There is little that makes investors (and human beings, frankly) perk up their ears more quickly than talk of a “cancer cure” … each of us has either been touched personally by cancer, or seen friends or loved ones hurt or killed by one of the many forms of this ugly disease, and we know that a cure would be both a boon for mankind and a millionaire-maker. A hot new cancer-fighting blockbuster drug like Avastin or Herceptin is the holy grail for biotech investors, who hope that their little stock could turn into the next multi-billion-dollar Genentech or Amgen or Celgene.
So, naturally, the investment newsletters like to use the promise of a hot new drug to get our attention — particularly when they can pitch us about a top-secret little tiny company with some heretofore misunderstood breakthrough that mainstream investors just don’t get, but which is going to (so they say) generate gains of 10,000% for investors who are clever enough to (subscribe to the right newsletter for $499) and buy the right stock.
This time around, the spiel is for a newsletter called Penny Stock Millionaire, from the Angel Publishing Folks and edited by Alex Koyfmann — the last few teaser stocks of his that we’ve sniffed out over the past year or so have mostly been genuinely teensy companies, with market caps well under $100 million (sometimes under $20 million), and so far one of those picks is up by about 30%, one is down by about 25%, and one is down by just a few percent… so perhaps this one will break the tie?
Let’s see what they’re pitching… here’s what got my attention:
“Early investors are poised to see gains of 4,000%, as this small company has found a way to destroy cancer… for good.
‘We’ve seen these drugs working in a wide range of cancers… we are at the beginning of a new era in treating cancer’
— Dr. James Larkin
“… it ALL revolves around the Didiscus oxeata, more commonly known as the Caribbean sea sponge.”
You could be forgiven for writing this off as the “son of Stellar” — those who got sucked into the Stellar Biotech story about their “cancer cure” (among other things) based on the immunotherapy potential of the Megathura crenulata, another noncharismatic ocean creature, had plenty of opportunities to lose money on a story that was long on high-end excitement and short on financial specifics… but this is apparently not someone who is creating a colony of sea sponges, but someone who has found a way to synthesize the active compound found in these sea sponges in a lab… so they don’t have to be either farmed or hunted to extinction.
That’s the goal for many of these appealing compounds with medical uses that are discovered in nature, of course — find a way to synthesize them so you don’t have to create giant tanks of mega mollusks and talk them into reproducing, or raze the rainforest looking for more plants or frogs, or extract ingredients from more charismatic animals like horsies and bunnies.
So what’s this compound? Apparently it’s something called curcuphenol — here’s a bit more from the ad:
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“For nearly a decade, medical researchers around the globe have relied on a chemical compound known as curcuphenol.
“Curcuphenol is simply the scientific name for what amounts to secretions from sea sponges…
“… as of right now, curcuphenol only comes from one place: the Didiscus oxeata, a.k.a. the Caribbean sea sponge.
“And these sea sponges only grow in one very specific part of the world: off the coasts of Jamaica and Colombia….
“… dozens of important drugs rely on curcuphenol…
“In the medical field, it’s used as an HIV treatment, a tuberculosis medicine, an anti-malaria drug, and an anti-microbial, among others.
“This may not seem very exciting, but think about it: It’s not a stretch to assume that because it’s so scarce, curcuphenol extracted from the Caribbean sea sponge sells for well over $100,000 an ounce.
“However, it’s been found that curcuphenol is also a key component in the fight against cancer.
“But due to the high expense of harvesting these sponges, it’s no wonder companies haven’t been able to develop a cancer cure (until now).”
So that’s what we’re looking for — the lab who synthesized curcuphenol and is developing some way to use it in cancer treatment. And yes, it’s probably going to be super-tiny.
Any more clues that we can feed to the Mighty, Mighty Thinkolator to get our answer? Just a few…
They have these two folks working in their lab:
“A PhD recipient from the Swiss Institute for Cancer Research in Lausanne, Switzerland who’s spent more than 30 years researching cancer and immunotherapy treatments.
