This article was originally published on November 3, but not many folks were reading about investment speculations back then, as election day consumed our attention… and I’ve gotten a big new wave of questions about this same pitch today, so I’m reposting this story with some minor updates. The ad itself has not been updated, and still carries an October 2020 date. What follows is mostly unchanged form when it was first posted on 11/3/20.
It hardly makes sense to publish an article today (or tomorrow, for that matter), since everyone will be obsessing over the election… but, well, what else am I gonna do with my time while I wait, with the rest of the world, for the polls to close? Might as well chew on something… and since probably not many of our readers are paying attention today, I’ll dig into what looks like a small cap idea.
The ad I can’t resist today is the “Holy Serum” one from the Casey Research folks, a pitch for Nick Giambruno’s Crisis Investing newsletter (pitched as having a “retail price” of $4,000 but “on sale” for $1,795, nonrefundable… the same price it was pitched at last year)… here’s the headline:
“Worth 1,489x more than gold…
“How this radical discovery could launch one $5 stock on a 4,100% run… as soon as soon as 9:31AM tomorrow
‘Gold rush.’ — USA Today
‘Wildly lucrative.’— The Guardian“
We are so very primed to believe that there are hidden riches, right? Nobody reading those words should logically think that there’s a huge opportunity “as soon as 9:31AM tomorrow”… if there were, and it were described as a “gold rush” by USA Today and as a “wildly lucrative” by The Guardian, newspapers with millions of readers, then how on earth is it so secret that it will explode higher, and that you must subscribe to a newsletter to learn about it?
Logic doesn’t come into play in these situations, though — there’s a blueprint for marketing, and it works: Describe a mysterious substance, throw in the names of some other sources that readers might trust to reinforce that it’s real, imply that it’s going to change the world and the fools just don’t understand, and then tell readers you’ve dedicated your life to finding out these secrets for noble investors, and will be delighted to share those secrets for a (nonrefundable) $1,795 fee.
I’m not sure why it works, but it does. We’re all suckers for a scheme, even if, when we slow down to take a breath, we know better. And, of course, it’s that “9:31AM tomorrow” bit that prevents us from slowing down and taking a breath — copywriters know that if you have an excuse to think it over, talk to your spouse, or read up on the topic or check out the fine print, you’ll probably lose that surge of profit lust they built up… and if that happens, you’ll be a lot less likely to pull out your credit card.
That’s not to pick on Nick Giambruno or Casey particularly, they’re not necessarily any different from the rest — there’s a marketing playbook, developed over the years by Agora and other leaders in the financial marketing space, and they just run the same game as everyone else (you can see what other folks have told us about Crisis Investing here, for whatever that’s worth). No harm done, as long as you realize it’s a hard sell and that you can leave the dealership… you don’t have to make a decision right this second because the deal is going away (it’s not, almost every newsletter ever promoted will be back for more money in a month or two), and you don’t have to get the undercoating.
So what are the clues about this “Holy Serum” that Giambruno is pitching? This is from the order form:
“Nick uncovered what could be one of the biggest millionaire-making discoveries — a biotech breakthrough he calls the “holy serum”.
“One $5 company is at the forefront of this historic breakthrough. No other biotech venture has been able to advance the “holy serum” into FDA trials before.
“They are breezing through the FDA approval process with a “holy serum” treatment that could be worth $8.1 billion.
“The anticipated FDA announcement may come as early as 9:31 AM tomorrow… and it could send this stock on a 4,100% run.
“But this $5 company isn’t a one-trick pony. They are angling for another $6 billion market with one more “holy serum” treatment in the pipeline.”
OK, so it’s some kind of biotech. Which one might it be? We’ll have to dig into the actual presentation for a few more clues.
Does this have something to do with gold? No, that’s just a spiel that is commonly used by biotech pitches to imply that somehow, it’s important that that the active ingredient or the drug they’re talking about costs more than gold. Lots of things cost more than gold, that’s just a marketing notion.
So what’s the “tiny $5 company” that “patented the serum?” These are the other clues from the spiel…
“Thanks to this radical discovery… which can be traced to one of the world’s holiest sites…
“One tiny $5 stock has the potential to multiply a small bet into a life-changing fortune.Are you getting our free Daily Update
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“And, thanks to a US government ruling, this microcap stock could launch on a 4,100% run…”
OK, so there’s some connection to some “holy” site. Throwing a little religion on the fire sometimes helps, we see that every now and then. What else?
