Patrick Cox is not a shy guy. I don’t think I’ve ever read one of his biotech teaser ads that didn’t leave me convinced (at least for a moment) that the world was about to be changed because of the newest potion or pill that his favorite little companies were developing.
And this latest one is no different — for the first time in a while, he’s sidestepped the Star Scientific (CIGX) anatabloc story (though that’s still one of his teaser picks, later on in the same ad), and moved on to something that’s arguably even a bigger market than inflammation: obesity.
Or, in his words:
“Act before April 9th, and you could live longer, healthier and much richer.
“That’s because you could benefit directly from the biggest Baby Boomer story of them all…
“10,000 Baby Boomer Americans now reach retirement age each day. Over 45% are overweight or obese, according the CDC.
“Each year, that’s 1,620,000 more Americans. The numbers will only go up from here as more and more Baby Boomers reach retirement age.
“What I’ll show you today could someday help folks lose weight, get back the healthy hearts of their youth, and potentially live many years longer. This is a revolution.”
And it’s certainly true: we’re fat. And it makes us sick. And if there’s someone who can make us less fat without forcing us to give up McDonald’s and sitting at our desks for 60 hours a week and watching 120 hours of television a month, well, it will find a ready and willing market. Heck, the gummint might even sneak it into our drinking water.
So what is it that Cox has discovered that helps with obesity? And how will it make us rich? Let’s sample a bit more from the ad to get a few clues for the Thinkolator …
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“… every idea in weight loss history – in one way or another – targeted the brain. What I’ll reveal to you today targets a major type of fat cell directly. And destroys them. So this is new.
“If you read The Wall Street Journal, you were among the first to hear about this work. It had the first scoop on this science years ago.
“As the work rushes forward, Reuters has called this advance ‘potentially groundbreaking.’ Fox News said subjects saw ‘their waistlines shrink in just weeks.’ Time Magazine reported obese test subjects lost ‘11% of their bodyweight in just a month.’”
OK, so it’s a new way of going after fat — sounds interesting. He goes into a few more pages of detail to make clear to us that this compound doesn’t mess with the brain or try to suppress appetite like so many other failed drugs before it, like Fen Phen, but it goes after the fat cells themselves.
And apparently, this compound is actually undergoing clinical trials now — here’s the impetus to BUY RIGHT THIS VERY SECOND …
“In the first week of January 2012, the FDA gave approval for the company behind this brand new weight loss research to begin Phase I clinical trials.
“Phase I, as you know, is for safety tests in human patients. Phase II is efficacy, proving if a new drug actually works in humans.
“Dendreon and their prostate cancer drug Provenge is a great example of the possible fortunes this company could deliver. As test data piled up, the share price shot from around $3.50 to nearly $60 in a little over a year.
“In the case of this weight loss breakthrough, the results of the pre-clinical tests on mice and monkeys are so encouraging that I expect a share price breakthrough of epic proportions if this new drug does well in Phase I. This news could come rolling in soon…”
And the last real clue is that this breakthrough came out of a University in Texas — here’s a spiel about the actual science:
“This leads me to revolutionary work going on right now at a major university hospital in Texas.
“I can’t mention the name, but you’d certainly recognize the school.
“This current work has come up with a treatment that doesn’t target the brain, but it still makes animal subjects lose weight.
“How does it work? It goes right after fat cells themselves. No more messing with the brain.
“The easy way to explain it is that this treatment cuts off the blood cells that supply oxygen to one type of fat cells. If you cut off the blood cells, fat can’t get into the fat cells, and the fat cells die.”
And apparently this treatment has been tested on both mice and rhesus monkeys, with great results (we even get a photo of two cute little mice, one humongously fat and one normal, to emphasize the point).
“In 30 days, these monkeys achieved a new, healthy weight. I’m talking about overweight and obese subjects losing huge amounts of total body mass… in a month. Imagine the implications of this news ….
“The monkey got thinner. Total fat reduction in this particular study came in between 30% and 40%. That’s astounding.
“If this work translates to humans, it’s a true weight loss revolution.
“That’s exactly why I expect the epic share price breakthrough I mentioned a moment ago.”
So … that ought to be enough to toss into the ol’ Thinkolator, no? We’ve got a University in Texas, a new treatment that breaks down fat cells in monkeys and mice, a huge impact in just a month of treatment, that means the stock we’re looking for is …
Ablaris Therapeutics … which is a private partly-owned subsidiary of … Arrowhead Research (ARWR)
Arrowhead Research is more known for RNAi research, and they have several different pipeline compounds that are pre-clinical, along with a couple cancer drugs that are in phase I or II … you can get a pretty good lowdown on their programs and their strategy from the latest annual meeting presentation here.
The stock is up about 10% today, due entirely, I’m sure, to Cox’s recommendation to his subscribers over the weekend (or he may have recommended the stock to them earlier, these might just be new folks brought in with his tease of a special report on the company). It’s still a tiny company, with a market cap of about $75 million as I type, and it’s an early stage biotech company so they have no revenue to speak of yet (any revenue in the near term will be from partnership deals, most likely). They are being carried for Phase 1 of this Adipotide trial, which will be conducted at and paid for by the University of Texas MD Anderson Cancer center, which is where the discovering researchers have their lab — which is good, because their current burn rate is over a million dollars a month and, at that rate, they have only a few more months of cash on the books.
Which makes it a good time for the stock to go up a bit, since they’re probably going to need to sell some equity to raise capital in the months ahead (I haven’t looked to see if they have capital raising plans or have raised cash recently, or even looked very closely at their books — that’s just an assessment based on the fact that they spend over a million bucks a month and have only about six million in cash as of their last filing).
The drug, Adipotide, sounds interesting indeed — if you can wipe out fat cells that easily and quickly, with the side effects being limited to some renal impact that they think they can counteract, that’s pretty impressive. And doing it in monkeys is much more impressive than doing it in mice (especially because the monkeys were “naturally” obese, they just were lazy and overate, they weren’t pumped up or primed to obesity … and it was only the obese ones who lost weight and fat, it didn’t have an impact on the lean monkeys). So though I’m not a scientist, that’s pretty impressive, and it has caught the attention of the press.
You can see the article that got a lot of attention in the Wall Street Journal here, and the notice about the approval to begin the Phase 1 trial is here. The company did a 1:10 split in part on the strength of that WSJ article and the initial surge of interest it got for them, so it has a nice reasonable-sounding price of about seven dollars instead of being a penny stock, but don’t get complacent and assume that the price can’t move wildly on any kind of attention or news (including attention from yours truly) — on the day before the WSJ story the stock closed at about $5 (or fifty cents, since this was before the share consolidation), and on the day of the article it opened at $7 and spiked as high as about $12, but within a week it was back down around five dollars. So if you decide to research this one yourself and do a little speculating, be prepared for news to cause big swings.
I haven’t seen official word (haven’t looked that closely, to be honest) about when the results of this first trial might start to come out, but it’s possible that it could be pretty soon — Phase 1 groups are often small since they try to test initial safety without exposing a lot of people or spending a lot of money, and the monkeys were tested over just four weeks, so it could be that we’ll hear some kind of preliminary results soon.
That’s about all I can tell you after my few minutes churning the Thinkolator and a little bit of reading of their website and filings — I’m sure there’s a lot more that you’d want to know before buying the stock, but I’m certain that this is the potential obesity-fighter that Cox is teasing. If you look into it and like what you see (or not), please let us know with a comment below.