This article originally ran on January 8, 2013. It has not been updated save for the addition of this brief introductory note.
More recent ad pitches on this same topic that say the stock and ticker have been “hacked” probably refer to our coverage of the story, but the more recent ads do not appear to have otherwise been substantively updated. The stock teased (revealed and discussed below, don’t worry) bumped up dramatically during the first week or two of the Breakthrough Technology Alert ad campaign but has since fallen back down a bit.
“God’s power to grant ETERNAL LIFE stolen by stem cell scientists in California
“Heaven’s Been Robbed!
“With the flip of a switch, doctors can now make the human body heal and regenerate itself — quickly, painlessly and naturally.
“Imagine what your life would be like… how much money you could earn…
“if you become… IMMORTAL!”
That’s the lead-in to the latest ad for Patrick Cox’s Breakthrough Technology Alert, a newsletter that we end up covering pretty frequently here at Stock Gumshoe … in large part because their copywriters keep coming out with great stuff like that and getting our readers hot and bothered.
Patrick Cox is a lover of the biotech breakthrough, and it seems to me that he’s pretty quick to draw straight lines off into into the future, turning promising pre-clinical results into world-changing science.
And I haven’t read his actual newsletter, which I’m sure must be more sober than his ads, but I’ve read enough of his hype-filled ads over the years that I almost spit my coffee onto the computer monitor when I read this paragraph:
“If you’re familiar with him, either through his published articles or by reputation, you know he’s not given to exaggeration or hyperbole.
“If anything, he’s an avowed skeptic and card-carrying cynic”
Maybe so, but when he’s reading one of his “presentations” to entice investors, and tells us that we’re on the verge of both immortality and generation-spanning wealth, well, I can’t help but think there’s a fair helping of both exaggeration and hyperbole.
Not that this means we’re less interested in finding out which companies he teases, of course — these companies have cool science and sometimes some of them do break through, turn science into products and FDA approvals, and make investors a lot of money. Not often, from what I hear, but sometimes.
And yes, I’m quite aware that a quick browse through the Stock Gumshoe Tracking Spreadsheets will not show you many Patrick Cox picks in the top half of the rankings. Or in the green, frankly. But they do have substantial pops from time to time, either because of Mr. Cox’s attention and Agora’s massive email lists or because of company news — these stocks are essentially never financial investments, because they almost never have meaningful sales and never have profits in these early stages … they’re driven by news, sentiment, and science.
So will this be one of the times that a teaser pick of his does well? Well, let’s see which stock he’s touting as the owner of the patent for the “God Switch” that can turn off aging in your body’s cells.
And no, we’re not going to get into the tease about whether this is really a “playing God” thing, or a threat to religion — the copywriter just throws that into the ad to get your temperature up a little bit and make sure you read (or listen to) the whole thing.
People heated up about big picture issues often don’t make rational small picture choices, I reckon, which certainly helps someone who’s selling an expensive and speculative newsletter to individual investors.
So … with that said, what’s our “God Switch” company? The tease says it’s run by a man who gets the pseudonym “Dr. Blanc” …
“The founder, CEO and lead scientist of the biotech company I’m talking to you about today — the company that could provide you with the means to live forever… and enough money to do so.
“Because I can’t disclose his real name just yet, I’ll simply refer to him as Dr. Blanc.
“A quiet, pensive man and small of stature, he is, nevertheless, a giant within the stem cell community.
“I believe, in time, he will be viewed in the same light we view other great medical minds that have changed the world.
“Pasteur, Mendel, Curie and Fleming immediately come to mind. Though I have no doubt his contribution to the improvement of the human condition will be considered far, far greater.”
And we’re told that Patrick Cox is a true believer in this one:
“Patrick is strictly forbidden from holding shares in any company he recommends — accordingly, he owns no shares of Dr. Blanc’s company.
“But if he could, he swears… he would’ve long ago purchased every share he could — enough to make him at least a “10% beneficial owner” and, therefore, technically speaking, a company insider.”
So what’s their technology? Apparently it’s some kind of way of creating pluripotent stem cells (ie, not embryonic stem cells — they want to use the body to make it’s own new stem cells), a way that is less dangerous than the previous virus delivery method for inserting gene control agents (Shinya Yamanaka just won the Nobel Prize for this 2006 discovery of those gene control proteins that can induce stem cell creation, creating induced pluripotent cells). More from Cox’s ad:
“Dr. Yamanaka’s process of inserting the four genes into an adult cell to create iPS cells appeared to be another dead end…
“The riches investors believed they could earn by backing the winning horse in the race to cure and prevent disease and prolong life were as faraway as ever.
“But Patrick knew the race had only just begun, and he told his readers so.
“Don’t fall prey to the skeptics who doubt the near-alchemical power of stem cells, he told them….
