[Ed note: This article was originally published in June, 2013 when the shares of the stock teased, Alnylam (ALNY) were around $30 and the Oxford Club was saying that the first person to live to 1,000 is already alive … now they’re touting it as the holder of the “Magic” Keys to Immortality, but the tease and the details (and the stock) are still the same. The latest pitch is based partly on upcoming catalysts, particularly the “winding down” of Phase 2 studies on their lead drug and the likelihood that they will soon get approval to start Phase 3 studies for this drug that has an FDA “orphan” designation, which they think will rocket the stock higher.
What follows has not been updated, edited or revised, but ALNY is now a $11 billion company with a share price of roughly $110, it has had its ups and downs after being teased two years ago, but it has been generally very strong and we last re-published this piece about a year ago when the stock was at less than half this price. I don’t know a lot about the company or the science behind it, and didn’t know much about it then either (sometimes I’ve got an opinion, sometimes I can just get you the stock name and ticker and let you get started on your own), so I’m republishing this instead of re-writing it — that will let us stay connected to the original stream of comments. If you want to see some of the more recent chatter on this, you can also check the article we wrote when Michael Robinson was using a similar “How to Live Forever” shtick in teasing this same company, about a month ago, for his Nova-X Report.
I hope you find the following helpful, but it at least answers the question so many have asked: “what’s Oxford Club’s ‘Magic Keys to Immortality’ stock?”]
—-following was published June 29, 2013 and has not been edited or updated—
“Just one company stands to make the lion’s share from this radical life extension phenomenon…
“It’s locked down nearly every patent behind this technology.
“The founder of this company, a Nobel Prize-winning scientist, is the same man who founded one of the most storied biotech companies ever.
“His first biotech outfit saw its stock go from $3.08 a share to over $240 a share. That’s when his company developed and released a treatment for a debilitating – and often deadly disease.”
I can see why so many folks have been asking about this latest pitch from the Oxford Club — not only do you get that kind of exciting story, but you also get the coincidence that the folks who buy investment newsletters tend to mostly be in their 60s and 70s and quite interested in health and rejuvenation and life extension, and the ad came in under the headline that …
“The First Person to Live to Age 1,000 Has Already Been Born…“
Presumably that’s going to be one of the people who are a few months old now, and you also have to see a real exponential hockey-stick chart of life expectancy to get to 1,000 years old — along, of course, with a complete change to the structure of human life on earth — but the more realistic-sounding projections, based on some big breakthroughs like the one being teased here, are that it’s possible for adults alive now to reach 150 years of age, and that the longer you live the more science will catch up with you and push that envelope further. Of course, you won’t be able to retire at 65 if you’re looking at making those monthly condo payments for another 80 years after that, but presumably you’ll be so strong and vibrant that you’ll be working as a longshoreman for a little fun and pocket change in your spare time.
But anyway, this Oxford Club pitch is that there’s a spectacular biotech company that’s got RNA technology patents locked up, and visionary leadership, and they’re going to shoot to the moon over the next few years — starting soon as they release their next FDA trial results in the days and weeks to come, and accelerating by next year as Phase III trials and possible drug approvals get closer to reality.
And no, it’s not the same idea as the “God Switch” ads still being run by Patrick Cox and the Agora folks — that’s a different “become immortal” strategy based on stem cells and they were (and are, and have been for a while) teasing BioTime (BTX). This is a different approach to living “forever.”
Here’s some more from the ad, talking about the huge success this scientist had with his last company:
“In the next 90 days, we’re expecting an unprecedented and shocking announcement from this gentleman’s new ‘start-up’ biotech company…
“It’s a ‘coming out party’ of sorts for this technology.
“And when this news hits the mainstream media, I believe it could become the most talked about technology breakthrough of our lifetimes. And the stock is likely to storm up the charts as a result.”
Here’s how they describe the actual science … and let me just warn you, from here on out I’ll be playing the role of “dumb guy”, the science is out of my sphere of understanding:
“Think of your cells like tiny photocopiers. Even if you have the highest-quality printer in the world, there will be a problem if you make copies of copies of a photograph. The little imperfections add up. Eventually you won’t even recognize the image.
“But, consider if you just used the original every time you wanted a copy. Then you could make perfect replicas for years and years.
“That’s what this company’s technology does.
“Its scientists have found a way to get the ‘original’ make-up of a cell. Its treatments convince the body to use the originals only, and to destroy any damaged ‘replacement’ copies.
Are you getting our free Daily Update
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just click here...“The industry term for this medicine is ‘RNA Interference.’
“Biologically it works like this…
“RNA is a messenger, copying genes from an old cell to a new cell. But what happens when RNA starts transmitting imperfections to the new cells? The answer is what we call aging… when these imperfections add up, and our body starts breaking down.
“But ‘RNA Interference’ stops the RNA from passing along these imperfections. It interferes with these mistakes, so your genes only pass along the blueprint of the original ‘perfect’ cell.
