Which “Tiny Company” is Patrick Cox Touting for an Alzheimer’s Treatment about to Enter Phase 1 Trials?

By Travis Johnson, Stock Gumshoe, November 8, 2010

I’ve been getting a lot of questions about the latest “teaser video” from Patrick Cox for his Breakthrough Technology Alert — it’s the one that starts with a story about how “Robert has Alzheimer’s” and that a “breakthrough” gives him hope. And, of course, Cox will be “forced to remove” the presentation on November 11, so you simply must subscribe RIGHT NOW!

So what is this company?

Well, the teaser, though long and droning as most of these “presentations” are (this one didn’t have a text version, so I won’t quote heavily from it — I’ll just share the gist), did give a few details that lead me to point the finger at one company in particular.

What are those details?

The basis behind the spiel is that Alzheimer’s treatment is awaiting a blockbuster drug, which is undoubtedly true — even the limited treatments now available, like Aricept from Pfizer, apparently do no more than help with symptoms (I’m no biotech expert, as the paragraphs below will probably make painfully clear). Of course, this has been true for decades, and the disease has proven to be one of the more difficult foes out there, crushing the hopes of researchers in academia, in tiny biotechs, and at the big pharma companies. Nothing has really worked, and investors in Alzheimer’s cures have been crushed time and again.

But Cox goes a bit further — he says that the big pharma researchers, and most of the other researchers, are all going down the wrong path, trying to fight the amyloid plaque buildup that most people appear to believe is the cause of Alzheimer’s (again, I ain’t no expert). He seems to agree with Dr. Robert Smith, who is probably the most vocal opponent of the “amyloid blockers,” that the solution lies elsewhere.

I don’t know if Cox also agrees with Smith that the amyloids might actually be protecting the brain, and that the new amyloid-targeting drugs could do more harm than good — there was a good interview with Dr. Smith on this topic a few months ago by a Forbes writer, you can see it here.

So this company that Cox is teasing is apparently pursuing a different type of treatment that actually helps to fight the disease (instead of just fighting the symptoms), and it is going to enter Phase 1 trials “in the coming weeks” — Cox describes this as a catalyst, and thinks that once the drug enters trials and gets mainstream media attention the shares could go to $10 or $15 (he describes the stock as being around $3 now, though the ad is dated October 2010 so I don’t know what the date might be for that price).

He also provided some more clues — that the drug far exceeds Aricept in “actual disease modification”, and that it is very effective at low doses. It’s a small molecule drug that can be taken orally, and their idea is unique (unlike the amyloid blockers, if they’re right “they’ll be right by themselves.”)

And of course, without being very specific he tosses around references to 7,000% and 17,000% gains, which we can probably all agree would be quite lovely (I think I’ve had a 10,000%+ return just once in my life, the result of a lucky options speculation on a company that was taken over at a steep premium, and I think my head grew four sizes that day as I swelled with pride … only to shrink again the next time I did something stupid).

So who is this “Tiny Company” that he thinks can “Stop Alzheimer’s in its Tracks?”

I think he must be teasing: Anavex (AVXL, trades over the counter).

It’s very hard to be definitive when faced with a surfeit of clues as I am today, especially because I’m not willing to listen to that “video” again, but this is a good match — Anavex has made advances in the understanding of sigma receptors that lead them to think they can trigger responses that protect the nervous system from things like Alzheimer’s and epilepsy, and apparently sigma receptors can also target cancer cells.

If that doesn’t make sense, it’s because I don’t understand the science — you can see the basics about their drug discovery platform here, and their pipeline here.

And yes, Anavex is expected to enter Phase 1 trials for their lead compound in Alzheimer’s patients by the end of this year — I don’t know if they have filed the IND application fully or whether there are still potential roadblocks before human testing, but they hired a contract research organization to enroll and run the trial and the FDA process, and in the press release for that they noted that they expected Phase 1 to begin dosing by the end of the year, in healthy volunteers, and Phase IIa to start testing efficacy by early next year. If I had to guess I’d say that the initial Phase I safety results would make news only if they’re bad — what everyone’s looking for is an effect on the disease, so my guess would be that those Phase IIa trials are more likely to get a lot of attention next year. Of course, anything could move the shares, and the beginning of phase I trials may well cause some sort of stock reaction as well.

Oh, and for what it’s worth, the publicity information about the drug also echoes much of what Cox said, about effectiveness and low doses and an “excellent safety profile.”

And if Anavex sounds familiar, it may be because I identified this same stock as the solution to another Alzheimer’s drug tease (by Brian Hicks that time) over the Summer, that one went under the headline of The End of the Grey Plague, and while the company has clearly made some progress since then the primary caution is still probably the same: This is still a preclinical research firm that won’t make any money unless and until they either partner with another company on one of their compounds, sell one of their compounds, or actually make it through the development timeline and release a product (that would be at least many years away, clinical trials can take several years, the FDA is particularly careful about novel compounds, and they’ve not yet begun phase 1 for their lead drug).

