Ernie Tremblay is the name behind the Biotech Insider Alert newsletter ($1,950/year) at Money Map Press, and his claim is that he has a “P-Value” formula that helps him to identify biotech stocks that are about to release good data that can send their shares soaring.
I’m not going to get into the actual “formula” he references, if you never studied statistics it just looks like the kind of thing you would have had nightmares about in the first few weeks of ninth-grade algebra. “P-value” is a standard formula, it’s not a formula that Tremblay made up or one that is specifically designed for assessing pharmaceutical products — it’s a way of determining the statistical significance of a result, and as with all such formulas it depends on what data you input and what assumptions you start with. Don’t get too focused on the “P-value” idea, that’s just a way of indicating that Tremblay tries to assess the significance of data released from clinical trials, and presumably he tries to pick stocks of companies whose drugs are reporting “statistically significant” results compared to whatever the standard of care is (or placebo, I guess, when there is no standard treatment). And, of course, it’s a way of making it seem like you can’t understand this baffling stuff, so you should pay somebody thousands of dollars a year to pick biotech stocks for you.
Which might be true, I don’t know — maybe Tremblay does do more rigorous analysis of clinical trial data and get into statistics to help his analysis, and maybe he’s good at it. That’s beyond my ken, I’m not a statistics maven and don’t spend much time on biotech stocks… so I’ll just move right on to identifying this “P-value” stock Tremblay is teasing today. If you’re curious, our tracking of the past teased biotech picks at Money Map, most of which have been from Tremblay of late, has shown a few big winners and a few big losers, which is sort of par for the course when you’re talking about small-cap biotechs.
And I’ll start you with a hint: He has teased this one before, just before the end of last year. And a warning goes along with that — the stock went crazy for a very brief period, at least in part because of Tremblay’s touting, and went from $3 and change to over $7 in a matter of a couple weeks, but gave up most of those gains just as quickly and has traded mostly in the neighborhood of $3.50-$4.50 since that spike. Think carefully about the story and the prospects of all these kinds of little biotech stocks (or other volatile news-driven stocks, like miners or emerging tech stocks) before you convince yourself that a big spike is going to “stick” and pile on — sometimes these small cap names move a lot faster on newsletter recommendations and ad campaigns than you might expect, with people buying like crazy as it doubles or triples because of the “fear of missing out,” but the reverse is also true… when the attention disappears and the ad campaign isn’t running, there isn’t an “easy” flow of new buyers to drive the price higher, and when traders take profits after a quick spike, without more new buyers coming in, a stock’s price tends to fall.
But we’re all grown-ups here, so let’s dig in and see what the company is — many of you already know, I expect, either because you thought it through yourself or you referred back to my quick solution on Christmas Eve last year or some of the other discussion on the site about this stock, so I’ll try to be brief.
Here’s some of the ad to give you the flavor:
“With One Word…
“This Little $4 Stock Is Set to Double… And Set Off an Avalanche of $775,460! ….
“The company I’m about to tell you about today not only passed it with flying colors… but passed it with one of the strongest P-Values I’ve seen in years.Are you getting our free Daily Update
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“Plus it’s just one of the many opportunities I’ve uncovered in the market right now that I’ll detail later.
“And when my P-Value Indicator blinks green, it usually means one thing and one thing only.
“The science behind a new drug works. It’s proof that the drug does what it was meant to do with flying colors.
“And make no mistake: Nothing can ignite an EXPLOSION under a drug company’s stock like when positive news hits the newswires.”
And then getting into the specifics of the company:
“My P-Value Indicator is ‘off the charts’ on this one.
“It checks off each and every one of my criteria for a successful treatment application.
“There are no unusual safety issues with the drug.
“Over 50 million Americans suffer from varying degrees of the ailment it treats. That’s one in six people – an enormous market by any drug’s standard…
“There is currently no cure or even a medically approved treatment.
“And doctors and patients alike can’t wait to get to get their hands on it…..
“The most common name for this affliction is ‘Tinnitus’…
“And that ringing you heard happens when the tiny sensory hair cells in the cochlea of the inner ear become damaged.
“This in turn affects how the brain processes sounds.
“A variety of things can cause it, starting with heredity and aging…
“But mostly its onset can be attributed to loud and sudden sounds, like gunfire or explosions.”
