A version of this article was originally published on October 21, 2019, but the ad continues to circulate and generate new questions so we have updated it to address any changes over the past six months.
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 Tim Bohen at Paradigm Press, one of the many publishers in the Baltimore Agoraplex, and they’ve been promoting it for more than six months now with a big teaser campaign now that hints at “The #1 Penny Stock of 2020” … so that’s our topic for today.
The latest version of this ad, which I received on June 16, 2020, highlights the Jeff Bezos connection…
“Jeff Bezos, owner of Amazon and world’s richest man has officially invested $151 million into a tiny $6 Silicon Valley stock.
“Could it be because this tiny company is set to end the biggest killer in human history?”
But other than the stock price, which in recent versions says “you can buy in at just $5 per share” and was previously touted as “shares are dirt cheap at just $6”, there haven’t been many changes to the meat of the ad in the past year — and if you have the endurance to make it to the end of the pitch, it’s still dated July, 2019.
The only other change they seem to have made is to the actual offer — originally you could have made money from this subscription by not doing anything at all, because they sold it with a guarantee that they’ll refund you $98 on your $49 subscription if you’re not happy in the first six months, a nice, guaranteed 100% return. That’s no longer the case, they still offer a guarantee but they’re not doubling it.
The “guarantee” makes you work for it, by the way… and they get really specific, so I thought it was worth mentioning — here’s what the latest order form says:
“And if you’re not extraordinarily impressed with everything you’re receiving you can follow our simple instructions to request your money back.
“All you need to do is ship back the penny stock course book (physical) with a summary of each chapter so I can make sure you tried it out…Are you getting our free Daily Update
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“And also write a letter that explains why you’re not happy with what you’ve received through ‘The Penny Stock Letter.'”
So I’m sure they’re counting on the fact that for most of us, our time is too valuable to do that much homework in exchange for a $49 refund… but still, it’s technically there.
But let’s get back on track, 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
– You Can Buy In At Just $5 Per Share…
– And a Special August 7th Announcement Could Trigger a Tsunami of New Wealth Across The Nation.”
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. There tend to be lots of ups and downs in drug development, sometimes you get a big 100% jump or a 80% fall on a great or terrible clinical trial result, but building a biotech holding into something genuinely “life-changing” takes a long time, and a lot of luck and patience.
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.
“And better yet, this affects the lives of all your friends and loved ones….”
But then there was actually another change to the latest version of this ad… it used to say:
“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 now it’s a little different…
“This Tiny $5 Biotechnology Stock Has Discovered a Single Groundbreaking Treatment, Bringing This ‘Disease’ to a Screeching Hault [sic]…
“This could be your ticket to a fortune unlike anything you’ve ever had before.
“Returns Massive Enough to Overshadow Anything The Stock Market’s Seen Before…
“Starting As Soon as August 7th.”
So they removed that “cure” word and got rid of the specific percentage returns… still carries the same hype feeling, but I imagine the lawyers like it better now.
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 (still) 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 $8.50 a share (it briefly got over $20 a share later in 2017, and did bottom out at about $5 during the March collapse, though it’s been above $8 for a month or so). And yes, they are expected to announce their next earnings report on August 7, though the exact date hasn’t yet been confirmed — 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 and they finished enrollment for Phase 2 just before the coronavirus shutdown so they do still expect Phase 2 results to come out sometime in the second half of this year (so, anytime after July 1 — they haven’t yet been more specific than that).
Those first results for their knee osteoarthritis treatment that we saw last year 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. That doesn’t mean it doesn’t work, but when you’re measuring pain and function for sore knees, there’s apparently a pretty big placebo effect to overcome. 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 proceed with Phase 2, but to my (completely inexpert) eyes 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, both of which are HUGE markets that are only growing, and this first clinical trial is important in that the drug at least seemed safe and well-tolerated — and perhaps it’s good news on the safety front that they haven’t said anything yet about the Phase 1b and 2 trials that are currently underway. Whether things improve from here, I have no idea. I hope they make some huge advances, my knees and hips could certainly use some osteoarthritis help.
They do have a bunch of patents, by the way, just like any other company trying to develop a new drug or new class of drugs — including more than 100 patents that they either own or co-own or have licensed from research organizations, but they don’t make any claims about a particular patent being the key to their whole operation, and I don’t know which specific patent the Penny Stock Letter folks are teasing as being extra-critical (I’d guess that the use of that greyed-out patent number is largely just a marketing ploy, so I confess that I didn’t try that hard to investigate it — though I did read through the patents section of their first 10-K, just for giggles).
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 ophthalmological drugs in the next few months, either, but they do say that they plan to file the IND to begin Phase 1 clinical trials for that drug, and that data is expected in 2021.
As of March, UBX has about $109 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, they say they have a “cash runway into second half of 2021,” though like any early-stage biotech they will probably use any moments of investor optimism to raise more money. Six months ago I wrote that I expected them to need to raise funds before they have Phase 2 results from their osteoarthritis drug, and they’ve since raised about $35 million… so I guess that’s enough to tide them over for a while.
You can check out the latest investor presentation from Unity if you’d like more detail on their programs and their strategy, it does sound fascinating and they’ll probably really start to heat up in six months if they’re able to move into pivotal trials for their osteoarthritis drug, assuming that all goes really well in Phase 2 when they announce those results later this year — Phase 3 is where trials tend to get expensive, testing in much larger numbers of patients, and also where investors start to really think about the approval timeline and how much the company might earn from these drugs.
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 the only potential big “price catalyst” bit of news from Unity anytime in the next few months will probably be the Phase 2 results from UBX0101, so hopes will probably be high when that data is released… and I won’t pretend that I can tell you what’s going to happen next. They do have plenty of backers, though the big name folks like Thiel and Bezos bought in years ago as venture capital investors, and they certainly are working on 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 (I’ve kept the original comments from the October 2019 version of this article attached as well)… thanks for reading!
Disclosure: Of the companies mentioned above, I own shares of Amazon. I will not trade in any covered stock for at least three days, per Stock Gumshoe’s trading rules.