“Blue Blood” — Which “Tiny Biotech Owns Only Source of Rare Cancer-Curing Chemical?”

Checking out the latest tease from Nick Hodge at Early Advantage

By Travis Johnson, Stock Gumshoe, June 18, 2014

Irregulars Quick Take Paid members get a quick summary of the stocks teased and our thoughts here. Join as a Stock Gumshoe Irregular today (already a member? Log in)

The following article originally appeared on February 11, 2014 — several readers have asked about the “blue blood” pitch for this “cancer cure” (there’s a reason why we use quotes there) so we’re putting it on top of the page in case you’re curious.

My opinion on this one is unchanged, I’m still pretty skeptical but the stock has gotten cut in half so perhaps they’ll try to drive it back up again.

What follows is unchanged from when it ran on 2/11/14

*********

A couple days ago we started getting a deluge of new queries from subscribers about something called “blue blood” — teasing a company that was about to sign contracts with major pharmaceutical companies, and which had a “lockdown” on a secret “blue blood” protein that will cure cancer.

I was a little baffled at first, because I hadn’t actually seen the ad — but more folks kept asking what “blue blood” was, so I looked a little closer and finally did find that we had a copy of that email in the vast Gumshoe teaser vaults. So let’s solve it for you, shall we?

The newsletter being promoted here is Early Advantage, from Nick Hodge, and it’ll run you $499 per year at the current price. Dunno what else they may be investing in, but we can at least get you this answer for a better price. Like, more free-ish. Then you can think it over and discuss it on your own … feel free to subscribe to Early Advantage if you like, but don’t do so just to learn what the secret “blue blood” thingamajiggery is all about.

Here’s the opening of the pitch:

“Tiny Biotech Owns World’s Only Source Of Rare Cancer-Curing Chemical

“Early investors are looking to bank 300 times their money

“This urgent video has live footage of the company in action….

“At the center of it all is its main product, which is on a worldwide lockdown: ‘Blue Blood.'”

Frankly, that sounds like hooey. And probably the kind of teaser that should have us all running for the exits (or at the very least, hitting the delete key), but a core precept of Gumshoedom is that even if a stock is touted with ridiculous, overhyped promise — like curing cancer with a secret chemical that only they own — it doesn’t mean it’s worthless. We have to go into this with an open mind — it’s almost certainly not as good as the teasers say it is, but that doesn’t mean it’s bad.

So what is it? Honestly, once we were into the ad a few paragraphs and saw the little snippet of video for this “blue blood” business we had our answer quickly at hand … but we don’t want to spoil the surprise, so let me share a few more of the clues they tossed out for us:

“Amgen, Pfizer, Merck, Abbott, Bayer, and others pay $35,000–$900,000 for one gram of this molecule.

“A single biotech company trading under $3 controls the world’s only source.

“Its stock is already up 300%!

“Highly rich Blue Blood Protein — which really is blue — is extracted from one of the rarest and most endangered animals on the face of this planet… a sea snail called a Limpet.

“What makes this blood so unique and life-changing?

“Well, it’s a major component of over 100 vaccines and drugs currently going through clinical trials with the FDA. In other words, these drugs simply cannot work without Blue Blood… and there is nothing in the world that can replace it.

“And here’s the mind-blowing peculiarity in all of this…

“Blue Blood is so vital to breakthrough vaccines and drugs today… one gram of it can sell for up to $900,000.”

Sound familiar? Yes, this is our old favorite “miracle mollusk” tease reborn. Hodge is now reworking his (very successful, so far) tease for Stellar Biotechnologies (KLH in Canada, SBOTF on the pink sheets).

And yes, we’ve covered that one to death here in its run from 60 cents or so last Spring — Hodge started teasing it in May, I think, and we covered it then … it got as high as about $2 a share a couple times in recent months, and is recently at roughly $1.60.

I didn’t cover the stock much after that, but we had an eager bunch of folks discussing it — led for a while by our own “blind squirrel,” Jim Skelton, as he started a discussion thread on the site and followed it up through last month with many, many detailed comments. There’s a lot more in that thread than I can tell you about Stellar, but there’s also a lot more optimism about Stellar in that thread than I could come up with.

