“Hunt Down Cancer Cells and Zap them Dead” Access Group

By Travis Johnson, Stock Gumshoe, September 5, 2008

Today’s teaser ad is from Marc Lichtenfeld and his Access Group — they specialize in part on medical and biotech stocks, and the first two ads we’ve looked at them are in that area. The first one was for the “$4 Cancer Detection Device that could go to $196,” which you might remember turned out to be Electro-Optical Sciences (MELA) and their little handheld mole scanner that screens for skin cancer.

And no, it’s not at $196 yet. Though Lichtenfeld did get his ads rolling at a better price than Georges Yared, who has also been hot and bothered about this stock but was beaten to the punch by a month or two (at least on the ads, I don’t know when he actually started recommending it to his subscribers). There is much less than a million dollars worth of trading taking place in MELA shares on any given day, so perhaps it’s not surprising that the stock has bounced dramatically with the attention of the newsletter touts — it’s on another upswing in the $7.50 range, though you could have bought it for $9+ earlier in the Summer or for less than $6 just a couple weeks ago. No idea whether it’s going to break out and have a huge success, though $196 stills seems, shall we say, a bit optimistic.

But we’re not here to talk about MELA again — I’ve written about that one half a dozen times as it has gotten the attention of my readers and several newsletter editors, and we’ve probably talked it to death in this space.

No, today we’re here for a drug company — a biotech, really, that has a new drug that Marc Lichtenfeld says is nearing approval and released exemplary Phase II results just recently.

Let me begin my little investigation here with the reminder that I am not a chemist or a scientist of any kind, and I can’t judge for you the results of any drug trial. I’m just going to share what Lichtenfeld said in the ad, and share with you the name of the company. Assuming I’m up to the challenge.

Just kidding! This is the Gumshoe we’re talking about — I’ve got this one on the mats and I’m ready for that final pin, let me just walk you through the clues …

Lichtenfeld tells us that this drug is, first, a potential breakthrough melanoma, which is the really scary kind of skin cancer, the one that spreads quick and kills people. He thinks the novel mechanism this drug employs might easily represent a new “platform” for developing treatments that kill other cancers, too, but we’re starting with melanoma.

The promise? “Nothing can make you richer, faster, than when a little known biotechnology company develops a breakthrough drug for a disease that offers hope and relief to hundreds of thousands of people.”

Where are they in their drug development?

“Right now they have a potential breakthrough drug entering Phase III trials that could be the only drug in the marketplace to treat deadly melanoma skin cancer.

“In Phase II trials, this company’s drug was found to as much as quadruple a patient’s “progression free survival” – which is the industry’s way of saying the cancer did not get worse. In other words, it stopped the spread of melanoma – one of the fastest spreading cancers – dead in its tracks.

“But what was most significant about these highly positive results was that all Phase II testing was “blinded” – which meant the company, doctors and patients were not aware of which test subjects were getting the drug, eliminating all biases….

“It’s a strategy that should pay off nicely. Because the company’s drug enjoyed such great success in the more demanding “blinded” test in Phase II, Phase III trials are “confirmatory,” rather than exploratory – which tends to speed up the approval process as well as increase the chance the drug will gain FDA approval for sale in the marketplace.”

So that sounds pretty good. I couldn’t tell you what percentage of Phase II trials are designed to be double blind, but certainly it’s preferable if they are. Phase II is often (but certainly not always) where drugs stumble when toxicity problems are discovered, or where efficacy theories fall apart, because it’s the first time the drug has been exposed to more than the handful of folks who got it in the initial Phase I trial, so the fact that they had good results is certainly excellent news, all else being equal. Phase III is where the number of patients treated increases dramatically in most cases, so rare side effects and other problems certainly arise in Phase III, too, I don’t want to imply that this drug is out of the woods.

What do we learn about the company, other than the fact that they have this promising melanoma drug?

First, the “mechanism” of the drug, the way the drug works in the body — in Marc’s words:

“Consider how the drug works…

“Cancer cells have greatly reduced anti-oxidant capacity, and therefore sport much higher intrinsic levels of reactive oxygen species (ROS) than normal cells.

