Cox Picks: Alzheimer’s Fighter in Phase 1, Anti-Virus Patent Awardee to make us millions?

Sniffing out the teasers from Cox in his "Breakthrough Profits Today From Tiny Companies Working to End The Great Plagues of Our Time" report

I always feel a swell of optimism when I read a teaser ad from Patrick Cox — something about his relentless happy-facing about the teensy tiny technology and biotech companies he loves just stirs me up a little bit, reminds me that the reason many of us dabble in microcap stocks, little mining companies, new technology ideas and the like is that we believe in breakthroughs. We want to see a company come from nowhere to become the next Apple or Genentech.

And just because it almost never happens … well, that’s no reason not to hope a little bit, is it?

Frankly, these Cox teasers also always float to the top of my pile because so very many of you, the great Gumshoe readers, ask about them — we are, after all, slavishly devoted to our legion of fans (and if you’ve got a teaser ad that you really want to see covered, you can help us by sending it along for consideration — just use our Contact Form, easy peasy).

So this particular pitch comes in the good ol’ “presentation” format from Patrick Cox, and he’s trying to get us to subscribe to his Breakthrough Technology Alert with a pitch for three different companies — and yes, thankfully his publisher, Agora Financial, has recently made a little transcript available for his ads so it’s not quite as much of a nightmare to sift through them anymore in our hunt for clues.

From what we can tell as we get started with our sifting, the two picks that are getting the most play here are an antiviral company that has recently gotten some sort of patent approved for polymer-based virus targeting doodads, and a company that has an Alzheimer’s drug that has already made it through one Phase 1 human trial and could skyrocket if it makes it to Phase II (they have a second Phase 1 trial apparently coming this Fall).

Cox opens with the Alzheimer’s one, since Alzheimer’s Disease hits pretty much every family in some way and since investors know that this is probably the largest potential market that remains almost completely un-addressed by effective pharmaceuticals (there are treatments for the symptoms, but none for the disease — and, frankly, there’s still a lot of debate about what causes the disease). So the first little biotech to develop an effective Alzheimer’s drug can pretty much count on creating some billionaires … assuming, of course, that one of them gets there (there are lots of folks trying, and they’ve been trying for decades — the brain is tricky business).

But we’re going to flip the story around and start with the Virus one, since that’s what folks are asking about (and I think I already know what the Alzheimer’s one is, so I’m following my curiosity). What does Cox tell us about that one?

The first clues come in the free Agora email that linked us to the ad:

“The U.S. Patent and Trademark Office has issued a broad and sweeping patent to a company that’s combining biotechnology and nanotechnology to wipe out viruses.

“But it’s bigger than that, Patrick says: The firm “has become the owner of an entire new field of science — the use of polymers for drug delivery far, far beyond the field of viruses.”

“The polymers essentially lure viruses to their demise. The viruses attach themselves to the polymers and they die. This treatment has the potential to treat bird flu, swine flu, even garden-variety seasonal flu.

“But that’s not what the polymers were designed to do in the first place. “They were designed to contain a drug payload that would kill diseases without endangering the patient,” Patrick explains. The newly awarded patent encompasses this purpose.

“It’s great news coming on the heels of a successful meeting with the FDA — in which the regulators gave every signal that they’d approve human trials for flu treatment soon.

“The market for flu drugs already tops $7 billion. ‘This company could be close to eliminating scores of dangerous viruses,’ says Patrick. ‘Someday…down the road this is…when it could be an industry leader… potentially raking in profits… potentially saving lives… long after it could have made forward thinkers like you very wealthy.'”

Well, after that it turns out we don’t need to get the few additional clues that were shared in the ad itself … this one must be teasing … Nanoviricides (NNVC, trades over the counter)

NNVC is a tiny company, with a market cap of about $100 million, and it is not going to become profitable in the near future. But that’s true of pretty much all of the early-stage biotechs. It’s also a stock that Cox has been touting for more than two years — I don’t know if he has recommended trading in or out of it at all along the way, but we first got wind of it from an earlier teaser of his back in early 2010. It has been a wild ride for the stock for many years, with a big spike in the mid-2000s when the bird flu story had everyone searching for virus killers and again in early 2010 (perhaps because of the Cox recommendation, though they had other developments going on as well).