Stellar Biotechnologies is essentially a pharmaceutical supplier — they have created an aquaculture and harvesting technique for extracting Keyhole Limpet Hemocyanin (KLH), which is apparently a very widely used protein for stimulating an immune response, and is of use particularly in vaccines but also as a tool for delivering other drugs.

My initial sense of the stock back in May was that it was tiny enough and a good enough story to be driven quite high by Nick Hodge and his relentless boosterism … but that the possibility of real volume production of their product or any kind of dramatic sales growth was very far away.

I may be too conservative on this point, I like the model of Stellar Biotech — develop a supply of a high-quality “drug carrier” (the KLH protein, in this case — which is produced from their aquaculture farm full of Keyhole Limpets, with Stellar’s primary “uniqueness” coming from their ability to harvest this hemocyanin from the limpets without killing them or decimating the shrinking wild population), then make money by both selling the ingredient to drug companies and by using their unique offering as leverage to get royalties on future products that are made using this chemical. It’s a great idea. It’s just that even if they are successful, it’s a long way off.

[As an aside, I like the model but I’m a lot more comfortable with the much larger biotech stock in my portfolio, Ligand (LGND), that has a somewhat similar business model (though more of a “prospect generator” that also is an ingredient supplier) but is already generating millions in royalties. Unfortunately, LGND is now a growth darling and ain’t exactly cheap at the moment.]

Stellar’s latest investor presentation is on their website here, and they do well in talking up the potential markets for their KHL — with dozens of clinical trials using this ingredient currently underway. From the presentation, I can’t tell whether they’re getting potential royalties on any of these drugs, or just potentially making long-term supply arrangements — the word royalty only comes up for their own proprietary stuff, like their potential clostridium difficile vaccine (that one is still in the lab, not in the clinic, and therefore probably at least many years away from real human results being known).

If they’re not going to earn royalties on any of the drugs in the KLH pipeline that are currently in late-stage clinical trials (I haven’t asked them), then their revenue for the next several years will be dependent on sales of the material to the firms who are making these drugs and vaccines. So I won’t guess about which of these drugs might be approved or even reach high-volume clinical trials, but we’ll look quickly at it from the other end — how much can they produce, and what will they be able to charge for it?

Hodge teases the fact that this hemocyanin is priced at up to $90,000 a gram, but it’s available now from Sigma Aldrich for $75 for 20mg — which would be $3,750 per gram. I don’t know whether a pharma company would expect to pay a premium over that amount in order to get guaranteed supply, or would demand a discount for taking up much of the production, or whether there’s something better about that expensive gram, but $3,750 is a LOT less than $90,000.

At $3,750, Stellar Biotech would be able to hit revenues of $75 million if they sell 20kg a year — 20kg is their goal production level over the next six or seven years, but that seems to be the “stretch” goal, the goal by 2017, according to comments in a press release last year, is annual production of 5kg. If they do reach 5kg, over the next three years as they hope, that would mean potential sales — at that lower, current $3,750 price per gram — of just under $19 million.

$19 million is approximately how much money KLH lost over the last twelve months, according to Yahoo Finance’s numbers … so put that way, a cynic would say that if they can keep their costs under control and not have costs rise dramatically over the next three years as they expand capacity (in my quick look at recent filings, I see no announcement of what their current production level might be), then they might be able to break even by 2017 on material sales… but it doesn’t sound like limpet aquaculture is necessarily “low cost” so expansion might be pricey. Whatever their production level is right now, it costs more than it brings in according to their latest quarterly filing but, again, we don’t know whether they’re currently producing 100 grams or 2 kg per year, or more or less, and we don’t know what they’re charging per gram.

The optimist, on the other hand, would say that they’re going to get better prices as competition for bulk delivery of this material begins because of approval of high-volume drugs requiring this hemocyanin … or that they will make strides in their own clinical trials or begin to receive milestone or royalty payments on drugs that use KLH (again, I have no idea what their deals with pharma companies are like, or whether they’re anything but a material supplier to any of these firms). There may be ammunition for the optimist’s take, too, in their partnership with Amaran, which invested in KLH in December and is partnering with them on two cancer drugs in clinical trials … I just don’t know much about the science or timeline there, and I don’t know enough to be confident in the uniqueness or value of this particular hemocyanin as a drug carrier protein (we have, at least, been told that it can’t be created artificially just yet — the molecules are apparently too big and complex. Whatever that means).

