“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.”

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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132 Comments on "“Greatest Medical Breakthrough in History” from Paul Mampilly"

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Ken
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Hi
I’m a subscriber to Profits Unlimited and haven’t seen this one recommended, or in his eportfolio

Victoria
Guest
0

Yes Myriads is under special reports. I bought the STM and made around 22%. Another stock that I bought was PCOM that was revealed by Travis not long ago. I bought them too and so far made 12%. Travis is excellent at revealing all these teasers.

Michael Piephoff
Guest
0

I am a Profits Unlimited subscriber too, and it is definitely recommended. Just look in the eportfolio for Nov or Dec and it is in there as a buy near the bottom of the page.

SageNot
Guest
0

On 8/17 Paul added MYRLAD to his Special Report RECOS, HUH? He’s lately showcasing this secret list & that’s when he took STM into his regular portfolio, yet claims that he bought STM @ $5.99, SHAMEFUL of him. 🙂

jrm1960
Irregular
53
#MYGN I’ve held Myriad since 1999, splits and spin-off adjusted cost basis of $2.44. Yes, I learned a lesson a few years back when I didn’t sell the collapsing enthusiasm for this quality company, when the patent court setback bolstered competitors. Hindsight teaches, Sell good managment with best in class product when a flood of new competetion will narrow profit margins and shrink market share. Today, I believe: MYGN is still the quality company in a croweded cancer testing space; that rev’s and net profit will grow going forward for years because of new products that will be well enough… Read more »
backoffice
Irregular
210

Thanks Travis and jrm1960.

SageNot
Guest
0

Wasn’t STM his pick before 2018, it’s come down big so far today?

Randall Hart
Guest
0

It’s still up 200% from last summer.It will go back up When Apple x starts being known.It has a very promising future and should double in each of the next 4 years.

Wild Bill
Member
3

I joined PU as he was pushing STM at 8.00 – 9.00 that’s when I got in and that has been a 200 percent increase.

Steve
Guest
0
Well, I have far too much to add coherently — I know the company, was there when all the research happened, have decades of advanced work with their “product line,” etc. So to jump to the end of the story, I would NOT buy Myriad in any way or form in the hyped context of Paul Mampilly’s Precision Medicine discussion. Since I just subscribed to his newsletter, and see what his analysis is like in something I know very deeply about, I will cancel [or try to] my subscription. In short, there is NO coherent line of reasoning from his… Read more »
PU subscriber
Guest
0

If you got PU for less than $50 a year, then don’t cancel it. Just read future issues with open mind. His picks as a whole have done well.

park schimp
Guest
0
Ken, I was taken aback by your comment. As a P U subscriber, I received info on MYGN after market close 9/5/17. I was unable to buy the next day anywhere close to the recommended price. Then I saw MYGN on the e-profile list dated before I was told about it! I have written to P U a second time today to see if I can get a response. I think it is immoral to use the research work to sell memberships for weeks before letting existing subscribers know of the offering, resulting in the stock price being approx 20%… Read more »
Ken
Guest
0
you are absolutely right. My apologies. It was written up on Sep 5 and somehow I missed it. It is NOT in the Profits Unlimited Portfolio though, but was described as a “bonus stock”. Like a couple of the others, I am hoping the price will drop significantly by which time I may buy. One of my problems with the service is he has made some recommendations of companies I know and would never have bought on my own, only to turn around and tell us to sell when it starts dropping. I’m like, why did I bother buying this… Read more »
Jeff
Guest
0

You are right he does not get them right all the time. However … he did get the IoT technology stock picks right … at least up to this point.

Laurie
Guest
0

Im a newbie with pu and i have notice the same thing with his stick recommendations. They are alway in the expensuve range when i get his recommendations!

Mark Murphy
Guest
0

Same thing has been happening to me in Profits Unlimited and Extreme Fortunes. I’ve called and written them and the only response I’ve received is to review Paul’s buying strategy in his manual.

frank_n_steyn
Irregular
45

Same thing here, sounds like front-running, contacted them about it with no response.

frank_n_steyn
Irregular
45

Same thing here, I often receive his picks and immediately check the stock and it’s been going up for at least 45 minutes. I asked them several times about front running and if others get his picks before we do with no response.