“In other words: All your new replacement cells can be as perfect as the original cells….
“Right now, doctors treat you by working outside in – using either invasive drugs or surgery.
“But using RNA Interference, it’s possible to treat disease by going inside out. That’s because this technology makes it possible to ‘turn off’ harmful genes.
“For example, let’s say one tiny cell in your body begins producing cancerous cells. With RNA interference, doctors can keep the cancer cell from ever reproducing.
“In other words, you can destroy the cancer inside your cells, before it starts.”
And here’s the understatement of the day:
“It’s unlikely you’ll be able to get a shot or pill in the next five to 10 years to get you to age 1,000.”
But they turn that into “still damn good” in the following sentences:
“After all, RNA Interference is still a very new technology…
“At its current level of development, we are perhaps decades away from using it to live a thousand years.
“That said, I am certain this company’s technology will be used to add as many as 60 to 70 additional healthy years to your life.”
Not bad, eh? So which company is this? Clues, please:
“… a small, American-based company, near the campus of MIT.
“This unknown company has unlocked the secrets of RNA. At this very moment, it’s administering these treatments to hundreds of Americans… But those numbers could be on the verge of a dramatic rise. And here’s why…
“We are only months away from an explosive announcement from this biotech company… One that could show up on the front page of every financial newspaper and website across the country.
“This is the start of something bigger than the introduction of flight by the Wright brothers. Even bigger than the birth of personal computers in the 1970s….
“The company I’ve been telling you about was founded by a scientist we’ll call ‘Dr. Allen.’ Dr. Allen is one of our greatest living scientists. In the 90s, he won the Nobel Prize for a different biotechnology, something called gene splicing.
“He’s also a professor at MIT and a member of the prestigious Royal Society of London, which once included Sir Isaac Newton among its members.
“But beyond his many scientific credentials, Dr. Allen is also an incredible businessman. In the late 70s, he founded a company we’ll call ‘Bio-Inc.’
“It was a tiny start-up at the time, but today that company has over $2 billion in annual revenue.
“You’ll be interested to know that Bio-Inc’s stock is up more than 7,547% since Dr. Allen founded it.”
Sounds intriguing, no? Any more little details that we can feed into the Thinkolator? Perhaps just a few …
“… only a $1.3 billion market cap …
“It owns nearly all the patents related to RNA Interference… over 700 granted patents worldwide for RNA Interference. In total, it has over 300 granted or issued patents in the world’s major pharmaceutical markets – the United States, E.U., Japan… No other company comes this close to completely controlling this technology….
…it’s arranging 30 licensing deals with pharmaceutical and biotech companies right now. And even more deals are expected soon….
“Dr. Allen’s latest company has an advisory board made up of scientists from Harvard Medical School, MIT, Howard Hughes Medical Institute, Swiss Federal Institute of Technology and Koch Institute for Integrative Cancer Research. In just three months, this company will announce incredible medical results, which could shoot its stock to the moon.”
OK … so that’s the pitch on the company — how are they going to make us rich? We’re told that there’s a catalyst coming soon — results from one of their trials:
“Dr. Allen’s company is on the verge of announcing incredible results from a Food and Drug Administration study about its top RNA Interference medicine.
“This study, conducted with the Boston University School of Medicine, will be shocking even to most doctors.
“We know. We’ve seen the earlier FDA reports for ourselves.
“The results of this announcement should lead to immediate Phase 3 approval from the Food and Drug Administration. Meaning…
“The first RNA Interference treatment of its kind will soon be commercially available in the U.S.”
“… laser-focused on a treatment for a rare ‘orphan’ disease. By taking this unusual route to get this medicine on the market, the company cut down the final approval time for its RNA medicine to as fast as 12 months.
“Specifically, Dr. Allen’s team is going after a terrible, genetic disease that more than 40,000 people are diagnosed with each year. Most die from it within three years.
“At this point, Dr. Allen’s company is winding down its Phase 2 trials treating this ‘orphan’ disease… based on early reports we’ve seen, after a single dose of this RNA medicine, patients had a 94% reduction of the protein causing this genetic disease. In other words, most of the problems were “turned off” after a single treatment. In addition, side effects were non-existent… we fully expect this treatment will almost certainly pass into final Phase 3 testing in the next three months. And when the company announces this next stage of approval, this event alone could be worth millions in profits.
“The door will be wide open for brand new medicines developed by Dr. Allen and his scientists. In fact, they’re working on five new treatments as we speak….”
So who is being teased by the Oxford Club folks here? Thinkolator sez it’s Alnylam Pharmaceuticals (ALNY), which was actually one of the top teaser touts of 2012 after the folks at Casey Extraordinary Technology teased it back in May of last year at about $10 a share (it went to $18 or so at the end of the year, and recent strength has driven it to $30).
