Here’s the lead-in to the ad that caught our readers’ attention this week:
“This ‘Perfect Storm’ Stock Is Set to Deliver Big Pharma a Swift and Devastating DEATHBLOW It Won’t Come Back From…
“And Launch This Little Company on A 72-Hour, $8.98 Billion All-Out SPRINT”
And there’s a deadline… today, in fact, when there will supposedly be huge news… or, at least, a deadline by which they want you to sign up for the newsletter (today’s pitchman is Ray Blanco, for his Breakthrough Technology Alert — $1,995, no refunds).
“The two-faced SOBs running Big Pharma are finished. And there’s not a high-priced lawyer or silver-tongued spin-doctor on Earth who can save them now.
“Because an obscure little West Coast startup is set to unveil a stunning medical discovery and expose the $1.4 trillion mistake that could bring the entire Godless pharma industry to its knees.
“Payback is here. Stake your claim in this tiny little company NOW, and as soon as April 9, 2019, you could be watching your money soar to the sky… while they tumble in flames.”
As with all mock-anger sentiments in newsletters (“Trump is about to be impeached,” “Hillary needs to be indicted,” “Big pharma is evil,” “Wall street is rigged and we’re about to bust it open”), this is all about getting your attention and appealing to base instincts — if you ever read a newsletter pitch and start nodding your head and saying “yes, that’s what I’ve been saying!” … you’re being played. These are ads, remember, they’re here to get your attention with an emotional response (fear, greed, anger) and spur you to action — go elsewhere for your carefully-researched commentary and analysis.
But anyway, we do want to know what this April 9 business is… since that’s today, after all, and if the earth is about to start shaking we should know why, yes? Here’s more from the ad:
“This is the kind of rare situation investors spend their careers fantasizing about.
“But this isn’t fantasy.
“Everything you read on this page is 100% fact. This is happening, and there’s no telling how high and how fast the profits will pile up once this announcement hits.”
The lawyers must have been on a coffee break when that paragraph got approved. “100% fact?” Really? No speculation at all? No misleading gobbledygook?
Here’s the next bit, now we get into what the actual breakthrough being teased is:
“If you want to see these Big Pharma crooks pay for this as much as I do…
“Because on April 9, 2019 — the tiny little company at the center of the ‘perfect storm’ I just told you about could unveil something truly astonishing…
“A radical new technology with the potential to TOTALLY REVERSE Alzheimer’s Disease…
“…quickly… painlessly… and without surgery or side effects
“With it, Big Pharma will be brought crumbling down, exposed as FRAUDS…
“The FDA will scramble to give this therapy ‘Breakthrough Treatment’ approval so it can be brought to patients as fast as possible…
“And if you act before that date, you could be treated to what I predict could be…
“The biggest 3-day gain in stock market history”
OK, so that’s all about how this company is going to develop an Alzheimer’s Disease treatment based on different science than the “Big Pharma” folks have been advancing… which I’d say might expose those other companies as failures, not frauds, but I suppose opinions might differ.
Yes, Alzheimer’s Disease drugs got another kick in the teeth last month when the brightest hope among advanced AD drugs, Biogen and Eisai’s aducanumab, was discontinued in late-stage clinical trials because it wasn’t working. That was just the latest in a string of high-stakes failures among late-stage Alzheimer’s Disease drug trials going back decades, but it was a big one — Eisai and Biogen together lost about $40 billion of stock market value when the news was announced.
That doesn’t mean that researchers have completely given up on drugs that attempt to fight the amyloid buildup in brain tissue plaque, though investors may have done so now as yet another anti-amyloid drug failure sucks up billions more in research and clinical spending without success (Biogen and Eisai, in fact, just launched another Phase 3 anti-amyloid drug trial a couple weeks ago). But yes, there continues to be a lot of interest in other theories about the causes of Alzheimer’s Disease and different kinds of treatments that might reverse or slow its progress, both in university labs and small companies and in “big pharma” operations.
We do go through waves of big companies becoming gun-shy about spending money on this research, given the many super-expensive failures that make investors gnash their teeth, but the profit motive usually wins out — the amount of money to be made by a successful anti-Alzheimer’s treatment or a preventive drug is truly phenomenal given the massive, massive size of the problem (both in terms of current treatment costs and the number of people impacted). And, of course, that keeps small companies percolating in the AD research business (and in the “selling stock newsletters” business).
