Wednesday, September 5Tuesday, May 28, a group of scientists will take the stage at a prestigious medical conference…
“And announce to the world the potential end of disease as we know it.”
That’s the attention-getting part of Ray Blanco’s latest teaser ad for his FDA Trader newsletter that Gumshoe readers have been asking about… and if you’re wondering what the deal is with that crossed-out date, I threw that in there because this is essentially identical to the ad he ran last September.
Indeed, it’s a very familiar style for biotech newsletters and is also similar to past ads we’ve seen from him and other biotech-focused folks, so it’s probably from the same ad copywriter as the Blanco daydream about a CEO’s speech heralding the end of Alzheimer’s Disease back in 2015, or the (different) CEO speech stunning the world about Alzheimer’s again back in January.
The imagery of a CEO or scientist stepping to the podium and announcing that “the end of disease is at hand” (or something similar) is powerful stuff, and it clearly resonates with people because they keep using the same imagery over and over again. That’s partly because helping you to visualize this event makes it more real, and gets you invested in the idea that something earth-shaking is going to happen (you’ve seen it in your mind, after all), which all helps to prime the pump and get you to pull out your credit card.
The fact that this essentially never happens, that diseases and health breakthroughs take many steps and many decades to come to fruition, with most successes measured in small improvements for patients, is no real dissuasion… because most of us don’t really think much about the building blocks that create “science,” we just imagine the breakthrough moment.
And, as I mention from time to time, time is critical for newsletter ads — they MUST have a deadline, and it must be pretty soon, because any extra time that you allow a reader to step back and do some rational thinking or research things on their own is another impediment to them pulling out that credit card — they don’t want you thinking too much, or dithering, or focusing on the fact that you’re buying a pig in a poke for $1,995 with no possibility of getting a refund.
Copywriters are paid to create urgency in your mind, and they’re very good at doing it… sales campaigns are often built backward from a feasible “catalyst” event or a compelling “story” that resonates with readers as much as they’re built forward from a compelling long-term idea (and yes, that’s why they keep getting repeated, sometimes with small tweaks to fit the changing stock story — whatever works gets re-used, often by multiple publishers).
So before I start I’ll be clear: There may be some event happening this evening, as there was last September, but it’s not going to be an announcement that “disease is over” … and Ray Blanco does not have any advance information about which direction that event will send the stock, he just has an educated guess and he’s not risking anything in making that prediction (this is, as I noted above, one of those big dollar “no refunds” deals — $1,995, which will renew annually, though the last version of this ad made the same sales pitch for $1,495. The only “guarantee” is that if you don’t get a 5,000% gain this year, and you almost certainly won’t, they’ll… turn your $1,995 payment into a “lifetime” sub, if you call and ask for that… which obviously doesn’t cost them anything, since you were probably disgruntled and going to cancel or complain to your credit card company anyway).
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“They’ve already confirmed their plans to reveal their discovery to the public on
September 5May 28.
“It has to do with a medical breakthrough capable of wiping diseases—even incurable ones right off the map…
“The suffering and fear of diseases may soon be a thing of the past…
“In fact, long term, studies from both MIT and Harvard reveal that the medical breakthrough could cure up to 15,000 diseases.
“Cancer… Alzheimer’s… Diabetes… heart issues…
“All a thing of the past.”
We all want this to be true, right? Heck, there are even a certain percentage of the folks reading this page right now who believe that all the cures have been found, but the Illuminati has been slow to release them to the people because they keep the best stuff for themselves.
“… it’s impossible to accurately predict just how high and fast share prices can soar after the announcement is made…
“What I can say — with 100% certainty — however, is this…
“At A BARE MINIMUM, You Could Possibly Book Returns Of 100 Times Your Money”
I know that not all of you are as geeky about words as I am… but stop to read those sentences again. What’s he actually promising? That he’s 100% sure that you might make lots of money. You can see why those words get in there — “100% certain” and “A Bare Minimum” stand out, but it’s the “could possibly” that actually matters to the lawyers. That’s the legal and marketing challenge: Inspire people to believe that this idea is an inevitable wealth generator, without actually promising anything. And man, they’re good at it.
The ad also includes a bunch of charts, as usual, showing past “breakthrough” companies that made 10,000%+ gains, in most cases over a decade or so (Gilead, Illumina, Medivation, etc.), and those are real… but, of course, it’s very, very easy to find past performers… it’s finding future performers that’s difficult.
So what is this technology and company that Blanco is talking up? Here’s some more from the ad:
“Titans Of Industry And The World’s Brightest Minds Alike Are All Quietly Referring To This Type of Treatment As The Breakthrough That Changes Modern Medicine Forever….
