“Greatest Medical Breakthrough in History” from Paul Mampilly

What's "midwestern company" has the technology that's being teased by Profits Unlimited as "More Important Than Every Drug, Vaccination and Medical Device ... COMBINED?"

By Travis Johnson, Stock Gumshoe, March 12, 2018


Paul Mampilly is out with a teaser pitch for his Profits Unlimited newsletter from Banyan Hill, which is the entry-level ($97/yr) stock picking letter for that publisher (which used to be called the Sovereign Society). I first covered this for the Irregulars last summer, but we’re still getting a lot of questions so we opened the article up for everyone.

Most of what follows originally appeared in the Friday File on August 18, 2017, though I’ve added a few updates.

So… what’s he using as bait to fish for our subscription dollars? He says he has identified “The Company Leading the Precision Medicine Revolution” … and that this will be a huge winner as it captures more and more of the health care market.

Let’s check our clues… this is how Mampilly gets our attention:

“The Greatest Medical Breakthrough In History

“More Important Than Every Drug, Vaccination and Medical Device … COMBINED!

“Experts Declare This Is ‘A Revolutionary Approach to Tackling Disease’ That Will Completely ‘Change the Game’ and Ignite ‘A Health Revolution.'”

And these are the hints he throws out to tantalize us:

“A mid-Western company is on the precipice of the greatest medical breakthrough in the history of mankind….

“In fact, this new method will make diseases that were once considered “untreatable” or perhaps even “death sentences” … things of the past.”

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OK, so it’s “mid-Western” … what else?

We’re told that it is a $1.5 billion company. And that it is involved in “precision medicine” … so what is it that he means by “precision medicine?” Here’s some more from the ad:

“Imagine looking at a person’s DNA, that person’s blueprint, and being able to design a medicine to fit that person’s specific genetic makeup … the same way you can custom tailor a suit to fit an individual … to prevent a disease from ever developing.

“If that were possible … chronic diseases like arthritis, Alzheimer’s, diabetes, heart disease, Parkinson’s … could be wiped out simply by looking at a person’s DNA.

“Well, this is where we are in history.

“The impossible is now possible, thanks in part to this $1.5 billion Mid-Western company….

“In simple terms, precision medicine allows doctors to accurately identify which medicines and treatments will work best to prevent a patient from getting a particular disease … and which medicines and treatments will work best for a patient to overcome an existing disease … all based on a person’s genes.”

OK, but there are lots of companies that are involved with what they would call “precision medicine,” whether that means doing the actual genetic testing or building machines that enable that testing, or marketing specific tests, or customizing treatments. It’s a broad area. Anything else about this specific company?

Not much… there are lots of stories of success of “precision medicine,” none of which have much in common when it comes to the actual treatment or drug that the person received, and none of which are publicly associated with a particular testing regimen or company that I’ve seen. At least one of the stories is pulled from the (Obama) White House’s “precision medicine initiative” page, another comes from the City of Hope National Medical Center folks. They’re great stories, and they buttress the powerful pitch for precision medicine just fine… but they’re not about one company.

So what else do we get that hints at this company? Here are our other hints:

“Formed in the early 1990s, this Mid-Western-based company’s CEO is a 25-year biotech pioneer, and he’s using his industry contacts to bring some of the top scientific minds in the world to work in these hilltop facilities…”

And they include a photo of the headquarters… which will be key in a moment in confirming the Thinkolator’s work…

“It is leading the industry in molecular diagnostic DNA sequencing to assess whether a person will develop a disease and to determine which drug therapy a person will best respond to.

“More specifically, this company’s sequencing targets various forms of cancer, from ovarian to breast to lung to uterine to prostate, and rheumatoid arthritis.”