I know we’ve got plenty of folks who have traded Stellar Biotechnologies on both sides here in Gumshoedom, so let’s hear your updated thoughts — feel comfortable with Stellar as a long-term stock in this range? Feel like it’s going to run again, or has the story lost its mojo? Let us know with a comment below.

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42 Comments on "“Blue Blood” — Which “Tiny Biotech Owns Only Source of Rare Cancer-Curing Chemical?”"

avatar

lancerrr
Member
1
lancerrr
February 11, 2014 4:40 pm

I’ve been long KLH for a couple of years now. I like their story but it’s hard to tell where their stock price will be in three to five years.

vivian lewis
Guest
0
February 11, 2014 4:40 pm
heh heh. Forget about limpets. The real secret ingredient to make cancer drugs work better is not blue blood from limpets but good old vitamin c from OJ. It improves the outcome when patients are given chemotherapy according to the latest headlines from health sites. So Linus Pauling was right! Us old codgers remember Linus who won not one but two Nobel Prizes, for physics and peace, and was also a real character extremely fond of high doses of vitamin C. To work against cancer you need even higher doses than even Linus was able to take orally; it has… Read more »
billharner
Irregular
13
billharner
February 16, 2014 10:40 am

my understanding is the reason the intravenous vitamin C works is because the body transforms it into Hydrogen Peroxide – that’s what kills the cancer cells. This is why you see all the hoopla on the Hydrogen Peroxide or H202 “cure”.
Google “DR Ronald Hoffman podcasts and listen to one on vitamin C- he has a great program called ‘Intelligent Health” and is well aware of the war on supplements by Big Pharma and the dangers of Codex Alimentarius

Phil Van Huffel
Guest
0
Phil Van Huffel
February 11, 2014 4:59 pm

I have owned this stock for a while. I got my investment back and continue to hold some shares. The downside I realized is that this is a Canadian company. Nick Hodges seems to tout mostly Canadian companies. These companies have terrible track records for sales and earnings and cash burns. Still, US government research money was invested with seemingly positive results. I think I will ride the roller coaster.

Solyom
Guest
0
Solyom
February 11, 2014 4:59 pm

The fair value of SBOTF is about (4.50) and technically has been going sideways for while. It is 1.61 a share now and might be worth some mad money, Maybe a 100 shares if that.

David B.
Guest
0
February 11, 2014 5:58 pm
I was once a believer but have recently sold SBOTF based on some very good science from Dr. KarmaSwamiSwim on GumShoe who has done some pretty extensive research on KLH finding that it is failing in trials. It’s C Difficile vaccine is in the very early stages and seems unlikely to succeed. KSS also believes that if KLH does become the next great thing then someone will figure out how to clone it. KSS can explain all of this much better than I and I imagine that he will. I wish all Stellar longs well and hope that KLH does… Read more »
bosley
Irregular
66
April 12, 2014 5:40 pm
I definitely can’t speak to the science (per Dr KSS), or the financials (per Travis). But I see a couple things. There are an awful lot of clinical trials using KLH, including Celldex’s Rindpepimut. If KLH proves effective, even in one, and demand increases, it is highly unlikely the Cal. Fish and Wildlife Dept. will allow an army of divers to inundate their coast looking for KLH sources. That’s why CF&W and NIH gave generous grants to Stellar. To provide a sustainable source in such an event. But Dr KSS says that if that event happens someone somewhere will develop… Read more »
Lw
Guest
0
Lw
June 30, 2014 9:06 pm
Though I do not question Dr KSS’s research on the fact that it may be failing it’s trials, of which there are a large number ongoing, only one of which is needed to show some success for further trials to be allowed, I do understand something about FDA trials that every human being deserves to be informed about. When the FDA gives their permission for trials to be conducted, the tested new item, whatever it may be, is ONLY allowed to be tested after the patients who are accepted for testing purposes have already undergone chemotherapy, if the new product… Read more »
Lw
Guest
0
Lw
June 30, 2014 9:17 pm
I need to correct one statement in my long earlier one: the FDA is not concerned AT ALL how long a patient being tested with a potential new product, but merely if the patient shows SOME improvement as a result of the use of the item being tested. When a cancer patient lives for at least five years, after undergoing ANY kind of cancer therapy, it is considered to be a closed case: RESOLVED. If sufficient numbers of the tested patients show improvement, then the new item being tested may be considered for additional testing, which is done in several… Read more »
gard
Member
198
August 15, 2014 5:14 pm

