Stansberry Venture and their next “Biotech Buyout Watch” for a New Antibiotic

What's the "superbug" fighting stock teased by Dave Lashmet?

By xiexgp@gmail.com, March 26, 2015

Antibiotic resistance is a big deal, as you undoubtedly already know — and resistant strains of various cooties are becoming more and more of a problem, particularly in hospital settings where they seem to spread like wildfire among the sick, infirm and open-wounded, but elsewhere as well.

And the new wave of antibiotics is certainly making some fortunes as doctors look for new ways to fight these resistant bugs, and as the government in recent years has (belatedly) pushed on this oft-neglected part of the pharmaceutical research business — lots of big pharma companies stopped developing new antibiotics a decade or two ago, antibiotics in many ways became a victim of their own success when there seemed little additional profit to be wrung from that product category.

But now, of course, they’re back in the headlines — we need new antibiotics, and we need them now. The government has thrown drug developers a couple bones, in increasing the potential market for novel antibiotics and extending their patent life, and that has helped to make the investment case stronger… even if the market wasn’t obviously growing, as it is, thanks largely to overuse of antibiotics breeding ever more resistant strains of bacteria.

So that’s the context of the latest pitch for Stansberry Venture from Dave Lashmet — he recommended two biotech companies in this area last year that were bought out, Durata Therapeutics and Cubist, and he thinks he’s got another one that stands a good chance of a buyout later this year. Does he provide us with enough clues to tell you which company it is? Well, let’s see… here’s how he piques our interest:

“Phase 2 Showed 100% Success Rate

“Phase 3 Results Expected in 90 Days…

“One tiny firm set to explode….

“An announcement is scheduled for the middle of this year that will change the lives of millions of people… Including — most likely — your own.

“The announcement concerns the final clinical trial results of a drug so revolutionary, it’s the only one of its kind — and promises to cure a disease that kills more people than HIV and tuberculosis combined…

“This disease is caused by a class of pathogens that the Director of the U.S. Centers for Disease Control (CDC) says could ‘devastate our economy’ … and kill millions….

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“For Americans, and people all over the world, the release of this drug could be as monumental as the discovery of penicillin.

“And for investors, it could mean a windfall…

“Because once the drug’s final clinical trial results are announced, I believe one of the largest pharmaceutical companies in the world is going to swoop in and buy this tiny drug maker to get its hands on the valuable drug they’ve developed…”

There’s quite a bit in the ad about the threat of “superbugs” and antibiotic-resistant bacteria, I won’t go into all of it but you can always check out the ad yourself if you like.

There is, however, more than one smallish biotech firm developing new antibiotics — and even more than one that will likely be releasing Phase III data this year. So which one is he talking about? Let’s see if we can sniff out any further clues:

“We must buy into this tiny firm before the phase 3 results are announced – which could be in a matter of weeks.

“I’ve tracked the final trial’s completion date — and all testing should already be finished.

“All that’s left is for the small drug maker to compile its data and announce to the world if its potentially life-saving drug is a proven success…”

OK…. that’s not enough. Anything else we can scare up in this long ad?

“I expect we have about nine weeks… But we might have just a few short days or weeks before the results are made public….

“It’s a tiny startup, and consists of about 50 employees, most of them scientists….”

And then a bit about where they are in clinical trials…

“the results show that this tiny firm’s drug is working 30% better than the ‘standard of care’ in one of its Phase 3 studies.

“So from that perspective, the drug is already a success.

“The only thing we don’t know is if the drug works as a pill…

“See, the Phase 3 clinical trial for this drug was split into different studies to measure two objectives. First, to evaluate an intravenous (IV) version of the drug that’s already shown excellent results, and second, to explore the potential for a pill form of the drug.”

There are a number of relatively small, near “pure play” companies who are somewhere in the process of Phase III trials for new antibiotics (either just starting them or near completion), including Achaogen (AKAO), Cempra (CEMP) and Paratek (PRTK), but if we’re focusing on the likelihood of meaningful data in the next few months, and a planned filing for approval sometime in 2015, I agree with our reader who posted a guess yesterday: this is most likely Tetraphase Pharmaceuticals (TTPH), which is developing a drug called eravacycline.

You can see their latest investor conference presentation here for an overview, or a more detailed look at eravacycline here.