Since then the stock has been relatively quiet — over the last year there’s been no big positive news to drive the shares higher, so it’s been drifting gradually lower and, in recent months, bouncing around between 50-70 cents most of the time.

They did get a patent award about three weeks ago, you can see that notification here — and it does sound pretty impressive in the press release as regards the broad potential scope of the patent, though obviously all press releases sound impressive and I’m in no way an expert on patents or the science behind their gizmos. They have a brief “fact sheet” style explanation of their technology and their strategy here if you want a quick run-through. Polymers that are used to track viruses are fairly common and it’s a strategy being tried by many other virus researchers from what I can tell (and there are a lot of polymer-related patents out there for drug delivery or antiviral stuff), but Nanoviricides seems to have as their key proprietary technology a “nanomachine” that mimics a cell’s surface (biomimetic, they call it) and allows the nanomaterial/polymer to latch on to the virus, prevent it from attaching to other cells, and effectively smother it to death.

That explanation is probably wrong in some technical way (or several), but that’s the basic idea — they make nano-scale materials that are designed to target specific viruses. Their most advanced project is called FluCide, which targets the flu (particularly the threatening pandemic-potential flues like avian flu, but it sounds like it can target any influenza virus), and they also have a program that might potentially reach the clinic fairly soon for HIV (HIVCide), as well as several others that are still at investigational/animal testing stages for Dengue Fever, various viruses that attack the eye, Herpes, Rabies, and some biodefense programs — one to build a base stockpile of “generic” nanoviricide base material that can be modified in the field to fight emerging pandemic viruses, and one for the real nasties (Ebola and Marburg). The company’s goal is to get external funding for their RabiCide and for the biodefense programs, and to try to develop the others through the conventional FDA clinical trial route (which I’d guess will mean getting in bed with deep-pocketed partners at some point — these would be mega-scale trials if they get to Phase II and III).

They have been burning through cash at the rate of roughly a million dollars a month, and that’s with quite a bit of their compensation being in the form of preferred stock, so their roughly $12 million in cash should get them through the year if they don’t start a large-scale trial — they say they have enough cash to last two years at their projected burn rate, so the reality is probably somewhere between those two guesses, and it seems very likely that they’ll continue selling shares to raise funding whenever the market seems receptive.

So … it’s interesting, they have a patented approach that seems to be working in flu studies so far, and so far — before human trials, which get crazy expensive — they’re burning through money at a reasonable rate in relation to the amount of cash they have on hand. Since this is a novel approach and a new class of nanomedicine, we can assume that the FDA will look at it very, very closely before it gets tested in humans in a Phase 1 clinical trial — which is why they had a “pre-meeting” with the FDA to exchange some questions and answers about what studies need to be done before they submit their IND (that’s the Investigational New Drug application, which is what you do before you can start a clinical trial). Their brief report from that “pre-IND meeting” is here, so it sounds like they have a “roadmap” of the path to a IND application but I haven’t seen any kind of timeline.

Cool technology, seems effective, not yet tried on humans and years away from the marketplace unless perhaps some emergency pandemic that thwarts all other drugs turns us all into guinea pigs (hopefully that will remain the stuff of thriller novels, and real life will remain more boring). Clearly some potential, though almost any biotech can say that — you’ll want to watch the science, watch their developments, and particularly keep an eye out for big pharmaceutical partners or deals with the defense department to restock their cash pile as they move down that “roadmap” toward potential future clinical trials. Beyond that, I bet a lot of Gumshoe readers know far more than I do about the science of attacking viruses (and I imagine several of you have nibbled on this stock in the past, either because of Cox and his past recommendations or because of other positive news items like this founder interview last year), so if that number includes you feel free to chime in.

