“The End of the Grey Plague”

This teaser ad that I started seeing about ten days ago has both promise for the families of Alzheimer’s sufferers and, of course, the promise of riches for those who get in early on the next hot biotech with a cure for Alzheimer’s Disease. The ad is from Brian Hicks, for a new letter that he’s apparently launching called the Hicks and Lowe Report — hard to tell how much the report costs, they seem to be using it as an add-on inducement for folks to subscribe to one of their other letters.

And to be honest, they haven’t tried all that hard to obscure the target of this teaser campaign — you can find the full report for free in a few places, despite the fact that it’s been recently touted as a special report that you get for signing up for their paid services … though of course, I sniffed it out the hard way for you (masochist that I am).

Here’s how they pitched the special report in a recent ad:

“The Grey Plague’s Last Victim

“On May 31st, 2016, 70-year-old Jay Vanaken will become the last American to die of Alzheimer’s disease.

And by the time it happens, this micro-pharma’s miraculous cure could bank you 898 times your money — or MORE”

I have no idea who this Jay Vanaken character is, or if they just made him up or changed the name of a family friend to get an example that would hit home. And they tell Jay’s story for a bit, then get into the riches from this possible Alzheimer’s cure:

“His doctor’s estimate that he’ll not likely live more than 5 years — call it May 31, 2016…

“But as tragic as Jay’s story is, the far bigger tragedy is that he’s only one of the 5.2 million Americans now facing similar dementia and premature death at the hands of Alzheimer’s.

“Estimates predict the incidence of Alzheimer’s cases worldwide at up to 120 million worldwide in the next 20 years if no new effective treatments are created in that time…

“But all that is about to change.

“What if I told you that one company has not only an established way of discovering effective compounds which could fight Alzheimers…

“But they’ve already had success with one particular drug that has shown to stop and reverse the Grey Plague’s effects?

“You can imagine the ridiculous amounts of money that investors in such a technologically advanced company could make…

“‘An effective treatment could produce $20-30 billion for the pharmaceutical company that produces [a cure for Alzheimer’s].’ — Dr. Jordan Tang, Oklahoma Medical Research Foundation newsclip center”

I don’t know what that “newsclip center” business is, but Dr. Tang is an OMRF researcher and founder of another research firm that has tried to develop Alzheimer’s treatments (not yet public — it’s part of what is now CoMentis), and the quote is real enough.

Of course, people have known for decades now that Alzheimer’s is, to put it bluntly, a cash cow just waiting to be milked. It’s a horrible disease, the existing treatments are not terribly effective and they generally just treat the symptons, and it’s one of those diseases that hits millions of Americans and is both long-lasting and fatal, so, not to be too crass, you can sell a lot of whatever treatment you come up with.

Unfortunately, the brain is a tricky place, and most of the treatments for Alzheimer’s have either been ineffective or caused frightening side effects, and the disease has led investors down the garden path time and time again as one hot biotech after another has promised the potential for even just a small improvement in the lives of Alzheimer’s sufferers. And I can’t blame investors or the companies behind this — anyone who’s ever known an Alzheimer’s patient knows how debilitating the disease is for families, and I think we can assume that if a safe and effective treatment does get developed, patients will storm the FDA if it isn’t put on the fastest of fast tracks for approval.

But first it has to be effective and safe. So that’s what we’re teased with here — and even if this particular compound is promising, it’s important to note that it has not even entered phase 1, the very first phase of human testing. We’re talking about a drug that looks promising, according to the tease, in preclinical testing on animals.

Here’s some more from the ad:

“For the past 3 years, I’ve been watching a particular Alzheimer’s research company with a technology so novel it makes the previous research look Stone Age.

“This firm has discovered receptor in brain cells that — when targeted with the right chemical compound — has been shown to stop and even reverse the effects of Alzheimer’s.

“Their leading compound, codenamed simply N141, actually modifies the disease by protecting the neurons from protein strangulation. This reverses both short and long term memory deficits.

“It’s nothing short of a medical miracle.

“The company’s phenomenal profit play doesn’t end there, either…

“You see, while their proprietery pipeline technology has enabled the company to take the lead in curing the Grey Plague, it also has an astounding application for another of mankind’s greatest afflictions: Cancer.

“Using a variation of the same cellular receptor compound that has been proven to fight Alzheimer’s disease, scientists at this company have demonstrated its ability to fight prostate, breast, colon and lung cancer as well—the top 4 deadliest cancers in the U.S.