“A world-renowned expert in biomarkers for Alzheimer’s and Oxford University graduate who’s discovered the ‘control room’ for immune system response in humans.”
And some more specifics about what this curcuphenol can be used for…
“Murray Aitken, executive director of the IMS Institute, says of this special class of drugs:
‘We’re at the edge of a major breakthrough in terms of cancer treatment.’
“The best part is that this type of drug is exactly the kind that’s made from the chemicals in Caribbean sea sponges, and it’s exactly the kind that has in-the-know investors licking their chops over the company I’ve been telling you about.
“Aitken goes on to say, ‘Few had options before, but we are seeing many new drugs become available in the future.’
“Two drugs similar to the ones Aitken describes are Opdivo by Bristol-Myers Squibb and Keytruda by Merck.
“These two drugs are primitive versions of the drug made by the tiny company I’ll reveal to you in a moment.”
Well, he’s not going to “reveal it to us,” of course, because we’re not going to be sucked in and write a check for $499 just to hear about a “secret” little company… but we can reveal it to you with just a whisper more in the way of clues. Here’s a bit more from the ad…
“The type of treatment I’m talking about is called cancer immunotherapy, and it’s designed to use a special class of chemical compounds (like the kind derived from sea sponges) to make cancer cells visible to your immune system.
“This is why Aitken and the rest of the IMS predicts cancer spending will continue to grow by 8% over the next couple of years…
“And it’s why investors in the tiny $6 million company I was recently tipped off about are doubling down on their positions.
“This company is going to change the game for this type of treatment, and it could even have its hands on the ever-elusive cure for cancer….
“Nobody Knows About This Opportunity.”
And, of course, there’s lots of stuff that you’d think a copywriter would be a little embarrassed to write…
“Not only has this company discovered an endless supply of cancer-curing chemicals, but it’s also positioned itself to corner the most valuable cancer market in history…”
And plenty of ridiculous hyperbole, comparing this company’s breakthrough to the discovery of DNA, or penicillin, or AIDS drug cocktails… and liking this company’s breakthrough and potential to companies like Gilead, Biogen and other long-term 10-20,000% gainers in calling this one an “easy 4,000% gain.”
But what is it? Keeping in mind that this is a $6 million company so no one should be pitching it if they have more than five subscribers, and I shouldn’t even be writing about it for you — there’s little chance that a stock this small could absorb 100 enthusiastic new investors without making the price go entirely irrational.
Still, we like to solve our puzzles — so I can tell you that the Thinkolator identifies this one as bioMmune (IMU.V in Canada, BIMUF OTC in the US).
I’m tempted to tell you to run, full speed, away from any company that uses stupid capitalization in their name… but that’s probably just my inner grouch talking, certainly silly names are commonplace in the markets, and endemic to biotech as they try to cleverly include their technology in the name.
So who are these guys?
Well, the two hinted-at scientists at BioMmune are Dr. Wilfred Jefferies and Dr. Reinhard Gabathuler, who are also the headline science names at larger (but still teensy) BiOasis (BTI.V in Canada, BIOAF OTC in the US) — the other name common to the two companies is Rob Hutchinson, who is on the board of each and was one of the founding shareholders of the “blank check” company (MC Partners) that raised money back in 2012 as a capital pool and, about a year later, raised more cash and acquired BioMmune.
This is really an early stage R&D company, as you can probably guess from the fact that it has a $6 million market cap (C$8 million) — they did just raise another million dollars a couple months ago, which should see their research through for a while unless they’re really planning on stepping up the pace. They couldn’t have waited all that much longer, their filings indicate they were down to about $80,000 at the end of May and they’ve been burning through something like $150,000 in the average quarter recently. And yes, those numbers are raw numbers — they really had only 80 thousand dollars in cash at the end of May, which means that everything on the books looks like a rounding error if you’re used to looking at larger companies.
