Patrick Cox and his Two Recent Teaser Picks

by Travis Johnson, Stock Gumshoe | November 16, 2012 2:36 pm

Neither of the two picks that Patrick Cox[1] has lately been teasing are new — but I’m getting a lot of questions about both of them so I thought I’d provide a couple quick answers on this lovely Friday afternoon.

Both of these teaser ads are designed to encourage investors to subscribe to his Breakthrough Technology Alert[2], which has tended to focus on biotech stocks but also sometimes dabbles in other technology areas, usually in both cases his companies are low on revenue and high on ideas or breakthrough potential if their product does what they think it will do. That’s typical of tiny biotech and tech stocks, as you’ve probably noticed.

The first one is the “Robert has Alzheimer’s” ad — you can see it here if you like[3], it is a story of a company with a new treatment for Alzheimer’s that , unlike the current standard treatments, goes after slowing and stopping the disease itself, not just helping with symptoms. Here’s a brief bit of the spiel:

“The story of the tiny company that could offer real hope for Robert is a double-big story because this company’s research is so unique. In fact, it’s completely novel. It’s new.

“Plus – this company’s best Alzheimer’s treatment has already completed Phase I trials.

“And in breaking news, the early results are astonishing. This, from a breaking press release…

“The confidential status of the new data has been lifted now that a formal presentation has been made at Neuroscience 2012 in New Orleans…”

“[Our drug] demonstrated its ability to restore mitochondrial functionality, and prevent oxidative stress[4] and apoptosis (cell death) in a scientific study at the University of Montpellier… Mitochondrial dysfunction caused by amyloid peptide toxicity has been consistently reported as an early event in Alzheimer’s physiopathology and a telltale sign of the disease, appearing before amyloid-beta plaque deposits and memory deficits in patients.”

“That’s a bit complicated, I know. Allow me to simplify…

“This company is showing promise of stopping the onset of Alzheimer’s before it’s taken its deadly grip.

“This is a matter of public record.

“If the evidence the company has so far holds up, we could be very near the end for Alzheimer’s.”

Cox goes on to say that you have to get in early, that this is a 96-cent stock that might enter a new clinical trial soon after these encouraging results and really, why wouldn’t you buy it since it’s so cheap?

And yes, he’s still touting Anavex Life Sciences (AVXL)[5], which he has teased several times — I last wrote about them in May[6] when Cox’s attention was helping the shares recover from a dip and go from 60 cents to well over a dollar, but he started hinting at this one a year and a half ago, at least,[7] back when the shares were around $3.

So it hasn’t exactly been an easy ride for investors — again, not a shock for a biotech stock, most of them lose money and continue selling more and more stock to fund their research, and most of them hit snags along the way that slow or kill their research programs or clinical trials. It’s not a pretty business, but the occasional 1,000%+ winners keep investors coming back in the hunt for breakthroughs … and, of course, we all want to see better treatments for scourges like Alzheimer’s Disease and cancer.

Anavex did have a successful phase 1 trial, they did present good results (that’s where their quote in the teaser is from) at a conference this year, and there seems to be some hope that they will move forward into more trials, either another phase 1 trial or phase 2. That’s for their primary drug, Anavex 2-73, though they do have several compounds for other central nervouos system diseases and problems that are in the preclinical phase and — their next most advanced one is being manufactured in some scale now so they can test it on large animals, so that’s a ways away from hitting the clinic. For Anavex, right now, it’s all about 2-73.

But actually, that’s not true — first it’s about getting out of the black, then it’s about 2-73. They can’t afford to do anything at all right now, as far as I can tell, they’re a couple million dollars in the red with “accounts payable” and have no cash on hand for continuing operations as of their last quarter, which was five months ago now, so I have no idea what they’re doing. They don’t seem to have sold stock, they haven’t announced anything financial, so my suspicion is that they’re trying to keep investor interest high enough to either do a big equity raise or a partnership deal with another pharma company from a position of at least some mild strength. They’ve announced in their last several SEC filings that there is, as you would expect, substantial doubt about their ability to continue as a going concern — that’s largely because they depend on new cash inflows, and cash inflows depend to a great degree on clinical success, and the same thing appears on a lot of biotech 10-Qs and auditor statements.

