by Travis Johnson, Stock Gumshoe | March 12, 2019 5:23 pm
Another day, another promise of imminent riches from a biotech clinical trial! This time it’s from Ray Blanco, who has made many such promises in his ads, and the pitch is all about a “bio switch” that has the potential to “end diabetes, plus heart & kidney disease (with a twice-a-day pill).”
What more could you want, right? Blanco says the market is valued at $1.98 trillion, but that this is a tiny little $3 stock — and he’s predicting FDA approval on March 15, 2019, which, in case you aren’t looking at a calendar, is this Friday.
So, naturally, once he’s got you fretting about a huge gain to come in just a couple days… this is the perfect time to say gosh, sorry, can’t tell you the details unless you subscribe to Breakthrough Technology Alert for $1,995. And, whaddya know, that $1,995 is non-refundable even if it turns out that I just made up the March 15 date, or the stock turns out to be lousy.
That seems a raw deal, and a foolish bet, so we’ll just figure out the stock on our own… then you can think it over, decide whether you like the risk, and use your $1,995 for something more satisfying. Or, heck, maybe once you hear about the stock you’ll be convinced of Ray Blanco’s brilliance and will want to send him your money… that’s fine with me, it’s your money, but don’t type in your credit card number just to get a stock tip. This way, you’ll know the stock in advance and have a chance to love or hate it before you pay for it, which isn’t always the way things work in this field (Remember the last time you bought a car? I bet you kept checking ads afterward to make sure you got the best price, right? Same with the last house you bought? Everyone wants to congratulate themselves for making wise choices, the human brain looks for validation for big decisions it has already made — so once you subscribe to a newsletter, most people are hard-wired to want to agree with the author… and if you paid $2,000 for a stock idea, you’re probably going to be hugely biased to BUY THAT STOCK RIGHT AWAY, with your critical thinking put on the back burner. What kind of dummy would spend $2k for stock tip and then not buy the stock? Sheesh!)
So anyway, what’s this magical stock? Clues from the ad for you:
“The New York Times raves: “These [‘bio-switches’] are crucial… They can silence some genes and activate others.”
“And the doctor who discovered DNA thinks this science breakthrough is even BIGGER…
“In the race to find a cure, this Rocky Mountain biotech just blasted 7 years ahead of potential competitors — in a market valued at $1.98 Trillion….
“A massive investor in this company recently tripled down…
“Plowing $87 million more in anticipation of the predicted FDA approval…”
OK, so we can skip a few steps and say that yes, this teaser pitch is about epigenetics… which for those of us who don’t really remember much from our science days is defined thusly by NIH:
“What is epigenetics?
“DNA modifications that do not change the DNA sequence can affect gene activity. Chemical compounds that are added to single genes can regulate their activity; these modifications are known as epigenetic changes. The epigenome comprises all of the chemical compounds that have been added to the entirety of one’s DNA (genome) as a way to regulate the activity (expression) of all the genes within the genome. The chemical compounds of the epigenome are not part of the DNA sequence, but are on or attached to DNA (“epi-“ means above in Greek). Epigenetic modifications remain as cells divide and in some cases can be inherited through the generations. Environmental influences, such as a person’s diet and exposure to pollutants, can also impact the epigenome.
“Epigenetic changes can help determine whether genes are turned on or off and can influence the production of proteins in certain cells, ensuring that only necessary proteins are produced. For example, proteins that promote bone growth are not produced in muscle cells. Patterns of epigenetic modification vary among individuals, different tissues within an individual, and even different cells.”
So for our purposes, I guess epigenetic treatments for diseases don’t rely on doing gene editing (like the CRISPR stocks) that actually alter your DNA, but on modifying the way a gene is expressed… or something like that.
I’m a bio-idiot, so bear with me. I’ll focus on naming the company, then let you do the science-y bit. There’s also an interesting site here called “What is Epigenetics” if you want to explore more. (Oh, and that NY Times article cited is here, from 2016)
Other clues? Indeed, here you go:
“… the stock that could earn you a once-in-a-generation $1,032,031 windfall if you move before March 15, 2019 — when the FDA is set to approve its final clinical trial.”
Not sure what “approve its final clinical trial” means — the FDA does have to approve trial design, but what companies are really looking for in the end is for the FDA to approve the drug itself for commercial use. So that’s a little squishy… but that’s OK, because the dates in these ads are often made up anyway, mostly to give an artificial deadline to hurry you up as you dig for your credit card.
More from the ad:
“For millennia, this biological switch was hidden above the surface of your DNA.
