“The Greatest Medical Breakthrough in 72 Years…
“One Drug to End All Pain — Naturally
“A new revolutionary drug called ‘Delta-9’ will send a small group of companies skyrocketing for life-altering gains… starting December 31, 2014.
“The last time something like this happened 72 years ago… investors had the opportunity to turn every $1,000 into $1,640,000.”
That’s the intro from Jimmy Mengel’s ad, he’s trying to get you to sign up for a subscription to The Crow’s Nest, his stock-picking newsletter put out by Angel Publishing.
And it’s all about something he calls “Delta-9” …
“This new ‘Delta-9’ drug could make all of that a reality.
“20,000 independent studies have confirmed its efficacy.
“105 of these were peer-reviewed clinical studies.
“And they found…
“It is more effective than any single painkiller or narcotic out there.
“It relieves pain for longer periods of time — without dangerous side effects.
“It significantly reduces the need for ANY painkillers — to the point of zero.”
Sound exciting? Sure! That’s why we decided to figure out what he’s talking about. Here’s the immediate promise of riches for you:
“On December 31, 2014, scientists are releasing the results of phase III clinical trials for ‘Delta-9.’
“Results that could send the handful of companies pioneering its development through the roof.
“Using history as a guide, you could see nothing short of 164,000% gains….
“Today, I’ll reveal the three companies at the cutting edge of what could be the most groundbreaking discovery in modern medicine.
“These are companies you can buy into right now for astronomical gains… including one that’s set to release a ‘Delta-9’ drug into pharmacies across the country by December 31.”
Mengel goes on to compare the potential of this “Delta-9” drug to penicillin, which he says made Pfizer and Merck such huge winners after they went public in the World War II era — generating possible gains like turning, he says, $100 into $2.4 million in the case of Pfizer (I haven’t checked those numbers).
And he talks about some lofty potential for the drug:
“And it could not only end all pain…
“But also reverse the symptoms of common diseases.
- Multiple sclerosis
- Back pain
- Type 2 diabetes
- Post-traumatic stress disorder (PTSD)
These are big markets. And the list goes on and on.”
And that it will help get rid of the problem of opioid addiction (which in turn has become a heroin problem as well, at least in our part of the country)…
“‘Delta-9’ is not just a potential replacement for prescription painkillers…
“It’s a potential addiction treatment, too!
“Mind you, this is a natural painkiller with virtually zero dangerous side effects or addictive properties.
“Once this goes on the market, it could rapidly wipe out the entire $9.4 billion painkiller industry.
“I’m talking about the end of Oxycontin, Oxycodone, Demerol, and other dangerous drugs.
“It could disrupt and shake Big Pharma at its foundation.”
So what is it?
Cannabis. Mary jane. Grass. Ganja. He’s talking about marijuana… and, presumably, about marijuana stocks — many of which have captured the public imagination over the past year or so in the wake of the continuing progress of marijuana decriminalization and legalization for both medical and recreational purposes. Delta-9-tetrahydrocannabinol is, if you want more detail, the psychoactive compound in the marijuana plant (usually called Delta-9-THC, or just THC).
Will it change the world, like penicillin did? Will the current crop of marijuana stocks be looked back on as the “next Pfizer” or the “next Merck” in 75 years? I don’t know about that — but some of them are making money, and some of them are “real” companies (many of them are not going to survive, since these kinds of stock manias bring out all the promoters and scammers who turn their old gold mining or 3D printing shell company into a marijuana shell company and promote it to naive speculators). We’ve looked at some of these before, as you might remember — including two that Frank Curzio teased when he was with Stansberry — one (FULL) for Phase 1 Investor and another (GWPH) for his Small Stock Specialist.
I’ve stayed away from the sector personally, just because I couldn’t get a handle on reasonable valuations and didn’t want to have to sort through the scams without any big picture idea about what might work in the end (my general thesis about marijuana is that the first big company, if there is one, will be the first one who develops a differentiated brand for consumers — but I’m not in the market myself so I probably won’t see it coming).
Still, that won’t stop us from trying to name the stocks for you — that way, you can decide for yourself whether or not you’re interested in subscribing to Mengel’s The Crow’s Nest, without some artificial pressure of stocklust to drive you to subscribe. So what are the specifics?