So you’d kind of expect a biotech company with what look like pretty good Alzheimer’s clinical trial results like this to have moved forward aggressively to line up more clinical trials, and that hasn’t happened yet — or at least, it hasn’t been talked about in their filings yet — so I suspect that they’re pretty focused on financing and possible partnership deals right now. That means this is a time of heavy uncertainty for Anavex, in my opinion, since they could do a dilutive stock offering that erodes current investors’ positions and drops the share price, or they could do a partnership deal that gives too much away, or they might not be able to do any deal at all and they’d be in default of their promissory notes or accounts payable contracts and things get grim quickly and they need rescue funding. I have no idea what will happen, but they’re due to release their next quarter right about now so I expect news will be forthcoming. Last quarter they said they expect to need $5 million to proceed with the development of their lead drug until next Summer, and that seems laughably low to me given that they must already be close to $3 million in the hole on a cash basis by now (accounts payable/current liabilities versus cash on hand), but we’ll find out soon enough.

This is a $25 million company, so raising a few million more, however they do it, will have a substantial impact — but of course, if investors or other pharma companies get enthused about a real cure for Alzheimer’s and their drug is better than the stock market is giving them credit for right now then $25 million is a drop in the bucket. An effective Alzheimer’s drug that changes the course of the disease could conceivably have sales of over $25 million a day. Of course, it’s also going to take at least five more years, I’d wager, for a drug in Phase 1 trials right now to get approved for Alzheimer’s even if all the trials go well — this is brain chemistry, and the FDA[8] is likely to be cautious. That’s a lot of “if’s”, and that’s why it’s a $25 million company that appears to me to be desperate for cash.

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So … drug presentation at the New Orleans Conference seemed to be good[9], but it looks to me like they need to raise more money really fast. If I were them, I’d wait until the Friday after Thanksgiving and announce that they’re selling 10 million shares of stock at 50 cents a share to a deep-pocketed pharma company, but perhaps I’m being too cynical.

I really do hope that the drug ends up working, by the way. Best of luck to them. And if any of you have invested in or researched Anavex, I’m sure we’d all be delighted to hear.

Oh, and I promised two stocks, didn’t I? The other one is Star Scientific (STSI), which he’s touting very aggressively again on the back of their Anatabloc anatabine supplement. The company has fallen hard because their settlement from patent litigation was not as good as many were hoping (that’s on the tobacco[10] side of their business, they began as a tobacco curing technology company, and tobacco is the source of their anatabine), and, though there are sales of Anatabloc and it’s getting some distribution, it’s a long, long way away from having good enough sales to justify a market cap of several hundred million dollars or more. So for Star Scientific, they’re hoping for breakthrough news in their clinical trials that advances the cause of anatabine in treating inflammation[11] and, yes, Alzheimer’s, but investors have clearly gotten a bit worried — STSI was also in a bit of a cash crunch and they raised some funds through a skeevy warrant exercise[12] with some insiders. I haven’t looked into their recent “real” news of late, but there is a lot of chatter going on in the comments section following my last article about Cox’s almost endless teasing of STSI so you can jump in there if you like[13].

I still have a few call options[14] on STSI shares that I expect will expire worthless, but do not own any other stocks I’ve mentioned above and won’t trade in any stocks mentioned for at least three days.

Endnotes:
  1. Patrick Cox: https://www.stockgumshoe.com/tag/patrick-cox/
  2. Breakthrough Technology Alert: https://www.stockgumshoe.com/tag/breakthrough-technology-alert/
  3. see it here if you like: http://agorafinancial.com/reports/VPI/Robert/Alzheimers_052312.php?code=EVPINB06&o=848858&s=854267&u=43938092&l=506493&r=Milo
  4. stress: https://www.stockgumshoe.com/tag/stress/
  5. Anavex Life Sciences (AVXL): https://www.stockgumshoe.com/tag/avxl/
  6. last wrote about them in May: http://stockgumshoe.com/reviews/breakthrough-technology-alert/cox-picks-alzheimers-fighter-in-phase-1-anti-virus-patent-awardee-to-make-us-millions/
  7. started hinting at this one a year and a half ago, at least,: http://stockgumshoe.com/reviews/breakthrough-technology-alert/next-printing-press-part-two-five-breakthrough-companies-teased-by-patrick-cox/
  8. FDA: https://www.stockgumshoe.com/tag/fda/
  9. drug presentation at the New Orleans Conference seemed to be good: http://anavex.com/press_release_2012_10_18.html
  10. tobacco: https://www.stockgumshoe.com/tag/tobacco/
  11. inflammation: https://www.stockgumshoe.com/tag/inflammation/
  12. through a skeevy warrant exercise: http://www.thestreet.com/story/11769949/1/the-fleecing-of-star-scientific.html?puc=yahoo&cm_ven=YAHOO
  13. last article about Cox’s almost endless teasing of STSI so you can jump in there if you like: http://stockgumshoe.com/reviews/breakthrough-technology-alert/live-20-years-longer-tobacco-resurrected/
  14. options: https://www.stockgumshoe.com/tag/options/