Here’s some more from the ad:
“A breakthrough so advanced… so revolutionary… the science it’s based on is now recognized by the world’s leading brain researchers as a potential CURE for a disease they thought couldn’t be stopped
“It’s true. Including…
Doctors at the UCLA School of Medicine, who reported the science behind this breakthrough not only ‘stopped disease progression’ of aggressive Alzheimer’s but also ‘restored cognitive function.’
Yale neuroscientist Dr. Jaime Grutzendler, who adamantly believes these scientific breakthroughs could finally ‘lead to new treatments for the disease.’
Neuroscientist Michela Matteoli of the University of Milan — totally blown away by the implication this approach could have on our fight against Alzheimer’s – who could only declare ‘huge opportunities opened up… the tools we need are [now] available.'”
Those are all quotes about one of the more recent trends in Alzheimer’s Disease research, the focus on immune response and the TREM2 gene. They’re also all quotes from researchers working on mouse models over the past three or four years, I suppose it’s fair to say that it’s opening up research into a different “potential CURE” — but you really have to put the emphasis on potential.
You can see more details in the source of those quotes if you like — the Matteoli quote comes from a Nature article last year, you can see Dr. Grutzendler’s quote on his lab’s website here, and those UCLA studies are referenced here. Those are all academic lab “basic science” projects so far, nothing that has yet been farmed out or licensed to a pharmaceutical company yet as far as I can tell, though for-profit researchers are also researching microglia, TREM2 and applying immunology research and ideas to the brain.
So what’s this company that’s supposed to cure Alzheimer’s Disease today? More hype for you…
“Act today and you could be a millionaire by summer
“Quite frankly, before now, I didn’t think I’d live to see something like this…
“A breakthrough so extraordinary, I believe the market could send the value of this company straight to the heavens: a 6,231% climb in the FIRST 72 HOURS…
“That’s 63x… in just three days.
“It doesn’t stop there my friend.
“Because after this ’72 Hour Miracle’ – I believe this company will continue its march to the heavens.
“In three months… it’ll be up 18,894%.”
We see a lot of wildly irresponsible ads here at Stock Gumshoe, of course, but this is shaping up as being among the most ridiculous. I guess that’s the challenge for a publisher, if you’re going to charge $1,995 and not offer any refunds, you have to make your product seem pretty infallibly and absurdly profitable.
And we get a few hints about insiders as well…
“… recently, the smartest, most connected insiders and biotech investors in the game loaded up on this one…
“…quietly vacuuming up as many shares as possible before the news hits.
“For example there’s…
- Ronald Baron, the New York ‘buy and hold’ billionaire, who scooped up nearly a million shares. You know what else is interesting about Mr. Baron? He’s formally trained in chemistry! In other words, when he plunks down nearly $17 million to invest in this company, it might be time to start paying attention.
- Robert Nelsen, the man who Forbes calls ‘Biotech’s Top Venture Capitalist’ and, who ranks as the 16th Best Venture Capitalist in the world. He snapped up an insane 11% of this company, saying: ‘The best scientists in the world are now calling us…You can’t wait 10 or 20 years…’
- Jay Flatley — the legendary former CEO of Illumina who returned 1,124% to investors while at the helm — scooped up 250,000 shares of our little company. How’s that for a blaring ‘BUY’ signal from the man responsible for helping Illumina become one of the Top 3 Performing biotech stocks of all-time?”
Oh, for crying out loud. This is a rehash of a previous ad.
Yep, the April 9 stuff is hooey, designed to spur your newsletter signup but not connected to anything in reality unless there’s some secret data release or biotech conference happening today that I’m unaware of. The company being teased here is still good ol’ Denali Therapeutics (DNLI), which Ray Blanco has pitched a couple times before.
The first time Blanco touted Denali for its Alzheimer’s cure was in January, when he similarly said that the CEO would soon step to the podium and shock the world with his news that Alzheimer’s is now treatable… and implied that the announcement would be coming “as soon as January 14”, which, of course, was also the final deadline for signing up for his newsletter (until the February version of the ad promised this news could go public on March 13, that is, or this latest version promised April 9).
