruptcy while communications and ecommerce platforms lost a significant share of their market cap. Individual speculation during the lead-up to this period had been so great that Fed Chairman Alan Greenspan even invented a term for it: “irrational exuberance.” What followed was an 8-month recession from March–November 2001 which also encompassed the 9/11 terrorist attacks on the World Trade Center, further depressing the market. Unemployment peaked at 5.5% while GDP fell by 0.6%.

What Are the Effects of a Recession?

A recession has profound implications on every facet of society. When the economy falters, people lose their jobs. Manufacturing output declines and prices fall. Businesses fold—sometimes banks do, too.

People feel the pinch in their pockets and spend less on everything from discretionary items like vacations and technology to big-ticket purchases like automobiles and real estate. But the biggest impact may be one that’s not even tangible. Psychological and emotional side effects of a recession range from a decline in confidence to a sense that “things won’t ever be as good as they have been.” The term animal spirits, coined by 20th-century economist John Maynard Keyes, says it all. When people rely more on basic instincts and emotion, their decision making gets impacted and, taken in sum, like when there’s panic-based selling in the stock market, their emotions can actually affect the economy.

Recessions typically follow one of these four trends in terms of shape. 

Canva

The Shape of a Recession

Economists look to the alphabet to describe a recession and subsequent period of recovery.

V-shaped recessions are short in timeframe and characterized by sharp declines with clearly defined troughs and recoveries. These recessions usually last 12–18 months. A variation on this would be a U-shaped recession, which has a longer trough. It would take a few more years to reach recovery in this instance.

W-shaped recessions are also known as double-dip recessions. The economy enters a recession, then achieves a short recovery, which is then followed by another decline and subsequent rebound. These recessions typically last 2–4 years.

Perhaps the most frightening shape of recession is the L-shaped recession, which is marked by a strong decline and trough that takes many years. Recovery may never happen.

Canva

Can I Predict a Recession? 

Economists look to the U.S. Treasury Department for clues on an impending recession. That’s because a rare phenomenon happens that can be predictive of an impending recession: The yield curve becomes inverted, making news headlines around the world.

Treasury bills and bonds are conservative investments that entice investors by sporting a rate of interest, also known as yield. Usually, long-term Treasuries, such as the 30-Year Treasury, have higher yields than short- or intermediate-term Treasuries. However, at times, the yields of the short-term Treasuries can become higher than the long-term Treasuries due to deteriorating economic conditions. They are perceived as having more risk (default risk) than the longer-term investments and thus offer more interest as an enticement. When this happens, it’s called an inverted yield curve.

The U.S. Treasury Department publishes yield curve rates daily on its website for all to see—and study closely.

Recession Vs. Depression: What’s the Difference? 

Both recessions and depressions are economic downturns, but a depression is more severe. The Great Depression of the 1930s, which began with a stock market crash in 1929, is an example of a prolonged period of contraction. During this time period, output fell by 30% while unemployment soared to 25%. The Great Depression also witnessed a period of deflation, when prices fell by nearly 10% per year. It took the election of President Franklin Delano Roosevelt in 1933—and, eventually, World War II—to restore jobs and improve the economy.

Are We Entering a Recession?

Every day, financial pundits try to read the tea leaves of monthly economic data, but we might not ever actually know when we are entering a recession until we’re in one. That’s because NBER’s approach is retrospective. In other words, it waits 12–18 months to classify business cycle periods. Perhaps its understanding of human nature is just as broad as its knowledge of economics.

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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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Spread & Containment

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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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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