Source URL: https://www.stockgumshoe.com/reviews/breakthrough-technology-alert/patrick-cox-and-his-two-recent-teaser-picks/


24 responses to “Patrick Cox and his Two Recent Teaser Picks”

  1. r1drama says:

    Travis; I’m really liking the “Irregulars Quick Take” box. It’s nice to be able to grab the summary when the day can be so full of demanding reading. I’m finding myself jumping to the quick take as soon as your blog hits then diving into the commentary later in the evening when I want to relax and absorb. I truly enjoy your views and have spread the word on “Gumshoe” to many of my friends who, by the way, have become irregulars. keep up the great work.

  2. Cathy says:

    IF THERE WAS A BREAKTHROUGH IT WAS COUNTING THE MONEY FROM THE NEWS LETTER PUTTING HOPE INTO HOPE MEANS YOU BETTER LITE A LOT OF CANDLES AT CHURCH. IWAS ON ON MY DUE DILIGENCE BUT I SENT YOU THE QUESTION TO MAKE SURE AND YOUR NEWS IS ALWAYS ON THE UP AND UP GOOD OR BAD . If a news letter wants to not have there guarantee used so much they should cut all the drama and deal with facts, those that reinvent the wheel everyday and play the same ads for months do not make the money they used to. Before they could give there guarantee and hold your money till you called back and do short term investment what the bookies call juice but they are digging a hole for the few that speak the truth, after all the markets are a modern day VEGAS and the rooms in Vegas are pretty cheap right now. I like how you rate the bookie news letters but who or how many really give an honest recommendation with out the investment speech at the end. WHO DOES THE GUM SHOE give credit for there honest and integrity more that the money back givers that can’t get the short term interest at the bank and the only way they can give money back is being above average on option’s or hit divy,s just to make ink for there paper or electricity for there computer. Honest and integrity mean at least they help you learn why you loose. Any thoughts on Tom Hutchinson or does he have one leg longer than the other, he seems to not be so dramatic and more rational even knowing these change in minutes unless you long haul, in other words who is or how many are worth having to sit in front of your screen or waiting for your smart phone to dump or buy. You are pretty straight up and at least show both sides of the painting and I commend you for that .You will have my subscription for that alone. Thanks!

  3. john gallo says:

    I have owned Anavex and sold it when It wasn’t making much progress. I think in the long run if they can hold out it will be a vg investment; but like Travis said, it may be 5 years away…I have it on my radar and hope they are successful ..

  4. misterht01 says:

    Just hoping and the cost of the candles for the church alone can kill a man..

  5. Mark H. says:

    I purchased AVXL on Cox’s recommendation some while ago; it’s down over 25% from my purchase price (a good chunk of that in today’s trading). I likewise own STSI; I’m down almost 60% on that stock (and that’s after it was up almost 10% today). Every other stock I”ve purchased on Patrick Cox’s reco is down significantly (the worst, ISCO, is down over 80%). From my experience, the only value to be drawn from his recommendations is to short them (or, at the least, wait ’til the price drops 25-50% from his time of recommendation).

  6. George says:

    Sometimes I wonder if the majority of these newletter writers even review the stocks they pump, or if they instead just pick a random one out of the hat and build a story from there.

  7. The problem with a lot of these types of stocks is there is no real way to protect yourself as options when they are available are thinly traded and tend to be expensive. This is why decades ago I left and stay with large cap dividend paying stocks. That said, I have a lot of friends who subscribe to the various newsletters that push these types of stocks and they purchase put options when available. For example I note today that a lot of put options traded on STSI at the $1.00 strike – a total of 1600 contracts for 5 cents by the looks of it. Then on the call side 1000 call options again for 5 cents at the $3.00 for January. Obviously some people enjoy playing these options on penny stocks. I wonder how many are selling the options short just for the income?

  8. Stephen says:

    Cox’s BTA Report service isn’t bad, IF your truly in for the long haul. I’ve held it for 3 years, and it’s been a very interesting newsletter, as well as profitable. And the “risky” biotech’s you all speak of aren’t as hopeless or ineffective as one might think. Staying with them is what fun’s all about.

  9. Bob says:

    Don’t be in a rush. With very few exceptions, if you just wait you can get into a Patrick Cox pick at one half to one third of the price of what the stock is at when he recommends it. He just goes for “gee whiz” science with no regard to the financial viability of the businesses he recommends.

