“This Wednesday, September 5, 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 legions of Gumshoe readers have been asking about over the past 24 hours… and it sounds very 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. 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 as much as they’re built forward from a compelling long-term idea.
So before I start I’ll be clear: There probably is some event happening tomorrow morning, 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 you might imagine, one of those big dollar “no refunds” deals — $1,495, which will renew annually. 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 $1,495 payment into a “lifetime” sub, if you call and ask for that, which obviously doesn’t cost them anything).
More from Blanco:
“They’ve already confirmed their plans to reveal their discovery to the public on September 5.
“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 had 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 this 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. 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. 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 on Wednesday, 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.
And that’s 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 Sangamo Therapeutics (SGMO), the pre-CRISPR gene editing folks who have been pursuing the “zinc finger” technology.
The “breakthrough” event that Blanco is referring to is that Sangamo will be 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’ll also be hosting a conference call for investors after the presentation, at 9am on Wednesday, and making the rounds of a couple investor conferences in the next week or so.
And if you want some further confirmation, then yes, Sangamo did report exactly $36,567 in revenue last year — almost entirely from collaboration agreements (if you’re curious, that’s very close to their five-year average). They have 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).
I don’t know whether this next conference presentation from Sangamo will be a critical moment in gene therapy history, but it’s certainly not preordained that it will be earthshaking — if it were, they probably wouldn’t be squeezing it in as one of four parallel sessions in a relatively small medical conference, after lunch.
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
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).
If this is going to change the world, though I’ll promise you one thing: Tomorrow morning 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 this trial could be meaningful — and they have signaled that by hosting a conference call, which they haven’t done for all of their trial results in the past, it doesn’t mean success is guaranteed.
On the positive “maybe it will be exciting” side, this is reportedly their most advanced Zinc-Finger Nuclease (ZFN) trial, so it will carry more weight than the small size of the cohort or the early stage might otherwise indicate… but 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.”
If you want to understand the actual data they present tomorrow, then you might start with their presentation from last month that explains MPS II, how they think their ZFN genome editing can help, and what they’re looking for in terms of clinical efficacy. If you’d like a general overview, there’s a very good quick history of Sangamo and its Zinc-Finger protein work (including the early trials and collaborations that failed) from the Motley Fool here, and 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 a couple months ago that I found really useful in understanding their technology and strategy… the video of that is below:
So 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 the scientific results they’ll announce tomorrow morning or what they might mean? Let us know with a comment below.