Today, as part of your Friday File delightfulness, I’m taking a look at a new teaser pitch from a newsletter that I’ve never heard of before — the Radical Wealth Alliance from Investing Daily, which seems like it’s culling “ten bagger” ideas from all the Investing Daily pundits but, in this case, is pitching an idea from Scott Chan that he calls the “Cancer Sniper.”
And yes, as you might imagine, this is a pricey newsletter ($2,495/year), and non-refundable… so we’d never be crazy enough to spend $2,500 for a stock tip,with no recourse if we turn out to not like the newsletter, but we’re still curious to see what this “Cancer Sniper” might be.
So let’s dig through the clues and figger it out, shall we?
This is what Chan says about the “Cancer Sniper” —
“* Clinically proven to target and kill cancer cells with virtually zero side effects… now shows an ability to eradicate all types of cancer
* This company has zero competitors and enjoys strong financial backing… and it’s loaded with $107 billion in extra profit potential
* Low-price $1.50 shares are set to surge 667% because of new rapid speed clinical trials… company enjoys FDA fast-track status”
The promise is quite huge, as with all such teaser ads:
“I hold in my hands astonishing evidence that every other cancer treatment could soon become obsolete.
“And I have shocking proof that one tiny biotech is about to take over its first $107 billion cancer therapy market. Starting in a matter of days.”
And it’s the kind of stock that investors tend to drool over in this space — very small market cap and low share price, which gets everyone’s heart palpitating as they imagine getting on board the next Amgen before it starts a meteoric rise (as an aside, of course, we should note that most little sub-$100 million biotech stocks — just like most exploratory small tech or mining stocks — are doomed to failure, at least if you go by the odds). Here’s what he says about the size:
“… right now this is just a $75M company, with shares trading well under $2.
“So there’s a fortune waiting for those who get in right now.
“And the math clearly shows the ‘Cancer Sniper’ has the potential to grow a mind-boggling 142,667% over the next few years.”
The math can say whatever you want it to say — if you start with a wild assumption, like “one tiny biotech is about to take over its first $107 billion cancer therapy market,” well, then yes, the math leads you to imagine 142,000% returns.
That output doesn’t mean anything unless the inputs mean something, of course, and there is no possibility of a tiny sub-$100 million company “taking over” any market of any size in a matter of days. Of course, they say “starting” in a matter of days — which, as the lawyers who scan those ads for qualifying terms will probably tell you, means absolutely nothing at all.
So what is it that this company is doing, according to Chan? Here are a few more clues…
“* In January 2016 they started setting up for massive scale using an innovative “cell line” technology…
* In September 2017, three different regulatory agencies gave them approval to start human clinical trials in the United Kingdom…
* In September 2017, they accessed well-funded global partners who lowered risks by preparing ‘production platforms’ for world-wide distribution…
* In May 2018, they revealed a lung cancer therapy showing strong potential to…
Destroy all types of cancers!“
We’re also told that they “just announced FDA ‘Fast Track’ status” … which is indeed always a nice thing for developmental biotechs — it speeds up the FDA review process by several months, giving them a better chance of having enough money to survive until they get a regulatory response.
And I’ll spare you some of the rest of the hypetasticness from the ad, but we also get some hints about insider buying…
“All investments carry risk. But tell that to the “Cancer Sniper” CEO.
“He’s been using his own money to grab shares for months. He’s loaded up on thousands of shares. In fact, here’s exactly what he paid, and when he bought:
* $2.34 per share in January ‘18
* $2.22 per share in December ‘17
* $2.41 per share in November ‘17
* $2.55 per share in October ‘17
* $3.25 per share in September ‘17
“…so right now, it’s like you’re getting 50% off compared to the CEO.
“That’s because you can get in right now for less than $1.75 – if you act fast enough.”
The number of clues is getting a little embarrassing here, you no longer need the ol’ Thinkolator to chew on this one… but we’ll throw one more on the pile:
“And a few days ago, world-class cancer researcher Dr. Nigel Blackburn of Cancer Research UK had this to say about the ‘Cancer Sniper’ therapy:
‘This vaccine trial is a pioneering approach to improving treatment for lung cancer, the biggest cause of cancer death worldwide.'”
Which, as luck would have it, makes it quite a bit easier to confirm the Thinkolator’s answer this time out: This is Asterias Therapeutics (AST), a little $90 million stem cell company that is, among other pursuits, trying to develop a cancer immunotherapy.
That quote from Dr. Blackburn is from early June, and it appears in a bunch of different articles — one of the better explanations of what’s going on with this “vaccine” is here.
Essentially, it seems that they’re trying to develop a vaccine that can help to treat non-small cell lung cancer (NSCLC) using similar ideas to those that have been used in the past to target cancer cells… but to do so with a “generic” vaccine that can be manufactured using stem cells, instead of a personalized vaccine that has to be created from the patient’s own blood.
