What are the “‘Ebola Tech Plays’ Set to Skyrocket” from Teeka Tiwari?

Teeka Tiwari teasers wash up on the shores of Gumshoe island every few months, though we don’t cover them all that often because he hasn’t done a lot of teasing of individual stock ideas (he has more frequently, if memory serves, pitched his trading “systems”). It looks like Tiwari’s Mega Trends is now being published by Common Sense Publishing, one of the newer arms of the Agora octopus, so perhaps we’ll see more of his teases in the months to come.

This one caught the eye as one of several active promotion campaigns about Ebola-related stocks. No one is surprised that any stock with any kind of hint of a connection to curing or treating the dreaded Ebola virus is being chatted up by investors these days, that happens every time a deadly outbreak or, worse, a real pandemic, hits the public health radar (and the front page of the newspaper).

As Tiwari’s ad indicates, these perennial seasons of panic put wings — often very temporarily — under the share price of well-marketed biotech stocks with a connection to the panic, whether it’s Avian Flu or Swine Flu or SARS or the anthrax bioterror attacks. And yes, if you time these well and get lucky and the headlines continue to drive investors in your stock’s direction, you can certainly see a quick profit… though on the flip side, as you can probably imagine, you can also see the panic subside quickly and the associated stocks drop like a stone.

Tiwari implies that his study of those several past panics gives some predictive power to what will happen to the Ebola stocks (all of which have already risen and fallen sharply several times during this latest outbreak), but that strikes me as a dangerous assumption — a dozen stocks across three or four different outbreak-type events in the past 10 years provides just one tiny little sliver of data even if the fact that you see the charts spiking up repeatedly in the presentation to give you great confidence. Assigning any real predictive power to those past charts seems a bit foolhardy to me — this is not technical analysis, which does work on some level to put the odds slightly in your favor, technical analysis depends on well-studied long-term patterns. This is event-driven investing that a copywriter can imply is predictable through the use of visually compelling charts, but we all know — or should — that every event can easily be different than the last.

Which doesn’t mean that the Ebola stocks mightn’t go on another run, or double or quadruple from here. I have no idea. I can just issue that small note of caution, and go on to check out the clues and let you know which ones Tiwari is pitching. So let’s get to it.

Here’s a bit from the ad:

“If just one infected individual gets on a plane, we’re looking at an epidemic that could spread like wildfire through the communities of suburban America.

“The U.S. and Canadian governments have already funnelled more than $5.5 billion into treating and containing this killer.

“That’s not a ton of money to a big pharma giant like Pfizer. But it’s a fortune to the tiny companies actively racing to deliver a treatment to the hands of the government.

“But the fact is, the stocks we’ve found won’t rise or fall based on dollars changing hands…

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“There’s a much more powerful catalyst that should drive these stocks to new levels…

“It’s a simple ‘trigger’… And once you know how to recognize it, proactive investors can make a small fortune.”

You can review his whole ad here if you want the details, and his assessments of those past “waves” of outbreak stocks. But That “trigger” seems to be, broadly, the wave of news-driven panic about outbreaks — and it’s getting triggered pretty frequently from what I can tell… including the further spread of the outbreak in West Africa reported just today. I’d argue that it’s pretty irresponsible to say that an epidemic would spread like wildfire through suburban America if one Ebola sufferer got on a plane, since the virus is not airborne and seems to be well contained in places that have good and consistent containment protocols… but it’s also a much scarier and more exotic disease than familiar (and sometimes deadly) ailments like influenza, so it is true that if a surprise Ebola victim shows up in a random American hospital or airport there will undoubtedly be panic, whether really justified or not.

So what are the stocks that Tiwari thinks can follow in the past “winners” footsteps of BioCryst, Novovax, Sarepta, Hemispherx, Sinovac and others that benefitted from big spikes from SARS or the various avian and swine flu epidemics?

Here are our clues:

“OPPORTUNITY #1: This Tiny Canadian Company Has Partnered with The Pentagon To “Cure the Incurable”…

“This tiny Canadian company has been researching and developing a cure for the Ebola virus for more than 5 years…

“It posted results of its pre-clinical trials on monkeys in scientific journal, The Lancet, in May 2010…”

We’ll stop it right there, they give another dozen or so clues and more jibber jabber about them, but this is quite clearly Tekmira Pharmaceuticals (TMKR in NY, TKM in Toronto), an RNAi “platform” company which has a cancer drug and a Hepatitis B drug in the pipeline but which is getting interest these days mostly because of its pre-clinical Ebola vaccine.

I won’t pretend to know what’s going to happen with Tekmira, or with their experimental vaccine — I hope it works, my quick read is that so far it has seemed encouraging on efficacy but discouraging on safety. Dr. KSS, who leads a series of biotech discussions for the Irregulars, has talked some about Tekmira and RNAi in past articles and mentioned it (not positively) in follow up comments like this one. Others will certainly issue cautious statements about wading into Ebola stock speculation, too, including Nigam Arora here.

