“Three Biotechs that Could Revolutionize Medicine (and make you RICH!)”

By Travis Johnson, Stock Gumshoe, March 30, 2009

Move over Geron, Genentech and Osiris… The next generation in revolutionary biotechs has arrived.

“(And they may be the only way to make money in this market!)

“Each one of these 3 breakout stocks could realistically bring you gains of 128%, 185%, or even 422% in the next 6 months!”

That heady promise introduces an ad from Hot Stock Confidential, one that I’ll start looking at today and will continue to review in the days ahead — it’s a teaser for three stocks, and it looks like I should be able to unravel the first one or two of them today, let’s see what we’ve got.

The intro is all about claiming credit for the big run in Geron shares, after they got approval to test a stem cell therapy back in January, and making the case that an effective cure for cancer is the “holy grail of medicine” — hard to argue with that.

And that “holy grail” is where there’s potential for big money to be made, apparently (no mention in the ad of losing big money, of course, which has been the fate of most grail seekers in biotech and elsewhere).

But anyway, the revolutionary gains made by the companies who have made big discoveries is certainly what most biotech investors shoot for. And according to Laura Cadden, “That’s the kind of potential I see for 3 tiny biotechs I’ve just uncovered.”

To find out more about them, she’d like you to sign up for a subscription to her Hot Stock Confidential newsletter, which will run you somewhere between $299 and $499 according to the various ads I’ve seen (this particular ad is pushing the “sale price” of $299).

The newsletter seems mostly focused on biotech and similar small cap high-risk, high potential stocks, though I don’t know anything about the editor — it’s from Today’s Financial News, which appears to be yet another spinoff from one of the many big Baltimore newsletter publishers (Agora, Taipan, etc.).

But you don’t care about where it’s from, I imagine — you care about these “hot stock” ideas. What are the biotechs that are being teased here today, biotech companies that are fighting cancer and seeking that “holy grail?”

We’ll start, appropriately enough, with the first one …


“Company A: Supercharging the immune system”

“Our body’s immune system defends us from infectious disease and foreign matter.

“Lymphocytes, a type of white blood cell, are agents of the immune system.

“Two key types of lymphocytes derived from stem cells in the bone marrow are B cells and T cells.

“B cells remain in the bone marrow. As long as a foreign antigen is present, they can produce antibodies.

“T cells finish their development in the thymus.

“A major subtype is the Cytotoxic (“killer”) T cells. They attack cells that carry foreign or abnormal antigens on their surface

“Imagine it as a kind of Rottweiler trained to recognize antigens with specific molecules.

“Company A uses a proprietary technology that instructs cytotoxic cells to inject deadly proteins into tumor cells.

“This induces cell death.

“Let’s be clear about this because it’s pretty amazing stuff…

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“Company A’s treatment actually “teaches” our body’s own killer T cells to attack and kill cancerous cells!

“Even more remarkable: That targeted “killer” knowledge then remains in our T cells….

“This treatment “teaches” the immune system to fight the specific cancerous cells it’s targeting—forever.

“It’s called “active immunity”.

“The company already has drugs in Phase I and II clinical trials to treat different types of cancer.

“And its technology is being applied to a variety of other diseases.

“Company A is on target to bring an entirely new approach to cancer treatment and right now, it’s stock is trading for under $4!

“One breakthrough… one news release touting success… could send this stock to the moon! And give early investors potential gains of 422%!”

So … since the ad notes at the bottom that it was written in February of this year, I’ll hazard a guess that this one must be …

Dendreon (DNDN)

That’s right, our old friend — it is the most high profile “cancer vaccine” company that’s working on an active immunity product for cancer, but I’ll have to call it a guess because of the “already has drugs in Phase I and II clinical trials to treat different types of cancer” bit. It could be that they just didn’t construct this ad carefully, and they meant to include a teaser about their most advanced product in there, too, with the “I and II clinical trials” as a bonus, but it also could be that I’m wrong on this one. Dendreon, of course, has been in Phase III trials for their lead product, the prostate cancer vaccine Provenge, for roughly 38 years.

OK, I exaggerate. It’s only been a few years of Phase III trials for PROVENGE and it’s predecessors from Dendreon, it just feels like forever — particularly for their shareholders, I imagine This is a stock that briefly spiked to near $25 just two years ago, though the trend apart from that brief spike has been slowly down, down, down … it was trading just under $4 for most of February and is currently slightly above that mark.