Jennifer
Guest
0

how much is Extreme Fortunes?

joeybags
Guest
0

EXTREMELY EXPENSIVE…$3000.00 AND IT IS UNREFUNDABLE. HE GOT ME

Richard R Hoffman
Guest
0
I was charged $3,219.63 (purchased 12/20/2017). I didn’t realize that it was non-refundable. They still haven’t activated my subscription, so I have no idea if I wasted my money. Most of the posts I’ve read are extremely negative, except for Profits Unlimited. I feel that PU is sold at a fair price, to entice you to buy the more expensive newsletters that Paul writes. I was offered the latest one he just came out with for an astronomical price of $14,000. There’s no way that any talented stock advisrr can possible do justice to so many newsletters. Eventually they will… Read more »
Sean Toomey
Guest
0

A good friend of mine is up over 300% from following Paul after paying the 3000. So much so that I’ve been thinking about following suite. You regret buying? I’m new to stock gumshoe

mary555
Irregular
116

Hi Laurie,
Do you mean the brand new picks when they are released? I have not had a problem buying those in the low to middle range. Sometimes I have to wait a few days to buy them on a dip if a lot of people pile in. I only occasionally buy PM’s picks as I like to do my own research and buy sectors I understand, but overall his entry-level portfolio seems to be doing well. Sometimes I kick myself for not following his lead ; )

Mark Murphy
Guest
0

I’m glad you wrote that park schimp, I’ve had the same experience. I don’t want to totally bash Paul yet, but I’m finding that I can rarely get an initial purchase price close to what he gets. I wrote to ask them about this and their response was a canned form letter response about reviewing Paul’s buying strategy.

frank_n_steyn
Irregular
45

I’ve experienced something similar, just happened to be at my desk the very moment his recommendations arrived, immediately go to the stock and it has been rising for about an hour or so before the recommendation arrives. I emailed them back on those occasions asking if some people get the recom’s earlier than others, or that there may be some front-running going on, with no response, and it continues.

joeybags
Guest
0

I believe the reason that he is ahead of the curve, now that i think about it, is he is in Illinois, I think. And depending where you live and breathe and have your being, will create that 1 to 3 hour time difference. So I doubt its an intentional thing MR. Mampilly is doing

david Verderosa
Guest
0

its not like i have to wait three hours in AZ to see the current price of a stock…this makes no sense

Rudra
Guest
0

I can’t believe people complain about not being able to buy the stock at the exact recommended price especially since the portfolio is averaging around 30%. For the money paid I couldn’t be happier with PU and I have had it for over a year. I am going to get into True Momentum next. For the most part his stocks are returning around 30% in 3-4 months. And if you read his ,material he clearly says don’t buy your entire position at once, be patient and wait for the dips.

guest
Guest
0

I bought STM and its doing great so far. His subscription is very affordable not like others who charge 2000.

Gr8Full!
Irregular
10998

Paul Mampilly’s latest tease: https://www.stockgumshoe.com/2017/09/microblog-solving-new-mampilly-teaser-could-this-topple-ford-toyota-and-tesla/ There aren’t too many specific clues. He says that it’s a ”tiny company” and that it ”builds the technology for the car companies” giving it many revenue streams because it’s working with ”dozens of automakers”. He adds, ”It’s cornering the market at this very moment locking down a contract with one of the world’s largest automotive manufacturers.” He says the stock is starting to take off and is ”set to soar”

vivian lewis
Guest
0
genetic tests for cancer are also available–free!–to survivers with a nasty family history of breast cancer, which covers me and my daughter as well. I have two aunts, one on each side of the family plus 2 cousins who had breast cancer and also me, a survivor of 22 years. Our daughter also has an aunt on her father’s side who got breast cancer at a young age and again in her 70s (on the other side.) Yet neither of us has a known genetic flaw–meaning that if it is genetic (we are of Ashkenazic Jewish heritage) the errant gene… Read more »
mary555
Irregular
116