“Dr. Blanc knew, too, that if there was one way to create an iPS cell, there had to be another.
“And soon enough, he found it — and far quicker than anyone could’ve imagined.
“You see, he realized… if other animals (certain mammals, fish and reptiles, for example) could self-regenerate — grow new limbs or tails and repair damaged internal organs — it wasn’t impossible.
“And we should, therefore, given the right conditions, be able to do the same.
“Enter the one gene that rules them all — the God Switch!”
How does that work? The ad describes it as kind of like “breaking the encryption” for a cell’s DNA:
“[for] DNA to replicate and pass into a new cell, encryption must be turned off.
“Dr. Blanc reasoned, therefore, that if he could find the encryption key — in other words, the gene or genes responsible for encryption — he could unlock the cell and instruct it to return to its embryonic state — just as Yamanaka did using a virus….
“Fortunately, in one of his subsidiary companies, a scientist devoted to finding a cure for cancer found that needle without even knowing it.
“After analyzing gene ‘expressions’ from numerous cancerous and healthy cells, this scientist noticed that one particular gene, named SP100, was not activated in cancer cells.
“A quick side note: Dr. Blanc’s company is now on the threshold of using gene SP100 to screen patients for cancer before they actually develop cancer, and even cure cancer if they already have it.”
And then, as the ad says “Dr. Blanc’s company” has done, the IPS cells (that’s the acronym for the adult stem cells, the induced pluripotent stem cells that we want) have to be directed to turn into the kind of cell you need to repair the heart, or whatever. That part is a few years old as far as I can tell, the transplant of a donor trachea that the ad mentions, using stem cells in a Spanish woman, was almost five years ago, and the similar transplant of bladders that were infused with stem cells to remove rejection risk and help them meld into the body (I’m sure none of that is a proper technical description) was a couple years before that.
And finally, we’re told, there’s one more challenge — how to reset the “biological clock” of cells so that your transplanted IPS cells from your own body don’t have the same age-related weaknesses as your current cells. And “Dr. Blanc” also solved this problem, apparently.
With Patrick Cox as a guinea pig of sorts — we see some photos in the ad of Cox visiting “Dr. Blanc” in his lab, and having Patrick’s stem cells turned into “immortal” heart cells that could be injected into the heart, rejuvenating that tissue.
The cells weren’t injected, apparently — this was a test, and such injection is, we’re told, illegal without FDA approval. But we’re told they would have worked just fine and would have had the same impact as would Cox’s own embryonic stem cells … had he happened to have any of those lying around.
We also hear a bit about the huge stock pops that some of these advancements were made:
“He successfully immortalized an iPS cell — it became ageless and continued to replicate without end.
“After he published his findings, CNBC immediately asked to interview him so he could explain why his company’s stock had more than doubled overnight.
“The rest of the world’s press was also quick to pick up on his impossible breakthrough…
“A Bloomberg headline read: ‘Stock Soars as Firm Clones ‘Immortality’ Gene.’
“Time magazine titled its coverage ‘The Immortality Enzyme.'”
Now, those quotes are about this key part of the scientific advancement — largely related to telomerase, the aging enzyme first cloned 20 years ago — but they’re also quite old now, this particular wave of press and the spike in the share price of the company happened about 15 years ago, and the company that headlined those advances was Geron (GERN), which was the standard-bearer for stem cell research among publicly traded companies for a long time … but has also been a huge disappointment over most of the past decade.
So Geron is both an example of the huge profits you can make from these advancements — more than once it has gone up 5-10X in value in a matter of months — and a cautionary tale, as those who believed in the technology and promise and held for the long term have seen the stock go from about $10 to $1.50 over just the past five years (to say nothing of the $60+ share price it hit during the market mania in 2000).
But Geron isn’t our teaser target today.
No, the Mighty, Mighty Thinkolator tells us that we’re again being teased about BioTime (BTX), a longtime Patrick Cox favorite that has had a very bumpy ride … and that is helmed by Michael West, who was a founder of Geron and is described as a pioneer of stem cell research. It’s hard to tell from the photos that Cox includes in his ad, but the images from the lab show someone who looks a lot like Dr. West working on Patrick Cox’s skin cells. West is, ironically enough, showing some signs of age since his publicity photo was taken for the BioTime website, so I’m not 100% sure on that.
But the match is perfect for all the other clues, too, including several pages of blather that I’ve spared you from the ad. Cox talks about this company’s strategy of pursuing multiple products and technologies using a set of seven subsidiaries, and that’s what BioTime has — or did have until this week, when they added an eighth subsidiary (BioTime Acquisition Corp) to buy some of the stem cell intellectual property from Geron. And he talks about a few of their key products, including a new cancer diagnostic test that could become a huge seller — all of which also match BioTime and its subsidiaries.