Apparently this “serum” is something that other folks are working on as well…
“After this miraculous serum was discovered in Israel — just steps away from one of the world’s holiest sites — the news of the breakthrough spread all over the globe…
“It sent the world’s leading research labs — MIT, Harvard, and Oxford — into an unprecedented race…
“In fact, Harvard Medical School alone has 30 scientists and doctors working on this new breakthrough right now.”
And apparently there have already been some clinical trials, with news expected soon…
“Already this year, they breezed through the first and second steps in the drug approval process.
“And they expect to announce FDA trial results for the next step any day now.”
Maybe that means they’ve completed Phase 1 and 2 trials, maybe they mean something else when they say “steps”… we’ll figure it out soon, I imagine.
And it’s a large potential market, apparently…
“Once this new treatment gets the FDA’s green light, it could be worth $8 billion in new sales. Virtually overnight.”
So what is this “serum?” Here are the clues we get:
“… this breakthrough could open the door to a whole new generation of treatments.
“Some of the most powerful pain-relievers and anti-inflammation therapies known to man.”
And where is it that this serum comes from?
“A scientist at the Hebrew University discovered something stunning.
“A discovery that turned this obscure chemistry PhD into a rockstar overnight… and earned him Nobel Prize consideration.
“This Israeli scientist found what I call the “holy serum”…
“An entirely new compound with enormous medical benefits.
“This scientist also found the human body has evolved an entire system specifically keyed to this compound.
“A powerful system that acts as a control center for our health.
“It helps regulate dozens of the most critical functions of our body — things like pain, immune response, inflammation…”
OK, so that’s almost certainly a reference to the endocannabinoid system, which was reportedly discovered by scientists at Hebrew University of Jerusalem (I say “reportedly” just because I don’t really know the scientific history here, but here’s the University’s claim).
So presumably this “holy serum” is cannabidiol or one of the other cannabinoids that have been found to act on the endocannabinoid system in humans, with some encouraging results in, yes, diseases like glaucoma and epilepsy and in pain management.
So… which company is being teased, and what’s the story? More from the ad:
“… instead of paying $2.3 million for a single bottle cap of this “holy serum”….
“The company came up with an ingenious alternative.
“A proprietary technology that produces these expensive compounds at scale… and at a fraction of the cost….
“… they now have global exclusivity to make the ‘holy serum’ in a lab.”
OK, so there are a lot of different technologies for extracting cannabidinoids from the cannabis plant, or even creating cannabinoids in the lab, but apparently this company has exclusivity on one particular technology or technique. What else?
“The company can now make these compounds in a lab… and turn them into new blockbuster drugs that were previously too expensive to make.
“This is a major milestone.
“That’s why mega billion-dollar drug giants like Novartis, Johnson & Johnson and Bayer are also clamoring for the ‘holy serum’.
“But instead of selling themselves out to big pharma firms, this tiny $5 company did something smarter…
“They decided to go for the jugular and do it all themselves.
“They’re using the ‘holy serum’ to develop a new blockbuster drug.”
OK… what’s the drug that’s now in clinical trials? Clues here:
“It’s for a rare genetic skin disease affecting children.
“Doctors describe it as ‘the worst disease you’ve never heard of.’
“For most children with this condition, life is like controlled torture. Two out of five never get to celebrate their 10th birthday.”
And Giambruno says not just that this drug is doing well and could help these kids, but that he also thinks it’s an “excellent candidate” to receive “orphan drug status” from the FDA… which can certainly be lucrative, in that it gives the drug seven years of exclusivity as a reward for that drugmaker developing a drug for a market that might otherwise not be large enough for an expensive R&D project.
So he extrapolates from that in the ad to get those headline numbers…
“The average orphan drug is worth $8.1 billion, according to a Forbes report.
“If this company’s breakthrough drug turns out to make just 1/10th of that – and I think that’s a conservative estimate…
“The stock could explode 4,100%.”