Those personalized treatments, as you might be aware, are really cumbersome and expensive — which helped to bring down shares of Dendreon and Argos Therapeutics (ARGS) in years past, and seems to be causing a challenge for also-oft-teased Bellicum Pharmaceuticals (BLCM) as well. If you have to draw a patient’s blood, send it to the lab, and create a customized drug out of that blood, the costs are high and the infrastructure required is substantial. Doesn’t mean it can’t work, and sometimes the science of these personalized treatments sounds downright phenomenal… but a manufactured “one size fits all” drug for a particular disease is far more attractive from a financial perspective.
I’m far from an expert on the science, of course, that’s just my perspective. So what’s the story with this little company?
Chan says this, which seems a little wild:
“I just found out that the American Cancer Society released this sizzling hot news…
The ‘Cancer Sniper’ now has a ready-to-administer, off-the-shelf, clinical grade dose. In plain English, that means they’re just weeks away from mass production and distribution.”
Really? “Weeks away from mass production and distribution?” I guess that’s not necessarily false, since you can express any length of time in “weeks,” but it’s going to be years before this is a commercially available drug… assuming, of course, that it gets approved.
This is a treatment that has only been tried in three people so far — and the second and third patients haven’t even gotten the full dose yet. They just started their Phase 1/II trial a few months ago of this drug, called AST-VAC2, here’s what CEO Michael Mulroy announced on that front in the quarterly press release last week:
“VAC2 achieved a major milestone in the second quarter as the first subject in its Phase 1 clinical trial for non-small cell lung cancer was dosed. Following the positive outcome from the Safety Review Committee’s review, two additional patients have been dosed. We continue to work closely with Cancer Research UK, the trial’s sponsor, and are encouraged by its commitment to the trial. Cancer Research UK has initiated the cGMP manufacturing run to manufacture the next lot of VAC2 to be used in the study. Cancer Research UK has just opened a second site to support open enrollment following the safety review meeting that is expected to take place later this quarter.”
So yes, they have manufactured the first clinical grade doses of this drug, ready to administer… but no, they’re nowhere near mass production and distribution. This first clinical trial will dose 24 people, and it will take a couple years to get complete data — though they may well have interim data that makes a big difference, particularly if there are hugely important results in either safety or efficacy among these first few patients, and they have announced that they expect to report the initial safety and immuogenicity readouts for these first patients in the second half of the year.
And while they have claimed to have lowered their “cash burn” this year, partly because the clinical trial is being run by Cancer Research UK, they’re still fairly close to the bone — they had $14 million left in cash at the end of June, and were on a pace to burn through a bit more than half of that by the end of the year. I would expect any positive news from either of their clinical trials to lead to a secondary offering to raise more funding. So quite a bit is riding on these first few patients.
Asterias, by the way, is yet another spinoff that’s related to BioTime (BTX) — which I wrote about a couple weeks ago when it was teased yet again by Ray Blanco. Their three drugs in clinical development, AST-OPC1, AST-VAC1 and AST-VAC2, have all been around for a while and were initially created by Geron (GERN), which sold its stem cell programs to BioTime/Asterias about five years ago (and yes, there were plenty of teaser pitches around those stocks at that time, too… and again a couple years later as their spinal cord injury drug, OPC1, inspired some “Superman flies again” pitches about Christopher Reeve — though the stock is down a good 60% from where it was back then).
Stem cells is a tough business, so I guess it shouldn’t be terribly surprising that it took them several years to prepare to begin clinical trials for AST-VAC2, but it’s a good reminder that these are not hot new discoveries — these are therapies that have been studied for a long time without making much progress, and that in some cases could have been pitched with similarly optimistic language 3-5 years ago. Sometimes breakthrough stuff is slow, and sometimes it doesn’t work.
If you’re excited about those CEO insider buys, you might also check in to see how substantial they were — he apparently had an “automatic buying” program in place for a few months last year, and bought a total of about $25,000 worth of shares across five months. That’s not meaningless, but neither is it very material to him or to the company — his total compensation from Asterias is estimated to be about $2.6 million, including hundreds of thousands of stock options. There haven’t been any insider purchases since January, despite the fact that the shares are at a 30% “discount” to where they were when the last insider buys took place.
So I’ll let you make your own call on this one — I hope the drug works well in lung cancer, since that’s an awful disease that really needs new treatments… and I hope that using stem cells in immunotherapy in this way brings on a lot of new treatments at lower cost than the personalized therapies that have been developed to date, but I’m not betting on it either way, especially not when only three people have even been dosed with this first-in-humans clinical trial. If you’ve got thoughts on Asterias, their technology, or the appeal of their stock, feel free to shout ’em out with a comment below.