by Travis Johnson, Stock Gumshoe | April 18, 2014 9:55 am
Since we posted the latest stock idea from our own biotech maven Dr. KSS[1] yesterday, I couldn’t help myself — had to take a look at the biotech pitch being made by the Money Map folks who are launching their BioScience Millionaire[2] service.
But I don’t really have any time, and God knows I ain’t no expert on no science’y stuff — so I’m just going to go quickly through the stocks they’re teasing for you and let you at ’em to do your own research (and share with the rest of the class, of course).
I’ll be on vacation for the next week, so this is your bonus note so you don’t forget about your favorite Gumshoe while I’m gone … then I’m moving on to finishing up my “Idea of the Month[3]” piece for the Irregulars (should come out tonight). After that, it will be ten days of occasional guest articles and your delightful discussions amongst yourselves… unless we hit a patch of teasers that are so enticing that i have to come in off the beach and get to the keyboard.
Since I’m not excerpting much or going through the details, you might want to have a gander at the actual ad — it’s here[4].
And it’s all about how Ernie Tremblay[5] is an expert on drug discovery, and can decipher the science and talk to the doctors and get the inside skinny, then take the drugs that are making their way through Phase 2 and 3 FDA[6] trials and make recommendations to trade them based on big moves the stocks should make around certain dates.
The volatility of biotech stocks around particular dates isn’t new to anyone who really follows biotech, there are thousands of analysts and investors trying to track biotech stocks and the dates on which they are expected either to have decisions from the FDA, to announce filings with the FDA, to have advisory meetings called by the FDA, or even to present at conferences and release new data about ongoing trials. For these development-stage companies, earnings announcements are usually an afterthought — it’s all about the clinical trials and FDA actions and whether their drug actually works and gets approved (and, sometimes, about how expensive the clinical trial process can be — and how often they have to raise more money by selling more stock).
It’s a flood of information, and there are hundreds of viable publicly traded companies who are active in fairly late stage drug development, so having a person who can track it all and make good recommendations is obviously of value (I personally have no idea whether Ernie Tremblay is any good at this or not, this is apparently a new letter they’re launching).
And they say there are hundreds of dates on his calendar already, of course, but there are some urgent ones that are coming up soon (there’s always urgency in a newsletter pitch — otherwise, why subscribe?). So I took a quick look at the hints regarding the first teased stocks:
“I want to talk about three opportunities that I believe are slam-dunks for substantial calendar gains in the coming weeks.
“The first one’s coming up fast – April 25th. And I expect a big pop…
“And as it takes off, we could be looking at as much as a 36-to-1 gain, or better.
“The market potential for this company’s new drug is huge. And I mean, really, really, huge.
“You see, according to the American Heart Association, there are 24 MILLION Americans who should be taking aspirin to prevent the recurrence of heart attack or stroke….
“Problem is regular aspirin use can lead to serious gastric ulcers. So a substantial number of people can’t follow their doctor’s advice….
“This company’s new drug appears to be the solution.
“It combines the blood thinning benefit of aspirin… along with a powerful proton-pump inhibitor drug, proven to help prevent the stomach problems regular aspirin can cause….
“It’s already the same pump inhibitor being successfully used as a co-ingredient in ANOTHER drug the company ALREADY markets….
“… this new drug combination has gone through two Phase 3 trials, as well as a long-term safety trial, and they both show clinically significant benefits.
“That’s why when they come up for FDA approval in April, I’m confident they’ll give us a nice “price pop” almost immediately.”
So who is it? This is Pozen (POZN). The drug they already market is VIMOVO, the combination of naproxen and esomeprazole. The new drug they’re expecting a PDUFA date on of April 25 is PA8140[7], which apparently is aspirin and omeprazole.
I know nothing and have not looked anything up, other than to tell you that POZN is a small $250 million company with a few approved products and a bit of revenue ($10 million last year).
Ernie paints a crazy rosy picture:
“So let’s run through the numbers real quick…
“Twenty-four million potential patients… just in the U.S. alone…
“Let’s say 20% of them end up on this drug regimen – at a monthly dosage cost of $120…
“That’s the potential for $6.9 billion in sales.
“If the current exclusive licensing agreement – already in place, by the way with a major drug marketer – pays them even half that, it would mean over $3 billion in revenues from this drug alone.
“If we take the industry median net profit margin of 7.5%, that equates to $225 million in earnings one year from now, or $7.37 a share.
“Apply the industry average PE, just the average, of 40, and that would give us a price target of $295.
“That’s a staggering 3,632% upside.”