So who is it? Well, thanks to good ol’ Google Earth I can confirm with certainty that this “mid-western hilltop” is actually in Utah, on the outer fringe of Salt Lake City, and the company is Myriad Genetis (MYGN). Here’s my picture that I grabbed from Google, in case you’re looking for confirmation as you compare it to the photo in Mampilly’s ad:

Myriad Genetics is indeed a “personalized medicine” and diagnostics company, they make their money by selling and processing tests that check for cancer risk, or that identify specific cancer variants and predict disease progressions and treatment efficacy. They do have non-cancer testing programs as well, but it’s largely cancer testing that drives revenue now… and, indeed, the vast majority of their revenue still comes from what they call “hereditary cancer screening,” mostly in breast and colon cancer so far, where their tests help to identify people who have mutations that dramatically increase their risk (and, importantly, where there are early-stage interventions that can reduce that risk if people are tested… which can make the tests much more appealing to insurers because they present prevention possibilities).

Myriad’s stock has performed pretty well since the original teaser back in August of last year… Mampilly’s teaser ad was originally dated July (it no longer carries a date), so that means he likely started recommending it when the stock was somewhere in the $24-25 range, before that good earnings report boosted the shares a bit in September, but after a series of good news events had helped the stock recover from the recent lows. It was a $1.5 billion stock in the Summer, it is currently a $2.2 billion stock.

My read of the situation is that shares bottomed out around $15 in February after falling sales due to competitive pressure for some of their hereditary cancer risk tests (the Supreme Court disallowed their patents on the BRCA1 and BRCA2 genes a few years ago, opening the market for competitors to offer similar tests in what had been, and still is, their core business), but recovered as clinical trials helped to prove the power of some of their screening tests, and as insurers started to cover some of those newer tests.

Myriad still seems to be the leader in this kind of hereditary cancer screening, probably partly because their monopoly position for a few years gave them a huge library of data on cancer variants and mutations that their competitors don’t have (there’s been controversy about their monopoly control of that data as well), but they’re still facing more competition than they would like, and insurers who continue to demand pretty strict efficacy before paying for tests, and it seems like pricing has been a little softer than expected.

It’s hard to draw any clear lines for Myriad’s success based just on their financials — the past four years have seen revenues pretty much flat, and there has been no particular trend of earnings growth (though they have bought back a bunch of shares), and the analyst growth estimates are not particularly compelling. Earnings per share took a big hit in 2017, but analysts expect them to rise about 15-20% annually over the next few years and get back to those 2016 levels by 2020. So from here, that’s a reasonably attractive growth rate but not necessarily a compelling one for what is supposed to be a high-growth “hot sector” biotech stock. The valuation right now is certainly reasonable for a 15% grower, the shares trade hands at about 24X forward adjusted earnings estimates, but it’s not a clear bargain. And, of course, MYGN’s GAAP earnings are far, far lower than their reported “adjusted” earnings that most analysts still stick with — if you use GAAP earnings they’re trading at 38X forward earnings.

Which means you can’t find your prognosis in the numbers — you’ll have to make an argument about their particular testing products being more successful than analysts expect, or becoming foundational to the industry over time and growing beyond this current “recovery” period as new tests come online and get adopted by doctors and patients.

If everyone’s going to use Myriad tests in five years, and everyone will have health insurance that cheerfully pays retail prices for genotyping cancers or screening patients, then it almost doesn’t matter what you pay for MYGN shares today — but that, of course, is a tough projection to make in a competitive world. Even if, as Mampilly argues, the market for precision medicine is going to grow at an “exponential rate.”

I don’t know enough to make that prognosis for you, I’m afraid — you can check out their latest investor presentation here, in which they make the case for their growth prospects, and judge for yourself. The diversification into new segments seems appealing, including the GeneSight test for assessing which antidepressant has the best chance of success for a particular patient and the Vectra DA test for assessing rheumatoid arthritis treatment, each of which has become roughly a third of testing volume now (the core business of hereditary cancer testing has not growth much in volume, but it used to be almost 100% of the business and now it’s only about a third of the business by volume) … but I don’t have any real wisdom to build on in those areas, so I’ll stick with the financials.