The shares of TTPH more than doubled in 2014, and they took advantage and raised a lot of money — in two tranches, the first in October and a larger second offering, at $35, just last week — so they are flush with cash, close to $300 million probably now (and a market cap closing in on $1.2 billion — the numbers in places like Yahoo Finance won’t reflect the latest money raise just yet), and they also may be eligible for additional funding from government antibiotic-spurring programs… so they’re not going to run out of money anytime soon (even in Phase III trials, they’ve only been burning through $20 million or so per quarter).

So far in 2015 the stock has been fairly flat — plenty of volatility, like almost every biotech stock, but it’s still in the mid-$30s where it started the year. They did release the positive Phase III topline results for eravacycline back in December, which helped to complete that spectacular year for the stock — that trial was IGNITE 1, for Eravacycline in Complicated Intra-abdominal Infections. The second Phase III trial top line results, for a combination of IV and oral treatment of complicated urinary tract infections (“iv-to-oral,” specifically — a more convenient dosing regimen), are expected “mid year” — though they’ve also said that they anticipate releasing “lead-in data” from that trial at a conference in April (the conference is 4/25-28), so perhaps there’s some anticipation that meaningful information will squeak out then. And yes, they do have about 55 employees as of the last report — so they’re not big enough to commercialize and sell the drug on their own, most likely, but with $300 million in cash they may have options beyond just selling out to big pharma.

And that’s all I can tell you — I’m not 100% certain this is the stock Dave Lashmet is teasing for his Stansberry Venture, but it’s the best match I’ve found for the somewhat squishy clues. I am not much of a biotech investor, personally, and I don’t have a handle on the market for novel antibiotics or what kind of sales and earnings might eventually be generated — Dr. KSS, who leads biotech discussions among the irregulars and has written quite a bit about new antibiotics, has noted TTPH only briefly in the past — he wrote early last year that he expected approval for eravacycline, too, but was not particularly excited about the opportunity for wide use and a financial windfall — but that may not be his current opinion.

So I’ll leave it there for you, feel free to suggest if you think I’m wrong on this guess — and no, I don’t usually like to give you a ticker symbol when I’m not certain — and I’ll leave it to the many wiser minds than mine to discuss or dig into the actual drug and its prospects. The company itself is well-capitalized, likely to file for FDA approval by the end of the year, and already valued at over a billion dollars. Over to you, friends.


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Don
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Don

Thanks again!

blackwater
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👍15
blackwater

As I recall someone at Stansberry, not Lashmet, was touting Dave’s latest as a takeover target, rather than a huge run up due to medicinial value. They compared it to Cubist.

Travis Johnson, Stock Gumshoe
Admin
👍12473

Yes, it’s a takeover pitch.

H.W. Hill
Guest

Dr. KSS, Bless his heart, writes very interesting and informative articles but his investing thoughts really suck and have led to numerous losses – MEIP being just the latest. Seems his recommendations are better shorts than longs.

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Travis Johnson, Stock Gumshoe
Admin
👍12473

That seems awfully harsh to me — he’s written about a great many stocks that have gone both up and down, I haven’t tracked the performance of each stock he writes about but there are certainly examples of both 400%+ gains and 75%+ losses in stocks he has analyzed for the Irregulars, more or less what I would expect from highly news-driven biotechs.

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H.W. Hill
Guest

Mr. Johnson, I accept your criticism, “awfully harsh”. However if winners and losers are, as you say, “more or less what I would expect from highly news-driven biotechs”, then it would seem that Dr. KSS’s opinions and analysis are no better than a crap shoot.

As for Gumshoe, you do outstanding work for your community of followers and I applaud you. Keep up the great work.