I think you probably all know well that I’m no doctor, and no scientific expert, but Alnylam Pharmaceuticals is a very active developer of early stage drugs that use RNA interference or RNAi technology — they’re not the only ones, there are other competing platforms and strategies that also aim to lasso the “turn off a gene” power of tinkering with RNA, including the one that’s probably a bit more well-known, Isis Pharmaceuticals (ISIS). And yes, ALNY is headquartered in Cambridge, not far from MIT, and the big brain on the board is Nobel-winning RNA-splicer (and MIT faculty member) Dr. Phillip A. Sharp — the A is for Allen, in case you’re wondering where the “Dr. Allen” bit came from.
They are also expecting Phase II data from their lead trial sometime this Summer, that’s the trial for their “orphan drug” to treat TTR Amyloidosis (the drug is called ALN-TTR02 at this point), and they do see this moving into a Phase III pivotal trial by the end of the year (assuming, of course, that good results continue). This is an exceedingly rare and terrible disease with no effective therapies, so the treatment would have to be pretty bad to not at least get the drug a fighting chance. You can see the rest of the pipeline here, the goal of the company is to advance at least five compounds into advanced stage clinical trials by 2015 (they call it their “5 in 15” campaign), which would presumably help to validate their RNAi platform and patents and technology and get other partners on board to work on other diseases.
The company has had a pretty steady drumbeat of positive-sounding announcements during the first half of this year, which has helped to spur the shares higher, and the last note I saw in their quarterly annoucements said they expect their Phase II TTR02 results by the end of June, so that’s awfully dang close to now … along with a “data rich” period of expected information being released about their preclinical and less-advanced products over the next few months. They’ve also been making the rounds of investment conferences recently, so you can check out some of those presentations here if you’re interested in hearing their pitch more directly, or the latest earnings call transcript here. That said, they’ve had plenty of periods of weaker news as well — they had a different Phase II trial fail a bit over a year ago, so these are not guaranteed compounds.
Financially, ALNY’s stock price can really only be justified because it’s a biotech stock that investors believe is creating a platform that will lead to a series of novel drugs inching closer to the market over the next several years. Their revenue is minuscule for a company that has a market cap now of almost $2 billion, and they have a couple hundred million in cash on hand but that’s only because they issued new stock this year to raise cash — they will be using all of that cash and more as their clinical development programs move forward, trials are expensive and they get more expensive as you move along to later stages (though their lead candidate, with a very small number of afflicted patients and orphan status to speed things up, may not cost as much to usher through the process as the average drug). The stock trades on sentiment about their clinical trials, and about speculation about what a real platform for RNAi drugs might mean — which almost means the share price is irrelevant, you can argue that the company is worth $500 million or $1 billion or $5 billion or whatever number in between, but it’s all based on the current drugs, all in early stages except for their lead orphan drug, continuing to show the promise of RNA. Massive returns from here, as have been achieved by a few biotechs that made the leap to becoming real “big pharma” names with real products and profits, are possible, I suppose, but that depends on the science working. And probably on a bit of luck, as well.
Oh, and yes, “Dr. Allen” was involved with one of those previous mega-successes — the stock they tease as “Bio-Inc” is Biogen-Idec (BIIB), and Dr. Sharp was the founder of Biogen. If performance like Biogen’s is the goal — and that would be a lofty goal, indeed — then it’s worth noting that even this clearly spectacular company has had some very weak periods of stock performance, so investors would have had to show either great prescience or great patience to enjoy all of that run. BIIB has been a huge success since 2000, running from $50 to almost $250 in just a couple years, and it was also hugely successful in the 1990s, running from a couple dollars in 1990 to almost $50 in 2000 … but it also had a “lost decade” there in the middle, bouncing from $35 to $70 and back again several times in the 2000s as their lead drugs showed promise and disappointment along the way.
ALNY last had a heyday for investors in the mid-2000s when their first compound were being readied for the clinic, and RNAi and SiRNA and other technologies and techniques to silence genes were just getting investors excited for really the first time. RNAi and the like have been very promising but very challenging develop for at least a decade now — that oft-cited quote that was in the ad that this is “The Greatest Medical Advance Since the Discovery of Antibiotics,” from an article in New Scientist, was published in 2005, when the first clinical trials for RNAi drugs seemed likely … it always takes longer than you think, and the FDA is always extra-worried about brand new treatments or technologies.
From what I can tell in the dumbed-down articles I’ve skimmed, the biggest issue with RNAi is how to delivery it to the right cells, a challenge that is being addressed in many different ways (intravenous, subcutaneous, oral compounds with engineered coatings, etc.).
Anything else I say about the technology or the company’s drugs in development will only further illustrate my ignorance … so I can tell you that the Oxford folks are almost certainly teasing Alnylam, but I don’t know what the news will be from their Phase II trial in the weeks (or days) ahead, how the other compounds in their “five in 15” campaign will develop, what partnered drugs might bring in milestones in the years to come, or how strong their patent portfolio is. This is a very young science still, at least when it comes to actually developing drugs, so I can easily see a successful drug approval in a couple years, if it does indeed come, being hugely important even if this first orphan drug won’t be itself a big enough seller to “make” the company.