“Bill Gates, the legendary founder of Microsoft, who alongside several other investors poured $120 million of his own family’s money into this breakthrough…..
“Jeff Bezos, the tech titan behind Amazon and the world’s richest man, who led a $100 million round of funding into this type of treatment….
“Google’s exclusive Google Ventures team, who took part in a $120 million investment into this technology.”
Those are all references to the broader technology and “type of treatment,” of course, not to a specific company… and, of course, they’re all investments of trivial size to those investors, but, yes we will stipulate that this is a major area of research and investment. So what is it?
“As this announcement is made…
“And, as their research progresses…
“We could see a cure for deadly diseases like cancer and Alzheimer’s…..
“With this breakthrough, there might no longer be a need for dangerous Chemotherapy…
“Rather, doctors could simply cut your DNA to modify your immune cells…
“Which will wipe out deadly tumors.”
OK, this is a gene therapy/genetic modification company — likely, one of the “DNA editing” firms that we’ve heard promoted as world changers for years. But which one?
“Right now, as you’re reading these words, some of the world’s biggest financial institutions are all pouring money into this tiny company at an unprecedented rate.
* State Street Corporation
* Adage Capital Partners
“And, at the same time, the world’s largest pharmaceutical companies are all partnering up with this tiny biotech company…
OK, so that helps to narrow it down slightly… though, of course, throwing names like Blackroch or Vanguard into the “institutions are pouring money into this” list is completely meaningless, those are passive index managers for the most part, and they own a piece of essentially every single publicly traded company… if they’re putting more money in, it’s just because either they’ve been given more money, or the company is growing larger or has been added to some new index.
How about some more clues?
This isn’t a brand-new breakthrough or company…
“These brilliant minds know that what this tiny biotechnology company has, after 23 years of research, is no mistake….”
Any other clues? Not a lot, but we do get this:
“I looked at their miraculous clinical trials…”
Which is a big deal, because the newfangled gene editing companies, the various competitors for the CRISPR throne, have not yet finished any clinical trials… let alone “miraculous” ones. CRISPR has barely been tried in humans yet at all, with initial trials by public companies just barely begun as of last summer (there have been some earlier trials begun in China, but you can’t invest in those researchers).
And we get this:
“… last year this company had just $36,567 in revenue.
“But when they make this announcement this
Wednesday at 7:30 A.M.Tuesday at 5:00 P.M. Eastern Time…
“It could result in a surge in the company’s value by billions of dollars.”
The revenue line rarely means much of anything for R&D companies — most of them don’t have any, after all, or they have a trivial amount like this — but it’ll be useful for checking and confirming the Thinkolator’s results.
Any other clues? They provide a little detail on this Wednesday morning announcement:
“It’s all taking place at a prestigious, world-renowned medical conference.
“A group of scientists will get on stage at
7:30 A.M.5:00 P.M. Eastern Time…
“And make an announcement that will stun the world.
“Make no mistake, the company CONFIRMED this will happen.
“This isn’t some hypothetical ‘what-if’ message…”
We need to be careful about how we process that circular logic… if the company already confirmed and told everyone what they’re going to announce, then that information is already known by investors and some reaction to that information is already in the share price.
What moves stock prices abruptly in short time periods is not typically just “small timers flowing in after the big guys and the in-the-know FDA Trader subscribers already invested,” it’s surprise. The earnings beat, the clinical trial that worked far better than anticipated, the drug that was rejected when everyone was expecting approval — that’s what moves stocks quickly. Over the long term, it’s market size and revenue growth and earnings growth and all that stuff that drives a company… but over the short term and when you’re dealing with a specific catalyst event, what most drives a stock is surprising new information.
Any other clues?
“I Personally Met With The Visionary And Founder Behind This Medical Breakthrough
“His name is ‘Dr. Edward’….
“He’ll go down as one of the greatest innovators in history…
“Maybe even as the man who eliminated disease from this planet.
“How can I be so sure?
“Because when we met years ago, what he revealed to me in our one-on-one conversation left me convinced…
“That this is the man who will change the world.”
I’ve heard essentially that same statement made about dozens of different biotech luminaries over the years, often from Ray Blanco and his colleagues in the biotech newsletter world, so I’ll hold my enthusiasm a little bit… but it does reinforce, again, that this is not a brand new company or technology.
So what else do we get? That’s pretty much it, other than the “if you wait until after everyone else has heard this news, you’ll be sorry” language… and some more daydreaming of the “what will your family think of you after you build this gigantic fortune starting tomorrow” variety.
Along with, and this is my favorite, a Special Report called “How to Spend Your First Million Dollars.”