Well, he throws around a few charts about stocks that have had tremendous short term runs, and hints around about which stocks they are — but those charts are all from last Winter, when marijuana crested as a stock wave and almost all the stocks with “cannabis” or “marijuana” in their name went up by at least several hundred percent (and yes, the ad came in today — this isn’t just a retread).
But those aren’t necessarily the “three stocks” he likes… so let’s check out the details one at a time:
“‘Delta-9’ Stock #1 — Potential Profit: 1,000%
“This Arizona-based company is developing a range of ‘Delta-9’ drugs.
“For example, it has used ‘Delta-9’ to develop a spray that helps treat multiple sclerosis symptoms, cancer pain, and neuropathic pain.
“And it has a bunch of new medicines in the pipeline that will help treat epilepsy, schizophrenia, and diabetes.
“Its medicine for epilepsy could be a huge seller if approved. Epilepsy affects over 50 million people globally, and current drug therapies are ineffective at treating 30% of epilepsy patients.
“But ‘Delta-9’ has shown great promise in that area. And this company is pretty close to figuring out how to make that happen.
“To give you an idea of this play’s potential going forward, it’s already soared a whopping 759% in less than 12 months.”
This one is an old standby, GW Pharma (GWPH), the same one touted by Frank Curzio earlier this year — and mentioned in this space quite a few times as a “real” play on marijuana even before the legalization trend got going. Which is not necessarily a great thing for GWPH — if people can legally smoke marijuana under doctor’s orders, or recreationally, will they instead opt for a spray that gets them that same active drug from the pharmacy? GWPH has had Sativex, their pain drug that’s in the form of a mouth spray, approved for a while now in many countries, but has not really been able to generate any revenue growth — they do have sales, and they have generally gone up gradually in recent years, but they’re not particularly impressive for a $1 billion company.
So investors must be expecting something new or better from GWPH. And maybe that will come. They are expecting Phase 3 results for Sativex in cancer pain (a partnered program) “around the end of the year” — so that may be the December 31 bit from the tease (Sativex is approved in a bunch of other countries to help control spasticity from multiple sclerosis, but not approved for anything in the U.S. yet). They also have several other cannibinoid drugs in phase 1 or 2 trials for diabetes, epilepsy, and other diseases.
I won’t try to parse what their drugs might and might not do, that’s not an area where I have any expertise, but you can check out their presentation at a healthcare conference from last month for an overview of where they think they’re going. I suspect that the pain indication might be the biggie for them if you’re looking for 1,000% gains, at least in the near term (that would make GWPH at least a $10 billion company, by the way), but the epilepsy possibilities seem like they could be substantial, too — particularly as they’re targeting pediatric indications for some of it, and probably not so many folks want to be teaching their small children how to properly inhale from a bong.
Partly kidding on that, of course — part of the argument for GW Pharma is that they’re developing strains of marijuana plants that have more of particular compounds in them that they want to extract, so there’s also a targeting and quality aspect that make their drugs substantially different, one hopes, from just smoking or eating marijuana. But with that, I’ll leave you to your research — GWPH is stock #1. What are the others?
“‘Delta-9’ Stock #2 — Potential Profit: 200%
“This next company out of Chicago has developed a ‘Delta-9’ based drug that’s used for the treatment of nausea in patients undergoing chemotherapy and that’s also prescribed to AIDS patients suffering from loss of appetite.
“The best part is this drug has already received FDA approval.
“Since going public in late 2010, this stock has… more than doubled… and returned twice as much the S&P 500 index.
“I expect this company to continue to beat the market for years to come. So if you’re looking for a company that can deliver reliable returns every year, this is it.”
There are two companies that have been selling drugs using THC or a synthetic cannibinoid for nausea in cancer and aids patients, the drugs are called nabilone (branded Cesamet), which is a small part of the business of the Swedish pharmaceutical company Meda, and dronabinol (branded Marinol), which was developed by Solvay but acquired by Abbott Labs back in 2010 — so presumably here he’s touting either Abbott (ABT) or, more likely, the Abbott spinoff that now sells Marinol, AbbVie (ABBV).
Investing in Abbott back in 2010, when they bought Marinol, would have helped you to beat the S&P, to be sure, but it ain’t because of Marinol. Marinol has been sold for 30 years, patients have largely been indifferent from what I can tell, and it is not and has never been a blockbuster. Marinol has been available in generic form, but I’d be surprised if all forms of dronabinol combined generated even $300 million in sales (nabilone ought to be generically available, too, but either there’s no interest or I didn’t notice another manufacturer). I have nothing particularly bad to say about ABBV, other than that (like many big pharma stocks) it’s somewhat expensive, but make your choices about ABBV based on their actual business — it’s not a marijuana stock, despite the fact that it does sell one synthetic cannibinoid.