  10. pmredmonton says:

    The problem with finding a medication that may prevent Alzheimer’s disease is that the disease has often progressed a great deal before it is actually identified. Furthermore, often early on in the stages of most dementing illnesses there is still not a great way of differentiating that which is Alzheimers from that which is due to another disease or process.

    I think finding a medication to halt its progress is great but really big money would go into a medicine that could reverse it or alternatively a vaccine that could prevent in high risk individuals. In lack of such meds, a med that prevents progression would be welcome but would probably be in 3rd place unless we find a way to cost-effiectively screen for the disease in its early phases.

    I actually suspect that the earliest Alzheimer’s bonanza will go the commercialization of a procedure to diagnose the disease early in its course in a cost-effective manner.

  11. baygreen says:

    Travis thanks for the reply earlier and by the way the honesty of not knowing Hutchins and not subscribing to news letters is cool even not knowing the Hutchins name. I am not a subscriber either but I did pull the trigger and join the irregulars today for a year and out of being curious the name Hutchins was brought to my attention from my uncle a very anal person and he was also Frank SINATRA’S PRIVATE PILOT and after that Pope John Paul the picture if him pinning the flying wings in the Vatican on the Pope are just one of his many worldly adventures, he had to retire from flying because of age and I am 56 and he looks younger than me, but to go from Frank to the Pope is quite a change and he said a lot of people did not like Frank off stage but he treated his team of followers well, kind of one of those people if you did not see the pictures you would take it in stride but he has quite the collection of Celabs he flew and even picked my FATHER up in Philly years ago dropped Frank off for some business and then went and played 18 holes at Doral with my Fther and flew back home for supper that night, The reason I bring him up is we talk now and then and he plays the market more since he retired and he said as long as Ben B. keeps printing cash for Obama to buy some of this company till interest rates go up which he says won,t be any time soon and he never recommends investments but he said his buddy calls him Hutch told him to get some PGX in the 14 to 15$ range and I play some Oil and Gas and GOLD and Silver , I play on what come out of the ground but I was looking at this pick and it looks like the banks kind of had to appease the Govt. buying some securities and now the securities they where kind of forced to buy will be on the other foot and profitable because more or less the banks are floating over 1 trillion from Freddie Mac and the Fed has now sent the prices up so the banks can flip the MBS’S back and he said the spread is big but when it is over a trillion the banks that have been sitting on money instead of loaning it will turn around and the loan mortgages will be big profit for the banks and the PGX fee is cheap and there beta is about 1/3 of PGF and PSK , I know my uncle plays with a lit of a bigger deck of cards than me and he has helped me on some long plays before that worked out, not no get rich quick things so I bought 500 shares for 14.50 and then found out they even got a monthly Divy like I said I don’t play financial stocks but any rationality put in easier ways to understand the bigger picture would be interested in or what does the thinkolater machine crunch on them. I am guessing this is all about the QE3 picture any thoughts, I hope I made sense about what I think he means and you could detail the good and bads? Glad to be a member or do you have to go through a initiation to be an irregular? Thanks!

  12. who noze says:

    as Travis said biotechs cud be quite rewarding TAKE A PEEK ATinsmed[insm
    they are working o C F lung disease no known cure they just got an infusion of 25million bucks

  13. Slick Rick says:

    From the NOSE KNOWS post above INSM looks to be a winner …..and check out NFEC to make a few quick bucks on Monday Pistol Pete Says BUY the Best and Forget The Rest!
    P.S. You will also save on church candles LOL

  14. Alastair Rutherford says:

    Bought some Star Scientific awhile back and thankfully put in a stop loss. Anatabloc is a great product. I have tried it and it works. It could put all the other products on the market for inflamation such as Celebrex out of business. The problem is the company is doing a lousy job marketing it and running out of money in the process. As pointed out earlier, watch the stock descend to some level where it gets picked up by another company, the product either taken off the market or sold in another more expensive form. Forget the Patrick Cox hype. Buy a supply of Anatabloc if you need it before it disappears. General Nutrition currently selling it. Watch to see who buys the patents and then decide if that company is worth investing in. Money may someday be made on Anatabloc, but it won’t be with Star Scientific.