Cox has probably teased BioTime more over the last several years than any other stock, with the possible exception of Star Scientific (STSI), but he hasn’t aggressively teased it like this for quite a while — I don’t think I’ve mentioned the stock for close to two years now. BioTime has also been around for ages, it’s been publicly traded for about 20 years but has seen some wild ups and downs and major changes to the business over that time … though the price now, right around $3.50, is pretty close to where it was in the early 1990s. It’s a small company but not a ridiculously teensy one, with a market cap of close to $200 million, and the shares are up by a good 15-20% over the last couple days based either on their deal with Geron or on Patrick Cox’s renewed enthusiasm — I’d guess it’s the latter, but I don’t really know.
Those subsidiaries at BioTime are involved in a lot of different things, and each one is apparently a joint venture that helps to get outside funding. That, and BioTime’s work to expand cell lines that are available for researchers at low cost (but with royalties due on future products), gives quite a few ways for the science to “work” in a business sense (ie, to make money).
In terms of substantial new products from BioTime, it looks like they’re targeting late 2014/early 2015 as a key time period, that’s when they hope to get European approval for a new cancer blood screening test, which would be a big deal (identifying genetic markers of cancer in the blood might be more effective and catch cancer much earlier than conventional screening like mammography or colonoscopy), and for a plastic surgery product called Renevia … and before that they hope to have launched clinical trials for an Age-related Macular Degeneration drug called OpReven that’s partnered with Teva. So there are some potential catalysts out there, though from a look at the balance sheet it appears they’ll probably have to bring in some cash from a new partnership or raise money over the next couple quarters in some other way.
BioTime has plenty of skeptics out there, folks who note that they have few real products and that those products bring in essentially no revenue, and that the promise of future revenue from work that’s now in the lab has been made many, many times over the years — so a substantial chunk of the shares are sold short, it would take a couple months of “normal” trading volume to clear up the short position, so if there happened to be some event that drove the shares much higher that move could be amplified by short covering … or, of course, the shorts could just hold on, if they have enough margin, and wait for the fall back down. There’s one bearish case for BTX here from last year — it needs updating but is still largely relevant, and some short sellers have shares negative pieces about BTX on SeekingAlpha, like this one from last summer. That’s not to say the short sellers will necessarily be right, but if you’re betting on a company with a large short position it’s usually a good idea to understand why folks are so aggressively betting against them.
There’s really no reasonable way to value this company, in my opinion — it’s worth what the future has you believing it to be worth, and I can see two investors coming up with wildly different numbers based on whether they agree with Patrick Cox that Michael West and his company and subsidiaries have now “cracked the code” to repair and rejuvenate human cells and that it’s just a matter of time before that leads to wealth. From reading their latest investor presentation it sounds like they’re on the verge of some products that have real, large addressable markets … but they’ve made that claim on other products as well (including Hextend, their one real marketed product, that appears to have a much smaller market than was initially hoped by investors).
The implicit hope of investors from years past seemed to me that BioTime would make enough money licensing their cell lines and selling research materials to turn them into a steady cash generator who could push that cash into developing breakthrough products, and that hasn’t happened (yet, at least), but the blue sky potential seems to still be there … of course, lots of companies, including the Geron of five and ten years ago, have had that potential too.
Immortality would lead to the Earth being such a festering, overpopulated cesspool that none of us would want to live forever, I expect… but I can see that developments along the way to that hypothetical future, like all of the advancements in regenerative medicine to help your body repair itself from specific injuries or diseases, would certainly be welcomed by the marketplace … not least because the largest and wealthiest generation of the wealthiest country on earth is starting to face its own mortality. So it wouldn’t be a shock if anything in this realm turns into a moneymaker, it’s just that I have no idea which of the many, many regenerative technologies bouncing around in labs and in early clinical and animal studies, if any, is actually going to turn into a blockbuster product.
I’m sure Patrick Cox has a better handle on the science than I do, and BioTime is certainly a stock that he speaks more glowingly about than some and has followed quite closely for years, but it’s also been my impression that he shares a burst of manic optimism about a new stock with almost as much enthusiasm every few months… so if you’re interested in BioTime and think they’ll be turning their science into huge piles of money at some point soon, by all means, start nibbling, but take the promise of the “God Switch” and immortality with a wee bit of a grain of salt. I’ve played around with some speculating in BioTime and other “revolutionary” biotech stocks in the past, and some have worked out for relatively quick profits … but most have not — I don’t have the brains or the stomach to bet big on an early stage biotech stock and let it ride, so I’ll leave that for the stronger spirits out there. If you’ve got an opinion on BioTime and the promise of stem cells, and the wealth it may or may not bring for little investors like us, feel free to shout it out with a comment below.
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