On consensus estimates about earnings for the next few years, the stock is probably priced about right with a PEG ratio of about 2 (meaning the forward PE ratio is about twice the expected long-term growth rate). Paying more means you think the company’s market-leading position is worth paying a premium for, or that the analysts are being too conservative in judging the growth of the overall market for these types of genetic tests, insisting on a lower price probably means you’re a bit worried about competitive pressures (or insurance companies) keeping pricing down. I’m not particularly interested in buying this one, but it’s not ridiculous.

And in case this whole thing sounds a bit familiar, that might be because Mampilly pitched a different “personalized medicine” stock for his much pricier Extreme Fortunes letter starting back in February of 2017 — the broad “personalized medicine” pitch was similar that time around, though the company specifics that time pointed directly at Foundation Medicine (FMI), which has done very well so far (and which is much less established than Myriad — FMI is almost as large as Myriad, with a market cap of about $1.3 billion, and is currently growing top-line revenues much more quickly, from a much smaller base, but is nowhere close to making a profit). As a reflex, looking briefly at FMI just now made me like MYGN more… but that might just be because I’m feeling cheap and skeptical today.

Since this teaser solution was first released, Myriad has had some news in the breast cancer business — they launched their “riskScore” algorithm that improves assessments of breast cancer risk (basically, by combining family history data with Myriad’s myRisk hereditary cancer genetic test), and they also released data supporting that test at the 2017 San Antonio Breast Cancer Symposium. They have a presentation up on their website explaining the value of the riskScore program that can provide some perspective — essentially, what riskScore provides is an assessment of your “at risk” probability if you don’t have the obvious “high risk” flag of a positive BRCA test, so it can say that your genetic test result is negative but that you also have a 30% or 50% (or whatever) lifetime risk for breast cancer. Higher risk individuals can be funneled into more aggressive monitoring, like MRI’s instead of just annual mammograms.

I don’t know whether this will be embraced by insurers and providers, or what the cost will be or whether it will increase usage of the myRisk genetic tests (which presumably are more expensive than the riskScore program), but it’s clearly good news that the test and assessment appears to be useful, and investors have reacted to that. Analysts have not changed their outlook at the moment, so the financials above are still accurate, and I still don’t have any opinion other than that the stock doesn’t seem particularly over- or under-priced.

My call isn’t the important one here, though, not when it comes to your money — for that, we turn the microphone over to you… what do you think? Is Myriad Genetics going to be a barn-burner again? Are analysts being too optimistic or pessimistic? Let us know with a comment below. We’ve kept all the original comments from the first version of this article appended below, in case those insights from readers prove to be helpful… thanks for reading!


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thaverly
Irregular
thaverly
March 13, 2018 10:56 pm

Huge drop (12+%) in MyGn today after a subpoena was issued from HHS over claims of improper or false billing to Medicare and Medicaid.

Wonder how long this will take to shake out?

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Mike
Guest
Mike
April 9, 2018 3:18 pm

The cure for cancer, and several other diseases, is to simply stop eating processed carbs, hydrogenated fats and trans-fats, and don’t damage your immune system for life with excessive antibiotics and X-Ray CT scans. Hardly anyone gets cancer or Alzheimers in Africa or India. There is more to this of course, but the success of the ketogenic diet is phenomenal. I am not selling anything, look up details on this diet, known since the 1920’s to reduce even epilepsy in many patients by 50%, anywhere on the internet or in any bookshop.

If a young woman has 6 courses of antibiotics before age 18, she then has a 3 times greater likelihood of getting breast cancer in later life, because 80% of your immune system in is in your gut, and antibiotics and even X-Rays damage that for life, AND GIVE YOU CANCER.

Alzheimer’s, currently 1 in 9 people get that, But if you get flu shots laced with poisonous mercury for 10 consecutive years, you multiply the likelihood of getting Alzheimer’s by 10 times, so work it out.