That has been my conclusion over many years of research and experience.
The FDA has many strange characteristics. I cannot comprehend why they do things the way they do. I know from personal experience, having worked as QC tech at Calbiochem in the late 70’s, they are a political organization more than a medical one, subject to some amount of corruption. I compare them to the way NASA has been run over the years. The FDA needs more Doctors, scientists, and biochemists and less beaurocrats

gard
Member
198
August 15, 2014 5:17 pm

The science of klh from limpets seems sound to me. The production and marketing, I am less sure of. If it comes back down to .75 I would go long.

jailbreak74
Member
0
February 11, 2014 6:32 pm

hello all, i was just wondering if anyone here has heard of or maybe even traded PVCT? i have been following this one for a couple months, and not gonna lie, when i saw the title of this article i crossed my fingers in hopes that it was in fact PVCT……….. i’d like to see if anyone else has done any research on this small biotech? thank you very much for your time , and happy hunting…..Jeremy THE VIKING Bellar hehehehe

jamespaul108
Irregular
29
jamespaul108
February 11, 2014 10:03 pm

Dr. Karmaswimswami has some comments on it elsewhere on stockgumshoe; you can most likely find them using the search feature for “Provectus” or “rose Bengal”.

Sam
Guest
0
Sam
February 11, 2014 7:00 pm

Thank you very much for the article, Travis. I am sure that you are 100% right; except that I had a concern because the advertisement said that an IPO is coming up. However, probably it is right because their website states, “Prepare for transition to major U.S. stock exchange in 2014”. Surely, this is a final check of your accuracy in solving the teasers.

Rick Johnson
Guest
0
February 11, 2014 7:07 pm

I think I’ll leave my money in unobtainum.

Carl May
Guest
0
Carl May
February 11, 2014 7:47 pm
Wikipedia has a good introduction to keyhole limpet hemocyanin (KLH), including references to what areas of research are going on in the health sciences. I’m not much of an investor in individual stocks–the only thing I took a flyer on in recent years the week it went public was Tesla–and currently I let a mutual fund at T. Rowe Price do what it can for me in the health sciences. That said, teasers that can’t get the most basic biology right instantly discredit themselves. Any reference to “the limpet” as rare is ignorant–there are dozens of species of limpets, some… Read more »
tanglewood
Irregular
169
February 11, 2014 9:09 pm

Hi JEREMY BELLAR
There is a lot of pro and con discussion re PVCT on this other Gumshoe thread. This thread is quite large; use find PVCT to locate.
http://www.stockgumshoe.com/reviews/biotech-supertrader/this-tiny-unknown-biotech-is-about-to-unleash-its-holy-grail-drug/#comment

jailbreak74
Member
0
February 11, 2014 9:22 pm

Thank you very much tanglewood! i am so green i can use all the help i can get…….

jan
Guest
0
jan
February 11, 2014 9:44 pm

Checking out the medscape site to find corroborating evidence to support their claim I note that the blue blood limpet protein test did not perform as well as another.