“When injected, this company’s drug quickly increases oxidative stress beyond their breaking point, causing the cell to, in effect, break apart and die – usually within six hours. (Picture blowing up a rubber inner tube too long with it eventually stressing out and bursting That’s roughly the “effect” this company’s drug has on a melanoma cancer cell…)

“And because normal cells can handle increased levels of oxidative stress, the drug has little or no impact on them.

“But here’s the most exciting thing about this process – something that bodes very well for millions of cancer patients as well as the company’s long-term drug pipeline…

“The process that’s been successful on melanoma test patients in Phase II trials could very well be successful on a long line of cancers… because of the drug’s ability to differentiate between cancerous and healthy cells and selectively “kill” the cancerous ones.

“Best of all, this type of “selective cell destruction” technology is the company’s own proprietary property – and will be for the next 13 years. Based on my research – melanoma is just one of the cancer types the company could be targeting with this technology in the near future. There’s also talk about testing this proprietary process on hematological (blood), ovarian, breast, prostate and pancreatic cancers as well.”

OK, are we surprised that this still “sounds good?” It’s an ad, of course, it all sounds good.

So that’s what the drug does, how it targets the disease, why it’s exciting for the Access Group folks. How about the company, do we get any nice, specific, juicy clues to feed into the mighty Thinkolator?

Here’s one tidbit that was hiding in the text:

“… insiders still own 48% of the stock – and not one of them has sold a single share since the company went public roughly two years ago.”

Good, good.

The few Wall Street medical analysts who follow this one all give it a positive rating.

The product has “orphan drug status,” which is a nice plum for companies (they get an extension of marketing exclusivity, some tax breaks, and sometimes a bit of a break on the requirements for their clinical trials, in exchange for doing expensive research on a drug that has a relatively small market).

And …

“That’s why one of the largest pharmaceutical companies in the world struck a deal with this little company to manufacture and help market the drug once it passes FDA muster. With this little company eligible for up to $1 billion in milestones…and a healthy share of the profits – it’s one of the largest partnership deals in history for a drug yet to gain government approval.”

OK, so the Thinkolator is ready to work on this one. Sometimes it gets a little spitty when looking for biotech stocks, so stand back a bit …

Ah, very good. This company is …

Synta Pharmaceuticals (SNTA)

The partner for this first drug, which is called Elesclomol (before they named it the compound went by the appellation STA-4783), is GlaxoSmithKline (GSK). It did have positive Phase II Results released a few months ago, and it is currently in Phase III trials. It is exactly 48% owned by insiders, and their drug, Elesclomol, is a novel injectable drug that (they think) works by increasing oxidative stress in cancer cells. With all those clues matching perfectly, SNTA has to be our target here.

As I said, I’m no chemist or biotech analyst, and I can’t give you a lot of opinion about this drug (well, I could, but it would probably be wrong). I can tell you that the stock had a quick spike down after earnings were released about a month ago, mostly because everyone appears to have been surprised by how expensive these clinical trials are. The company is projected to lose a couple dollars a share both this year and next, which is saying something when your share price is down below $10, but that’s not unusual for early stage biotech companies with no products. Lichtenfeld was a bit optimistic when he said you could buy it “below $13”, since the shares have never been much over $11 in their two year history … you can pick them up now for about $9 if you like.

The things I like about this, at first glance, are the deal with deep-pocketed GSK, which should help in what I assume will be a very expensive Phase III trial, and the fact that SNTA is pushing this drug to the investment community very aggressively this fall, and that insiders are still holding their bets on the future of the company. That doesn’t mean it will succeed, and I don’t own shares, but those are generally positive signs. I’d urge you to look into some analyst reports on this one if you’re able, and to follow the company’s presentations and try to learn about this drug and its marketplace. You can listen to their last analyst meeting online here (it’s a bit outdated, from March), and the replays of a recent presentation and their last conference calls are both available here. You can also read the transcript of their most recent earnings call here if you prefer.

On the flip side, this is a tiny biotech company whose future is really riding on this one clinical trial — they have a rheumatoid arthritis drug in Phase II as well, but other than that the pipeline is very short and narrow — there’s only one other drug in the clinic (Phase I), and a couple potential preclinical candidates that make the pipeline list on their website. Any problems with Elesclomol, and their next potential compounds are probably years away.