What’s the technology? Well, it looks like much of the research at the company is based on screening their library of marine compounds for immune response activity, specifically for those that can help increase MHC Class 1 expression in cancer molecules and therefore help the immune system to recognize them, one step in helping the immune system fight off cancer — which is the broad aim of immuno-oncology, certainly a huge area of research and a probably revolutionary jump forward in fighting cancer (that’s what the big picture quotes from Murray Aitken are about in the ad, the huge spending on cancer research and the advancements being made in general, certainly not specific to BioMmune).
Curcuphenol is the first one of these compounds BioMmune has identified, tested (not in humans, but in the lab and in animals), and synthesized… and they say it can be cheaply and easily synthesized, as can four other (unnamed) compounds they’ve identified as prospective. This is part of their work, but it’s mostly what was teased so I focused on that — they have apparently applied for patents relating to Curcuphenol and three other compounds as of last Fall, but I don’t know whether they will end up really “owning” those compounds or the specific method of synthesizing them… or if, assuming that this particular compound does end up being valuable, there might be multiple other methods that are effective.
So yes, the teaser is about a real company that is doing real work with a compound with potential cancer immunotherapy applications that really does come from marine life — in this case, one of the compounds was originally identified in that sea sponge. But be very, very careful — investors are usually accustomed to investing in or speculating on companies who have developed drugs and tested them on animals and applied for FDA approval to test them on human beings or, preferably, have already tested them and are working through the multi-year process of defining the safety and efficacy of the drugs in clinical trials. That’s not what this company’s doing, and it’s not even very close — this company is far too tiny, and the research far too early, to even think about the FDA. Maybe the technology is amazing, maybe it will turn out to be important — and maybe, if it is important, it will turn out that this company has valuable ownership of the intellectual property in that eventuality… but it is extraordinarily early, this is stuff that would normally be done in a University lab (and indeed, that’s where much of this work was started, at the University of British Columbia), and it’s so teensy and “not ready for prime time” that it probably shouldn’t be a publicly traded company. Not that this means the company is bad, just that companies who have to raise a million dollars to get through a few more quarters of lab research aren’t really designed to meet the expectations and disclosure requirements of publicly traded stocks.
And that’s about all I can tell you — I have no idea whether the stock will rise or fall in the month and years to come — it has risen 30% or so just from the attention from this newsletter in recent weeks, I expect, and it may well rise further for a brief while just because I’ve written about it for you today (one reason I’ve published this after hours, so folks can at least have a few minutes to think it over while the stock isn’t trading), but there’s no rational argument that you can really make about whether this company should be worth $10 million versus $100 million or whatever other number you wish to invent — it’s a research lab run by some scientists who are also working on other projects (and at other companies), they’ve identified some promising things in the cancer immunology space, but it’s also a brand new and tiny, tiny little company with a ridiculous little market cap of $6 million … by way of comparison, immuno-oncology giant Bristol-Myers Squibb (BMY) earns roughly that much in profit every single day, so if BioMmune has a breathtaking technology that is in hot demand among all cancer researchers and has proven their ideas enough that they’re likely to rise by 4,000% in any foreseeable future, well, why wouldn’t someone who follows this area incredibly closely and has cash to burn (like BMY or dozens of other large biotechs and pharma companies) have snapped them up? Odds are, it’s either because these firms like to let little speculative R&D firms burn their cash on science and wait until something is proven before striking, thus reducing risk, or that this earth-shattering 4,000% gainer (insert sarcasm emoticon here) just fell through the cracks up there in Vancouver, and it’s been left to little ol’ you to be the beneficiary.
You can make your own call, of course — it is your money. You can see their SEDAR filings here (that’s the Canadian equivalent of SEC filings in the US, quarterly reports and the like), and their investor presentation from March here if you want a little more info on this one, and feel free to let us know what you think with a comment below.