If you’ve been an ALNY investor or follow the stock, or just paid more attention in science class than I did, feel free to jump in and let us know what you think of this one.
Sankar—–Can you reduce your long discussion into an executive summary of the point being made? Is this about reading palms??
Thanks for re-running this piece Travis, if for no other reason than to see how kooky the comments can get in a chat stream!
I bought ALNY in July and it is up 75% since then. Roche and Novartis both think the technology has promise; Roche invested $330 million in them over the summer. Lends some credibility to the science…
I believe they are talking about company RXII, right or wrong?
This is rambling/rumbling of old man; I bought ALNY in 2009 rode upto$20+ & down to$13- in 2011;sold & bought gold/silver related as it was rising. So what? bad timing
Incidentally as a child all we ate on farm was organic,only food available. I was sick most of the time I think no magic bullet solve problem. BTW those of green belief should celebrate population increase of thousands of millions. Think of all hydro-carbons sequestered in obese bodies.
Sankara; I think there is a huge field to be investigated in various spectra of radiated energy.
Question I ponder;, is magnetism really zero frequency electricity? Does gravitational field
affect RNA transfer?
Siva, stout yeoman that he is, brought up Palatin Technologies (PTN). They have devised, and have patent protection for, what appears to be a genuine aphrodisiac. This company merits a look with a view toward buying shares. They have dawdled for years, had to do reverse splits to keep their NYSE listing, and faced setbacks, but they may be on a path finally to succeed.
PTN’s work pertains to the melanocortin receptors, which weren’t even modestly understood until about 10 years ago. These occur through the nervous system, and regulate several behaviors, including appetite and sexuality, as well as certain critical physiologic processes such as temperature, energy expenditure, blood pressure and degree of pigmentation. Their natural agonists, things that bind to them, are products of the opiomelanocortin gene that are snipped by several proteolytic enzymes to govern in what way behaviors are modified.
The class 3 and 4 melanocortin receptors appear to modify sexual behavior in both men and women. In early studies of agents that bind to melanocortin receptors, being studied as potential ways to establish tans without sun exposure, male subjects began having erections spontaneously.
PTN is proposing a proprietary peptide, bremelanotide, for female sexual dysfunction (FSD). Study of FSD has had serious problems, the worst of which is that clinicians have tried to apply concepts and rules that work for male sexuality to female sexuality. That hasn’t worked at all! Male sexuality is kindled by visual and tactile stimuli, has strong overlays with aggression and dominance behavior, and has a way of being quickly set in motion and quickly completed. Female sexuality is much more governed by context, by partner, by mood. It is slower to get set into motion, and once underway has no particular stopping rules. An episode of male sexual behavior ends when that male achieves orgasm. Female orgasm may be more elusive, but is also without quantitative constraints. Women are capable of climaxing as many times as they choose and satisfaction may be based on partner stamina.
FSD has several facets, including failure to achieve arousal, but the main issue, I believe most psychiatrists and gynecologists would agree, is disinterest. Inability to get into a state of mind for sexual activity has not responded to treatment with estrogen or with testosterone. True to form as regards using male notions, agents such as the PDE-5 inhibitors (Viagra) do nothing for women. These are vascular agents, and in fact also do not put men in a sexual state of mind at all.
In PTN’s recent phase II placebo controlled trial, its agent bremelanotide was given subcutaneously to women with FSD. PTN stumbled years earlier by giving the agent intranasally, which led to significant hypertension. Absorption is slower with the subcutaneous route, and BP is not a problem. Women in the clinical study were assessed using the Female Sexual Function Index(FSFI). something I read quite a lot about last night. This is a questionnaire about intimate details, but I am persuaded that it has been quite clinically and mathematically validated, and weighted so as to weave in facets of being in a mood for sex, being able to arouse for sex, being able to perform sexually, and being able to experience sexual satisfaction.
What is appealing about PTN’s agent is that women getting it experienced approximately a one standard deviation increase in FSFI score. Moreover—and this is what I was really looking for—-the benefit of the agent appears to grow with time. Which is what I would expect if it is really effective….it will lead to a good experience, which leads to anticipation of a good experience with subsequent use. The effectiveness of the drug appears to increase with successive uses over time.
The implications are enormous really. At least a fifth of women have FSD, and nothing of a pharmaceutical sort otherwise helps. About a third of women that I have begun on serotonin reuptake inhibitors (drugs in the Paxil, Prozac, Celexa class) stop taking them because though depression improves, the ability to be sexual vanishes for many of them,
The key question then are about timing of buying PTN. It still must complete a phase III trial of bremelanotide. This trial is not underway yet, and I cannot even tell for sure that a protocol has been drafted. It has patent rights, and the drug is very promising, even blockbusterworthy. PTN shares though struggle to hold onto valuation greater than or equal to $1. I’d like to see some real progress get made on drafting that study and getting in placed in centers, but I am pretty likely to take a long position in this company.