No, really. Stop laughing, dammit, I’m being serious! They actually include this report, trying to buttress their claims that you’re about to see wealth rain down upon you. That’s not quite as absurd as the ads that include photos of the yachts and Ferraris you’ll own as a result of this newsletter’s sage advice, but it’s pretty damn close,… all designed to tweak your brain, get you daydreaming about wealthy, and make you start believing that yes, this is real and yes, you’re going to get rich because of it.
But that’s about it … so what’s the Thinkolator able to come up with? Well, we had to change the oil, and empty some old spittle out of it from a few previous ads, but once we fired her up she worked just fine and the answer came out pretty quick: This is still, as it was in September, Sangamo Therapeutics (SGMO), the pre-CRISPR gene editing folks who have been pursuing the “zinc finger” technology.
The “breakthrough” event that Blanco was referring to back in September was that Sangamo was reporting an update from what they call the Champions Study, the Phase 1/2 clinical trial of SB-913 for MPS II (a very rare genetic disease) at a symposium in Greece (at 2:30 local time, so yes, that would be 7:30am here in the eastern US). They also hosted a conference call for investors after the presentation, at 9am on Wednesday, and made the rounds of a couple investor conferences.
And if you want some further confirmation, then yes, Sangamo did report exactly $36,567,000 in revenue in 2017 — almost entirely from collaboration agreements (if you’re curious, that’s very close to their five-year average). That’s no longer “last year,” the number for 2018 is $84.5 million, but I guess they were too lazy to update that part of the ad.
Sangamo has four clinical trials in Phase 1/2, and several others that are in the “research” or “preclinical” stage (meaning they haven’t been tried in a human being yet).
Back in September I didn’t know whether that next conference presentation from Sangamo would be a critical moment in gene therapy history, but it was certainly not likely that it would be earthshaking — if it were, they probably wouldn’t have squeezed it in as one of four parallel sessions in a relatively small medical conference, after lunch when half the attendees are probably napping.
And, in fact, the stock price surged into the announcement, fueled in part no doubt by Blanco’s incessant hype but also by the vast legions of biotech investors who are obsessed with betting on perceived binary events, and then crashed afterward mostly, it appeared to me, because the results were fine but not earthshaking or definitively positive.
But what about this time? Now we’re in May, the stock is 30% lower, and the company has reported some updates and some quarterly financials in the interim… so is there some big announcement coming at 5pm this evening? Is anything exciting happening with the stock?
Um… not really. They do present regularly at conferences and congresses, but the next presentation that they’re making which includes actual clinical trial results, it appears, is their presentation at the ISTH Congress in Australia on July 6 (that’s about the Alta study for SB-525 gene therapy in hemophilia A — partnered with Pfizer and with preliminary good results from the first few patients already announced last month). They’re also presenting at the Jefferies Healthcare Conference next week, on June 6, but companies don’t report new scientific results at investment conferences.
So Sangamo is still the stock, still the perfect match for those clues, but I can’t find any evidence that they will be making any kind of presentation or announcement today, or even this week. I don’t know if that’s just lazy updating of the copy, they could probably have pitched June 6 with a straight face, or if they don’t care or made a mistake.
It’s hard to really know what will happen with these early gene therapy companies, whether a pioneer like Sangamo or one of the more recent CRISPR entrants (Editas, Intellia, CRISPR Therapeutics, Caribou, etc.). Partly that’s because tinkering with genes means the FDA wants to proceed with caution, particularly with irreversible treatments, and partly that’s because the science itself is still awfully new and the earliest human clinical trials are mostly very, very small and often focused on extremely rare genetic disorders.
It’s a lot easier, at least in regulatory terms, to prove your science and move forward on a clinical trial for a drug that will only impact 500 people in the United States, which is the size of the MPS II patient population, than it is to advance a trial for something with thousands or hundreds of thousands of possible patients… but it’s also true that it’s hard to justify spending a billion dollars over a decade to develop a drug that will only help 500 patients, so if you want to daydream about massive wealth, you have to count not only on these initial clinical trials showing progress in rare disease… but also on the possibility that after proving the science in this way, they can move on to much bigger
And beyond that, we’re faced with the fact that “curing” genetic diseases is an entirely different economic thing than “treating” disease, and not something the current pharmaceutical sales and insurance world is set up to handle very well — these are often one-treatment drugs or therapies, and, as we’ve seen from the furor over Novartis’ new Zolgensma this week, there’s a lot of headline risk in charging $2.1 million for a single treatment even if you can argue that it’s more effective and economically efficient than the “standard of care” (curing a patient, of course, can negate the need for years of expensive treatments in the future — but that headline risk over pricing is no less real, particularly in the current regulatory climate).