  15. ClintFromNYtoVA says:

    Bot Mesoblast (ASX: MSB) (MEOBF Pinx) a week ago for clients a little higher than today. Finished phase 2 stem cell trials in almost all 50 states (US) for that breaking back that ails us and other things that ail us like diabetes. Mine is herniated degenerative torn and Im trying to keep smiling but the smiley pills are harder to get these days. I missed phase 2 but will sign up for Phase 3 approaching. They use stem cells from your own body, I forgot the fancy medical name for that, but the bodys rejection is low. All biotech risky and the US tracking stock on the pinks is low volume but on the ASX its just fine. Not touting cuz were small for the haul, but I like em best of the STEM companies. Problem with Pinx is no reliable data, but not true on when on asx. http://quicktake.morningstar.com/stocknet/secdocuments.aspx?symbol=meobf

  16. Don says:

    Subscribed to P. Cox newsletter a couple of years ago, and thank goodness I bought only 10 of the stocks he was touting, because nearly all of them are down 50% or more. (have since cancelled the subscription). If somehow one of these stocks turns out to become a 1000% winner, then I will be back to breakeven on that part of my portfolio.
    Truth be told, he warns readers that his picks are for the very patient and some/most of these companies will not make it. But the biotech index has outperformed most sectors in the recent years and was one of the first sectors to break above its 2007 peaks. So, it’s kind of disappointing to be losing money with investments in the right sector.
    I also hope that companies and products he mentions succeed, because it would improve our lives enormously. But if you are interested in one of his stock picks, then just wait at least 3 or 6 months, and as soon as there is some stock market correction you will be able to pick up these thinly traded stocks at 50% discounts or more.

    Good luck.

  17. SAGACIOUS says:

    I have a kind of love-hate attitude toward Patrick Cox. i subscribe to his low end Technology Profits newsletter, and he’s obviously a brilliant guy with a laser focus on highly technical details, which usually cause my eyes to kind of glass over, and he seems to be on the cutting edge of the latest tech and biotech innovations. But his track record of actually picking winning stocks is fairly abysmal. I must give him credit, however–he is scrupulously honest. He continues to list all of his picks in his portfolio which currently comprise about 27 stocks, 17 0f which are in the red. If you had followed his advice and purchased every single one, investing equally in each one, you would be down an aggregate of 150%. While he may be a brilliant analyst in assessing tech and medical related matters he is clearly not brilliant at assessing a company’s business model or the market’s reaction to that company, so my suggestion would be that caution is the word with any Cox pick.

  18. Just to reiterate how much STSI needs something positive to happen: Their last three quarters have had sales of $1.2, $1.6 and $1.7 million, almost entirely from Anatabloc sales. That is huge growth from last year, when Anatabloc was not available (Anatabloc sales started in September 2011), but in my opinion it’s not particularly fast growth sequentially given the claims for Anatabloc and their pretty active marketing. At a run rate of $10 million in sales they might become profitable, but the cost of sales is also very high so it doesn’t seem likely to me that it’s going to become a high margin product unless it really reaches mainstream volumes of several times that amount.

    Which doesn’t mean that they can’t grow into their $250 million valuation, but I think the prospects for STSI depend far more on their Roskamp clinical trials than on the Anatabloc supplement. Ideally for them, they’d see the clinical trials provide compelling support for anatabine, which might lead to developing a separate product for FDA approval but which also ought to have a halo effect on the supplement, so I think that’s the roadmap to eventual profits that most investors should look at if they’re interested in STSI. With a year under their belt and a high price for an OTC supplement ($100/mo, roughly), I think they still need a kick start of some kind as the first few quarters of year-over-year sales numbers for Anatabloc will probably be underwhelming. To me, at least.

  19. patricksean says:

    Patrick pumped this company (STSI- Star Scientific) back in February of this year. At that time I did my own research to find out what was the company he was pushing. I found the company and added it to my watch list and performed my own technical analysis on the company as well as ordering Anatabloc (it does work but not the wonder drug that it was advertised by Patrick, I still use it). I watched as the stock quickly shot up, since its RSI was above 50% (my own personal comfort threshold) I waited and watched it peak then drop just as fast. Another one of Patrick’s pump and dump and now he is at it again so good news for those who bought it and held in hopes of it recovering. More good news is it looks like it is getting some legal problems with RJ Renolds behind them as well. I think this will make you money over time as they do have a good marketable product that is getting shelf space and advertising (again a personal comfort indicator).

  20. Len Lindenmeyer says:

    Very good advice. I sometime ago tracked 10 stocks that I had received this type of recommendation on through the mail or via the web. After 3 months there was not a single one that was up. All were down from 20 to 95% after 3 months. The further out you went the bigger the loss. Some jump a few points immediately after the recommendation goes out in the mail or hits the web. My recommendation is wait at least a month and then see where the stock is. I have to believe that the ones hyping these stocks have gotten big stock grants because they are on the bOard or have some special relationship with the companies. None of the people hyping these stocks are buying them on the open market. DO NOT BUY QUICKLY! IF YOU DO BUY, BUY A LITTLE AT A TIME. BEWARE.

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