This next teaser stock, we’re told …
“Is Proof One Doctor Can Grow New Organs, Regenerate Limbs, and Eradicate Disease
“And you can buy shares of his company right now, before anyone else knows it exists.”
The tease is to get you to subscribe to Steve Christ’s newsletter, The Wealth Advisory — I’ve written about a few teasers for this newsletter in the past, though it’s been a while — but the idea of regenerative medicine is certainly a perennial hit with newsletter copywriter, it combines science fiction with the dream of fabulous profits, what’s not to like?
If you subscribe to his newsletter, you get a special report that he’s teasing:
“Regenerative Medicine: Growing Body Parts, Harvesting Profits. This report will give me all the details I need to know to capture a fortune from medicine’s next frontier. Not only could it make me a millionaire in the coming weeks, but it stands to be the most profitable pick I’ve ever made.”
So let’s see who this little miracle stock is, shall we?
The ad is a video presentation that actually includes some video — it’s not just Steve Christ reading his sales letter out loud, so that’s refreshing. There are excerpts from a 60 Minutes episode regarding regenerative medicine, including interviews with a military doctor using “pixie dust” made from pig bladders to help regrow injured body pats, and with a Wake Forest doctor who is using stem cells to grow body parts (like an ear) in the laboratory. It’s this second guy, I think, that Christ is interested in.
We get a few other clues along the way — that this is a “$3 biotech company” that might be the first to “bring one of these solutions to market” and make us all terribly wealthy.
And, naturally, that the technology will wipe out virtually every disease known to man, completely change emergency medicine, and re-grow limbs lost in battle.
We also get teased about an animal that scientists have long been fascinated with, one with the ability to regrow its own limbs — he doesn’t actually get specific with that hint and just sort of drops that train of thought, but I assume he’s talking about salamanders.
As a way to get us excited about the possible profits, we get an example of an early investment in Amgen, which would have turned $1,000 into over $300,000 — and we also get the same basic spiel about Genzyme and we’re told that this is “exactly that same type of play.”
Strangely enough, we don’t hear anything about the thousands of biotech startups that quietly (or not so quietly) disappeared as their science failed to pan out or they ran out of money (perhaps for good reason, as we’ll see in a moment).
So what other clues do we get? We’re told that this firm has already completed phase II trials, and “this $3.00 company is about to transform modern medicine as we know it.”
Not only that, but we’re told that this little company will end our current healthcare mess, curing diabetes and kidney disease and reducing our trillion dollar health cost problem to mere pennies! An unusually bold promise for a little company you never heard of, no?
And it sounds deceptively simple: doctors harvest a few cells, plant them in a mold, and the body part grows. Here’s another quote:
“In as little as eight weeks, the mold dissolves and is replaced by a living, functioning organ … all grown completely from the patient’s own cells”
More quotes to tantalize and provide some clues?
“The doctor in the video has shown us all what is possible”
and “Phase III trials are just around the corner”
So how do we “generate life changing wealth in as little as a few months?” Well, here’s our last clue … then I’ll tell you what I think:
“One of the doctors from the video is on the board of a biotech company trading for only a few bucks. And it is his plan to use this company to commercialize what he has done in the lab — making a fortune in the process.”
The main doctor seen in the excerpt from the 60 Minutes story is Anthony Atala — you can read about that story here if you’re interested, and see a few of the same clips that Christ excerpted. The story ran back in December of 2009, so it’s not exactly breaking news on that front.
And Dr. Atala is a leading scientist in regenerative medicine — his lab at Wake Forest University is a big center, apparently, for growing organs using stem cells (and actually, he got some fame a few years ago for his work in using adult stem cells instead of embryonic stem cells, which was used as ammunition in the battle over stem cell therapy legislation).
And he is the “Scientific Founder and Chairman” of Tengion’s Research and Development Advisory Board (not the board of directors, and he doesn’t seem to be a major owner of the shares) of a little biotech company that’s trying to commercialize some work in his area of specialty, presumably using some of his patents or expertise. And though he’s not a big owner of the company, presumably he does hope that it will be lucrative for him — Tengion has reportedly licensed his technology (there’s a profile of Anthonly Atala from Fast Company here that goes into some more detail).
So yes, I think our solution today is a little company called Tengion (TNGN), which was trading at $3 last week and is once again at a bit less than $3 today after a wild four or five days. And, despite the fact that the company went public less than a year ago, it is both tiny and broke.