Dr.Karma I have question: Paxil etc. seem to remove ability not nec. desire for sex. Food appetite & sexual appetite seem to have some correlation. Effectiveness of PTN drug increases effect with treatment duration. Would it be weight gain drug? Marketing problem if so . Seem to remember testosterone effective short term with some women,unwanted side-effects. Different response with hetro/homo sexual women? If PTN effective & makes it to market would dwarf viagra profits.
KindergartenInvestor: good question about AMEUF. I put in an order late last night, and am chagrined now to be logging on and finding that it did not execute. This is the company’s only product. It seemingly has no pipeline. For repairing septal defects, I sense it will become standard of care, and to me that means that institutional investors, mutual funds, and the like may want to own some of it. It is still quite cheap at 0.20 (another vexatious situation with Australian capital structure….oodles of penny-shares). The Sydney exchange will be opening shortly. Let’s watch what happens there tonight with AHZ. The company has not even updated its website to reflect the news. Shares here traded at well over a hundred times usual volume, but still what traded is a mere sliver of the float.
AHZ : got in @ .1775 Au for 10k. Fingers crossed. This is the sort of product that >50% of all humans will want to buy.
I had the same trouble with AMEUF as my order was something like 12-15% above the close but that was not enough. I did get in eventually this morn, but ended up pretty much flat for the day which was disappointing to say the least. I’m hoping it has more run in it. My short term Chelsea play CHTP is looking quite good as it was up 9% today.
PTN will be fantastic if we all live to be 999!
I really really don’t think people should be long RXII. It is the worst of the RNAi plays. Alnylam is so grossly overvalued at this point. I just don’t see any reason to be in Tekmira. It is overvalued and pursuing RNAi goals that are just not high priority. It has a clever way of delivering the RNAi, but I am disappointed by what targets it is going after. I will go into more depth and detail at some point on these.
Frank: As a general theme, agonists of the MCR3 and MCR4 receptors, inhibit feeding (see http://www.ncbi.nlm.nih.gov/pubmed/14572167) and so if anything bremelanotide may cause appetite reduction. The melanocortins and their receptors are being actively studied as avenues for treatment of obesity. But control of appetite and, more important, energy use and expenditure, are deeply complex, and involve hormones such as leptin, ghrellin and neuropeptide Y.
The overall effect of serotonin reuptake inhibitors on male sexuality is a mild increase in libido because mood and outlook improve, but with marked orgasmic delay. As a class, they do not interfere with performance but markedly extend time to climax (and depending upon the female partner, this may be welcomed or dreaded). In fact, quick onset SRI’s are in trials as agents to prevent premature ejaculation. Therapists have been giving these out for that purpose for quite some time (see http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2374931/). One of the companies we have discussed here in the last few days, and I cannot at this moment remember which one, has an agent in trials for prevention that can be taken a short time before.
Thank you Dr. for response; It however causes me more questions, perhaps explains to degree phenomenon of those newly in love/lust skipping meals to engage in other activities? .Also does melanocort have role many summertime romance?. Human Organisms are extremely complex chemical ‘factories’ responding to universe of external forces. Again thank you & ask that keep showing generosity to all.
I guarantee satisfaction or double your love back.
Travis,
The title of today’s article is, “The Tiny Company About to Go ‘Public’ With True Fountain of Youth” (“Dr. Allen’s … RNA Interference Revolution: Your Ticket to Centuries of Health and Wealth”)
This is confusing me because over the weekend I started watching a video advertisement talking about a Tiny Company About to Go ‘Public’ With multi bag profit. They are manufacturing “Blue Blood” which is in heavy demand at very high price.
If you come across it, please let us know who are they.
Thanks.
re: PTN: “[AstraZenica] has an agreement with Palatin Technologies (PTN) to develop the use of “Melanocortin 4 Receptors” to treat obesity. Interesting… http://bit.ly/1gj3Iwx
Louis thank you. I was unaware of such. PTN sounding better? I think I keep eye on.
The AstraZenica relationship hit a snag with FDA on the drug that they were working on.
this site is a mess; people do not stick to the subject but the stuff on social security and living forever is at least fun.
As a Gemini I would like to hear more from Sankaravelyudhan Nandakumar about what the stars have in store for me. too bad he isn’t karmaswamiswami (or is he?)
Vivian; Some might argue that chaos has a role in innovation,in any case I enjoy the interplay of intellect evident in many. Perhaps stars best examined in eyes? cheers :-}
As to soc. security If I correctly recall, actual Bush/Senate proposal was to allow you to self-direct 1% of with-holding in approved investment vehicle,, T-Bills,gold CDs Gov.bonds etc.etc. with other 99% to continue going into common pot to finance whims of beloved leaders & replaced by ious for grandchildren to pay.