James B. Fuller
Guest
0
March 15, 2014 5:18 pm
Not All Things are of course, but we can eliminate many toxins in our bodies by employing Cold Brew Apple Cider Vinegar which has a great record for reducing acids and PH balancing the Blood stream. The Benefits have hardly even been studied. Inflammation is removed from joints and circulation is increased dramatically over time with just 1 tablespoon daily with clean water and honey. Some studies even indicate type2 diabetics have a dramatic decrease in blood sugar levels. Now, I’ve been using Bragg’s apple cider vinegar which is the only one out there that cold brews I can find.… Read more »
Cookie
Guest
0
Cookie
February 12, 2014 7:54 am
Another thing to consider is that the market model frequently motivates the impulse to violate the most basic understandings about health care and medicine . There never has been, nor will there ever be, some “magic bullet” that solves “all” of any condition or disease, no matter the “natural” or “unknown” source. When you fall for copywriters having a field day with such fantasy claims, you mistake a doctored photograph for a reality that can’t be. Clinical trials are so loaded with the taint of industry politics, no matter the “drug,” just realize you’re betting not on products, but hype.… Read more »
Myron Martin
Author
192
February 12, 2014 9:22 am
Very well said cookie, “There never has been, nor will there ever be, some “magic bullet” that solves “all” of any condition or disease, no matter the “natural” or “unknown” source.” The last I heard the natural laws of “cause and effect” have not been repealed any more than the laws of gravity. Good health has to be EARNED by attention to the laws of health that require breathing pure air, drinking pure water, getting enough exercise, and sleep. Most important of all, eating a balanced diet of fresh and unprocessed foods that supply all the vitamins, minerals, enzymes and… Read more »
arch1
Irregular
4154
February 12, 2014 12:50 pm

Martin I certainly agree. I think it was Leonardo Da Vinci who said “nature never breaks its own laws.” Einstein said ” god does not play dice with the universe” I think that leads to “It is impossible to avoid/avert the “law of unintended consequences”.

arch1
Irregular
4154
February 12, 2014 12:54 pm

Addition; I think this may also apply;I once heard a wise scientist say “We invent nothing ,We discover all “.

aterosin
Member
6
aterosin
February 12, 2014 1:57 pm

I have it. I bought in at $1.38. Was an optimist and bought some more for the kids. Will sell if it EVER gets back to $2.00. It was mad money.

gard
Member
198
August 15, 2014 5:23 pm

Way to go. I think you will get to $2.00

Myra
Guest
0
Myra
February 12, 2014 3:02 pm
Got this email this morning. I own a few shares. Dear Stellar Biotechnologies Supporter: Please see this morning’s press release below Stellar Biotechnologies Presents KLH Verification Method at Aquaculture America Conference PORT HUENEME, CA, (February 12, 2014) — Stellar Biotechnologies, Inc. (“Stellar” or “the Company”) (OTCQB: SBOTF) (TSX-V: KLH), announced today the presentation of a poster at Aquaculture America 2014 (Seattle, February 9-12, 2014), describing a new method for verifying authenticity of Keyhole Limpet Hemocyanin (KLH) product. KLH is an important protein widely used in the pharmaceutical industry as a hapten carrier in active immune therapies and as an injectable… Read more »
Steve
Guest
0
February 12, 2014 10:46 pm

I am still conservative about biotech investments, although I know a good number of them are likely to be worth the risk.

MICROBIOBOB
Guest
0
February 15, 2014 1:57 pm

KLH, as described above, is used as an adjuvant or substance to boost immune reactivity to compounds with lower immunogenicity or enhance immune reactions. This is because of its lack of exposure in most humans and mammals and its general ability to elicit good responses. Many researchers use it because of its generally accepted uses and because of apriori use in studies establishing the compound(s) of interest. However, there are many other adjuvants in use and KLH would certainly be replaced if unavailable or too expensive.

Robert
Guest
0
Robert
February 15, 2014 4:44 pm

Thanks for another good article Travis.
I think that the price comparison you make for hemocyanin will be off somewhat because the product sold by Sigma Aldrich at $75 for 20 mg is ‘Premium’ grade and not the pharma grade that Stellar will be producing. As a result I suspect that the speculative 20 kg/year would see them generating revenues over the $75 million that you state. Whether they can really get $900,000 for a gram is another matter!