So I’ll leave you to speculate on whether or what the April 25 response will be, and what that will mean for the stock. I dunno.
(April 25 is the PDUFA date — if you don’t know what that means, it’s the Prescription Drug User Fee Act date, the date by which the FDA is supposed to respond to a New Drug Application (NDA) submission by a company… under that act, which passed about 20 years ago and has been amended and reauthorized a few times, the FDA essentially won the right to collect fees from applicants in exchange for streamlining and clarifying the timeline for the approval process, the general dates are 10 months from NDA submission for regular review, or six months for priority review. The response doesn’t always come out exactly on the deadline, it’s often earlier and occasionally later).
Next one?
“Let me tell you about this NEW recommendation. Here’s the story in a nutshell.
“Back in November of last year, the FDA accepted a new drug application for a PRIORITY REVIEW of this company’s drug….”
[So that’s that means the six-month clock started ticking for an FDA response]
More from Ernie:
“And the serious condition THIS drug targets is called ABSSSI. That stands for ‘acute bacterial skin and skin structure infections.’
“The one that gets the most attention – the one you’ve probably heard of – is called MRSA….
“According to the Center for Disease Control and Prevention (CDC), two million people contract these infections every year, and 23,000 die from them….
“… there are a several companies developing drugs to treat ABSSSI. So what makes our company’s treatment superior?
“A number of studies demonstrate that it’s as safe and effective as the current standard of care, intravenous vancomycin, but with one major advantage:
“It’s administered only once a week over a two-week period.
“Vancomycin, on the other hand, must be given every 12 hours over the same period.
“That’s an enormous advantage in terms of patient comfort, cost, compliance, and exposure to side effects.
“More than 90% of patients who showed response within 72 hours of the first treatment were ultimately cured.
“They also showed fewer side effects than with vancomycin….”
When’s that “calendar date” for this one” Tremblay says May 26, at which he expects to hear about approval of the drug, with the stock probably rising before and after approval.
So who is it? This is Durata Therapeutics (DRTX)[8], which is essentially a $300 million one-drug company waiting for approval of its Dalvance drug (dalbavancin), which does seem likely to hit a huge market if it is approved. I don’t know if the drug is partnered or anything, or, really, anything else about the company — but our own Dr. KSS was very positive about them back in February[9], the stock is down about a dollar since then, along with all the other swooning biotechs, and has since gotten unanimous approval from an FDA advisory panel.
Tremblay’s pitch for the potential share price appreciation is huge again:
“There are already 3.3 million potential patients for this drug. But just to play it safe, let’s assume only a fifth of them take this particular treatment.
“At a cost of $2,800 per patient, that adds up to $1.85 billion in first-year sales.
“Once you account for operating expenses – and corporate taxes, of course – net income ends up at $137.8 million or $5.17 a share.
“Apply a ‘closest peer’ price-to-earnings multiple to the bottom line, and you’re looking at a stock price of $258.74.
“Right now, it’s only $15 a share. So you’re looking at what could be a 1,664% gain at its highest.”
Next one?
“I’ve been following this company’s work for YEARS, actually. And it’s finally time to move on it…
“The company’s next key meeting is scheduled for September. And the results could be huge, based on my research.
“This company’s drug deals with… yes… constipation. Not EVERYday constipation, which can be treated with over-the-counter medicine…
“I’m talking about the kind that people get from taking any kind of pain narcotic.
Around the world an estimated 35 million people suffer from this affliction….“It’s called OIC, for ‘opioid induced constipation.’ This is the most prevalent serious side effect of opioid use.”
So what does the drug do? Here’s what Ernie says:
“… this little company has developed a once-a-day tablet that keeps narcotics from binding with opioid receptors in the gastrointestinal tract… But it also allows them to continue binding with receptors in the BRAIN, where the painkilling effect occurs.
“We’re very close on this one.
“Two Phase3 trials proved the drug works.
“Another trial has shown it is very safe.
“Based on the strong results, the FDA has accepted the company’s New Drug Application and simply awaits the recommendation.”
So who is it?
Thinkolator sez this one is Nektar Therapeutics (NKTR)[10], which is a bit bigger company and has a few more things in the pipeline — this is a billion-dollar company that just raised another $100 million earlier this year and also has a few fairly advanced cancer, anti-infective and other drugs in the pipeline, but their lead drug in development right now is indeed a treatment for OIC — it’s called Naloxegol, the PDUFA date for that one is September 16.