I’m in for PTN. I once had a female patient present to the ER for anorgasmia as her only complaint, so it must be serious. If you are over a certain wgt you would qualify for bariatric surgery under current insurance plans. If bremelanotide is approved, or has some effect I see no reason why it would not be part of the new health care plans. It will also have an initial price jump as the science sounds novel.
For further s.s. info search Galveston social security experience, or see usatoday30.usatoday.com/…/2005-03-15-benefits-reform-g
Myron; In re post#32 & your reply I think ‘creation’ indisputable,, question is; created by blind unreasoning chaos or intelligent person/force/alien life-form. Order out of chaos requires what? Many Godphobic I think.
Ref #50 Sam,
Money Map Press also referred to a another company this week as a “Fountain of Youth”. It is Anika Therapeutics (ANIK). I’m not smart enough to link to it as it was an email so here’s the write up. Perhaps Dr. KSS can decipher this one for us? I apologize in advance for the long write up….
“Job One here at Money Map Press is to identify “Next Big Thing” trends – and then get you out in front of those trends. One of our favorite areas to reconnoiter is the healthcare/biologics arena – and with good reason: This is usually where we uncover our best ideas. And our latest discovery is one of our best.
You see, we just found the “Fountain of Youth.”
What we’re actually talking about is a “youth-inducing” molecule known as Hyaluronic Acid (HA). It’s a naturally occurring, biocompatible polymer that enhances joint function. HA also coats, protects, cushions and lubricates soft tissues.
We’re really jazzed about this for a couple of reasons. The potential market is big. There’s one specific company that stands to benefit. And there’s real-world evidence that this isn’t just the “fad of the month” that will leave hopeful investors holding the bag.
In fact, let’s start with that story. Aging Gracefully.
In 2000, the World Health Organization (WHO) surveyed 990 villages and towns across Japan. What the WHO researchers found in one specific village – Yuzurihara – was stunning enough to launch a decade-long investigation. For one thing, there were 10 times as many folks older than 85 in Yuzurihara than anyplace you could name in North America.
The Yuzurihara villagers had smooth skin, flexible joints and thick hair. Only a few needed reading glasses. They didn’t have wrinkles or age spots. And it was the norm for villagers to work their fields well into their 80s. And despite this outdoorsy life, there’d never been a documented case of skin cancer there.
Yuzurihara was nicknamed the “Village of Long Life.” And researchers were determined to discover the source of this “Fountain of Youth.” Dr. Toyosuke Komori, the town doctor who penned five books on Yuzurihara, attributed the villagers’ vibrancy to diet.
Because of the mountainous terrain, the Yuzurihara people were unable to grow rice – a dietary staple throughout Southeast Asia. That forced the villagers to depend on a diet that contains little meat, but is high on homegrown sticky starches: Satsumaimo, a type of sweet potato; satoimo, a sticky white potato; konyaku, a gelatinous root vegetable concoction; and imoji, a potato root.
It’s also high on hyaluronic acid. Komori, now 80, believes his own healthy longevity was due to his having embraced the villagers’ diet. “I feel very strongly that if I had not come here to Yuzurihara, I would not have lived this long and healthy a life,” he says. “I probably would have died from some adult disease.”
Science Steps In
Building on Dr. Komori’s findings, biologics researchers stepped in and found ways to transform the HA polymer into a medically useable compound. In fact, the polymer has gained a strong reputation as the “healing” molecule used in numerous medical procedures.
Take the emerging science of “Orthobiologics.” In this biotech sub-sector, orthopedic surgeons use HA to help injuries heal more quickly. Researchers combine the human body’s natural healing capabilities with stem-cell therapies and advanced medical technologies in a manner that makes it possible to repair and heal orthopedic injuries that range from osteoarthritis to sports-induced afflictions. For advanced osteoarthritis patients, the benefits of this approach are massive.
Instead of joint-replacement surgery, patients can rely on so-called “visco-supplementation,” a non-invasive procedure that utilizes the healing power of the hyaluronic acid in a fight against osteoarthritis. And the benefits of HA don’t stop there.
A modified HA molecule is used in a variety of other applications, including soft-tissue and bone regeneration, wound-treatment solutions, surgical-adhesion, dermal-aesthetics and ophthalmic surgery. This is already a big business.
According to GBI Research, the worldwide orthobiologics market will reach $9.6 billion in 2016. That works out to a compound annual growth rate (CAGR) of 12% from the $4 billion recorded back in 2009. The growth drivers are all there – including such osteoarthritis catalysts as a growing elderly population and surging obesity rates.
With 50% of osteoarthritis cases, the U.S. market will account for $6 billion of that $9.6 billion – representing the single-biggest opportunity for new treatments and therapeutics. According to the U.S. Centers for Disease Control and Prevention (CDC), 52.5 million adults suffer from arthritis, while more than 50% of people 65 and over suffer from osteoarthritis.