Travis Johnson, Stock Gumshoe
Admin
👍12473

I didn’t say they have averaged out to being average — just that there are both winners and losers, there is no portfolio to track or judge and I think that’s as it should be. I like Dr. KSS because of his incredible skill at writing about and explaining biotechs and the science behind them, if I were judging the performance of the stocks he writes positively about I’d have to use a five or ten-year timeframe given the volatility of the sector… but I’m not interested in judging him as a stock picker, and stock picks are not what… Read more »

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MachineGhost
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MachineGhost

I can’t speak to Dr. KSS’s acumen, but I used the spreadsheets you provided and tracked every recommendation for a couple of years. As I recall, nothing was net profitable overall. It doesn’t reflect on a publisher’s track record, but it is somewhat strange.

alanh
Member
👍4086

REPH ? Of course it all depends on when he first mentioned it (?) and when you got in (?). Its highest point was in march 14. at 9.17. It fell as low as $2.47. Its now 15.8. No gain there ! I dont think Ill rely too much on your DD. But youre just pulling our tail feathers…you knew you’d get a reaction. 🙂

alanh
Member
👍4086

Then you could try RCPT. July 13 $18.33 now $229.67 for a 1543% gain. Hardly worth bothering really. I suspect MachineGhost is an alias, hiding here in the free pews….come out come out whoever you are !

CATHY
Guest
CATHY

CRITICISM IS USEFUL WHEN TRUTHFUL AND MEANT WHAT IT IS USED FOR. SO MANY JUDGE INSTEAD OF CRITICISM WHEN USED AN THERE LIES MOST PROBLEMS. GOT TO LIKE HOW THE WORD LIES WAS USED. THE BIO/ETC. SCIFI SHOT IN THE DARK IS DIFFERENT AND WHEN ONE GIVES A TOUT GIVING THOSE ABC’S WELL IF YOU DON’T KNOW YOUR ABC S THEN CONSIDER IT A SHOT IN THE DARK. YOU KNOW MONEY THAT YOU CAN BURN AND WILL PARTY WHEN EARNED BECAUSE YOU WON’T PARTY EVERYDAY! CAN GET A SYSTEM TO DO WELL AND ONE CAN FRY THE SECOND IS EASY.… Read more »

DrKSSMDPhD
Member
👍47656

It’s easy to take potshots and be a critic HW Hill. I suspect you have no idea what goes into analyzing biotech. You are an abuser and don’t expect any help from me.

Alan Harris
Guest
Alan Harris

His opinion aint worth a Hill of beans.

newby3867
Member
👍6779
newby3867

Mr Hill, you need to get a clue.Why don’t you grow up and be responsible for your own actions.What about the numerous other winners Dr Kss has introduced us to and all his teachings with all the people he has helped here in different ways? We do not need your kind here and far as I am concerned you can get lost.

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chibana
Irregular
👍1417
chibana

H.W. Hill,
Hmm…. ESPR +500%, CLDN +105%….One would be singing the blues if they had shorted either when Dr. KSS first wrote about them. I have the ESPR blues because I sold to soon. Probably a bad idea to short either of them now. CLDN is very risky indeed but risk cuts both ways. Not a stock to be short on if the April news is positive. Being long the worst that can happen is $0. Being short the potential loss could me much greater… Long CLDN.
Tom

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Alan Harris
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Alan Harris

H W Hill: Dont be ViLe. KSS DOES NOT GIVE TIPS nor would Travis allow SG to become a tip sheet. He comments on the science thats mostly beyond whats possible for Mr Avg to be capable of, and says what he’s doing with his own money. He then leaves the likes of you to do your own DD and choose whether to sign that cheque. Ive kept a list of 40 of his mentions. Even today 80% of them are green since first mention, some by +200%. Still I forgive your comment as you are clearly suffering from constipation.

hipockets
Member
👍1233

Re H W Hill’s comments — Alan, are you suggesting that he is afflicted with constipational bias? 🙂

DrKSSMDPhD
Member
👍47656

If you read the threads—more likely you need someone to read them to you HW Hill—you now know that once again I have been right. GFT505 data strongly good as predicted. Looks like you’re an idiot. I hate it for you. Alzheimer’s screening for you maybe?

H.W. Hill
Guest

What a vile little man you are, Dr. KSS…. calling me an idiot, suggesting I can’t read, and hating. Congratulations. You have shown your true colors. I’d say, with all your hate, your demise will far proceed my Alzheimer’s.