This stock was discussed pretty thoroughly following the Stansberry teaser that hinted that it would be the “next stock to crash”, so if this is indeed the stock they’re touting, they’re up against S&A’s claim that Provenge will release bad results at the end of April from this latest Phase III trial.

Your friendly neighborhood Gumshoe, of course, can barely follow the technical talk on this stuff — my main memory from chemistry class is waking up with an impression of a spiral bound notebook smushed into my cheek. If you think it’s likely to be one of the other “active immunity” cancer vaccine companies (I don’t know of one that’s near $4 at the moment), give a shout and let us all know with a comment below.

And since this is a repeat and a wee bit of a guess, I’ll move on to “Company B” and try to get you something fresh and fun for this lovely Monday (we’ll get to Company C later in the week, I’m sure) …

“Company B: A molecular approach

“Company B’s scientists have developed a revolutionary approach that involves generating molecules to tackle any abnormally regulated signaling pathways.

“That’s quite a mouthful, I know. But it’s the reason an industry leader like Genentech was eager to partner with them for two of its treatments.

“Company B’s top therapeutic candidate is currently in clinical trials for metastatic basal cell carcinoma and metastatic colorectal cancer.

“Additional trial applications will begin later this year.

“Chances of success are excellent. (Why else would Genentech be on board?)

“Shockingly, this company’s shares are still trading for under $2!

“And as the clinical trials progress, that low share price could easily skyrocket up by 422%—it’s happened before.”

AHA! So I don’t really have to guess on this one, for Company B we’re talking about …

Curis (CRIS)

This is a company that specializes in cancer, and more specifically “leveraging its innovative signaling pathway drug technologies to seek to create new targeted small molecule drug candidates for cancer.” (That’s from their website.)

The match is perfect this time around — the shares are (well) under $2, at about $1.30 as I type this … and they are indeed all about signaling pathways and cancer, and two of their lead compounds are targeting basal cell carcinoma and colorectal cancer.

I really hope their drugs work, of course (and I’ll offer that same hope to anyone fighting these awful diseases), but just to be clear, I don’t understand how they work, or know if they will indeed be effective.

My very quick look at these two companies suggests that Dendreon is still a complete wild card — they will have some Provenge results that are likely to move the stock at the end of April, but it’s anyone’s guess what those results will be. That’s true of any biotech, of course — and one need only look at Arena Pharmaceuticals (ARNA) this morning to see that even heavily touted newsletter-picked stocks can certainly fall hard and fast if investor optimism isn’t rewarded with boffo news.

Curis looks like it’s much lower profile than Dendreon (or Arena, for that matter), and I don’t know of any upcoming “make or break” data releases (doesn’t mean there aren’t any). They also do have Genentech as a partner for a couple of their compounds and, though tiny, they appear to have enough cash to at least get a bit further through their clinical development.

It’s always hard to evaluate biotech balance sheets, because you need to dig in a bit and find out what partnerships they might have, when payments might be coming, what stage their development is in and what the trials might cost (Phase III trials are far more expensive than Phase I or II, generally speaking), etc. etc. But at least they have cash on hand now, and, unlike Arena a few weeks ago, they’re not necessarily desperate for immediate new financing as far as I can tell (ARNA did get their needed financing, at least for the short term).

So … no great wisdom here from the Gumshoe, but at least I can tell you that these appear to be the first two companies teased by Hot Stock Confidential as their “Three Biotechs that Could Revolutionize Medicine (and make you RICH!)

Whether they’ll do so or not is, of course, quite an open question. I can’t tell you whether their drugs will work, or whether the shares will really climb by 422% … but I can listen, so if you’ve got an opinion or more information on these, feel free to share with a comment below.

And “Company C” is related to DNA targeting … more on that later in the week (see? The Gumshoe can “tease” too!).


Full disclosure: as of this writing I do have a call option spread on Arena (ARNA) in my portfolio, short the April calls and long the October calls. I do not have any interest in any other company mentioned and won’t trade in any of them, including those ARNA option positions, for at least three days.


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newshidden
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newshidden
March 30, 2009 11:16 am

MITI CRIS VICL

TimothyJ
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TimothyJ
March 30, 2009 11:27 am

I hesitate to use chart patterns to evaluate stocks that are as heavily news-driven as small biotechs. But a glance at the daily chart of CRIS shows a classic “cup and handle” pattern, with a target of about $2.05. C&H patterns are usually fairly reliable. Stop-loss would make sense just below the recent low of $1.15. fwiw.