“In other words, by researching cures for Alzheimer’s and cancer, this company is opening up itself to two of the largest markets for Baby Boomers’ healthcare.”

He compares the potential to Biogen Idec and Amgen, two of the dramatically huge success stories in biotech over the past ten years — and, though it remains unsaid, two survivors out of probably thousands of biotech startups that had similar goals.

“Investors who first put their money into play back in 1985 — when cancer drug manufacturer Amgen’s stock was a meager 9 cents — saw their early investments pay off to the tune of over 89,822% in just 15 years…

“Or $1,347,330 on a $1,500 investment.

“That’s more than 898 times your money.

“And this estimate is likely on the LOW side. A cure for both Alzheimer’s and the top for cancers in the world would be practically guaranteed to bring you long-term gains that leave these in the dust…

“But there’s a caveat: You must get in on this company NOW if you expect to land the biggest gains.”

And then he drops the name of another research company to imply that they’re predicting huge things for this stock:

“financial analysts at eResearch are expecting this puppy to push up to 688% within the next year alone.”

Now, that’s true as it stands — but the analyst report that I expect he’s referring to was published in 2008 and predicted a share price of $21 and change within three years (so yes, 2011 is “within the next year alone”), which is a gain of roughly that 688% from today’s share price of about $3 … though it’s not as dramatic a jump from the $5 or so that the shares changed hands for at the time (the $21+ was the three year price target from eResearch, their one year target was $6.50, which the stock also never came much closer to than the day they released the report).

I have no idea whether or not eResearch stands by that prediction now — though to be honest they may well do so, perhaps in some significant part because Anavex paid them $20,000 to produce the research report.

Oh, and there I’ve buried the lead — yes, the stock being teased here is Anavex Life Sciences (trades over the counter at ticker AVXL), and Brian Hicks has mentioned them quite a few other times in the past as one of his favorites.

They do have several preclinical Alzheimer’s compounds in development, though the one he’s obliquely referring to in the teaser, 1-41, is no longer their lead compound and probably won’t be the first into clinical trials. Hicks talked that particular compound up a bit over two years ago in an older tout of Anavex, passing along the word that, at the time, they expected to have it in phase 1 trials within six months — not that this is a surprise for a preclinical drug research company, but that obviously didn’t happen.

So the lead compound, the one that’s now expected to enter phase 1 sometime this year, they hope, is 2-73 … you can see the pipeline here if you’re curious. The company’s latest press release came out about two months ago and talked up the results of that animal testing and the “near term” plan to submit the investigational new drug (IND) application to the FDA to get approval for Phase 1 trials to begin.

And yes, I said the special report was available online — from the publishers themselves, not from a copyright cheater, so if you want to see the details you can check it out here without subscribing to anything.

I hope it’s abundantly obvious by now that I am no expert on biotech stocks, and even more obvious that I don’t have the scientific knowledge to tell you whether or not Anavex’s focus on sigma receptor ligands will be the breakthrough we’d all love to see in Alzheimer’s … all I can tell you is that the need for a real treatment is obviously overwhelming, but it has been overwhelming for years and the promise of the next Alzheimer’s cure is all-too-common.

The stock has been moving up nicely over the last couple months, perhaps in part because of their contention, possibly a very optimistic contention, that phase 1 trials should be underway by the end of the Summer, but do note that this is a tiny company with a market cap of about $60 million and accumulated losses of about $15 million even before they actually make it into human trials.

Oh, and they’re almost dead broke — as of the latest quarterly report they announced about $ 144,510 in cash and $1,746,061 in accounts payable, not counting promissory notes due, so unless they’re going to start selling off equipment I imagine they’ll be issuing new stock soon — as they have been pretty much anytime they’ve owed anyone money in recent years. I’d imagine that their financial future depends pretty heavily on getting this first compound into Phase 1 trials, and pretty soon after that partnering with someone who can actually afford to sponsor the trials. Either of those two things, a green light to begin phase 1 from the FDA or a partnering deal, could certainly move the stock, but personally I have no idea just how likely it is that we’ll see either of those catalysts before the end of the summer. If this drug pans out and really does make a dent in the advance of Alzheimer’s, early shareholders could easily be treating themselves to solid gold bedpans in their dotage … but of course, it looks to me like they haven’t even tested it on a single human being yet and it’s really, really early in the process to put much stake in those claims right now.

So what do you think? Hyped up about killing the Grey Plague? Have some war stories of past high hopes for Alzheimer’s-fighting drugs from other little biotech companies? Let us know what you think with a comment below.