“But since 2001, one company has been developing it behind the scenes…
“They’ve figured out how to take advantage of this natural anomaly to fix three of the world’s deadliest diseases…
“And they created a breakthrough treatment for heart & kidney disease, plus diabetes.”
Other clues? He says it’s “trading at just $3.06 per share” …
And “Seeking Alpha calls the stock ‘A Billion-Dollar Blockbuster in the Making.'”
Which is pretty silly for anyone who spends time perusing Seeking Alpha, since you can easily find extreme opinions on both sides of any stock there… with very little editorial control (not that Stock Gumshoe is any better, but, well, I wrote some for Seeking Alpha in its early days, years ago, and hopefully no one ever quotes me to validate their opinion about a stock’s future).
And he’s got a quote from the company’s 9/12/2018 earnings call…
“When we were finished with Phase 2, no other pharma or biotech had even started Phase 1.”
And the “seven years” quote is sourced to a hedge fund…
“The renowned NY-based Makalu Fund estimates they hold ‘a lead of seven years over potential competitive drugs.'”
More from the pitch:
“… they have a stunning sixteen patents protecting the lifesaving creation.
“Plus, I’ve found only 1 Wall Street analyst covering it.
“It all set to come to a head on March 15, 2019…
“That’s when they’re slated for a key FDA approval round that could trigger the catalyst to catapult every $1,000 invested into $158,770 over time… in its longer mission to end suffering.”
So who is this? We’ve got plenty more clues we could bore you with here, but that’s enough to get our answer — Thinkolator sez this is Resverlogix (RVX.TO, RVXCF OTC in the US), which is trading right around C$3 (in US$, the 52-week high was right around $3.06, back in September).
The drug in question is apabetalone, which works through an epigenetic mechanism called BET inhibition (bromodomain and extra-terminal), and the FDA did approve its plan and endpoints for the first big Phase 3 trial of the drug in Acute Coronary Syndrome (ACS). That trial was originally noted in their investor presentations last fall to have a “read out” of top line data in the first quarter, which I guess could make the March 15 date somewhat relevant, though in subsequent presentations they have been a lot squishier about that (in the latest investor presentation, they note that the trial will probably be complete in the first half of 2019 and that the top line data will be announced after the outcomes (SAE MACE events) are adjudicated, two or three months after the trial is completed. These are high risk patients, and it’s a Phase 3 trial so there are a lot of very sick people being treated… so my understanding is that this basically just means it will take some time to get the official judgement (from who, I don’t know) on which Serious Adverse Events or Major Adverse Cardiac Events might have been caused by the drug and which weren’t. The drug has apparently been judged safe in 1,900 patients so far over the years, but I assume this is their biggest trial yet.
That sounds more to me like we’ll have results from the clinical trial in the Fall, not on Friday this week… though who knows, maybe they will say something about how the trial is going at a conference — and they do have a poster session about this trial at a conference on March 16, though poster sessions don’t usually announce huge news (Resverlogix did announce yesterday that they’re participating in a bunch of conferences in the coming weeks, so you can peruse that list for other possible events if you like).
And yes, Resverlogix did get an $87 million infusion from one of their big investors, their Chinese partner Shenzhen Hepalink… but I’d call “recent” a bit of an exaggeration, that private placement deal was announced back in December of 2017. That got them through a few quarters, along with a $30 million loan last summer and another $30 million in shares issued late in the year (including a November private placement of $13 million that’s not in the filings yet), but a biotech running late-stage trials is a cash-burning machine and they’ll presumably need to raise money again soon (I’d guess they will probably have to do so in the next couple months, well before we have top-line results from their Phase 3 trial, but one never knows — maybe they’ll be able to do more borrowing or hit up one of their partners for more cash).
If you’re curious to see a bullish take, that hedge fund mentioned published its analysis a few months ago — you can download Makalu’s report, “Resverlogix — The Making of a mini-Humira?” here. I don’t know anything about Makalu or their track record, though the author does also note that this Phase 3 trial will be critical to proving their concept, with an argument for huge potential gains if there is a large and verifiable reduction in cardiac risk, and that they will need to raise more money. Makalu seems to think that a takeover is likely if the trial is successful, but that the risk is higher before trial results are in so any acquirer would prefer to wait for that ‘derisking’ event. Which makes some sense, though I had never heard of Resverlogix or Makalu before today so my judgement isn’t terribly useful here, either.
So I’ll leave you there, dear reader — think Resverlogix has the next big breakthrough in cardiovascular disease with their apabetalone? Want to bet on what the clinical trial results will be later this year? Understand the science better than I and feel like explaining for us? Just use the happy little comment box below to share your thoughts… thanks for reading!
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