That’s partly why I have trouble investing in clinical stage biotechs — the stories are often fascinating, and I hope that they all come to fruition and save lives and make people rich, but I can’t get my head around where the money is going to come from and what the economics of the business might look like at some hypothetical future date when the company evolves from being an R&D shop to become a revenue-generating company… and I certainly have no particular talent in deciphering which Phase 1 clinical trial is going to fail and which is going to succeed (or get bought out when some big pharma companies begins to believe they will succeed).
Here’s what I said in September:
“If this is going to change the world, though, I’ll promise you one thing: Today is NOT your last chance. Sangamo has been advancing this science as a publicly traded stock for almost 20 years, and they have a half dozen early-stage clinical trials underway, any of which could either brighten or dim their prospects. While any news from the next trial could be meaningful, no one Phase 1 trial is going to make you rich or make a therapy successful.
“The stock is not going to go up 1,000% this week, no matter what they say tomorrow morning. It could certainly shoot higher if everything sounds rosy, and it might be a huge long-term winner, perhaps, if this turns out to be the most effective variety of gene editing and it is safe and effective enough to spur more collaborations with deep-pocketed partners… but even if that’s the case, we’re at an extremely early stage, even after 20+ years for Sangamo, and there will almost certainly be lots of big ups and downs.
“If you want to gamble on whatever might be said tomorrow, that’s your prerogative, but do be aware that it’s a short-term gamble on just one smallish part of what has been an almost 25-year history of ups and downs and breakthroughs and “firsts” and disappointments for this technology… and that whether you’ve heard of the company before or not it has been around for a long time and is widely followed, so lots of folks are watching this “catalyst,” not only those who have bought into the idea with an FDA Trader subscription but also thousands of other milestone-watching biotech traders, which means the stock could easily bounce around as folks both react to the conference call and ‘sell the news.'”
And here’s the Quick Take I shared in February, after Sangamo had reported another early bit of results (which had been separately teased, again as huge — this time “the biggest discovery in the history of capitalism” — by Ray Blanco):
“Sangamo didn’t release data at 6:15 yesterday evening as Blanco promised… but did so at about 11am today, and you can see it in the abrupt response in the stock price (down 25% almost instantly). The news was underwhelming for investors, who presumably hoped for more than cautious optimism and preliminary indications that this gene-editing treatment might be working in these early and tiny clinical trials, so the gang of catalyst-seekers has moved on. I’m not interested in Sangamo personally, since I avoid long-term future-guess biotechs who are years from commercialization, but it is, at least, well-funded (about $450 million in cash, they’ve lately been “burning” through less than $30 million a quarter for these early-stage trials with few patients)… and it’s “cheaper” than it was when Blanco started touting it as “ending disease” when it was at $16-18 back in September. SGMO hosts a conference call at 12:30 today to discuss the results, so we’ll see if they can change the sentiment with anything they say there — early-stage biotechs are all “story” stocks, and it’s hard to conjure up enthusiasm for a story when pretty much every headline about your recent results includes the word ‘underwhelming.'”
That’s still how I feel, and though 2019 looks like it will be a decent year for “news flow” for Sangamo, with some new trials starting and some more data flowing in, there isn’t anything obviously on tap for this week that’s going to shake the foundations of our understanding of science. And they (somewhat surprisingly) did a stock offering to raise some money last month, so they are even more fiscally secure than they were before (they say they have enough cash to get them through the end of 2021 now, a good reminder that they’re nowhere near a commercial product).
If you’re aware of a scientific presentation you think Sangamo folks are making this week, by the way, please do let us know.
Sangamo’s latest investor presentation, including their first quarter updates, is worth a read if you want to do a little catching up on their clinical progress… the transcript of their last conference call, on May 8, might provide some more context and a sense of management priorities.
If you’re interested in the science, Sangamo’s new(ish) CEO Sandy Macrae (he replaced the now-retired Edward Lanphier, who founded Sangamo and is presumably the “Dr. Edward” that Blanco talked to years ago, following the stock’s collapse in 2015 when a couple high-profile collaborations failed), gave a plain-language talk last year that I found really useful in understanding their technology and strategy… the video of that is below:
And with that, I’ll leave you to it… go forth, researchify on this one to your heart’s content, and let us know what you think — ready for a ZFN revolution? Think Sangamo is finally ready for prime time after all these years? Have any insight into their clinical trials or what they might mean? Let us know with a comment below. We’ve kept the comments from our original September article below as well, just for some context (and you can see the February update here if you want more). Thanks for reading!