“‘Delta-9’ Stock #3 — Potential Profit: 2,900%
“It’s the smallest stock in our group… but it’s also the most undervalued, and so it’s the one that offers the greatest potential.
“The Vancouver-based company has developed over 60 different varieties of ‘Delta-9.’
“And it has over 60 years of experience in the pharmaceutical industry, so it’s not some fly-by-night operation.
“That’s why Canada has recently licensed the company as one of the first distributers and manufacturers of ‘Delta-9.'”
OK, that’s a good start — apparently Mary Jane is catching on North of the border, too…
“Right now, the Canadian market for the drug is growing rapidly, too.
“On April 1, the government altered regulations to rapidly boost the number of ‘Delta-9’ patients.
“In fact, these new laws alone could launch sales to as high as $1.3 billion annually.
“As CBC News reports, ‘the profit potential is enormous.’
“Industry experts project the ‘Delta-9’ market will grow from 40,000 individuals to 1 million in just a few years.
“That’s a whopping 2,400% gain!
“And this firm is a ‘pure play’ on this tremendous market growth.”
OK, so perhaps this is one of those little high-fliers that everyone loved back in February? How about some more clues:
“It’s one of the few companies positioned right now to grab the lion’s share of this new demand….
“The company is now doubling its revenue each month in 2014.
“By 2015, its revenues could grow sixfold.
“And in just two short years, its revenues could explode 2,900%….
“Just to give you an idea of its potential, this stock has more than doubled investors’ money in just ONE month.”
Thankfully, Mengel throws in a little chart for us, too, showing how the stock went from about 45 cents in early September to more than 90 cents — and actually almost the entire move came in just one day, and the stock stayed up around 90 cents for about two weeks… but it has since fallen back down and is now trading in the 50-cent range. This is the ridiculously named T-bird Pharma (TPI on the Venture exchange in Canada, haven’t seen a pink sheets symbol on this one). T-bird Pharma is the publicly traded owner of Thunderbird Biomedical, which was licensed as a marijuana producer by Health Canada earlier this year, and they say they’re the only one of the licensed companies to be publicly traded (though that may have changed by now). They’re public thanks to a reverse merger, so the stock didn’t really go up by 100% because of anything they did — that was akin to an “ipo pop” as they effectively went public by taking over the old listing of a company called Firebird Energy.
This is a tiny, tiny little firm — market cap around $20 million — and they haven’t really done much yet. They have spent a couple million dollars going public through their reverse merger, and a tiny fraction of that buying some equipment or facilities, and I don’t see any indication that they’ve ever had any revenue (they’ve only existed since early 2013). T-bird says they are expanding, after proving up their ability to produce some of the 60 varietals they have identified, and that they will have much more production capacity ready to be inspected by Health Canada early in 2014, but I didn’t see anything in their press releases or filings that mentioned revenue or income. No idea when such things might materialize — and without having any idea what their assets might be worth, what their sales could be, or what they’re specifically going to do other than hire PR firms and give their insiders share awards, well, it’s hard to be interested as an investor. Maybe you’re excited enough about Canadian medical marijuana and the boom potential to jump aboard a blank slate like this, but it doesn’t ring my bell.
There’s a summary of medical marijuana from cancer.gov here if you’re curious about the details and recent history of medical use. And, well, that’s about all I can tell you.
I see the potential for pot sales growing because of the obvious increase in legal demand — but I fail to see how that has anything to do with drug companies who sell products that are derived from marijuana, which has always been legal and, in some cases, on the market for decades, but has yet to be particularly successful. And frankly, when it comes to the startups and IPOs and reverse takeovers in the cultivation space, I’d expect most of them to be at risk of complete failure — it’s a gold rush mentality and an uncertain market, so make sure you understand these stocks fully if you want to invest in them with real money, and note that if you’re just riding the waves of attention that the huge speculative moves in the penny stocks (like T-bird) can go both ways and are, to my mind, largely unpredictable.
If you think I’m a fool who’s missing out, or have other and better ideas than Mengel’s in the cannabis “Delta-9” space, well, use our friendly little comment box below to let us know — we’d love to hear your thoughts.
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