Heads up: I made a mistake on this one when it first went up on the site. We strive for at least a 99% accuracy rate in identifying teaser targets, and this is apparently my mistake for 2014. Thanks to several readers for alerting me to the fact that I moved too quickly in posting this one and made an error.

It looks like the BioScience Millionaire trading service by Ernie Tremblay over at Money Map Press has now been renamed Biotech Insider Alert… but the focus seems to be the same, with a goal of investing based in large part on the timing of FDA decisions and other science-based milestones for biotech companies (they launched this newsletter earlier in the year with the boast that they had a handle on the “most profitable calendar known to man”).

Which isn’t unusual, of course — biotech stocks, particularly those which don’t have any products for sale (and won’t for years) trade based on the development of their product pipeline, with reports on efficacy and safety moving the needle and the big decisions, like FDA approvals or partnership agreements or other key steps in the development process, often having a large impact on stock prices.

And Tremblay’s publisher, Mike Ward, has a new ad out promoting the service — all built on the promise that a move by the FDA will “ignite” this tiny stock. He throws around numbers that make you salivate, like sales going from $28 million to $1.5 billion, and the share price going from $4 to $143.

So what’s the stock? Well, they’d be happy to tell you all about it… for $5,000 (OK it’s “on sale” for $1,950). What if you don’t really want your report and you’re just kind of curious about the stock and want to research it for yourself? Well, we can help with that — let’s dig into the clues and figure out who they’re talking about.

Here’s the lead-in:

“Hi, I’m Mike Ward, Publisher of Money Map Press.

“I just wrote this check for $40,000 for a very specific reason.

“I believe in a very short time this $40,000 will be worth many times that value.

“It’s because of a very special situation I recently learned about…

“One that involves some of the smartest research scientists in America… and a breakthrough they’re making that

“I believe could be worth more than $1.5 billion dollars to one small company.

“Right now, this company has annual sales of $28 million.

“So that’s an increase in revenue of more than 53 times. The market value of this company could reach dizzying new heights.”

The check was a donation that Ward made at the behest of Ernie Tremblay, here’s how Tremblay describes it later on in the ad:

“I believe so much in this tiny $4 company and its breakthrough drug…

“That I convinced my publisher to donate 10,000 shares of its stock to the Ocular Immunology & Uveitis Foundation.

“And I can’t think of a more worthy cause…

“The Uveitis Foundation is a non-profit organization working to provide education, care, and emotional support for victims of Uveitis.

“They rely on the generosity of others, and that’s exactly what we’re giving them.

“In fact, I don’t have one shred of doubt about this tiny company and the value of the gift we’re giving the Foundation.

“I’m 100% confident in their veteran management team… their drug… and the hard science behind it.

Are you getting our free Daily Update
"reveal" emails? If not,
just click here...

“And I’m even more confident that their $4 stock is about to go on a run that could make shareholders – including the Uveitis Foundation – very rich.

“Based on my price target calculations, that $40,000 stock donation could soon be worth $1.4 million.

“And when I say soon, I mean any day now.

“Again, the drug has already zipped through two FDA trials. And my research indicates that they could soon announce results of a critical Phase 3 trial.

“When that happens, the stock is likely to go fast and furious.

“In the coming days, I wouldn’t be surprised to see big hedge funds scrambling to pick up shares for $15… $25… even $50.

“You can get in today for $4 a share.”

We’ll leave aside the tax implications that might make this an oddly tax-stupid decision in light of Tremblay’s conviction, but I do need to quickly mention the oddness: if you want to donate shares of stock to a tax-deductible cause like a charity, you donate it after it runs up — your deduction is the average price on the day you make the donation, and this is a way that you can get a deduction and avoid paying capital gains taxes on “your” profits. You don’t just buy a stock to donate it, or donate stock that has fallen in value. If they’re convinced it will go from $40,000 to $1 million+, they could get a $1 million tax deduction (in theory, assuming that fits the IRS guidelines for Mike Ward or Money Map’s tax situation) by waiting until the stock rises. And it would be strange if the foundation kept the shares of stock that they’re being given, they usually just sell it because they need the money for their work and charities don’t tend to be biotech speculators. That’s just an observation, I’m not a tax expert.

So what is this stock? Well, we know it’s got some kind of drug going after Uveitis:

“most people have never heard of Uveitis…

“But it afflicts more than an estimated 19 million people worldwide. And as I mentioned… it’s a leading cause of blindness for middle-aged people in the Western world.

“Technically, Uveitis is the inflammation of the uvea, the middle part of the eye, which supplies blood and nutrients to the retina.”

OK, I’m in that group that had “never heard of” Uveitis. How about some clues about this specific company?

“A tiny California-based company has developed a breakthrough drug that has the potential to save as many as 150,000 Americans from several devastating forms of Uveitis…

“The remarkable thing about this drug is the way it fights inflammation.

“Basically, the drug attaches itself to “interleukin-1 beta,” – which is a substance made by the immune system – that causes inflammation.

“The drug regulates the cellular-signaling events that produce inflammation….

“This drug ‘unclogs’ the uvea, keeping your retina alive, and your vision intact.”