Antidepressants are known to take 30% minimum off your lifespan when used for extended periods, but simply going on a low calorie, low carb, medium protein high (quality) fat diet is known to make your cells turn from an oxygen starved pre-cancer anaerobic process to an aerobic process, so that even 4th stage metastasised tumours that are deemed incurable after even chemo and radio have failed have been totally cured and remain cured even 10 to 15 years later (see the excellent videos by Dr Mercola on this, the wotk of Dr Coldwell is excellent as well) and the Ketogenic diet I have just described in brief reverses all kinds of stuff besides cancer, including benefitting those with neuropsychiatric conditions, it reverses type 2 diabetes, and other health conditions, massively improving the immune system, which, as I mentioned is largely (80%) produced by friendly bacteria, which also perform 10,000 different functions in the body and even the brain, so when those are helped, your entire health improves in all areas, including helping reverse iatrogenically caused auto-immune diseases.

See, and you get that for free, you don’t have to buy any stocks for that. There is no such thing as natural genetic predisposition to cancer, if there were, we would all have died out long ago.

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askforinfo
Member
April 24, 2018 9:01 am

STEVENSON, Md., April 23, 2018 (GLOBE NEWSWIRE) — The securities litigation law firm of Brower Piven, A Professional Corporation, announces that a class action lawsuit has been commenced in the United States District Court for the District of Utah on behalf of purchasers of Myriad Genetics, Inc. (MYGN) (“Myriad” or the “Company”) securities during the period between August 13, 2014 and March 12, 2018, inclusive (the “Class Period”). Investors who wish to become proactively involved in the litigation have until June 19, 2018 to seek appointment as lead plaintiff.

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TaMoKi
Guest
TaMoKi
April 28, 2018 9:37 pm

Here is why members make at least 15-30% less (if not 50-70%) than the figures presented in Paul Mampilly’s Extreme Fortunes and other portfolios.

Let’s say he issues a recommendation to buy a stock at $8. Let’s say you’re in line in a coffee shop and instantly leave the line upon receiving a “buy” recommendation and access your laptop to place an order. That is, within 30 seconds the stock may shoot up to $10.50-$11.00. So you have no choice but to purchase it for 30% more than the recorded price on his portfolio.

Now, he has a 30% stop loss policy from his recorded price, but effectively it has almost never worked as such. By the time he issues a sell recommendation, the stock is typically down some 50% from the recorded price. In this theoretical example it be be thus trading for about $4-5. By the time you get to sell your shares (within 30 seconds, if Extremely Fortunate), the stock is down by another 20-30% by the sheer selling pressure of Extreme Fortunes members. So, it is entirely likely that with your best efforts you may still lose some 70% of your capital on any given recommendation. And as every quarter he issues 5-10 sell recommendations, your aggregate losses will be a hefty sum, significantly dwindling your capital for growth.

Regarding his 1000% promise, it’s a joke! This is a portfolio that performs neither better nor worse than those of most investment gurus out there. His 1000% annual promise thinly borders fraud. It may be true (only time will tell) that a few of his picks may achieve 1000% gains over the long haul, that is 3-5 even 10 years from now, but not a single stock in his portfolio has so far given even the slightest hint that it may achieve anything resembling such growth within the promised time frame. And by the time it does, for each successful pick you will most likely have 10 losses of 50-70% of your capital, eroding your initial capital such that no 1000% growth may be able to alleviate neither your losses, nor the pain and years of constant stress experienced.

What’s the reason that this discrepancy between his stated figures and actual member performance?

He blames the members for being greedy and purchasing their shares at once, and constantly advises them against doing so. He seems to be very sincere in this, but he has failed to address the fundamental problem behind it. The problem is systemic and cannot be resolved by mere pleas. I guess no one knows other than he and his publisher, Banyan Hill, the true number of members subscribed for each portfolio. The promised limit is 1000. If true, that is already a large number that will effect the price of the stock in either direction. But who can verify it if t is 2000 or 3000? No one! If this is the case, then the unscrupulousness is on their part and not the members.