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Alan Harris
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Alan Harris

Sorry, youve clearly shown its already set in….and KSS will be here while youre still slobbering.

omcdac1
Member
👍468
omcdac1

I know where to send you for Alzheimer’s treatment!

wiredawg2014
Irregular
👍45

Dr KSS, I’m disappointed in this response form you. “Looks like you’re an idiot. I hate it for you. Alzheimer’s screening for you maybe?” Seems incredibly juvenile from a person of your talent. I’ve read many of your articles and I have learned alot and admittedly most is above me. But, I do feel just a bit more educated. Most likely, “H.W.” is referring to NBY & MEIP both failed their respective phase study and took huge losses. Is that your fault…no, of course not. But, if one is happy with credit given by any member here for pointing them… Read more »

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Alan Harris
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Alan Harris

Very Respectfully ?????? Where to begin ! Lets try here:
KSS analyses the science that in our ignorance, neither you or I could. If there were ANY guarantees of success, wtf would he share them with us from his own Caribbean island? If you want guarantees, look to death and taxes. All else is his generosity. Unsubscribe if you like(pleaaaase!). But attack him at your peril. If you stop him writing to 1000+ disciples here for your own ignorant reasons; have the balls to publish your home address and expect a shit storm.

LostOkie
Member
👍302
LostOkie

With all due respect to you Alan, you seem to have completely missed the point of Mr. Henley’s post. Well, his latest post anyway, the one you responded to. He’s not questioning Dr. KSS’s scientific knowledge. He’s simply pointing out his rather bad response to criticism. And I’ve gotta say I kind of agree with him. With all due respect to you Dr. KISS, this seems to be the ONE flaw in an otherwise brilliant and highly respected individual. I’ve seen in it you a couple times before. You get a critical post and reading your response it’s easy to… Read more »

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gard
Guest

To LostOkie, Here, here. I couldn’t have said it better. I have been on the receiving end of Dr. Kss’s “ire” and thought it a bit “abrasive”. But I do appreciate the scientific knowledge he imparts. As for investments, do your own due diligence, and don’t blame anyone else for those that don’t work out. It’s your money and do with it what you decide is best.

herbalix
Member
👍163

This is for LostOkie: somehow I feel I want to address you as LostCookie or something like that. ;-))Totally agree with your way of addressing this situation. It is nice to know that there are others who perceive it exactly the same way. Thanks for sharing and stating your point of view. The ‘like’ Icon just was not enough to express my gratitude!

sooku
Member
👍62

Dr. KSS, with all due respect, I suggest you learn from Travis how to maintain your image in a public forum. You need to ignore hecklers rather than abuse them.

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Gui_
Member
👍778
Gui_

Gee guy, as a free member and now as a 2 1/2 mo. irregular I’ve done very well with Dr. KSS’ research, stocks I would never have found on my own.
Perhaps you need to improve on your skills, both trading and social. I suppose trolls were bound to show up even in this quiet little backwater.

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Alan Harris
Guest
Alan Harris

GUI: I like that…very measured. 🙂

H.W. Hill
Guest

You do mean troll and hater Alan Harris, don’t you.

Alan Harris
Guest
Alan Harris

Your question is too cryptic for me. Im just a plumber. What and who are you?

seanmc
Member
👍636
seanmc

Ok, now I see what all the fuss was about on the other thread….”his investing thoughts really suck..” Seriously!? Unquestionably, the dumbest line ever keyed in on this site. Hey H you and your 18 ‘likes’ haven’t a clue and would probably be happier on a yahoo message board or the like where you can wallow in this crap on a daily basis. Thank God this isn’t the norm on good ol SG. Long $KSS

Garry Cleverdon
Guest
Garry Cleverdon

I spin for AKAO as it is more in line with the Stansberry price levels as an easy double. AKAO have completed Phase 3 testing on a superbug vaccine and just behind on a pill. Both really need to be available to cover all aspects of a cure. TTPH price level is already a high valuation and at $1.3 billion seems also to be out of the normal Stansberry range. Just a few thoughts.