What else? We’re also told that “the company has made it clear they’re going to announce FDA trial results any day now” … so that’s where the “9:31am tomorrow” urgency comes from (though the ad is dated October 2020, so “tomorrow” is, of course, just a “hurry up and get out your credit card!” alert.
And they have a second drug in development, apparently…
“This $5 company is also developing a treatment for one of the leading causes of blindness.
“I’m talking about glaucoma.”
And we get a couple hints about insiders or early backers who might be involved…
“The ‘Warren Buffett of Asia’ is all in.
“I’m talking about Li Ka-Shing — the Chinese tech billionaire…
“Tech billionaire Peter Thiel, who turned a tiny stake in Facebook into a billion dollars, is also pouring money into it.
“He’s already made 10x on the biotech breakthrough I’m talking about today, according to a Bloomberg report.”
And, of course, we close with the hard sell:
“I’m putting my reputation on the line when I say this…
“But I’m convinced this tiny biotech stock could be one of the biggest winners in the history of our firm…”
I often get questions about these kinds of statements from readers — “he wouldn’t risk his reputation if it weren’t a sure thing, would he?”
Try to look past that. This is about selling… “reputation” isn’t as important as you might think it is, not when you’ve got a few million email addresses to pitch in your back pocket and a faltering newsletter editor can be replaced overnight by a fresh new face that can be sold, and it’s often the case that these kinds of “promises” come from the publisher’s copywriters, not from the newsletter editor himself (I don’t know how it works with Casey and Giambruno, to be clear). If they’re taking your money for a product you don’t get to see until the check clears, and they won’t give you your money back if it’s not at all what you expected, then the risk you should be thinking about is that it’s your money on the line, not their reputation. And, of course, anyone who’s been in this business for more than a week has already made lots of predictions that didn’t pan out, but will be no less excited about selling their next idea — if you stop selling ideas, your newsletter dies.
If you’re curious, by the way, Giambruno’s last couple pitches that we looked at were a rare earths tease a year ago (he predicted 1,127% gains in six months from Lynas, which didn’t happen… right now that one’s up about 35%, though that is better than the market’s performance… and he said at the time that he was “putting my reputation at stake here to send you this presentation” back then, too), and a group of marijuana stocks in 2017 and 2018 (including one very strong pick, Innovative Industrial Properties, and a couple terrible ones in Kush Bottles, since renamed KushCo, and Cannabis Wheaton, since renamed Auxly). Before that his best tease that I remember was pitching Ferrari (RACE) as one of his “Europe is imploding” plays in 2016, the worst was Fission Uranium in 2017. Sometimes he picks good ones, sometimes not, just like most folks… you can see a few of his other ideas tallied up on our tracking spreadsheets if you feel like searching a bit.
But anyway, back to our point… what’s the stock he’s hinting at? This is very likely, sez the Thinkolator, to be little InMed Pharmaceuticals (IN.TO in Canada, was IMLFF on the OTCQX in the US when we originally published, and a week or so later they did indeed uplist to the Nasdaq at new ticker INM).
And it’s a true penny stock, with a market cap down around $25 million, so BE CAREFUL. A little attention from a newsletter, whether it’s Casey’s Crisis Investing puffing it up, or even yours truly here, saying somewhat more skeptical things, can often be more than enough to drive a little stock like this bonkers. InMed shares typically see less than $100,000 worth of trading in any given day, and having even little Stock Gumshoe mention such a microcap, let alone the Casey/Stansberry machine rolling over it, can make things very unpredictable.
And this is a busy time for InMed — it’s possible that they’ll have some Phase 1 results fairly soon, though they’re not likely to be shocking, but, more importantly in the near term, they have filed to do a US offering and “uplist” to the Nasdaq. That offering is a generous one, with a five-year warrant attached to each share according to the latest prospectus I saw in the SEC’s system, so it seems to be a bit of a buyer’s market on this one — probably just because it’s a tiny biotech going through Phase 1 trials, so they’ve got to sweeten the pot to raise that kind of money. That $10 million offering would be enough to get the company through another year at the current burn rate, and I’d guess that the costs probably won’t accelerate terribly fast given the tiny cohort of patients they’re likely to be treating in their Phase I/II efficacy trials next year (assuming those trials proceed). They first filed their S-1 to begin the process of getting a US listing way back in June, but it has been amended a couple times in the last month so perhaps they’re getting closer to the finish line — I don’t know what the timeline might be for that. They’re planning to list with the ticker INM, assuming the SEC and Nasdaq approve.