Haven’t looked at this one, but Nektar is one of those “platform” companies that also licenses its technology to other developers, and most of their drug candidates (including Naloxegol) are partnered, so they do also get royalty income. Not enough to make them profitable this year (or next, according to analysts), but they do have some meaningful revenue.
And Tremblay’s blue sky predictions for the stock price? As always, take these with a grain of salt (they are, after all, trying to sell you something), but this is what he says:
“17 million potential patients…
“An average treatment program of 12 weeks – at an estimated cost of $336 per week, or $4,032 per patient.
“If doctors prescribe this treatment to just 20% of the prescription narcotic users who could benefit from this new drug – you’re looking at a potential $13 billion jump in revenues.
“Using the average industry net profit margin of around 12%, my price target for this little company is $416 a share…
“That’s a peak 2,958% upside from current levels – enough to turn a small $5,000 play into over $150,000.”
After that, you’re on your own — I don’t think Dr. KSS has every written about that one, and I’m quite sure I haven’t. let us know what you think with a comment below. I don’t own any of these.
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Travis; Enjoy your well earned vacation, Thank you for the going away gift you are leaving with US!! I look forward to your rested & ready return. fa
Why we don’t see public companies promoting directly their stocks themselves on the internet. Im sick and tired of these secret promotions. Do I miss some knowledge in the financial domain?
suggest you look at insmed [[insm]] biotech w// promise
http://www.biopharmcatalyst.com/fda-calendar/
This might be the calendar he’s teasing.
Got this from another comment elsewhere.
I’m sure he must create his own calendar from lots of Inputs — there’s no secret, it just takes a lot of legwork to follow hundreds of companies.
TRAVIS ANV has been shorted out, THE GEO AND ENG TELLS ME IT IS REVERSE KICKBACK AND BUY , BEST HOLE IN Nevada and should have kept Kirk but needed cash will they have enough to make it through the yr. my source tells me see’s good prod, and no feedback from attorneys on Lawsuits 4 out of 7 judges said won’t hold water if there case gets to ct. on class action just pi od investor but makes them look bad shorts are coming around the mountain yo think just a ploy and pad faults are justs that talk to get institutions scared but they don,t look to scared unless they are waiting for more any thoughts can always open range for Harry Reids cattle joke. any thoughts on ANV HEARD WAS SLEEPING GIANT FOR CHINA from pretty feeder man,thoughts? usually right on his info. Institutions mostly quite and they would be first out DC ATTORNEY FIRM GOT JUICED BECAUSE OF THERE NAME. KIRKLAND TALKS TO WYO OXIDE SIDE SOMETHING FUNNY.
Again, please? In simple English?
Please try some punctuation. You know, periods, commas, etc.?
What the h-ll is she talking about
Must be a mechanical translation from Chinese
Travis have a good well deserved vacation.
Thanks for the uncovered teasers. I am convinced about a tiny Canadian company Theralase – TLT which is looking for a non invasive CURE for certain cancers. It also has cold laser products in the market. It would great if your biotech expert can comment on this.
Good luck to all.
I’ve held Pozen for about 10 years, for a net of no gain. Their promise back then was the answer to Migraine headaches. Don’t know why it didn’t take off but I’m happy to hear my buy and hold philosophy is now going to reap enormous gains. We’ll see…….
I won’t buy that one. How much does Aspirin cost? How much does Prilosec cost? Both are over the counter. Prilosec is not a benign drug long term, so there are some potential problems. I don’t know if they will get approval due to the long use. Even if they do so what? The dose for the anti platlet effect of Aspirin is so small it could be taken every third day. If you have this one already I’d wait for the news and if a good price appreciation sell. I just can’t see this one going anywhere. Now NKTR may have something , and I’m sure will be discussed much in the coming week.
log
Looking to put some $$$ into DRTX before May 26th…. worth it? When is it worth selling afterwards?
A simple one move solution to the question about any biotech/medical stock.
Are any of the directors buying the shares? The London FT director deals section will tell you the answer for all UK US Canada and Australia stocks, and I am sure you can find US sites with this detail for US and Canadian stocks. If the answer is no, then beware before you buy. Directors will err on the side of optimism anyway, and might buy shares in their own company when the forward projections do not merit it. But if they have not bought in the advance of allegedly transformational good news, then sit on your hands until they do.
I’ve been a member of Stock Gumshoe for some time, and an irregular for some months. My specialty has been lurking, time to spread my wings a little. First, Travis, you provide a great service, I really appreciate all you do. For anyone out there wondering whether the premium paid to be an Irregular is worth it, I would say absolutely. I have been investing since high school, and this past January was able to retire at age 60. I’ve never been so busy.
