“Rare Move by FDA to Ignite Tiny $4 Stock” with a “35-to-1 Bang”

Revealing the "secret" stock teased by BIotech Insider Alert -- they say you can "Profit BIG... And help 75,000 Americans see again"

By Travis Johnson, Stock Gumshoe, November 20, 2014

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…

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“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.

“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.



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Jaime
Guest
Jaime

I don’t know as much as Ernie Tremblay or Mike Ward about Biotech stocks either, but they are pulling out all stops on promoting this stock that still seems to me to be very speculative. And they pull out comparisons to past well-known all stars. Anytime someone is selling something this hard it reminds me of an artist friend who said “Calculators don’t sell art.” I did research it somewhat and there are some insiders and institutional investors. Let’s just say I’m not banking my retirement on the service or the stock. And like many others, the presentation is lengthy… Read More »

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takeprofits
Guest

Well made observation on most promo’s, they are repetitive ad nauseum. An honest product should be able to be sold with half the verbiage. The desperation to get you to subscribe / invest is palpable, really turns me off.

Deborah G Flynn
Guest

MoneyMap is pretty awful they are like Carney cons. I actually figured out some of their teases in the past. I look to Travis because I am patently lazy since I decided to be a paid subsciber. If anyoine deserves that kind of money its Travis LOL

JOE
Guest
JOE

hi my name is Joe and I just retired from ABC I worked 40 years for abc sports as an editor I must say that I never had a stock that went up!!! I lost a couple of thousand on penny stocks I” batting a 1000 never a winner what doyou think of psdv and alim joining together just looking to see how I can lose more of my pension check replys would be great

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backoffice
Member
👍323

I just got this relevation sent to me today, this is now June 2015! Now I find out this was hyped in Nov.2014! How do they get away with this. Hillary Kramer hooked me once for over $200.00 and now she’s begging me to join up again and give her a second chance! At what? picking my pocket again?

Oen Tio
Guest
Oen Tio

I have been looking at several investment letters
after I retired. Your goal is probably a easy to read and understandable
newsletter. Stock of the month by Amy Calistri might be O.K. for you.
Fee is reasonable. Amy paid off her house when she was 25 years old.
She seems to be honest and helpfull.
I had Hillary Kramer for 2 years.

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Brer Rabbit
Guest
Brer Rabbit

Agree. I would not fund my retirement with this stock either. As a doctor who has treated many cases of uveitis over the years, I’m confident that the projections made for this stock are extreme. First, uveitis is an inflammatory disease that is treated initially by suppressing the inflammation with corticosteroids such as Pred Forte, and then determining the cause of the inflammatory process. It’s the cause that is then treated. In short, uveitis is most often a symptom of an underlying disease process. A common rule of thumb is that we give a patient one unexplained uveitis, and just… Read More »

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gard
Guest

Thanks Doc, for all you do. What I noticed is that they are basing the math on a years Rx and only a single treatment would be used before looking for the cause. So I divide the $21,264 by 12, say a 1 month supply and get $1772 or less per patient. And since MD’s have a preferred drug, they wouldn’t switch right away. Maybe 5% the first year instead of 50%. I’ve drawn trend lines since May and see a converging wedge, now trading in a range of 3.81 to 4.54, which it is at now after the beginning… Read More »

Brer Rabbit
Guest
Brer Rabbit

The ‘standard of care’ treatment is much less expensive. A $100 bottle of Pred Forte 5ml should be sufficient. Treatment protocol might be 1 drop every 2 hours for 2 days, 1 drop 4 times a day for 2 days, 1 drop twice a day for 2 days, and finally 1 drop once a day for 2 days. So compare the cost of treatment between the two. It just doesn’t make sense. Have to add in the office visits in either case (probably two: initial & follow-up).

Janos
Guest
Janos

I actually paid around 30.00 Canadian for Pred forte

James
Guest

Biotech stocks small biotech stocks are usually a hit or a miss Their certainly not for the faint of heart.

gard
Guest

:Your right, they are for traders not investors

Rosemary1
Guest
Rosemary1

I really don’t understand why these people try and con their readers in this way. People must be really vulnerable to hand out so much money for his reports especially when his teaser campaign contains so much rubbish! Can anyone tell me what they think about James Rickards who also writes for them ? Very many thanks !

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JOE
Guest
JOE

hey Joe here does anyone think that the partnership with psdv and alim would be a better buy than xoma well just wondering any reply would be great I”m thinking about buying some shares of psdv and all this coming from a guy that never made a penny on penny stocks good luck JOE

kenneth57
Member
👍9

The company is actually XOMA Corp. (NasdaqGM:XOMA). Don’t ask me how I know this!

LT
Guest
LT

How do you know this? 🙂

seriously though, how do you know this?????

Speculation
Guest

He probably bought into the hype 🙂

WaxMay
Guest
WaxMay

Apparently MoneyMapPress have updated their site with an explanation as to why Baker Bros are selling shares. It would be interesting to understand their perception of this if you/anyone still has access to the content 🙂

quetzal
Guest
quetzal

I recently subscribed to Money Map at the cheapest rate – $39 for one year which I do not plan on continuing next year. I did it primarily to get Rickard’s book for ‘free’.
Anyway, I was reading the tease which has been hammered into my inbox several times now and I simply put some clues together and did an internet search to come up with XOMA.
My search words: “uveitis drug company in california lunesta”

Some gumshoe – huh?