So yes, this is a company that has some sort of tinnitus treatment. More details?
“One tiny drug company appears to be on the cusp of developing the very first FDA-approved medical treatment.
“It’s nothing short of a breakthrough…
“It’s a surprisingly simple treatment… administered by an ENT specialist in his office… and repeated three times over a three- to five-day span….
“Studies suggest it’s highly effective… particularly in those cases caused by noise-related trauma.
“In earlier clinical trials, 62% of users got relief from this new treatment.
“That’s a very substantial number – especially when there’s no standard of care treatment on the market for people to turn to.
“And importantly, the drug is very safe, even at far higher than required dosages.”
So yes, this is, again, a tease about Auris Medical (EARS), which is in clinical trials for the development of AM-101, which is now called Keylizen, a tinnitus drug that essentially works by injecting a low-dose of a ketamine-derived anesthetic through the ear drum to “calm” (that’s not the technical term) the overactive receptors that are creating the phantom ringing noise that drives tinnitus sufferers insane (literally, in some cases).
In the company’s own words, this is what the drug does:
“KeyzilenTM is a small molecule N-methyl-D-aspartate (NMDA) receptor antagonist formulated in a biocompatible gel for intratympanic injection. Emerging evidence suggests that NMDA receptors in the cochlea play a major role in the occurrence of tinnitus following acute injury to the inner ear, e.g. from exposure to excessive noise, infections, disturbances in inner ear blood supply, or the administration of certain ototoxic drugs. Persistent overexpression of NMDA receptors may lead to pathologic excitation of auditory nerve fibers, which in the brain is perceived as tinnitus. The development of KeyzilenTM is based on research conducted at the INSERM Institute for Neurosciences, and patents have been granted in more than 40 countries worldwide so far.”
And yes, the Keylizen regimen is a few injections by an ENT physician, in their office, over several days, and about half of the patients so far in trials have seem improvements even several months after those injections (the 62% number is a reference to those who had “substantial” improvement, so presumably it wasn’t as persistent for everyone). Since there isn’t a current treatment for the condition, that sounds like pretty impressive efficacy to me — but I know nothing about tinnitus, so don’t count on my assessment. They haven’t reported any serious safety issues or side effects that I’ve noticed.
And yes, there is an August catalyst that could impact the share price — they have announced that they expect top-line data for one of their Phase 3 trials (TACTT2) in August, so presumably that means “before August 31” … and they are releasing earnings tomorrow morning and hosting a conference call before the market opens (there’s more info coming, too — from their TACTT3 trial, which is expected to generate data by the end of this year). The earnings probably won’t mean much, they don’t have any revenues (no products approved yet, Keylizen is their only product that’s fairly close to possible approval and commercial release) and they’ve already announced some debt financing that should be enough to get them through at least to next Summer at the current pace of spending, but they could certainly say something positive or negative in the call about the ongoing clinical trials or their anticipated approval timeline that gets investors either excited or enraged. I have absolutely no insight into that.
Nor do I have any idea what the financial performance of the company might look like if they do get approval — which is a major reason why I avoid a lot of biotech stocks. I have no idea what the pricing might be for treatment, how many patients might be approved for it, how long it might take to roll out to the millions of people who have non-severe tinnitus if they are able to reach that market, etc.
It is a small company, it went public about two years ago after receiving a large chunk of venture funding, and it now has a market cap of about $150 million, so it wouldn’t take a lot to generate meaningful returns for them — and it would probably be an easy swallow if a larger company wanted to acquire them or partner with them on Keylizen, I don’t think that drug or their acute hearing loss drug that’s a year or two behind Keylizen in development are partnered yet (the hearing loss treatment is AM-111, which from my quick glance at press releases seems to have shown good safety but not a lot of efficacy in Phase 2, more data expected starting in a year or so).
And with that, I’ll leave it to you to do your chewing. Think EARS is worth a slot in your portfolio? As I said, be careful — the attention has already started to jerk the stock much higher in the absence of any other news today, and a large newsletter campaign promising a “double” on a small stock can be a self-fulfilling but short-lived prophecy. But there’s a good chance that you understand the science or the prospects for EARS better than I do, and I’m sure we’d all be delighted to hear what you think…. just use that friendly little comment box below to share your view.