This Friday File article was originally released to the Irregulars on June 16, we have now opened it up for anyone to read in hopes of answering some questions that continue to roll in about the latest Biotech Insider Alert ads. The text below has not been updated or revised, though I and other readers have added updated comments to the discussion thread at the bottom.
Hello, Friends — I don’t have any major updates for you this week, other than the “Holy cow!” news this morning that Amazon (AMZN) is buying Whole Foods (WFM). That will be immediately accretive to earnings at Amazon (meaning their earnings per share will rise), but no one cares about Amazon earnings so I guess we’ll see what happens. Will it matter if they go from 50X 2019 earnings to 45X 2019 earnings? Probably not… and as for immediate impact, this deal, if completed today, would change Amazon’s trailing PE from 185 to 160.
This could become a brilliant way for Bezos to build out Amazon’s grocery business and further extend the Amazon brand into “bricks and mortar” retail, and probably every single Whole Foods shopper is already an Amazon prime member, so it will be an interesting merger to watch. There will almost certainly be strategic integrations at some level, even though the talk so far is about Whole Foods remaining independently managed and run by John Mackey out of Austin. And given the very small size of the deal relative to Amazon’s business, and the fact that Amazon’s paying with cash, there’s very little downside risk.
This doesn’t make me change my mind about Amazon, which I already like and own because of the still ridiculous future growth potential (even as I hold my nose a little when I think about the valuation)… but if something about this deal brings down Amazon’s share price, perhaps I’ll eventually add to that position.
That’s certainly not happening so far, Amazon and Whole Foods are both higher in early trading today (it’s a cash deal at $42 a share, just FYI, and presumably there won’t be any problem getting the deal through unless another bidder appears, which seems unlikely but not impossible).
… so there’s nothing really to add on the portfolio front this week and no updates to the Real Money Portfolio, after a few weeks of lots of buy/sell action for me… which means we’ll spend our Friday File looking into a new teaser pitch that a bunch of you have asked me about.
It’s from Ernie Tremblay, who some might remember well from a slew of disastrously unsuccessful and heavily promoted teaser ads last year like Auris Medical, Transenterix, Cempra and Aralez… though he did, to be fair, tease a few in prior years that ended up doing well (like OraSure, Nektar and Durata). He’s again selling his Biotech Insider Alert ($1,950/year), and doing so by promising great returns for the company behind the “CD19 Vaccine.”
So what’s the story? Here’s the intro:
“On June 23, 2017, a small Texas lab plans to announce a miraculous breakthrough that could defeat the most dangerous disease known to man.
“This historic event will take place in a room full of executives from the world’s largest pharmaceutical firms…
“And they will hear the official results of a clinical trial conducted at a Nobel Prize-winning facility. We have seen these results firsthand and they are stunning.”
This is a company that’s not yet really generating any revenue, so the growth numbers sound exciting:
“Last year, their sales were only $388,000.
“However, next week, after their trial results become official, we expect them to quickly ink a licensing deal…
“And it could pay them $500 million in just a single year.
“That would represent a 128,765% surge in revenue… “
So what is this little Texas company? What announcement is Tremblay talking about?
“This trial was conducted at the Nobel Prize-winning Fred Hutchinson Cancer Center and the Dana-Farber Cancer Institute.
“And 91% of the patients experienced complete remission from an advanced and aggressive form of cancer.
“Compared to existing treatments, this CD19 Vaccine breakthrough delivered a 10-fold improvement in mortality rates.
“That’s unheard of.
“And these results are set in stone. I’ve seen them firsthand.
“But this June 23 announcement will make them official.”
OK, so unless someone is doing some illegal leaking, Ernie Tremblay doesn’t know anything about this that other investors don’t also know — if he’s “seen them firsthand,” then Mr. Market knows them, too. So don’t get your hopes up too much about some exciting and fantastical announcement that’s going to shock the world — if he’s right in his assessment, then probably the shock would be if something bad or disappointing is announced…. Wall Street doesn’t cause wild swings in the stock prices of companies who do and say what’s expected, the big driver of wild jumps in stock prices is the surprise. At least in the short term, which is what newsletter pitchmen are usually selling (who wants to wait a couple years to be a millionaire, after all? Don’t we deserve 1,200% gains TOMORROW? Especially for $1,950?)
OK… so what’s the story? Here are our clues:
This June 23 announcement will be the lab…
“making the results of their Phase II clinical trial official.”
They have protected this “vaccine breakthrough” with 13 patents.
“it’s received “Priority Status” from the FDA and the European Medicines Agency (EMA).”
What else? More from Tremblay:
“This is a millionaire-making opportunity…