So … those of you out there in Gumshoe University who’ve taken some of the higher-level biotech classes, feel free to chime in with your thoughts on Syngenta. Given the clues, I’m certain this is the stock Marc Lichtenfeld is touting, but I don’t personally have any idea whether it’s a good investment for you …


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30 Comments on "“Hunt Down Cancer Cells and Zap them Dead” Access Group"

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Carlo
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September 5, 2008 10:28 am
Flyfisher
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Flyfisher
September 5, 2008 10:38 am

Travis,

You might want to check out Mederax (MEDX) which has a cancer drug in Phase III for treating melanoma. They have a webcast posted and Sloan Lettering reseacher decribes the research.

Questionit
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September 5, 2008 11:11 am
Hey Gumshoe love the site… Here is a releaser for stansberry research not sure if you have covered this one..title it ‘The 10 minute work week’ The Amazing 10-Minute Work Week Dear Reader, I want to tell you about the greatest business in America. If you want to get into this business on your own (which I will show you how to do) you can start with almost nothing… And earn a six-figure income in just a few short years. Or, even better… If you don’t want to do any work, I can show you how to gain an equity… Read more »
iwouldratherbegolfing
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iwouldratherbegolfing
September 5, 2008 11:23 am

Mr. Gumshoe, I believe you are correct with this one. I received the teaser email last week and came to the same conclusion you did.

It is definately Synta Pharmaceuticals (SNTA)

EYOUNG
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EYOUNG
September 5, 2008 11:43 am

Thanks for this one, Gumshoe! I had received teasers on it, and was curious about it! You do GREAT work, and really provide a worthy service. KUDOS
Eugene

Snoopy
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Snoopy
September 5, 2008 12:41 pm

Thanks, Gumshoe. I got this teaser this week and it had me tempted, but I typed Marc Lichtenfeld into your search engine and got the previous articles. Mela got a little boost in price from the spam, but I didn’t know about SNTA, I think I’ll check it out.

Options Trader
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Options Trader
September 5, 2008 1:02 pm

Ga Ga Ga Gooo-Yaaa! Gumshoe!
You never let me down with the research.
Today it’s Synta (SNTA), tomorrow who knows.
Some folks I know pay good money for these tips.
Given your sound research, I would imagine this is nothing better than a coin-flip. But I’ve paid for worse….! Well done.

SageNot
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SageNot
September 5, 2008 1:14 pm

Hi Option’s Trader:

Tell me, do you follow this “Easy Money Options” guy, J.Wayne Burritt. Not many Option’s Services (actually none that I know of) offer a year’s service for $49. with a full MBG, a free blue chip manual & access to their entire website with back issues & their portfolio w/updates.

It reads to me as a poor man’s (women too) option’s service w/o the “high roller” component.

T.I.A.!

Dashriprock
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Dashriprock
September 5, 2008 1:32 pm

Thanks Gumshoe! I wanted to talk about HNSO, what’s the deal with this company, nobody likes it! The Company makes money, employees are buying back shares, Company just purchased another diabetes company, what’s up, not sexy enough? Dashriprock

Hans
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Hans
September 5, 2008 1:36 pm

Only problem with Easy Money Options is: Their reco’s just don’t work that well. Had you bought their reco’s when recommended and followed their advice otherwise, you would be seriously down by now.

custerslastfriend
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custerslastfriend
September 5, 2008 2:54 pm

SNTA sounds like a good one for the patient investor. At 82 I can’t wait!
Wish you’d been available during the 70s, 80s, 90s when I lost bundles just subscribing to teasers.

custerslastfriend
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custerslastfriend
September 5, 2008 2:54 pm

SNTA sounds like a good one for the patient investor. At 82 I can’t wait!
Wish you’d been available during the 70s, 80s, 90s when I lost bundles just subscribing to teasers.
custer

trevor peasland
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trevor peasland
September 5, 2008 5:00 pm

I understand that a trial of a drug only has to be 15% better than a placebo for the FDA to approve it. Does anyone know if this is correct?

MJF
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MJF
September 6, 2008 6:29 pm

As I recall the drug must show an efficacy of 51% (1% better than a placebo) or better. This must be shown to be the case by three successful studies. The catch is their is no limit as to how many studies a drug company can perform until they achieve 3 successful results. Hence only one of the many explanations of why so many drugs end up with toxic side effects & ‘cost effective recalls” … The system is broke….