Tengion has indeed completed some Phase II trials for its “neo-bladder” product, a bladder augment that’s created from a patient’s own cells, they’ve tested this for spina bifida and spinal cord injury patients, and they also announced enrollment of a third Phase II trial for patients with “non-neurogenic active bladder” about three years ago, though I don’t see results from that one yet and it’s not listed on their “pipeline” page (initial results from at least one of the other phase II trials was announced to relatively little fanfare here). The neo-bladder augment, however, is apparently not their “lead” product — though it has gone through the most testing so far. The self-designated “lead” product, from what I can tell is their neu-urinary conduit for cancer patients, which seems to be currently still recruiting participants for a Phase I trial.
Tengion has been around for at least several years, accumulating losses of about $200 million so far, most of which they raised through several rounds of private funding — but they did go public and raise some of that cash last April in a relatively uninspiring IPO (it never traded above the $5 IPO price until Monday). They’ve been announcing for some time now that this money will run out probably in April of this year if they don’t do something significant.
And it sounds like what they have been trying to do is merge with someone — presumably someone with more cash. But interestingly enough, either this Steve Christ promotion or rumors or leaks about the takeover/merger helped to send the stock soaring over the last few days, going from $3 and change about a week ago to almost $6 yesterday. Tengion this morning responded to the crazy increase in price and trading volume by saying that due to the price and volume spike, their potential merger partner was backing out — and the stock fell back to $3 as a result of that announcement.
So it would be ironic if it were the Steve Christ teaser that drove the price up, and that also put the kibosh on their merger lifeline because of that price spike — I don’t know if that’s the case or not, the company has also made the round of biotech investor conferences over the past week with at least two or three presentations, so there are plenty of other things that could have driven the stock higher, it’s worth remembering that it can be almost ridiculously easy for the share price to double if the market cap is only $30 million — before this week, it was very unusual to see a day in which more than $50,000 worth of TNGN shares changed hands, so when $5 million worth of shares change hands like they have this week, 20% of the company and most of the free floating shares, the price goes nuts (in this case, in both directions — up and down).
Their last “milestones” update was in January, indicating that they hope to have the latest trials more fully enrolled by the end of March, and that the initial candidates for the trial are being evaluated. Or something like that.
The company clearly needs cash, so the next month or two should be interesting, at least for TNGN employees — they’re not exactly working from a position of great strength, having essentially said that they may have to wind down the company in an attempt to preserve some value for creditors and stockholders if they don’t get a cash infusion before they run out in April. So it wouldn’t be surprising if their next potential merger partner tries to drive a hard bargain — and it does strike me as odd that the company they were previously in negotiations with backed out just because of a price spike, though maybe they were concerned about insider trading or, perhaps, looking for an excuse (that’s all just my speculation, I have no idea what’s going on behind their closed doors, and I haven’t even read their SEC filings).
And as you might expect I have no idea how it will end up and can’t pretend otherwise. I don’t know what value their patents and technology and techniques and licenses with Dr. Atala might have to any other potential merger partner or acquirer — but since Dr. Atala is a fairly high profile guy and this technology has been around and being refined for several years and some of the products have gone through at least preliminary clinical trials, it seems like there must be some significant investor unease about the science or the stock would be more valuable … right now you could buy the whole company and pay off their debts for less than $50 million. They do have some big strategic and venture funders still holding large stakes — it looks like Johnson and Johnson, for example, owns more than a million shares (something like 10% of the company), but there hasn’t been any insider or big investor activity since last year’s IPO.
Breakthroughs happen in biotech, of course, but they rarely happen overnight — and the scientific breakthroughs at Tengion that actually result in marketable products, if they are to come, are likely at least many years away … I say that not because I know of anything wrong with the technology or the techniques, but because it’s pretty new stuff, the trials are long, and the FDA is very antsy about new stuff. If Tengion sees breakthrough profits and great share price appreciation in the months to come, it seems likely that it will be for corporate reasons, not because there has been a shocking result from one of their clinical trials or a new discovery.
And, of course, it might be that I’m wrong about identifying this company — Dr. Atala, who is the only relevant person in that 60 Minutes video segment the teaser uses, does not appear to be involved in any other public companies, and the products and science at Tengion seem to be exactly what Steve Christ is talking about in his video, but given the mushy language used and the lack of other precise clues about the corporation itself (other than that $3 share price), I suppose there’s some small wiggle room for debate — I’ll sign myself up as 95% sure that he’s teasing Tengion, but if you’ve got a better solution (and no fair cheating — you have to sit through the “presentation” first!), feel free to let us know.
Likewise, I’d be delighted to hear more comments from anyone who knows more than I do about Tengion, or about regenerative science in general — we’ve covered this before in teasers for International Stem Cell and BioTime, among others, but when it comes to the science and the relative value of different approaches, I’m still pretty much a blithering idiot … and whether you fall into this “idiot” category or not, you’re more than welcome to chime in as well with a comment below.
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