So yes, the dates are marketing hooey. What’s up with the company? Here’s what I wrote about them back in January when I first covered the pitch (I’ll throw some minor updates in after) …
From 1/4/19: Confirmation? In this case a couple specific numbers make it easy… on December 12, 2017, most of the board members and officers converted their private or preferred shares into common equity, right after the company’s IPO. That number did indeed total up to 11,856,247 shares, including the 250,000 shares owned by former Illumina CEO (and now Independent Director of DNLI) Jay Flatley.
I expect that not a single one of those people (or any other insider) has bought Denali shares since it went public (there have been some “acquisitions,” but they all look like stock grants to board members and executives, some of whom have also been selling — as is typical of a newly public company), and I wouldn’t describe that conversion process as them “gobbling up” shares on that particular day, though some of them did invest in the company when it was private (most notably ARCH Venture Partners’ Robert Nelson, a well-known biotech venture investor who is also a board member and a large shareholder — more than 10 million shares of that 11.8 million are listed under his name)….
Denali’s drug pipeline stands out mostly for its lack of any big news at this point, their most advanced three drugs are in “early clinical” stage (including DNL747 for Alzheimer’s, along with a couple Parkinson’s drug candidates) and mostly still testing for initial safety in small groups of healthy volunteers, though they do say that the “science is breaking open” for their work in Alzheimer’s, Parkinson’s and ALS as degenogenes are identified.
Most of the leaders at Denali are from Genentech’s neuroscience division, and it seems that they’re trying to take Genentech’s (and others) success in oncology, based partly on better genetic understanding and targeting, and use that to take the next steps in neurodegenerative diseases like Alzheimer’s and Parkinson’s. They are using genetics to select specific targets and biomarkers for drug development, and have designed their own proprietary platform for engineering large and small molecules that can cross the blood brain barrier, which is a challenge for many drugs (particularly the “big molecules” like antibodies). They also talk about a “portfolio” approach, where they work on several drugs at once for an indication, dropping the lead drug and going to the next one in line if it fails to show progress, which sounds encouraging… but I have no idea whether that’s at all unique in the world of biotech.
The company is not pitching themselves as the owner of a cure for Alzheimer’s, that’s all Ray Blanco, but they do have three Alzheimer’s drugs in their “core” portfolio — though the “TREM” drug breakthrough hinted at, which they currently call ATV:TREM2, is still in “drug discovery” phase and hasn’t been tested in humans yet, they’re just planning for an IND at some point over the next year or two and it won’t likely generate any data anytime soon… and certainly not before
January 14April 9.
They have released Phase 1 results for their most advanced Alzheimer’s Disease drug, DNL747, which gave some indication of a solid safety and pharmacokinetic profile (meaning mostly that it didn’t cause severe reactions in healthy volunteers, and the drug got into the blood as expected and had the chemical reaction planned), and hope to initiate the next clinical trials soon to start to get some indication of efficacy (whether it actually does anything useful for patients)… presumably from some targeted Alzheimer’s patients with specific biomarkers.
You can get a good deal more information from their R&D Day Presentation that was given in December. This is one of those companies that looks really impressive to me, mostly because of their professed strategy and the quality of their investors and executives, but I’ve learned to resist that impressive look in this particular sector — I’ve generally sworn off of investing in clinical stage biotech stocks because of my inability to be an expert in the science… or make any rational guesses about the financial prospects for drugs that are likely to be close to a decade from commercialization (though that could speed up a bit if all goes really well). This is not a sector where betting on one or two companies is likely to work out well for individual investors, the failure rate is very high and lots of very smart people who understand the science (unlike me) calculate the odds of success for specific companies very differently — and accept that failure rate as the cost of investing in the sector, which means they have to diversify (ARCH Venture Partners, for example, Robert Nelson’s fund, helped to build Denali and is well-known for their venture work in biotech, and they list a portfolio of well over 100 companies they’ve worked with — some have been big successes, some have disappeared).
