The latest ad for Green Chip Stocks is a doozy — reminiscent of the many “the world is about to change” ads that we’ve seen over the years, though a little bit light on detail.
That’s OK, though, I’m sure the Thinkolator is up to the challenge.
The headline of the pitch for Green Chip Stocks ($99/year “on sale”) is all about March 29, 2019 being the day that an announcement will be made that changes your life. If you’re someone who’s a little bit worried about having enough money for retirement, this kind of language is like setting a shot of whisky in front of an alcoholic who’s trying to quit…
“This event will be very, very good…
“And could make you very, very rich.
“If you know what’s coming and take decisive action.
“On that day, at an invitation-only meeting of the world’s most connected and influential people…
“A company executive will step to the podium and make an announcement so stunning…
“That it will rank at the top of the most life-changing events ever recorded in history.
“Folks still remember where they were when we landed on the moon…
“And when the Berlin wall fell…
“Or when Bin Laden was killed.
“This announcement will be bigger than all of those.”
See? Even though we KNOW it’s BS, that these kinds of deadlines are mostly ginned up just to get us to pull out our credit card before we have time to think it over, we’re still tempted.
And it gets worse, with this kind of language:
“You can brag about your new wealth if you want.
“Or you can just sit back and listen to them talk about how another one got away.
“Listen to them complain how the rich keep getting richer.
“And just be content knowing you had the foresight to see what was coming…
“And the guts to take action.
“Just do me a favor.
“Don’t be a jerk with your new millionaire status.
“I’ve seen so many people go off the rails when they get rich overnight.
“Donate some to charity… or church if that’s your thing.
“Just imagine the look on your wife’s face when you tell her.
“Or how the kids will feel knowing you just paid off their college debt.”
OK, I’m all for “don’t be a jerk” reminders, but still — let’s not put the cart before the horse, OK? This dude is promising that there will be an earth-shaking announcement in one week (I’m late getting to this, I started seeing the ad in late February… though did get a question about it from a reader just today), and that he’s the only person who can tell you about it… all it takes is a hundred bucks to get the answer.
We know that’s not the way the world works… right?
OK, so let’s load up our wheelbarrow with skepticism… then we’ll head down to the garage, pull the tarp off the Thinkolator, and see if we can’t get an answer out of this mess of tantalizing promises.
These are the clues that stick out:
“The Chief Medical Officer of this company is about to be a science rockstar.
“Not only am I convinced that her company is the best bet for overnight riches we’ve ever seen in our lives…
“But I’d be willing to lay odds that she’s named ‘Person of the Year’ after this announcement.”
And we’re told a little detail about here, which should help:
“A.B. from Harvard…
“An M.D. from Harvard Medical School…
“A fellowship with the Harvard Combined Infectious Disease Program…
“She led a team researching breakthroughs in biotech for a global, Switzerland-based corporation…
“And joined the faculty of both Harvard and the University of Massachusetts Medical School.”
That narrows it down a LOT… still, Thinkolator chugging away. Any other clues we can toss in?
“In that invitation-only room…
“Packed with the wealthiest insiders on the planet…
“The Chief Medical Officer of this company will reveal scientific proof detailing a new treatment…
“That makes immune system ailments…
“And brain diseases like Alzheimer’s and Parkinson’s…
“A thing of the past.”
And we do get a little bit of detail about exactly what this company does…
“TORC1 is like bad cholesterol.
“When you block TORC1, it’s been shown to prolong lifespan….
“And block the onset of age-related diseases.
“TORC2 is like good cholesterol.
“When scientists blocked TORC2 in tests…
“It actually decreased lifespan….
“You want to block TORC1 without blocking TORC2.
“And that’s exactly what this company has been secretly developing for years.”
And, well, that’s about it — like I said, light on the clues. And a little surprising in focus, given that Green Chip Stocks in my experience has mostly been a newsletter that pitches renewable energy investments. So who is it?
Thinkolator sez this is almost certainly little resTORbio (TORC), which has graced the pages of Gumshoe before — though at a substantially higher share price (Marc Lichtenfeld teased it as a “fountain of youth” drug developer back in September when it was around $14, today, after announcing a secondary offering earlier in the week as they prepare to enroll for Phase 3 trials, it’s trading at about $6.50.)
And yes, resTORbio is indeed developing drugs that strengthen the immune response by inhibiting TORC1. The primary drug at this point is designated RTB101, and like all of resTORbio’s other programs the compound was licensed from Novartis (NVS), their partner. This drug just completed Phase 2 trials in respiratory tract infections, it’s basically designed to cut down on RTIs in elderly people and it seemed to do just that in the Phase 2 trial, cutting the incidence of RTIs from about 2.5% to 1.5% for that population, either by itself or in combination with everolimus (a rapamycin analog from Novartis). Which seems substantial, and respiratory tract infections among the elderly are a big deal and a major reason for hospitalization (and therefore a large market, with insurers looking for drugs that reduce the need for hospitalization), so that sounds pretty good.