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With companies like this, it seems ridiculous to get granular in your analysis and say that it is worth 50 cents but it’s not worth a dollar — the science is the value, and the science is years off and massive in potential scope, so the future value will be determined not by incremental cash flow but by broad brush strokes, with the most likely result being either a gradual decline in the share price if there’s no news or progress toward a clinical trial, or a binary event sometime in the next few years, which would probably be either a big partnership deal or an effective rejection of their technology. These kinds of investments, in very early stage companies, usually require a strong stomach and the ability to be patient and accept a total loss on your investment if the patience doesn’t pay off — you can sometimes get an edge if you’re expert on the technology or follow a largely-ignored company more closely than most, but it’s still a crapshoot. It’s like venture capital investing — they know that most of the companies will fail, but occasionally one will come through as a 10,000% winner that makes all the failures worthwhile.

Meanwhile, we move on to the Alzheimer’s teaser — who is Cox talking about that has an Alzheimer’s Phase I trial ready to go for this Fall?

He starts with the story of a guy named “Robert” who has Alzheimer’s, putting a human face on the disease and the desperate need for effective treatments and a cure — but you probably already know someone with Alzheimer’s already, so we don’t need that spiel. Here’s the promise:

“But due to recent research I will share with you today, there is hope…

“As MSNBC quoted a professor from King’s College London as saying… ‘The care of people with [Alzheimer’s] is not just a health issue, it is a massive social issue.’

“This higher awareness comes just in time too. Because as one researcher told Bloomberg BusinessWeek…

“‘The new understanding [is] that Alzheimer’s starts years before symptoms are apparent… The earlier the disease can be identified, the better are the chances to slow its development…’

“Now what if there was a way to not only find out about Alzheimer’s sooner, but also slow it down and eventually destroy it?

“Due to shocking new research, this is the HOPE I want to share with you today…”

And he mentions a few of the big, failed projects to fight Alzheimer’s that have ended up squandering millions of big pharma dollars over the years, reiterates the massive size of the potential market (he says we spend $172 billion a year on Alzheimer’s treatment — which presumably includes a lot of nursing home costs) and tells us how he thinks it will be a little guy with a breakthrough that discovers or develops a real cure …

“…. my research leads me to believe that in the case of Alzheimer’s – it isn’t one of the big, powerful pharma companies that have the best possible solution for Alzheimer’s.

“In fact, as my research will show you – big pharma has dropped the ball on Alzheimer’s.

“In the case of Alzheimer’s research, I’ve uncovered yet another classic case of the biggest potential breakthroughs coming from the smallest companies.

“What I’ll show you is like how 25 years ago two unknown Australian researchers discovered the true cause of peptic ulcers was a bacteria, not stress or spicy foods.

“Despite millions spent in ulcer research by the big pharmaceutical companies…

“This is just one example of a research David slaying Goliath in the past few decades…

“Today it could be happening again. Not with ulcers – but with Alzheimer’s.”

And some specifics to help out the Mighty, Mighty Thinkolator? Of course!

“CEO Reveals: Shocking New Alzheimer’s Treatment to Hit Phase I Trials in September…

“Phase I trials are the first official step to finding out if new drugs and treatments are safe and if they work. Merely getting a hopeful new drug to Phase I is a big story…

“The story of the tiny company that could offer real hope for Robert is a double-big story because this company’s research is so unique. In fact, it’s completely novel. It’s new.

“Plus – this company’s best Alzheimer’s treatment has already completed Phase I trials.

“This is a matter of public record.

“If the evidence the company has so far holds up, we could be very near the end for Alzheimer’s….

“A Barclay’s analyst recently reported that a drug on the market that could reduce memory loss would immediately be worth $5 billion a year.

“If the tiny company I want to tell you about today is RIGHT – they’ll be right by themselves. That market could BELONG to this tiny firm.

“When you compare $5 billion to the current market cap of the company I want to tell you about – you’re looking at the potential for a 100x price explosion.