But let’s assume that it is the purported number, or less. Could be 500, and they may simply be boasting. In this case, some “members” might actually be foundations or large capital funds run by brainless and fraudulent money managers, who rather than making their own picks for their portfolios, have subscribed to his service and are pumping millions of dollars into the recommended stock (before everyone else does, perhaps having an employee or two for that purpose), and actually making money off your back and off the pockets of the members of Extreme Fortunes, True Momentum and other portfolios. It is these fellows that must be eliminated from joining the service and proscribed from doing so.

But what happens is this. Every once in a while you get a promotional blurb from Mr. Mampilly that one of his clients has made half a million dollars or some have already become millionaires. Total nonsense that aims to silence dissatisfaction! You go back to your portfolio and check the performance of every stock in it. It would be plainly IMPOSSIBLE!!! The only way this could happen is if one such “fund manager” or an idiot full of money not knowing what to do with it chose to allocate half a million dollar in one particular stock, and it so happens that only that stock goes up by 100-200%. This means, that this fellow is in defiance of Paul Mampilly’s rules to more or less equally allocate your funds for each stock in the portfolio. If you consider that the overall portfolio has perhaps 10% loss or a 10-15∞ gain in the mentioned time-frame, let’s assume the latter is the case, then this person must have invested 10 million in that stock to make an additional million. All this is so improbable that Paul Mampilly’s laudatory and pompous statements on the success of such so called members no doubt causes a wave of irony throughout the membership.

Is he willing to identify and expel such people from the service? Unlikely, given the fact he bases his “success” on these very people who are the cause of the losses of all the members of both in Extreme Fortunes and True Momentum and Profits Unlimited.

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Dean
Member
May 1, 2018 1:09 pm
Reply to  TaMoKi

TaMoki,

Thank you for your very insightful and excellently detailed explanation of what really happens with these bogus investment guru’s and their subscriptions. Besides bad stock recommendations you clearly identified why the whole process is flawed. I especially liked the comment about institutional investors trading early before the market is available to the non institutional investor. Your insight has made me even more skeptical of these Gurus and probably saved me from wasting money on their service and the subsequent losses that no doubt would follow.
Based on what I read in this vine everyone seems to be loosing money with Mampilly, I don’t know what he charges for his service however I’m almost inclined to subscribe and short all his picks, it seems that overall this approach will make money. What’s your thoughts on that strategy?

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eleanor
Irregular
eleanor
May 1, 2018 11:14 am

Since I followed Paul’s recommendation in the last few months, I have only lost money on every stock he recommended. Granted the market has not been so kind so far. But every recommendation??

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Ken L
Member
Ken L
May 1, 2018 11:31 am

Profits Unlimited has been laying egg after egg the last few months. His stop loss strategy is a big part of the problem. One moment he is telling you to buy a stock at different times and prices so that you can average costs, and that a drop in a particular stock means that it is cheaper to buy more, and days later he is telling you to sell the stock you just bought more of, because it had alreay dropped 10% when you bought it and it just dropped another 5%, it seems like the strategy is fundamentally flawed and costly in a dropping market.

He recently said some people have written that they have made 1 million dollars with Profits Unlimited. I guess it’s possible, if you only count gains and if you started with over 1 million in seed capital. Otherwise I find it hard to see how.

Another problem is his recommendation and quick abandonment of stocks that I know and would not buy if not for his recommendations. Stocks like Sprint, GE, Tesla, Lows, Snapchat, Chipotle. It’s one thing for him to recommend some up and comer that is under the radar, and we take a chance and lose. But when it’s a company that we don’t trust, and he recommends them, I mean that’s why we are paying him. So we buy and lose within days or weeks and are told to sell out.

So the bloom is definitely off the rose.

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somewhatcautious
Irregular
somewhatcautious
May 1, 2018 11:52 am