It’s also worth noting that discovery-stage biotech companies are a lot like exploratory mining stocks: management tends to be almost pathologically optimistic, and indeed it would be impossible to do their job, in an industry of long odds, without that optimism. These kinds of companies always sound like they’re on the verge of something great when you read about them — some of them are, of course, but I don’t know which ones … and even when it works almost as well as they think it will, it almost always seems to take far more time to get to that point than investors are led to expect. Older Anavex presentations that I’ve seen clips of from 2007 and 2008, for example (like this one), noted that they expected to have four drugs in clinical trials by now, including this Alzheimer’s drug that they refer to as Anavex 2-73 (though even that optimistic forecast didn’t have them getting the first drug through Phase III until at least 2013).

So you’re betting on a drug, and indeed on a whole family of potential drugs based on their “sigmaceptor” technology, that, as far as I can tell, haven’t yet been tested in humans.

That’s not to say it’s necessarily a bad bet — the animal testing results, at least as I read them in their press releases, do sound quite encouraging, the market is definitely immense if they get it right, and it would not be at all surprising for a big pharma company to try to snap them up if they show promising results in human trials — even very early trials, since the potential market is so big and the company so small.

They have apparently raised a little bit of money this year, since the cash balance tipped back above a million dollars in the last quarter, but it is worth noting that they seem pretty cash-poor to me and have accumulated a deficit of about $20 million and that, with their clinical trial ambitions growing, they’ve recently been losing money (or investing money, depending on how you interpret it) more quickly than before. The funding need for clinical trials will only grow — the further along you get in the FDA approval process, the more the trials cost. They may well have partners ready to finance these trials, I don’t know and I didn’t check into their funding needs more closely than that.

They have about 22.5 million shares outstanding if you ignore a few million warrants and options, so the current share price of about $3.70 gives the company a market cap of right around $80 million. So clearly this tiny little stock could move prodigiously if Patrick Cox changed his mind, or if any news comes out … or even just because I happen to be writing about it today. It doesn’t take much for these little microcaps.

So how much might one be willing to pay for this stock? Is $80 million fair?

Well, if they can cure Alzheimer’s they’re clearly worth billions — but if their sigmaceptor technology doesn’t eventually lead to any drug discoveries that reach the market, they’re probably not worth anything. What they’re worth in the time before we discover whether one of those extremes is likely to be the truth is anyone’s guess, and I imagine that Patrick Cox is probably a far better biotech guesser than I am. If I’m right about this being Patrick Cox’s pick, then he probably likes their chances even as I imagine he must concede the riskiness inherent in these tiny biotechs … but it’s not his money at risk that we’re worried about, of course, it’s yours. What do you think? Let us know with a comment below.

And if you’ve subscribed to Breakthrough Technology Alert, please click here to let us know what you thought by submitting a rating and a brief review. The reviews we have on hand so far are relatively positive on the whole, you can see them here.


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21 Comments on "Which “Tiny Company” is Patrick Cox Touting for an Alzheimer’s Treatment about to Enter Phase 1 Trials?"

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TJR
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TJR
November 8, 2010 3:43 pm

You sure they aren't referring to CIGX?

Benjamin Blech
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Benjamin Blech
November 8, 2010 3:54 pm

There is a small company far ahead of Anavex with ties to 4 major Pharma firms. If their approach – disvored by Dr. Chain, son of Nobel Prize winner co-discoverer of penicillin – is correct, the cure and the financial rewards are imminent.
Here's the story: Intellect Neurosciences (OTC.BB:ILNS – News), a very small, publicly traded micro-cap company which was, until just recently, in debt and struggling to survive, is now in line for a chunk of the profits from the $20+ billion Alzheimer's Disease space.

bmc
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bmc
November 8, 2010 3:54 pm

I have found if you click away from their video as soon as it starts you'll get a prompt to hit "cancel" to stay on the page…or something else to quit the page (can't think of what the other option is right now). If you hit "cancel" then you have a text version of the video. I also can't be bothered to sit through those videos and I've found what I've described above as a great way of accessing the info fast (in written form so you can scroll through it quickly). Hope this helps!