Clearly, this “Fountain of Youth” molecule is a very real investment opportunity. And one company is perfectly positioned to capitalize on the transformational potential of hyaluronic acid. We’re talking about the Woburn, Mass.-based Anika Therapeutics Inc. (NasdaqGS: ANIK), a biotech manufacturer of highly purified, high-molecular-weight HA products. A Pioneer in Therapeutics
With more than 20 years’ experience in HA technology, Anika is a pioneer in developing therapeutic products for a variety of uses. The company’s HA-based products cover a broad range of therapeutics, including orthobiologics and dermal, ophthalmic, veterinary and surgical applications. Anika’s “bread-and-butter” is the proprietary purification-and-formulation processes used to consistently produce high quality HA products.
It is useful to know that the highest-molecular-weight “hyaluronans” are more effective than low-molecular-weight hyaluronans. Efficacy, in turn, translates into a superior product and wider range of applications, which will allow Anika to diversify its product portfolio and exploit different growth opportunities.
Make no mistake: Anika is an innovative company whose ability to generate future growth will depend upon the successful leverage of its proprietary HA formulation-and-production processes. Anika will continue to innovate and fundamentally change the orthobiologics and aesthetic-dermatology market forever.
The firm’s latest financial results paint a vivid picture of a breakthrough quarter.
The “Fountain of Youth Formula” generated a 200% increase in third-quarter net income on a year-over-year basis, while total revenue surged an impressive 20%. Product gross profit jumped 70% as a result of favorable product mix, while international sales alone are up 83% so far this year.
These are record results for the firm, and underscore the company’s strong momentum. It comes as no surprise, then, that firm’s flagship product, ORTHOVISC, an injectable HA compound used to treat osteoarthritis of the knee, currently holds the No. 1 position in the domestic multi-injection segment.
ORTHOVISC is the only FDA-approved compound using hyaluronan. All other pain medications in this class are derived from birds and can give some people allergic reactions. Currently, ORTHOVISC is only approved to treat knee problems in the U.S. market. But that alone is a very lucrative market.
Fact is, with the graying of America, millions of us suffer from knee pain. Indeed, a recent study by the Journal of the American Medical Association (JAMA) found that total knee replacement surgery – the most drastic action for this type of pain – surged 161% between 1991 and 2010.
If anything, the JAMA article understates the true magnitude of knee problems.
The authors only studied federally funded Medicare beneficiaries, meaning their study group consisted chiefly of folks 65 and over.
That means the true number of full knee replacements could be much higher than the 3.2 million performed during the study period. Those surgeries cost between $11,000 and $46,000 each. If we just take an “average” price of $28,500, we find that Medicare surgeries alone cost as much $91.2 billion in those two decades, or more than $4 billion a year.
Given that there are roughly 70 million Baby Boomers in the United States born between 1946 and 1964, reducing the number of knee surgeries could help lower healthcare costs. It also would help millions avoid the often-painful rehab process required after these operations. And the story gets better from there.
Why We See Huge Gains
Anika has found a way to expand HA sales outside the U.S. market. The firm has received medical approval in Europe to sell ORTHOVISC for use in other joints, like the elbow, shoulder and wrists. (In Europe, Anika also sells a version of ORTHOVISC for use in smaller joints, like the thumb and big toes.)
These versions of ORTHOVISC illustrate the potential for Anika’s Orthobiologics business, which saw sales zoom 40% on a year-over-year basis to reach $40.6 million in the first nine months of the current fiscal year. And the third quarter by itself was a total blowout. Sales rose 20% to $17.8 million, but net income jumped roughly 200% from the year-ago period to reach $4.9 million.
At the same time, Anika is using HA to make inroads in the aesthetic dermatology market. Anika entered this field in 2007 with ELEVESS, an injectable filler that corrects lines and wrinkles on the face. Anika notes this is the first HA-based dermal filler to incorporate the anesthetic lidocaine to improve patient comfort. ELEVESS is approved for use in the nasolabial folds, more commonly referred to as “laugh” or “smile lines.”
This also is a potentially large market for Anika. Researcher Kalorama Information says the facial-rejuvenation market reached $3.2 billion in 2012, up 9% in two years. Analysts say ELEVESS could pick up sales from industry leader Botox, a product from Allergan Inc. (NYSE:AGN). Allergan is projecting total 2013 sales of Botox at about $1.8 billion, about half of which stems from the aesthetic market.
So, even if Anika made a small dent in Botox sales it could mean a huge influx of cash for the small company. In addition to the growth, Anika is also boosting its operating efficiency. Most recently, the company shuttered an unprofitable tissue-engineering operation in Italy.
For investors, this is both a favorable move and an encouraging signal. It demonstrates that the company is conserving its capital and devoting its resources to products and ventures that can generate real returns. With a Price/Earning (P/E) ratio of 25, the market has high expectations for Anika. A lot of their future success is already priced into the stock.
But here’s the kicker … Even with a P/E of 25, the market is underestimating Anika’s growth potential.