Some more clues about the company that we can feed into the Thinkolator:

“The senior management team has more than 190 years of combined drug development experience. And they’re responsible for some of the most successful drugs to ever come down the pike, including the blockbuster sleep drug, Lunesta®….

“This company books a mere $28 million in annual sales….

“… the estimated cost for this new Uveitis drug is $21,264 per year….

“At $21,264 per patient – and 150,000 potential patients – the projected market for this new drug would be over $3.1 billion”

So the $1.5 billion in sales he projects is if the company reaches “just” half of the potential patients, which is how they get their massive price target:

“Based on projected U.S. sales of over $1.5 billion, and an industry average price-to-sales ratio of 9.6, we’re looking at a first-year target – before any splits – of $143 a share.”

And plenty of even headier numbers if you include international sales, etc., but we’ll jot down in pencil that they’re projecting a 3,400%+ gain from $4 to $143.

And one more tidbit of clueiness for you:

“The U.S. Government just put this tiny company’s drug on the ‘bullet train’ to success….”

Which is his way of saying that the drug has gotten “orphan” status from the FDA — basically, that means they get a set of incentives reserved for drug developers who are working on diseases that don’t have mass numbers of patients.

So they have some kind of drug with a near-term catalyst:

“It’s already sailed through two FDA clinical trials. And the results of a critical FDA trial could be announced any day now. “

And there’s been insider buying:

“People inside this company are loading up.

“I’m talking about the company’s President, Senior Vice President, Executive Vice President, even their Board Members, including the FDA’s former Chief Counsel.”

So who is it?

My original answer was that this is the awkwardly capitalized pSivida (PSDV), a medical device company that’s actually likely to have a massive drop in earnings next year since they’re currently enjoying the one-time milestone payment for FDA approval of a partnered drug/delivery system (that’s Iluvien, which their partner Alimera Sciences will be selling to treat diabetic macular edema), and they’ll be following it up with — they hope — approval for their own Medidur (the exact same drug as Iluvien, with the same delivery system) to treat Uveitis.

But that’s not it — this is a different company called XOMA (XOMA), which is developing a monoclonal antibody drug for Uveitis and several other eye problems. So what’s up with XOMA?

XOMA’s primary asset is a monoclonal antibody called gevokizumab. It is partnered with Servier, does have orphan drug status, and is in multiple Phase III trials for different varieites of Uveitis right now, here’s how the company puts it:

“In September 2014, XOMA initiated a U.S. clinical trial of gevokizumab in patients with BDU, EYEGUARD-US, to supplement data from Servier’s EYEGUARD-B study being performed outside the U.S. and the ex-U.S. data previously generated from two Phase 2 trials of BDU patients. Upon receipt of successful results from the EYEGUARD-B study, XOMA plans to request a pre-BLA meeting with FDA. EYEGUARD-US is designed to supplement the Agency’s need for information in U.S. patients, including potentially serving as a second pivotal study.”

The stock was clobbered this year because there was hope that gevokizumab would be effective in arthritis, but that turned out not to be the case in clinical trials — which moved their focus to narrower applications for this anti inflammatory compound, particularly in Uveitis. They are also moving forward in some other skin conditions, including pyoderma gangrenosum, where they also have orphan drug status.

And yes, one clue I didn’t check is the presence of the FDA’s Chief Counsel on the board — Peter Barton Hutt, former Chief Counsel for the FDA, is on the XOMA Board of Directors. The other clues also match, and the revenue was almost $28 million over the past year (all from partnership/licensing fees, I believe) and is expected to grow a bit, to $36 million or so next year — still far short of covering their R&D and other expenses as they push forward with clinical trials, even with a partner, but it is, at least, growing (pSivida’s revenue, in contrast, will almost certainly not grow next year, not unless they strike a surprise deal with a big up front payment).

XOMA, according to its last quarterly release, is getting a bit low on cash (they say they anticipate using $55-60 million on the year, they had $59.1 million in the bank at the end of September and by my rough calculations had already run through about $40 million, so it’s not imminent but the cash burn is not exactly even) — I don’t know what other sources of funding they might have. Presumably they’d like to wait until they have some good news before they raise more money, they last did a big offering in late 2013.

There is a fair amount of insider ownership, but no insider buying over the last year (there’s been plenty of selling and option exercising, which is typical) — and they do have one huge investor, Baker Brothers, the well known biotech investing group, owns more than 20% of the company (though they last added to their holding in 2013 at about $3.60).

Interesting to see two small companies push forward with this small indication — forecasts for at least one of them are likely to be disappointed, since for such a small patient base it seems that one company will have to dominate the market for it to turn into anything near a blockbuster stock. But XOMA is, at least, far larger than pSivida… it’s still a small company, but with a $450+ million market cap it’s 10X the size of the little device/delivery system maker PSDV.

And with that, I’ll leave it to our biotech enthusiasts to chatter about it, let you know if I’ve made any mistakes in my description of the company, and you can decide for yourself if it’s going to make you rich with a 3,500% gain in the years to come. Just fill up that happy little comment window below with your thoughts and let ’em fly, we’ll all be the wiser for it.