“This is exactly what further clinical trials could begin to make clear. To analysts. To the press. To the scientific community. To every researcher in the world….”

And then Cox starts to share some excerpts of interviews that he conducted with the CEO of the company …

“In validated standard approach animal models, which everybody does, we’ve seen an efficacy that far exceeds Aricept (Eisai/Pfizer), and at very low doses. We also have seen actual disease modification. Aricept is the market leader and is a symptomatic treatment only — there is no disease modification.

“…The other interesting thing is affinity of these compounds… is very strong at very low doses. So our thinking is we may be able to get significant efficacy without having to make the trade-off between tolerability and adverse event profile.”

Aricept, despite the fact that it only treats the symptoms and doesn’t “cure,” reverse or prevent Alzheimer’s, generated revenues of several billion dollars a year before it went off patent a couple years ago (it is now available as a generic called donepezil), so that kind of mega-drug status (or better) is what researchers are striving for.

And then we get the bit that makes you want to start browsing Ferrari catalogues:

“Right now this tiny research company I want to tell you all about trades for around $.70 a share….

“As it enters more trials as I expect it could in the coming weeks, the increased exposure alone could shoot it to $10-$15. This is a conservative projection.

“In time, if this new way of possibly treating Alzheimer’s is successful, $30-$50 a share is reasonable. This is also a conservative guess.

“Then, if all goes well – by the time folks like Robert can receive this treatment – by the time this tiny company is RESTORING lives… well, the sky’s the limit.”

Of course, there are lots of “coulds” and “ifs” in there, but the lizard brain’s lust for an Italian sports car doesn’t listen to qualifiers.

We then get a little bit more detail about how this company’s approach and drug might be different …

“Plaque in the brain can contribute to Alzheimer’s, according to how the New York Times described Alzheimer’s.

“At least, that’s the common wisdom.

“New science, pioneered by the first company I reveal to you in Breakthrough Profits Today From Tiny Companies Working to End The Great Plagues of Our Time, says that common wisdom could be wrong….

“Remember that major drug backed by Pfizer that recently failed? The research behind this drug was based on the “plaque model” of Alzheimer’s.

“So was a recent failed drug from Eli Lilly. The Associated Press carried the story just a few days ago…

“Still, big pharma’s insistence on researching the ‘plaque model’ continues.

“The tiny company I want to share with you today flat-out rejects the “plaque model”. All of this company’s research is focused on another possible Alzheimer’s cause…

“In fact, here’s what this tiny company’s CEO told me in our recent interview about where big pharma’s work is headed…

‘The field is thinning out…And you need to define the mechanism, which is probably best addressed via multiple pathways. The ideal drug would be one that is a small molecule, orally available, with an ability to combine with other oral therapies, that is a disease-modifying {…} compound. With those qualifiers, there are very few companies.'”

Ironically enough, it turns out that this must be a stock that I had forgotten about completely (but that Cox has teased in the past): Anavex Life Sciences (AVXL, trades over the counter).

Which was indeed around 70 cents a few weeks ago when it bottomed out … but it’s now just over a dollar, perhaps partly due to Cox’s renewed enthusiasm for the shares. This is another pick that has come far, far down from the enthusiastic pricing it enjoyed in recent years, it hit $4 in 2011 and was around $5 back in 2008, though it’s been all downhill over the past year or so, even with their completion of the first Phase I clinical trial late last year.

Anavex explains itself pretty well, so if you want the story of their lead Alzheimer’s drug (Anavex 2-73) you can get the basics here on their website. They are continuing to test dosages, and hope to get into a Phase 2 trial (or Phase 2a, whatever that means, as a preliminary step) to start testing efficacy and safety in humans — Phase 1 was for making sure the drug gets into the system, making sure there’s no dangerous reaction, and seeing what kind of dose is tolerated; Phase 2 is where we start to really learn whether it might work.

Anavex is teensy even compared to the other companies