BobM
Guest
0
BobM
February 18, 2014 7:32 am

I’ve been reeled in by the KLH stories. I hope it turns out to be true. Both my wife and I have lost friends to the big C. I bought 1000 @ 1.60. Mad money as everyone is saying. But then I also was fool enough to get caught in the BioZoom scam. Live and learn.

goldguy2
Member
0
goldguy2
February 25, 2014 4:34 pm

I’m an amateur as far as analyzing daily market actions, but it seems to me that recent trading in SBOTF indicates some large buyer is knocking the price down while picking up truckloads of shares. Does anyone else read it this way? Today was a good example. If this is correct, the next conclusion might be that it would be wise to hold onto this stock to see if and when the price resumes its uptrend. Is this naive?

david
Guest
0
david
March 18, 2014 10:09 am

Anybody ever heard of a Sun-Gas?

joe_retail
Guest
0
joe_retail
May 2, 2014 10:54 pm

just got the outsider club email….my guess is their mexican billionaire “investor” is selling into the hype generated by hodge, seekingalpha, stockreversals (another email outfit) etc. The email and the embedded presentation make no mention of the tank job that happened over the past month.

Donna
Guest
0
Donna
May 6, 2014 6:27 pm
I threw some of my pin money at Stellar. I never gamble what I cannot afford to lose. I am also interested in Neovacs a biotech from France, trading at about 5.50 per share US. Yesterday, I bought GWPH, which is a UK company with the Only FDA greenlight on its cannabis based pharmaceuticals. It got fast tracked for Sativex, which is a nasal spray for MS. They are also getting good clinical results for a substitute for opioid pain relief and Diabetes II, which is a potential blockbuster since many baby boomers have it. I got in late at… Read more »
paul
Guest
0
paul
June 14, 2014 10:37 am

i bought a lot of useless stocks thru nicks recommendations. Unfortunately i easily succumb to an experienced salesman’s deceit! In certain parts of the world there is a saying that salesmen are less welcome than a undertaker. which funeral directory does Nic work for?

Bill Seibert
Guest
0
June 22, 2014 11:18 pm
Unfortunately, I came across Nick Hodge’s Pump @ dump teaser on Blue Blood. I was brand new in stock investing. I bit on Hodge’s recommendation and bought Stellar at $1.77 Per share. I invested $2k on his recommendation. I also purchased his newsletter at $499.00 per year. Fortunately he had a 4 month money back guarantee for his service. It wasn’t but 2 months that Stellar nosedived to just under $1.00 per share. I also bit on his other B.S. play Blue Light. I also lost money on this stock tease. I have since sold both Blue Blood & Blue… Read more »
deb
Guest
0
deb
January 4, 2015 7:44 am

i am still the fool. i haven’t bought his newsletter but i gather enough info from the teasers to usually find the company myself as i did with stellar. i have not taken the time yet to discover the blue light stock. can you save me the time. what is that company so i can do my own research? thanks,
deb

Slick Rick
Guest
0
Slick Rick
June 24, 2014 8:36 am

Folks why waste your money on Nick Hodge OTC story stocks that will probably go into the tank.
Buy THRX which is virtually a generating cash cow, The company has an interest and collects fat royalty checks from bio pharma companies who take all of the risk . Do your own research…….i KNOW you will be happy with what you see, Good Luck!

Myra
Guest
0
Myra
August 1, 2014 2:12 pm
FYI – Received this on 8/1/2014 Dear Stellar Biotechnologies’ Supporter: Below are links to stories released last week regarding two of our collaboration partners. Stellar long-time customer Neovacs (Paris: ALNEV) discusses the company’s immunotherapy programs and pipeline for autoimmune disease Watch video http://tinyurl.com/qxpphpk Neovacs is developing the next generation of immunotherapies using Stellar KLH™ as the carrier molecule in three of its products now in clinical development for Rheumatoid Arthritis, Crohn’s Disease, and Lupus. News regarding OBI-822 Immunotherapy: Clinical trial for breast cancer drug completes patient collection Read full story http://tinyurl.com/p3f6qxv Stellar is working in collaboration with Amaran Biotechnology, Inc.,… Read more »
Ken
Irregular
1
January 7, 2015 2:46 pm

I saw a tease on SBOTF a year ago and figured it was SBOTF so I bought the stock. I was certain it would hit $10 until I looked at it in seekingalpha.com. I was shocked and sold it. I would advise anyone look at SBOTF in seekingalpha.com before buying.

James K Farley Sr.

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