1/7/21 Update: Yes, they did finish the uplisting in mid-November, and closed on that US$8 million offering (roughly C$10 million), and now trade at ticker INM in the US, the market cap is still around $25 million.
But I’m getting ahead of myself — what do we know about the company?
You can see InMed’s latest investor presentation here if you’d like to get an idea of how they’re selling themselves, they say that they are specifically focused right now on researching the therapeutic potential of cannabinol, which must be that “holy serum” Giambruno touts, and is one of the 100+ cannabinoids present in the cannabis plant (THC and cannabidiol (CBD) are the most well known, but there are lots of others), and that they have been accumulating patents on their IntegraSyn manufacturing process that provides “cost-efficient cannabinoid production” for this and other rare cannabinoids.
The lead drug for that “worst disease you’ve never heard of” is called INM-755, it’s topical cannabinol for the treatment of Epidermyolysis Bullosa, which apparently causes “fragile skin” and massive amounts of painful blistering for the unfortunate ~10-20,000 people with this condition.
And yes, it’s quite possible that there will be results very soon from their clinical trials, but we should keep some perspective on that — what’s active right now are two Phase 1 trials for INM-755, and they are solely designed to evaluate the safety and tolerability in healthy volunteers — as far as I can tell, nobody who actually has the disease has been treated with this drug yet. That comes next year, assuming that the Phase 1 trials don’t raise any red flags, when they have their first clinical trials to test the efficacy of the drug (first you find out if it’s safe and delivers the medicine in the expected way in Phase 1, typically, then in Phase 2 you start to get some actual evidence about whether the drug is effective in treating the disease or, in this case, alleviating symptoms). I have no idea what the results will be, but my guess would be that they’ll move on to Phase 2 — it’s hard, though certainly not impossible, to imagine the safety profile for a topical application being ugly enough to stop them from trying the drug on a genuinely horrible disease.
1/7/21 update: Indeed, the first Phase 1 trial results came out on November 25 and did not raise any big red flags, or have any real impact on the share price.
Though I should note, at the same time, that other cannabidiols and cannabis-derived treatments are also being tested for Epidermyolysis Bullosa, along with a few non-cannabis drugs that are in clinical trials for this condition… I don’t know whether this makes it any more likely or unlikely that “orphan drug status” will be granted for this particular compound. There have been 20 or so drugs given “orphan” status for Epidermyolysis Bullosa, according to the FDA database, including for cannabidiol designated as an orphan for Tetra Bio-Pharma back in April, though that particular project doesn’t appear to be in Tetra’s pipeline at the moment. I haven’t seen any indication that InMed has applied for “orphan” designation for INM-755 as of yet, though they have talked up that possibility in past filings, but nor have I researched that with much effort. For whatever it’s worth (and it’s not necessarily a lot), when Tetra Bio-Pharma (TBP.TO, TBPMF) earned that designation for their cannabis drugs in April, it didn’t have much impact on the shares (they’ve now gotten five orphan designations over the years, so that seems a key part of their early drug development strategy, but the stock is still near a three-year low).
The glaucoma drug is INM-088, which is preclinical — they say they’re still researching delivery methods to get that drug into the eye, so I guess it will be a while before there’s any news, they’re talking about 2022 as their target for initiating clinical trials in glaucoma.
And to wrap things up, no, I did not find that Peter Thiel or Li Ka-Shing have specifically invested in this name… but with careful wording, it might be that this isn’t exactly what Giambruno is saying, and both of those investors have invested in other synthetic cannabis and cannabidiol companies (none of which match our clues today nearly as well as InMed, to be clear).
So there you have it, a microcap that you can take your time researching on this lovely election day (or to update that, as we wake from a day of insanity and prepare for inauguration day in a couple weeks). I’ll be voting “not just yet” with my money, but, of course, that’s easy for me because I typically avoid clinical stage biotechs — maybe you’ll see something great here, or something gnarly, either way, we’d like to hear your thoughts… just use the friendly little comment box below. I’ve kept the original comments from the few folks who read this article the first time around attached below, in case that helps to provide any perspective.