Hard to believe that the major publishers didn’t already have something called The Penny Stock Letter, but this is the first time I’ve seen the title — it’s an entry-level newsletter from Paradigm Press, one of the many publishers in the Baltimore Agoraplex, and they’re promoting it with a big teaser campaign now that hints at “The #1 Penny Stock of 2020” … so that’s our topic for today.
Oddly enough, it looks like you can make money from this subscription by not doing anything at all — they say they’ll refund you $98 on your $49 subscription if you’re not happy in the first six months, so that’s at least a nice, guaranteed 100% return. And even better, that’s 200% if you annualize it!
Will the stock picks they make be as successful as that? Well, probably not, but I have no idea. Let’s look and see what the one they’re teasing might be, shall we?
They’re peddling a special report called “How to Amass a Retirement Fortune from The Biggest Medical Breakthrough in History,” and the lead-in is enough to get anyone excited:
“Backed by Billionaires: Jeff Bezos, Peter Thiel, Venrock Capital, and BlackRock Inc. Reveals…
“THE #1 PENNY STOCK OF 2020
– It holds the $8.18 Trillion Cure to Man’s Biggest Problem
– Shares are dirt cheap at just $6
– And its November 7th announcement could shock the world and start a historic 7-figure market sprint, unlike the world has ever seen…”
The two key words in there? “Could,” and “start.” And I’ll bet the lawyers added them… but this is basically the same spiel that every biotech newsletters uses — there’s a cure for X disease coming, it will be announced in a shocking development in a few weeks, and the gains will be life-changing. I can’t tell you that it never happens that way, but in my experience examining these teaser ads for 12 years now it hasn’t yet happened that way.
Which doesn’t mean the stock won’t be worth considering, of course, just that we should start with a little sobriety and skepticism. So what is the stock?
Let’s check the other clues they drop. The ad says that there’s a secret US Patent that was filed to “end the biggest killer in human history,” with the little patent number blurred out to make us think it’s super-secret. Here’s some more from the pitch:
“In just the last year alone this deadly killer has taken 34.6x times more people than heart disease AND cancer… COMBINED.Are you getting our free Daily Update
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“And better yet, this affects the lives of all your friends and loved ones….
“This Tiny $6 Biotech Firm Has Just Discovered The Cure…
“… what we are projecting will be huge…
“10,343% Returns Starting As Soon as November 7th”
And there are some quotes from outside sources that fall into the “other people are also saying it, so it must be real” category:
“I know this sounds nuts, but as Forbes says…
‘The idea behind [this company] sound’s crazy, but it’s backed by dozens of scientific papers.’
“SingularityHub has confirmed the power of this technology, saying…
‘It’s like a 90-year-old human suddenly jumping off the couch and running around the block.’
“Technology & business news, The Hustle, says…
‘Study shows [this tech] could increase the human lifespan by almost 35%.'”
And they dive deeper into those big backers, too:
“Founder of Amazon and the world’s richest man Jeff Bezos has invested $151 million.
“Venrock Capital, started by the Rockefeller family invested upwards of $55 million.
“Billionaire investor and founder of PayPal Peter Thiel is also in.”
What about the company? We get a few more clues:
‘[this company’s team] has collectively moved more than 90 therapeutic candidates into human clinical trials and developed 13 FDA –approved medicines.'”
“The genius behind this company had one (of his many) biotech ventures be acquired for over $2.1 billion.”
So what’s the stock? Thinkolator sez the stock being teased here is Unity Biotechnology (UBX), and the disease they’re fighting is aging. I grow more sympathetic with the anti-aging researchers each year, of course, so I can understand why aging billionaires and venture capital folks love to throw money at the promise of extending the human lifespan — including Peter Thiel, who has invested in a bunch of anti-aging companies (and, yes, is on board with UBX as an early venture investor, along with Venrock and Bezos and others).
Unity Biotechnology is an interesting story — there’s a good in-depth piece here from Quartz that appeared two years ago, before Unity went public. This is a little excerpt:
“The company’s approach is deceptively simple: clearing the body of senescent cells, which are trapped in a state of purgatory between division and death—they’re still alive, but they’re not making new tissues. Cells in this mode are found throughout the body, and research has shown that they can congregate in areas that start to wear with aging, like the eyes and in joints. A recent paper in Science, coauthored by Unity founders Van Deursen and Judith Campisi of the Buck Institute for Research on Aging, demonstrated that, in mice, senescent cells contribute to atherosclerosis, the buildup of plaque in the arteries.”
Unity went public during a happier market for biotech companies, in mid-2018, and is now trading at about $7 a share (it briefly got over $20 a share a little over a year ago). And yes, they are expecting to announce their next earnings report on November 7, so that date wasn’t just pulled out of the air by the ad copywriter… but they’re not going to announce shocking results or a “cure for aging” on that day.
Earnings reports don’t generally mean anything for clinical-stage biotechs, and Unity is in a fairly quiet period where we’ve seen their Phase 1 results from their first drug, but we’ll probably have to wait quite a while before there’s any more meaningful drug development news. And those first results for their knee osteoarthritis treatment were, at least from my perspective, pretty unimpressive — Phase 1 is mostly designed to make sure a drug is safe enough to try on a broader group of patients, but they also want to see if it is effective… and for many of the indications, the placebo did as well or nearly as well in reducing pain in osteoarthritis sufferers. The press release headline was that “topline results demonstrate a dose-dependent and clinically meaningful impact on pain,” and that they showed enough progress to plan for Phase 2, but it certainly wasn’t a “wow, this is amazing!” result.
The company’s goal is to extend the “health span” of humans, dealing with some diseases and conditions that significantly impact the joy of living like osteoarthritis and macular degeneration, and this first clinical trial is important in that the drug at least seemed safe and well-tolerated. Whether things improve from here, I have no idea — but it will presumably be a while, they just started enrolling for the Phase 2 trial, and they don’t expect to report results until sometime in the second half of 2020 (they’re planning a “parallel” 1b study as well, with multiple doses and a higher dose, don’t know when those results might be available but presumably it’s also at least a 12-week study so it will be sometime next year).
And the next wave of research they do will be in Ophthalmology, where they have identified their first clinical candidate — but they haven’t even filed an IND for that yet (that’s an Investigational New Drug application — basically, sharing their toxicology results and other background info, including stuff about the manufacturing of the compound, outlining the clinical trial protocols they intend to follow, and requesting approval to test the drug in humans)… so we won’t be seeing any actual clinical trial results from those drugs in the next few months, either.
As of June, UBX still has about $125 million in cash to fuel their R&D programs, so they should be OK for a little while — even with a Phase 2 trial underway which should increase their costs, that will probably be enough to get them at least a quarter into 2020 (so far this year they’ve been burning through about $20 million in cash per quarter), though like any early-stage biotech they will probably use any moments of investor optimism to raise more money — and they will almost certainly need to raise funds before they have Phase 2 results from their lead drug next year.
So is Unity Biotechnology a good candidate for you? Only you can answer that, I’m afraid — I don’t like to dabble in early stage biotechs because I can be fairly sure that I’m buying shares from someone who understands the science a lot better than I do, and I don’t see any reason to expect a big “price catalyst” bit of news from Unity anytime in the next few months that might attract the biotech crowd, so this one isn’t for me — but they do have plenty of backers and some interesting-sounding science, so perhaps it will eventually become a big winner. You’ll have to make your call on where you see the probabilities falling for this one, and I hope you’ll share your thoughts with a comment below… thanks for reading!