Tom
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Tom
November 8, 2010 4:26 pm

Ant news from Richard C. Young investment ? He used to have a few good picks and was right on some take over candidates.

jeff
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jeff
November 8, 2010 4:26 pm
Yeah, but while the endless "audio" video drones on (is this tres annoying or whut?), you can be typing, say, "Alzheimer's phase 1 trials" w/out the quotes into a search engine in another tab. I'm betting a small amount that this may be the rumor, while the beginning of any phase 1 trial might be the news. Stranger things have happened, while I've been wrong before! The crashed jet with the nukes in Greenland (talk about going around your elbow to get to your wallet!) search term: Greenland uranium; Iran warmongering: Tupi oil field (Petrobras). Okay, that last sounds reasonable.… Read more »
snapper
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snapper
November 8, 2010 5:01 pm

I can not add anything but sure enjoy the Gumshoe trips thru the hunchs

- o s g o -
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November 8, 2010 5:58 pm

Let's all remember the term "Phase I" — which is way, way speculative. It can also be defined as "10 years b4 u c any ca$h" or "Major dilutions ahead, and chancy approvals too!"

While I hope there's a cure out there, the chances of your money staying parked and/or buoyed by press releases should concern you… I can think of better, less-risky plays that return, I dunno, this year maybe? 🙂

sonnyjames
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sonnyjames
November 8, 2010 7:08 pm

This entire subject gives me an AzzAche

BillW
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BillW
November 8, 2010 7:58 pm

From the Gumshoes archives this guys picks are not always correct but some have done well, some tanked..
http://www.stockgumshoe.com/reviews/breakthrough-

Myron Martin
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Myron Martin
November 8, 2010 9:43 pm
The comparison with junior mining explores is certainly on target. If you like 100 to 1 odds then you are a gambler not an investor. Is there money to be made in biotechs, of course there is, but you better be very focussed, have some knowledge of the subject, good connections, and do your homework. I don't doubt that Cox is well connected and knowledgable in the field, but I still don't like the odds. At lest with junior miners there are some standards (N1 43-101 compliant definition of resources and reasonably standard pricing of oz's in the ground and… Read more »
Dave
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Dave
November 9, 2010 3:09 pm

Thanks for the info Gumshoe.

I literally can't count the number of times I have read "entering Phase 1 trials", only to see something go down in flames because it never makes it to Phase 2 or 3

To me Phase 1 means maybe someday 5 years or more away.

Dr. Terry Davis
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Dr. Terry Davis
November 9, 2010 4:59 pm

The alternative to the amyloid plaque approach is the tau protein, but both these bets are guesses, which is what big Pharma has been doing.
What do you think of Ocologics Bioresearch? Their Reovirus approach to certain cancers looks promising, but they pretty much beneath the radar as far as the market is concerned

Brrrmystr
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Brrrmystr
November 10, 2010 9:49 pm

I want to contact GUMSHOE but I couldn't find any way to do that other than to write this post.
I wish to ask him to look at the new Stansberry SA promo letter (the one that begins with Clinton getting $8k plus per month from this new source of money, which is a gas and oil royality Co……… It is actually advertised on the main Gumshoe page.)

I will follow up and hope to find the write-up on this idea. Thanks in advance.

James Pritchard
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James Pritchard
November 12, 2010 4:25 pm

anyone have a link for the text version?

Prodiver
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Prodiver
November 21, 2010 7:49 am

Curaxis has data that is way ahead. Ran out of money a few years ago, but now resurfaced.

It's all about hormones. http://www.curaxispharma.com

Gravity Switch
Admin
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November 8, 2010 3:59 pm

That works for some, but unfortunately not all (like this one).

Bigg Fredd
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Bigg Fredd
November 9, 2010 7:24 am

Why does a legitimate scientific site have to resort to crap like the hard-sell investment gurus?

I'd view that as a red flag.

Gravity Switch
Admin
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November 8, 2010 4:02 pm

Thanks Blech — I certainly don't know anything about the technologies but that one sounds impressive too (as do they all in their own words, of course). They make Anavex look huge, by the way, ILNS is literally a penny stock (trading for one cent) and I think their market cap is under $10 million, one of those companies that's so small you wonder why they're public at all. I haven't looked at their info at all other than that.

Gravity Switch
Admin
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November 8, 2010 4:04 pm

As I hope I made clear above, not enough info to be "sure" about anything on this one, though, as I said, Anavex seems the best match to me. CIGX's deal for an Alzheimer's compound seems a bit far behind in terms of advancing to human trials, but I don't really know (and CIGX is, of course, still mostly focused on their core task: making healthier tobacco).

Gravity Switch
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November 10, 2010 10:05 pm
Justhinkin
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Justhinkin
March 30, 2011 8:31 am

Roskamp Institute is already doing human trials re Alz on CIGX's anatabine compound … which is already on the market as a dietary supplement (CigRx). It IS CIGX.

Roskamp is also doing human trials to confirm the anti-inflammatory properties of that same compound (which property, apparently, they believe is the key to its suspected Alz effectiveness). See
http://www.rfdn.org/inflammaging.html

It IS CIGX.

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