There’s a more positive spin on the Ebola “opportunity” for Tekmira and others in this SeekingAlpha rundown, and Tekmira hit the NY Times and Wall Street Journal a couple weeks ago, which probably helped to keep the shares up in the $20ish neighborhood. And yes, any company with any potential for using one of their compounds for Ebola has ramped up the push to do testing or get emergency approval or whatever else to get more attention of late, though Tekmira has indeed been working on this Ebola vaccine for many years, largely with government funding.

TKMR is a decent-sized biotech, market cap around $450 million, and they do have $100 million in cash so they’re not going to be strapped in the next few months (that would be enough for a few years of operations at their recent “burn rate,” though presumably their currently early-stage clinical trials, if they advance, will become more expensive as they move on to the next level).

So you can work out your bet on that one one way or the other — I mostly try to avoid highly volatile stocks whose markets I don’t understand, particularly when they don’t have anything to keep them grounded (like revenues, or earnings), but that doesn’t mean they won’t create compelling trading opportunities for folks who are more nimble than I.

How about Tiwari’s other stocks?

“OPPORTUNITY #2:

“Developed in Canada… Made in Germany… Sold in Iowa… And proven 100% effective in preventing Ebola infection…

“On August 5, 2014, in what might seem like a surprising move, this tiny cancer laboratory in Iowa entered into a contract with the U.S. Defense Threat Reduction Agency.

“The point?

“To rush an Ebola vaccine it’s been working on ‘on the side’ to clinical trials.

“As the company CEO said:

“This [developing an Ebola vaccination] is not our primary business, but we have a vaccine that’s further along than almost all of the others, and it’s such a high-profile area that the government basically came to us and said, ‘We want to accelerate your vaccine.'”

“That contract gives the lab $1 million up front.”

This one, sez the Mighty, Mighty Thinkolator, is NewLink Genetics (NLNK). They are working on an experimental vaccine that has worked in primates, and they and their partners have donated thousands of doses to the Ebola fight, but it’s unclear whether anyone’s really excited to take them as testing continues — it’s one thing to treat a patient who has Ebola and has a huge need for any possible cure, it’s another thing entirely to vaccinate healthy medical workers or volunteers for the first time. There’s an interesting article on it from Bloomberg here from mid-August.

Ebola is not their focus at all, or at least it wasn’t a month ago — it’s not on their development pipeline, this is a company mostly developing cancer immunotherapies that they call “HyperAcute Immunotherapy”, including some that are in advanced clinical trials. A look at the chart says that something big happened for NLNK back in February and March — that was the release of preliminary data on their lead pancreatic cancer immunotherapy Phase III trial, a data release that was hotly anticipated and which took the stock on a wild ride (the stock more than doubled in anticipation of the preliminary data, then collapsed when the data was not as sexy and exciting as hoped, though it wasn’t necessarily negative). I don’t know anything else about the company, I’m afraid, so I’ll leave you to research it and find your own opinion — I don’t think they’ve ever come up on the site before.

And one more?

“While most companies have focused on Ebola, this company has been working on a treatment for Ebola’s “little cousin”—the Marburg virus…

“The science and medicine journal, Nature, reports monkeys injected with Marburg virus survived so long as they got this company’s treatment up to two days after infection… all the animals that didn’t get the drug died…

“But that’s not all…

“So far, the drug has proven to protect mice from Marburg and Ebola…

“Plus it has protected guinea pigs from Ebola, Marburg, and Yellow Fever.

“The Department of Defense has the ultimate aim of using this treatment to protect the world from virus threats (including Ebola, Marburg, and Yellow Fever), high priority pathogens, natural outbreaks, and bio-threats.

“And one of the key selling points of this treatment is that it’s small and might be stable enough to ship and stockpile wherever it’s needed.”

And this:

“This Company Has a History of Profiting from These ‘News Event’-Triggered Trends

“The company has five products that are already in Phase 2 (of 3) of development.

“Back in 2005, this company partnered with Johnson and Johnson to develop an experimental flu vaccine…

“Currently, this drug is being sold in Korea and Japan. It was submitted for final FDA approval in December 2013. Once the FDA approves it, sales will begin in America. According to a report from Ibis World, annual revenue for the cough and cold industry totals approximately $8 billion…”

This one has gotten attention during almost every public health scare/outbreak — Biocryst Pharmaceuticals (BCRX). They are testing an Ebola drug in animals (non-human primates) soon, they say, and I expect you can find a thousand different opinions on this one. Dr. KSS discussed it briefly because of their Hepatitis C drug earlier in the Summer, we covered it a year or two ago when it was teased for the bird flu outbreak, and it was a top performer among teased stocks for that year, but I’m afraid, well, I’m out of time — I’ll give it to the peanut gallery to see what you think.