Bud Devlin
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September 7, 2008 8:31 pm

Has anyone read this one from Wealth Daily, it is about converting tractor trailer diesels into lng burning engines. But there is a small Canadian company (of which 12 percent is actually owned by Pickens) that has designed what could be the most advanced, efficient engine on the planet. And it’s powered by LNG.

In fact, it’s so revolutionary it was awarded the 2007 Industry Innovation Award for alternative fuel trucks.

stockcrazy10
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stockcrazy10
September 8, 2008 10:52 pm

Sounds like WPRT.

swiggg
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swiggg
September 9, 2008 10:06 am

wow…anybody know why MON is down 6.60% so far today?

Ketan Thakkar
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Ketan Thakkar
February 27, 2009 1:37 am

SNTA halted cancer drug trial. Down 70% in after hours from 7 to 2. OUCH!

Bigg Fredd
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Bigg Fredd
December 7, 2010 2:17 am

Hardly surprising for an unprofitable one-trick pony.

Gravity Switch
Admin
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September 5, 2008 10:48 am

Thanks, hadn’t ever looked at that one in detail before. Looks a bit bigger and more diverse, though they’ve had a truly awful month. MEDX uses a different technology/approach, they’re a monoclonal antibody developer (perhaps more similar to a company like PDL Biopharma, which I owned a few years ago and has also had some serious ups and downs).

farley 5
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farley 5
September 5, 2008 2:44 pm

MEDX is a real pump-and-dump. In a freefall since september of last year. ZERO out of 5 techs positive. ’04 low was $4.50 so you may be able to pick up some there.

Gravity Switch
Admin
11
September 5, 2008 11:28 am

Hi Questionit — haven’t looked at this one yet but it’s on my list, I’m sure it’s not as sexy as it sounds but don’t know the details yet. I clipped your comment just because it was so long.

Thanks,
SG

Gravity Switch
Admin
11
September 5, 2008 3:07 pm

I’m old enough not to even take a wild guess about what moves the price of a stock that’s priced at 7 hundredths of a cent and trades on the pink sheets. Good luck with that one, but I know nothing about it. By “making money” do you mean “profitable?” That would be a bit surprising.

trevor peasland
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trevor peasland
September 7, 2008 10:48 am

Thanks for the info MJF. Even scarier than I thought.

Suzanne Gerard
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Suzanne Gerard
September 18, 2008 9:10 am

You are right! The system is broken. The FDA was, at one time, funded by the taxpayers but is now funded to a large extent by the drug companies. When the fox is in charge of the hen house, the hens need to be very vigilant!

avery
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avery
September 8, 2008 2:05 pm

hi options trader,
this not pertaining to the comment but ive been investing in individual stocks and now trying the options hat on can you give me a FREE site that would help me a little more understand the dif options trading tactics and dos and donts also please feel free to lend any advice from your own archives IM ALL EARS AND EYES lol thanks ajeff

JScott
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JScott
September 9, 2008 11:20 am

MJF — That information is completely wrong and doesn’t even make sense. 51% of what? # of patients who respond? Survival rate? Either of those would be incorrect. They or any other company need to prove in one phase III trial (unless directed by the FDA to conduct another) that the drug is safe and effective.

farley 5
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farley 5
September 9, 2008 11:25 am

Of course – Simply look here to see the supply and demand picture:

http://stockcharts.com/def/servlet/SC.pnf?c=mon,P

This has been in a freefall since June. You would have sold at the triple bottom break at $132 and not had a chance to buy since. We always ignore the first buy signal and act on the second if we like the fundamentals. SC has the target as $82. Let’s see if it can make a bottom. I sound like a broken record, however, blue good, red bad. Forget the story until demand gets control.

farley 5
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farley 5
September 9, 2008 12:56 pm

Colombo – “Ah – Just one more thing”. If you are hooked on the story, simply pull up a chart and cover up the name. If Supply is in control, then buy the stock. If I had you look at the URL above, I would have a tough time convincing you to own MON without the STORY. Happy investing

GigaBill
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GigaBill
September 9, 2008 3:31 pm

WPRT it is…

wpDiscuz