SageNot
Member
SageNot
March 30, 2009 11:36 am

MITI is into stem cells?

http://finance.yahoo.com/q/pr?s=MITI

Obviously I’m not knowledgeable about this industry but this link really has me scratching my noggin.

http://www.bio-medicine.org/biology-technology-1/Micromet–Inc–to-Present-at-the-Sal–Oppenheim-2nd-European-Healthcare-Conference-258-1/

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Darrell
Guest
March 30, 2009 12:27 pm

I own DNDN and am holding because some reports say they will surpass %’s required by FDA. Many blogs and a few news letters report that the reason for no approval on last applicatio was an Insider Holding. Buy Beware.

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Ed
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Ed
March 30, 2009 9:34 pm

Hi Travis,

I commend You and your website for your honesty and integrity. You are the best on the web. You are a credit to your profession and an asset to any investor. Keep up the great work.

Regards,

Ed.

cancer researcher
Member
March 30, 2009 10:26 pm

I’ll try to provide some research insight into this discussion [can’t address the chart patterns, etc.]. I have spent some years looking into signaling pathways related to colorectal cancer. As a disclaimer, not connected with any pharmaceuticals now at all, and no financial “dogs in this fight.” To begin, as a former director of research of a national cancer-related bio-tech firm with “high-level” connections with famous colaborators, I can tell you it didn’t mean much at all. You use these famous connections to raise more capital and keep shareholder interest, while the big guys use you since they have the option of getting in on any gravy if anything happens to arise.

Second, I can authoratatively tell you that our research confirmed what is widely known — there are a HUGE number of signaling pathways, that one will kick in if another is stymied, and shutting one down which is the usual approach does not get you very far [e.g., perhaps just slowing of progression for a short while]. True this might be marketable, or at least has been in the past to some degree, but usually this was mostly the case when there was no other therapy option anywhere on the table. Not so with metastatic colorectal cancer.

Finally having a phase I trial does not mean much — you’re trying to figure out dose levels and toxicity. Starting a phase IIa trial indcates that you want to see if there is any impact in the human model — but don’t think it somehow conveys a lot of take-to-the-bank potential. The rubber meets the road when you do a Phase III trial, indicating that you are willing to spend some very serious bucks now in order to see if this discovery is worth a hill of beans.

In summary, it is my estimation from only a scientific viewpoint that the odds are very high againt this approach providing a marketable outcome in the next quite a few years. But if I’m so smart, why didn’t I win the Nobel Prize in Medicine yet? I haven’t, so I was just trying to give a neutral perspective from one of the guys that still plays in this pool. By the way, our research HAS shown that if one can address about 12-14 of the key signaling pathways simultaneously, and that’s the key — simultaneously — then you indeed do have a crack at turning off the carcinogenic process. But this leads to a dozen different therapeutics combined as a strategy, and it will be a long cold day in hell before the FDA would ever approve such a multi-focused approach [you’ll have to trust me on the veracity of this fact]. Hope this helps a little.

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Paul
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Paul
March 31, 2009 12:40 pm

Having been around this business for a couple of decades myself, and having a spouse as a journalist who writes about it for a living, I would say that what I see in clinical trials usually leaves me appalled (not from an safety point of view, merely efficacy. Basically, we don’t know how anything works. What we see here for example, is the equivalent of an infertile couple, and someone has a piece of velcro, and decides to try velcroing them together. And everyone goes “Woo Hoo! That’s gotta work right?” We have this fascinating stuff called velcro, made up of all these carefully manufactured microscopic hooks, and nobody has ever tried velcroing two people together to have babies. And if it works, the stock will go right up ! Because nobody has ever solved this problem in the history of man !

Compared with the precision of the computer industry, and nanotech industry, I can assure you we are dealing with something that is extremely speculative to say the least.

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johnk
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johnk
March 31, 2009 2:34 pm

Friends please remember, S&A says 80% of drugs fail to get FDA approval. Thier strategy then is to wait for good news (higher price) and then sell short. When the price goes down, buy to cover and pocket the difference.

Of course this strategy requires a lot of shorting (to get the 80%), careful money allocation, and constant monitoring of stock prices. The risk comes with the 20% that garner FDA approval and skyrocket up.

I think that constant vilgilance is the only thing that will keep your losses less than your gains. Maybe exit the trade the day before the FDA announcement and be poised to go long the day the news is released. Lot of work, no vacations, and you are responsible for your own investments.

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Jon Loren
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Jon Loren
March 8, 2010 8:00 pm

How to Flip the World’s Longest-Running Drug Deal for Triple-Digit Profits

What-Who is this ?? Thanks , Jon

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