As for Pozen – I held it for a while last year, got out with about a 20% gain. If you look at their chart, late 2013 shows unusual activity. This was due to a 18% special dividend. The partner for PA8140 is Sanofi I believe. I wouldn’t be surprised to see it get FDA approval, but as commented above, I’m not buying into the hype of the potential market.
When do you ever see a biotech with no debt by the way? There was some talk about the company being liquidated or being taken over, not counting on any big premium if that happens.
Enjoy your vacation Travis, and Happy Easter to all.
Thanks!
Thanks logging in to see updates.
Hi, Jus t a v.quick bit of info : Nektar does NOT pay dividend to common shareholders. Not sure where I picked that up…might have been when was scrolling through annual report toward end where figures were. So can only do OK if price goes up. Hope everyone has hapy Easter and (maybe) a good rest> Sue.
Well? Where’s this big payola and pop from POZN that was occurring yesterday???? What bullshit!
Despite what the American Heart Assoc. says, humans were not born with an aspirin deficiency. And even those with existing heart disease who do benefit from a baby aspirin a day don’t often have gastrointestinal bleeding from that small amount. So forget about that “24 million”. POZN might have a market for the arthritis patients who do take full aspirin many times a day every day` – and for them internal bleeding is an issue, but this is a much smaller market.
As for DRTX – do you think they will get insurers to pay $2800 just for some convenience in taking it less often than the established and relatively cheap vancomycin? And there are now other even cheaper alternatives for MRSA and other skin infections, including narrow band UV light that kills pathogens and MRSA but does not damage skin like broader band UV light does. How cheap is light – well the doctor would have to buy the lamp but the usage is basically free thereafter. So I am thinking I will pass on DRTX too.
NKTR with their Nalozegol sounds promising – if it works as claimed it would be a huge blessing to people in chronic pain taking narcotics and for those in pallitive care like hospice. And I think Gumshoe usually likes these royalty deals. Of the three only this one interests me but with no profits yet I will wait a bit.
John,
MRSA is becoming resistant to current drugs, especially the “cheap” ones. How are you going to kill MRSA with light when it’s IN YOU?? IV drugs, that’s how, not by light. I’ve had it twice while living on the West coast. 6 iv antibiotics at once, for 2 weeks. Surgery to remove a large section of my calf, skin graphs, ect. DRTX is the answer before it sets past the skin. It only takes 3 days to “eat” past the skin. That’s your window for topicals.
Now $250 sp is pure nonsense. I believe the speculative buyout was 23-25 $.
Hospitals are already using UV light to eliminate MRSA off surfaces (railings, handles, doorknobs even walls) to prevent infections. Most MRSA infections start on skin and can be treated early on with UV light. And even blood can be removed from one arm send through a light tube exposing it to UV light and then put back into the body in the other arm now devoid of pathogens. It is simply another tool, but a cheap one. And after all the only point I was really making is I don’t see DRTX making much money – it won’t replace vancomycin just due to cost and other methods to control MRSA are around as well.
following
POZN will probably DROP on Monday because of some screw up by the FDA, or so says Ernie Tremblay Of Bio Science Millionaire . Another pick of his CYTK took the gas pipe and lost over 60% of its value. on Friday …so much for advice from an expert.
Folks what a record 2 for 2 LOSERS!
The only money I will make with this service is to get my 2 grand back before 30 days is up!
Perhaps the Service should be renamed to , “Bio Science Pauper”
For your money’s worth, this is the first time I issue a comment to stockgumshoe’s community.
As a physician who has treated many chronic pain patients with opioid medications for more than 30 years, it is very common, especially in the elderly, to stop taking their pain medications just because of the mandatory side effect of opioid-induced constipation, which can be quite severe. They prefer to suffer the pain rather than suffer the dreadful effects of constipation, which in several instances do require surgical intervention.
So, I see Nektar’s new medication as a gift sent from a Heaven to these chronic pain sufferers. We’ll see.
Doctors were responsible for the death of my mother, father and grandmother so taking any medication any doctor would recommend would be shear lunacy . Wobenzym will cure most any pain and enough vitamin c will get rid of any constipation. There is ALWAYS a better way than going to a doctor unless something is broken.
Further to a strong recommandation of yours, I have bought 6110 shares of XOMA at an average price of 4.10 and they are around 0.75 cents now! You have certainly gave some explanations somewhere and what’s next? Where can I get access to your comments.
Thanks!
Jacques