They are just now enrolling for their Phase 3 trial, and won’t have top-line data from that until probably next summer (2020, not 2019), so what’s this about a “earthshaking announcement?”
That’s a good question. There are a couple things that could be reasons for Siegel’s claim of some huge announcement on March 29 — it’s hard to consider them with a straight face, but they’re probably enough to convince a lawyer to let you mail the ad…
The first is that last year they reported their fourth quarter earnings on March 29, so that would have been a reasonable guess as to when the earnings would come out this year. At least, it would have been a reasonable guess if you were putting together the copy for a newsletter ad a couple weeks ago — now it just seems silly, since the earnings actually came out on Monday, the day before they announced the pricing for this most recent share offering.
And the other is the language resTORbio had put out for a while saying that they expected to have their “end of Phase 2” meeting with the FDA by the end of the first quarter. March 29 is the last business day of the first quarter, so for a made-up date it ain’t half bad… but, alas, that is now old news as well, they announced the results of that meeting on Monday, too.
As a non-expert, the announcements that resTORbio has made about the success, so far, of their TORC1 inhibitor are indeed reason for some hope about helping the body to fight diseases that become more difficult with age. That’s hopeful, but not “your grandkids will weep when they tell your story” life-changing for investors. At least, not yet. This is still an early-stage story.
There are no announced conference presentations coming from resTORbio next week, but there is one other possible announcement that could come soon: They also indicate in their presentations that they intend to initiate a Phase 1 trial in Parkinson’s Disease for RTB101 in combination with sirolimus in the first quarter, so March 29 would be the theoretical deadline for that (sirolimus is another rapamycin analog, similar to Novartis’ everolimus and sold as Rapamune by Pfizer as an immunosuppressant for use in organ transplant rejection). Still, initiating a clinical trial would not be earthshaking news in this case.
So why am I certain that the Thinkolator is right? Well, the TORC1/TORC2 work is a perfect match, which they explain pretty effectively in their Investor Presentation here, but the real kicker is that, yes, that Chief Medical Officer teased is an exacdt match for resTORbio’s Dr. Joan Mannick, who, from what I can tell, really is a rock star in her field.
Where does that leave us? Well, sadly, you might not go from nothing to being a millionaire next Friday. Sorry.
But it was only our greedy daydreams that made that promo work on us anyway, right? The same thing that tempts us to buy lottery tickets? So let’s set that aside, acknowledge that the ad was silly, and think about whether TORC is a stock worth considering.
I don’t like buying clinical stage biotech stocks, personally — it drives me crazy that they are usually at least several years from generating any revenue, and that we have to make wild guesses about what they could even charge for their drugs if they do get approved someday… but that’s a personal hangup, and I know a lot of you do enjoy speculating on biotech ideas. Partly because it’s fun to be part of helping people, which helps to salve the wounds a little if you lose a lot of money in the effort to help people.
And to give further reason not to listen to me when it comes to biotechs, I thought this one sounded pretty interesting when Marc Lichtenfeld pitched it in September at $14. So I’m not embarrassed to say that although I won’t be buying the stock, I still think it seems interesting. This is a huge potential market, and they are going into Phase 3 without (so far) having hit any big safety concerns.
It seems Phase 3 will be a little bit different than Phase 2, in addition to being substantially larger — they’re testing only RTB101 instead of adding a combination therapy, and they’re judging reduction in the percentage of patients who have symptoms of a respiratory illness, not just a lab-confirmed respiratory tract infection. This will all happen during cold and flu season, so they’re starting with the first group in the southern hemisphere in a month or two and then moving on to the northern hemisphere next winter.
They think that if they can test a total of 2,500 patients, that will provide a big enough safety database to apply for new drug approval, which means they’re hoping that this one Phase 3 trial will be their last before they cross their fingers and hope for safety, efficacy and an FDA approval to commercialize the drug in 2021.
What does that mean? Well, they’re going to spend a lot of money, and probably won’t generate any big news in the next year unless their planned Phase 1 trial launches and catches attention for something surprising right off the bat. So I guess that’s why they raised a big chunk of money (about $50 million) this week, despite the fact that they were already sitting on $100 million in cash — they presumably know that they don’t have any pending news after this that will make raising money easier in the near future, and predicting how investors will think about your company during a relatively quiet period when they’re waiting for news is probably a worrisome guessing game for companies that need to raise money to keep trials going.