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JOE
Guest
JOE

Ken which do you think is better or anyone who wishes to answer PSDV ALIM or xoma or if you know the stock synbol for psdv and alim joined JOE

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gard
Guest

Hey Joe, since I haven’t seen a reply yet, I went and looked up both on my brokers website.
Neither one looked like they were going anywhere fast. Earnings estimates for psdv were flat for the next year(steady loss) and for alim they were going up for the next year and were getting close to break even. If I were to choose one I would of course pick alim on earnings est. But I wouldn’t choose either one. Just my humble opinion

J. MCLEOD
Guest
J. MCLEOD

I looked at this promo acouple days ago and decided they were talking about xoma, since they were inferring a drug and not a devise

Dave
Guest
Dave

I also thought it was XOMA.
http://www.xoma.com/content/pipeline/gevokizumab.htm
http://investors.xoma.com/releasedetail.cfm?ReleaseID=701926
Revenue also very nearly 28M, and about 4 bucks per share.

Sam Hall
Guest
Sam Hall

The FDA holds a lot of cards. When I ask the famous “follow the money” question, I sometimes feel I’m a conspiracy theorist. I added a note to another biotech stock alert about the fact that despite the Ebola scare there is no mention of Cerus’s (CERS) Intercept System for various blood products (whole blood, plasma, and platelets), since it kills any and all viruses (including Ebola). Although Intercept has been in use for years now in Europe, the Middle East, and Asia, FDA is still sitting on approval for its use in the US. Although is not a treatment… Read More »

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Richard Epstein
Guest
Richard Epstein

I’ve been long CERS 5 years and traded its vacillations numerous x. I believe in its science but can’t reconcile its lack of profitability. With a proven methodology and acceptance by the EU ; what’s preventing this indispensable product from worldwide distribution? I will maintain my long position with belief the FDA will wake up and adopt this critical intervention to the spread of all blood borne pathogens! I hope the mngmt. gets it together and make this happen or vote the bums out.

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Robert
Guest
Robert

http://onlinelibrary.wiley.com/doi/10.1111/php.12311/pdf

Robert
Guest
Robert

Hepatitis E transmission by transfusion of Intercept blood system–treated plasma:
http://www.transfusion.ru/2014/02-17-1.pdf

modernrock
Irregular
👍236

Thinkolator is wrong on this one……. it is XOMA.

chibana
Irregular
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chibana

Travis, Thanks for this interesting article. I have this eye condition (Uvetis/Iritis )which first hit me in 2010 (right eye) 2011 (left eye) while on a tour in the ME. Pretty painful. Mine is a result of another auto immune condition but it was treated fairly quickly with steroid ointment and drops. I keep a bottle of drops with me at all times in case the Iritis returns so I can self treat until I can see a Doctor (which I had to do once on a trip out west). Mine seems to remain in check but I think that… Read More »

william kobin
Guest
william kobin

Travis

How can I adequately express my gratitude to you for revealing the $4 stock . My $1,950
heart burn has been completely relieved.
Regards,

WCK

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vivian lewis
Guest

I own pSividia (not in the global portfolio of course) so I am sorry Travis corrected his first guess. But despite the likely short-term loss he cites it is a cool way to treat eye diseases.
I did an update on Benitec after meeting the Australians yesterday and anyone who wants to find out more can visit my website http://www.global-investing.com and sign up for a day pass to read all about its attractions and why this site is not telling you the whole story.

Thomas
Member
👍50
Thomas

This is if you want to pay $50 for another line of bullshi.

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biotechlong (btl)
Member
👍2793

Thomas, I would agree that we regularly receive a sufficient quantity of the unadulterated real “bull” directly from Peter French; no need to go to a “paid for services” indirect source for a second mushy helping.

SoGiAm
Member
👍11385

I would not give you $8.99 for an annual subscription Vivian after reviewing your comments on this site. Long SGS, Dr. KSS, IRRR’s
Best-Ben

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SoGiAm
Member
👍11385

RE: Blt and life. Each One is responsible for their own actions/inactions, stones and which lake they decided to skip a rock in and watch the ripples effects on All otherz.
Please bury the hatchet and sit on a log as the 16th did.
https://www.google.com/search?q=abe+lincoln+sitting+on+a+log+penny&es_sm=122&biw=1269&bih=866&tbm=isch&tbo=u&source=univ&sa=X&ei=C2duVI7JNISqyQS8goLgCQ&ved=0CCoQsAQ
Best-Ben

Chris
Irregular
👍62
Chris

RE: Vivian.
This isn’t the forum to promote your global investing business. Try paid advertising elsewhere. I subscribe to Gumshoe to gain insight and knowledge from all that post and share here. I’ve looked through your site and wouldn’t spend a dime for any information you have.

gard
Guest

I call foul. i’ve read Vivian and i conclude: leave her alone, she is worthy, as honest as the next person and I value her opinion, and do my own DD.

Lorraine R
Guest