So I won’t be buying this stock, but it is the first new Alzheimer’s pitch we’ve seen in a while, and it is an interesting looking company despite its young age and early stage pipeline, so perhaps those of you who dabble in biotech or have some sector expertise will be interested in at least watching their progress. If there’s going to be big news on January 14 about some efficacy breakthrough from Denali in these early Phase 1/2 trials, and a “Alzheimer’s will soon be treatable” headline, I would guess that January of 2020 is a much likelier date to shoot for than next week. But, of course, hope springs eternal and I wish them the best — the science sounds cool, and the cause is certainly worth the effort.
So what has been happening in the past three months? Any huge changes?
Not really. Denali did start dosing their first patients with DNL747, first for ALS in January and then, in mid-February, for Alzheimer’s Disease.
And they reported their financials in mid-March, which was also fairly meaningless — they did technically report a profit, which is unusual for early stage biotech companies, but that’s just because of the timing of funding for their collaboration agreement with Sanofi and the preclinical milestone payments for their Takeda collaboration. Those are good things, to be sure, and it’s that kind of funding that will sustain Denali for the next several years of R&D (along with the $450 million or so they already have in the bank), but they’re likely to burn through cash in most quarters and they are probably close to a decade, assuming all goes pretty well, from having an approved Alzheimer’s Disease drug.
Yes, that could be sped up with breakthrough therapy designations or shockingly excellent clinical trial results that let them skip some steps… but these are extremely early stage projects right now. Only three of their drugs, including DNL747 (plus a couple for Parkinson’s, DNL151 and DNL201) have ever been tested in a human being before… and regardless of how much we like to think we want faster clinical trials and faster approvals, there’s little chance of a major drug for Alzheimer’s, at least, hitting the market until it has been studied in a large cohort of patients for at least a few years to assess safety. Maybe efficacy gets to slide a little bit if the FDA loosens up, but not safety, particularly not for Alzheimer’s Disease drugs that the FDA knows would be immediately prescribed to millions of worried baby boomers who are looking for a preventive or worried about early stage dementia (or even just memory loss or early cognitive decline).
Until proven wrong, investors are probably better off reminding themselves that Phase 3 is where Alzheimer’s Disease drugs go to die… which doesn’t mean that stocks can’t surge because of hope or encouraging early-stage results, and Denali won’t be in Phase 3 for years, but it does mean that we should probably keep our expectations in check, especially when it comes to drugs like Denali’s TREM2 treatment that has not even been tested in humans (they’ve mentioned in the past that they hope to get into the clinic with that one in 2020)… or even for their Phase 1b Alzheimer’s Disease drug that has been tested in a few volunteers but won’t even begin to look into efficacy in a meaningful way for at least a year.
Denali’s stock is up almost 40% since Blanco started touting it in January, largely thanks to hope for its many programs and the big bet that Takeda and Sanofi have placed on their research collaborations, so there’s clearly some optimism (and biotech in general is riding a wave of enthusiasm so far in 2019). But no, there’s no indication that they’re going to announce anything today… and if you want to see some real results from their lead Alzheimer’s Disease or Parkinson’s clinical trials you’ll probably have to wait at least until the fall.
Really interesting company. Really impossible to value unless you can assess the probability of success for their early stage R&D and initial clinical trials, which means that sentiment could easily drive the company up to a $5 billion valuation or down to a $500 million valuation based on early-stage results, all it would probably take is one or two patients to bring either an efficacy daydream or a safety scare into the headlines… but regardless of the initial results that begin to come out, probably late this year, they will probably have at least a few years to advance the early stage science since they’re well-funded, and they’re certainly going after some big fish in Parkinson’s and Alzheimer’s Disease.
If you like to bet on science and early stage clinical trials, go right ahead, just be mindful that stocks like DNLI can pretty easily move up or down by 40-50% without any real news, and you’re probably a few years from really knowing what the potential is for Denali’s lead drugs… and probably at least a year from seeing if they can get approval to test their TREM2 Alzheimer’s Disease drug in humans at all.
And not to be too snarky with the ridiculous newsletter ad claims, but if you want to wager that they’re going to rise 1,000% this year, let alone 18,894% by the summer as Blanco urges us to dream, I’ll cheerfully take the “under” on that bet.
Thoughts on Denali? Other Alzheimer’s hopefuls? Let us know with a comment below.