Travis Johnson, Stock Gumshoe
Admin
👍12473

Could be, but I thought AKAO was a bit earlier in the timeline — I think they’re anticipating possible approval more in the 2017 timeframe, not 2016 as TTPH is anticipating, and my understanding is that they’re still enrolling their Phase III study due to some delays in recruiting patients.

espcomputer
Member
👍1
espcomputer

Aloha Travis, Here is the info on AKAO from “ClinicalTrials.gov” as at February 10, 2015
https://www.clinicaltrials.gov/ct2/show/study/NCT01970371?show_locs=Y#locn
A Study of Plazomicin Compared With Colistin in Patients With Infection Due to Carbapenem-Resistant Enterobacteriaceae (CRE)
Phase III
Estimated Enrollment: 360
Study Start Date: September 2014
Estimated Primary Completion Date: January 2017 (Final data collection date for primary outcome measure)

sooku
Member
👍62

Thanks Herbert for reminding me of that site. It also shows that Cempra is recruiting for three Phase 3 trails slated for completion in 2015., and already has completed a dozen studies on CABP (community acquired pneumonia). Sounds interesting!

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Lon Henderson
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Lon Henderson

Stansberry teasers and worse their audio versions, far exceed my ADD to stick with them to their anticlimatic conclusions.

robert
Guest
robert

It’s Cempra when it makes a new high it shows up on their daily digest.

Travis Johnson, Stock Gumshoe
Admin
👍12473

Interesting, I was down to Cempra and Tetraphase as my best guesses but I think Cempra’s solithromycin has already shown strong top-line results as an oral antibiotic and is still evaluating the IV-to-oral, with data expected soon. They are similarly close matches on a lot of the info. On the somewhat unclear clue about the drug performing 30% better than standard of care in one of their past studies, I didn’t find a match but didn’t read all their past results. The more recent results all seem to be in the same neighborhood of existing antibiotics when it comes to… Read more »

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dormdweller
Member
👍0
dormdweller

Robert is correct. CEMP is the stock that shows up on the daily digests when it hits a new 52 week high. Looking at the past digests and when TTPH hit new 52 week highs, it wasn’t shown on the digests which leads me to believe that CEMP is the stock being touted and held in one of their basket of recommended stocks.

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rubber
Member
👍46
rubber

Dr. kSS yes he does write very informative and interesting articles but no one can correctly predict the final out cum. After reading his very positive article on RGDO, I ended up putting large chunk in at $7 and then again on his recommendation doubling up at$2.60. A real bummer. There will always be some winners and more losers but one good winner can make it all up. Like IVOB from 1 to 30.

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Ron
Guest
Ron

Uh Oh, Ol’ Dr KSS must have had a rough night, seems a little thin skinned this morning.

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sooku
Member
👍62

Agreed. A bit disappointing regardless of his record.

Ron
Guest
Ron

UH OH, Ol’ Dr KSS must have had a rough night, seems a little thin skinned this morning.

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Roger
Member
👍1761

Mr. Hill, Dr. KSS gives information, tells you where he is investing, and suggests that you do your own due diligence. No doubt there is someplace that you can get infallible advice; please advise us when you find it. Meanwhile I am grateful for the Dr. KSS illumination and his advice on where he is putting his money. Start up biotechs are a speculation, and Dr. KSS points this out. If you don’t want to lose anything; don’t speculate. Nobody is twisting your arm to buy. Meanwhile I am ahead by selectively winnowing the companies he writes about and not… Read more »

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robert64
Member
👍14
robert64

Shame on you Mr Hill, if that is indeed your real name, and THANK YOU Dr KSS for sharing your perspective & knowledge of medicine technology. I seldom comment, but I wish to thank Dr KSS for his most illuminating works, and perceptive and professional insights into medical advance we can expect — and those we should suspect!!!! His commentary is most informative, and cautionary for everyone. I value the insight into the state of art of medicine as it gives me critical foreknowledge of what to investigate further if illness hits any of my friends, or extended family. It… Read more »

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dave
Guest
dave

If I’m not mistaken the other few superbug drugs are all IV. TTPH will be the first pill form if approved and would probably be a big advantage and I imagine a big boy would indeed want them. The U.S. added 5 years on the patents for the drug guys, not sure of the specifics, but could add a lot of value. I think the last trial was completed and I don’t think it was shut down by the feds, so it appears its not making peoples limbs fall off. I rarely touch these types of stocks but I did… Read more »

Travis Johnson, Stock Gumshoe
Admin
👍12473

All the new wave of antibiotics are getting the additional five years of patent protection, it appears — and they have also gotten some regulatory backing to help reimbursement, which at least theoretically may help them to be more frequently used (as opposed to being held out for the severe cases, since they’re dramatically more expensive than older or generic antibiotics).

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