Assuming continued product-revenue growth in both the orthobiologics and aesthetic-dermatology market, we estimate that Anika will earn at least $1.50 a share next year. With a continued P/E of 25, the earnings per share (EPS) of $1.50 implies a stock price of $37.50 – a 19% gain from current levels. But this is actually a highly conservative scenario. First, we believe that Anika is going to earn more than $1.50 a share next year. And Allergan, Anika’s closest competitor, is currently trading at 28 times next year’s earnings.
An in-line multiple of 28 and a conservative 2014 EPS number of $1.50 leads us to a $42 stock price (P/E of 28 x EPS of $1.50 = $42 projected share price). That’s just slightly above the current market consensus of $41 a share, and represents a 12-month gain of 32% from current levels. It’s also well below its 52-week high of $39.40.
The markets that Anika serves are expected to grow at a 15% annual rate for the next several years. And we’ve shown you how the company is going to grow faster than the market. So that 32% gain in the next year is just the start – and may be conservative, too.
Like any small-cap biotech, this is going to be a higher-risk play – especially in the whipsaw market we’re currently flying through. But this is a real company with real products – meaning we’re not waiting for the outcome of some clinical trial, or a Food and Drug Administration (FDA) ruling.
And that means Anika could deliver the kind of market-beating gains that will keep you young.
HA is nothing new–it’s been in joint inflammation formulas for years now. This sounds like snake oil to me.
I can definitely see no reason to be in Anika. It looks overpriced in fact. The yarn about the enchanted Japanese village with its special diet is just so much malarkey as we are always hearing from the diet/supplement/natural crowd. Dietary hyaluronic acid makes not a whit of difference in anything. HA is made by the body. HA products have been around for ages and are made by other companies. To compare Anika with a high-flier that knows how to execute well like Allergan is just crazy.
Dr. You have here answered question I had. Thank you.
Hi Shaunus Brousek
Are you aware of this other Gumshoe thread that discusses molecular biology at a high level? Since you have a biotechnical degree, you should be all set. Others have to have the book ‘Molecular Biology for Dummies’ handy!
http://www.stockgumshoe.com/reviews/biotech-supertrader/this-tiny-unknown-biotech-is-about-to-unleash-its-holy-grail-drug/#comment
I thought death was God’s way of telling you to slow down.
ALNY is legitimate and will be bad news for undertakers.
Frank, legitimate, yes, but also heinously overpriced at present. Alnylam has put the bulk of its effort into commercialization of silencing RNA for transthyretin-mediated amyloidosis. Do you have any idea how rare that is? They are very unlikely to recoup development costs. Moreover, their approach to this elides the fact that this condition is curable by stem cell transplantation. ALNY has yet to demonstrate really long-term efficacy. There is tremendous concern that its approach, the exogenous administration of naked RNA, will stimulate Toll-like receptors and thus lead to autoimmune phenomena. Would you rather have the problem fixed or take shots twice monthly of a dumbfoundingly expensive drug?
Dr Karma ; have you any thoughts on recent reported generation of stem cells from mature cells using weak acid & further generation of much needed platelets from patients own cells?
Bernie Sanders…taxing the rich, ..? Were we talking about investments, or did I stumble into a rabbit hole and end up in a Marxist commune reading Das Kapital ?
In my 60’s, I plan on collecting SS for as long as I paid into it, or taking my gold & heading to South America.
Adios.
With nod to P.J. O’rourke; after we “Eat the rich” where do we then turn?
The longer one lives, the more chance one has of dying from something else other than old age.
Paul I think that is most sensible statement. As one nearing end of run I think ” no-one gets out of this world alive” agrees with science which seems to show each generation accumulates defect in genes,which does much to explain increase in dis-ease. Too often I think we address symptoms & not cause. To reiterate prior statement in this thread ,do not expect miracles from this company.
Merci beaucoup Frank.
The problem is that people only look at the length of life, not the quality. What point would there be to living, say, 1000 years, and be demented for 920 of them?
This research is a symptom of the “me” society. “Who care if there’s not enough room or resources for future generations, as long as I can get money now for some supposed fountain of youth?” is what they are really saying. But there is no fountain of youth, only fountains of stupidity.
We have a similar mindset with politicians, spending now, with no regard to future generation who will have to foot the bill. Selfishness gone mad.
Paul I could not say it better,I still have hope in diety who knows better than we what we need,not what we desire. We do not begin to know capabilities of/ for this earth we call home.
To answer possible question I Think diety is Jove, Jehova, Yahweh
Which approximate translation means ” he who causes to become whatsoever he wills”
Frank: You hit the nail on the head, “Too often I think we address symptoms & not cause” and just maybe part of our education on living a healthy lifestyle is learning what doctors don’t tell us! http://abcnews.go.com/Health/Wellness/things-doctors-telling/story?id=16175754
If you follow all the treads offered in the essay you may just become a little more sceptical about medical procedures.
Many of us forget that medicine is a business just like any other. Cure for cure sake, money for God sake!