P.S. I do feel the need to mention these kinds of disclaimers whenever they catch my eye — which isn’t to say I always notice — but Angel Publishing, which is behind this newsletter, does make a point of saying that their editors can own and trade the stocks they’re touting more freely than many investment newsletter publishers I write about. This is the wording from the ad’s disclaimer: “The publisher, editors and consultants of Angel Publishing may actively trade in the investments discussed in this newsletter. They may have substantial positions in the securities recommended and may increase or decrease such positions without notice.” I don’t know if they’re trading around these recommendations, but the fact that they’re apparently allowed to always gives me some extra caution.


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9 Comments on "“The End of the Grey Plague”"

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Scott479
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Scott479
July 5, 2010 1:56 pm

Pinnacle Digest is also touting this company and you can learn a good deal more about management and their board here: http://www.pinnacledigest.com/articles/vol.-168-a

Their "ad" with Pinnacle also will link you to more recent interviews with management. Interesting that the need for a secondary/tertiary is only made in passing.

a g
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a g
July 5, 2010 2:45 pm
Suggestion : Dear Friend After your great article you could write a brief with titles: 1. My view on stock offering. Negative or positive or whatever 2. name of the company offering, Stock Symbol The above will only make sense if the company is listed on a good exchange and not a penny stock. A quick brief note at the bottom or top will help many people who may just want a quick view. I do not ever trade any such offerings but if your brief is encouraging I could read more. Wishing the best. I used to frequent your… Read more »
jbengfort
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jbengfort
July 5, 2010 3:21 pm

It is a very long swim from this point through the FDA….most don't make it.

Harold Anderson
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Harold Anderson
July 5, 2010 5:38 pm
I haven't been following AD closely lately but followed and invested heavily in Elan Pharmaceuticals for years. They have what appear to be one of the most promising "cures" to this disease. Their stock price has taken a very rocky ride going from $60 to $1.03 to $30 and now around $5. They share 1/2 the AD program with Pfizer and recently raised more than $1B selling an interest to JNJ. From my experience with that company, I'd be very cautious with a company that hasn't even entered P1 and only has $144k in cash. How will they get through… Read more »
Klaus Schonfeld
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Klaus Schonfeld
July 5, 2010 2:57 pm
Hi Travis I’m a recent reader of gumshoe and am considering the monetary option. Regarding this piece on Alzheimer, please note that nobody actually dies of the disease; in fact, I’m not sure that there is a diagnosis for it. You get tagged with it when there’s no other idea floating around. BTW, my mother had it (so they say – she certainly lost pretty well ALL of her memory and thereby, rational thinking) and when she passed away, it wasn’t because of A. Anyway, I don’t think this mistake detracts from your piece although I find that often. such… Read more »
Kitty
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Kitty
July 10, 2010 12:15 am
Sorry to contradict you Klaus, but people DO die of Alzheimer's – my mother certainly did. After several years she was unable to eat or drink because she did not know how to swallow any longer and her body simply shut down. With respect to this biotech stock, I'd not touch this right now. I had shares in a couple of such companies in the last three years and lost my shirt. Neither of them had any cash to work with – one did not make it to Phase 1 and the other simply went down to pennies. I think… Read more »
tomt
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tomt
July 11, 2010 5:17 am
Travis, Nice job on this. It takes a lot of patience not to rail on some of hype you have to address. I have bet (small) on only a few of these "story stocks" myself over the years, perhaps one in five or one in ten, and put many others on a watch list as well. Very few work out profitably excluding the short term runup from the story, even when the potential was realistic. I think you provide a great service with your evaluations of these "story stocks", and hope your readers are taking your advice, and learning to… Read more »
Myron Martin
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Myron Martin
July 11, 2010 10:15 pm
Interesting that so many companies are looking for the "magic bullet" that will supposedly CURE this or that disease when most of what we suffer from are so called "lifestyle" diseases meaning they are preventable. Somewhere I red that Alzheimers patients inevitably have an elevated level of ALUMINUM in their brains so could PREVENTION be as simple as not using uncoated aluminum cookware and avoiding deodorants containing aluminum salts? I find it perverse that people are so eager to profit from some "chemical compound" that will negate their bad living habits, but then you can;t PATENT and exploit sound nutritional… Read more »
Ian
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Ian
July 21, 2010 1:19 pm

It will be interesting to read your comments on THE DEATH OF DEATH a cancer cure if you can.

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