Stansberry Venture’s “Most Valuable Pill in Development, Anywhere” pitch

What's being touted when they guarantee, "This Stock Will Double in the Next 18 Months?"

By Travis Johnson, Stock Gumshoe, July 18, 2018

The ads that get the most attention tend to be either those that are most dramatically distributed, with seemingly every single email address getting multiple copies… or those that come with a big promise and a very high price. Today’s topic of interest is the latter, since we’re told that Stansberry Venture Value’s Dave Lashmet believes this stock has the most valuable pill in development anywhere in the world… and they’re selling their nonrefundable letter for $5,000.

There is some wiggle room in that “nonrefundable”, in that they will give you Stansberry credit if the stock doesn’t double… and the initial subscription goes for 18 months instead of the typical year, but it looks like they’re trying to hold the line on that $5,000 sales price instead of offering it “on sale,” as they more typically do with these high cost letters. And after those 18 months, it renews at $5,500 every year.

So that’s out of reach for a lot of individual investors, of course — you’d have to have a sizable portfolio allocation to higher-risk speculative and “venture” investments to justify spending that much money to get advice on that sector… but, naturally, many Gumshoe readers are curious: What the heck stock he’s talking about?

Time to put the Thinkolator on the case… starting with a bit of overview:

“In short, our team believes a tiny biotech company most people have never heard of will soon announce positive trial data for an experimental treatment, which tens of millions of Americans desperately need.

“Based on developments over the past several weeks, we expect the announcement will lead to nationwide approval of the company’s treatment, and will make their patents among the most valuable in the entire pharmaceutical universe.”

And these are the clues that I’ve seen in the various email ads…

“… the treatment Dave has uncovered – currently in Phase III trials – may soon help prevent the #1 cause of death in the United States.

“A disease that currently accounts for one out of every four deaths in our country.”

OK, so that’s “heart disease” for the win in that category. And apparently this company is releasing clinical trial results sometime soon…

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“As soon as next month, new data from this treatment’s ongoing trial could cement a new era of hope for the tens of millions of Americans who can potentially benefit from this treatment. And for investors, it could mean a windfall…

“That’s because this particular treatment in development is one of the most lucrative types of medicine in the of biotech world.”

And they back that up by citing a few big annual sales numbers from some others of “this type” of medicine, including $6.5 billion for AstraZeneca and $12.9 billion for Pfizer… which means we’re talking about statins and/or cholesterol drugs (those numbers are sales totals from Lipitor and Crestor in past years).

What other clues do we get? Here are a couple:

“… today, the company we recommend you invest in right now has a market capitalization of only $1 billion….

“… most drugs in this class have the negative side effect of causing muscular weakness. As a result, 40% of folks who are prescribed this type of drug don’t stay on them for very long.

“But with the radical new pill Dave has discovered, those side effects could be totally removed for the first time ever.”

And there are some catalysts coming up very soon, which is where they get the “get in before next month’s announcement” urgency…

“… we now know this little-known firm will announce the first of two remaining pivotal Phase 3 results next month.

“If the results are positive, as we expect, you want to be invested in the company BEFORE that announcement….

“As Dave wrote in his email to me, “Two phase III trials are complete. If the other two are successful, this stock is a Grand Slam.””

To be fair, they are also clear in the ad about the possibility that those two trials might NOT be successful… which gives us the fairly typical, “don’t buy a drug developer unless you can afford to lose all your money if you’re wrong” kind of language… they say if the best happens, everyone celebrates and they file for FDA approval early next year and the stock could double in a couple months… if the worst happens and both trial results are disappointing, it might go to zero.

And that is indeed important to remember — for folks who aren’t used to biotech stocks, particularly pre-commercial companies who might only have one or two drugs in development, it is eminently possible for the market to turn on one piece of news and tell you that the company you thought was worth $1 billion is now worth 90% less. It’s all about guessing the future, predicting the clinical trial results and, later, trying to figure out how much of it they can sell, and at what price… which is hard all the way around, and one reason why I rarely delve into this space personally.

But, caveats aside, what’s the stock? I tossed all those clues into the Mighty, Mighty Thinkolator, and we get an answer that will sound familiar for many of you: Esperion Therapeutics (ESPR).

Esperion calls itself “the lipid management company” and has added the “beyond statins” tagline to some of their marketing materials has had a couple huge moves over the past 3+ years as it tries to move its Bempedoic Acid through clinical trials to get FDA approval to market it both as a way to lower some types of cholesterol and as acardiovascular disease “risk reduction” solution… both of which would obviously be huge markets if the drug is approved and insurers and doctors endorse it as a drug that should have widespread use in the huge “at risk” population for heart disease.

And yes, they do have two Phase III clinical trials that are still underway, and which will release data over the next two months — one in August and one in September.

I won’t try to parse the clinical trial results, since that’s not my bailiwick at all, but it seems that a substantial amount of the volatility in recent years has been relate to the expected safety profile — how many of the patients had bad stuff happen to them on Bempedoic Acid, compared to placebo, and my recollection is that some bad news on that front back in 2015 or 2016 led to real weakness in the stock. It’s clearly still front of mind for the company, since the first part of their analyst day presentation last week was entirely focused on safety.

Which makes sense — a drug that might be prescribed to tens of millions of people who are not in imminent danger or sick has a far higher safety hurdle to leap than a cancer drug that’s going to be prescribed to a much smaller number of people who are very likely to die in six months.

So those fluctuating opinions about the effectiveness and the safety of this drug have clearly given the stock price the jitters — it went from $15 to almost $120, then back down to $10 from 2014-2016, and then things started to look up a bit and the stock gradually climbed back into the $80s over the past couple years… until a higher mortality rate in one of their trial results in early May cut the stock in half in a matter of hours.

Which means that yes, sure, the stock could easily move dramatically over the next couple months as these last two important Phase III trials are reported. And that I have no personal guess as to whether that’s going to be a move up or down, though it’s probably good that the stock reset back in May has served to lower expectations a little bit.

And with that, dear friends, I’ll leave it to you to make your own decisions — it’s a stock that was covered by Dr. KSS many times back when he was writing biotech columns for us, and it certainly gets a lot of biotech pundit attention because of that huge potential market, but I suppose it should go without saying that I don’t know whether or not Dave Lashmet is right in predicting a double over the next year and a half (or the next month or two).

I know there are many of you that are far wiser biotech investors than I am… so what do you think? Have you been following Esperion? Have any thoughts on the drug or the company? Expecting big things in the months to come? Let us know with a comment below.


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vivian lewis
July 18, 2018 4:30 pm

although I specialize in foreign shares I am a shareholder in EsperionTherapeutics in my personal portfolio (I can buy US stocks but I just don’t write about them.) It is up 2.63% today presumably because of the Stansberry promo but was higher at the beginning of the year. It is a favorite of a Swiss biotech start-up fund called BB Biotech AG which uses a subsidiary called Biotech Target NV incorporated in Curacao in the Dutch Antilles to hold US shares. Biotech Target just doubled its holding in ESPR by buying more of the shares, according to a report to our SEC. There are two possibilities. Either they know something that Stansberry also knows. Or the Swiss-Curacao setup is how Stansberry is being paid for the promo.
I hope it is the former because my global-investing.com newsletter startup was funded by Bill Bonner who also stands behind Stansberry. As he is a nice guy, I hope he is not a total crook despite having renounced his American nationality to not have to pay US taxes, becoming a man withut a country despite having been born in Baltimore MD.

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yukonjack
yukonjack
Member
July 18, 2018 4:49 pm

The better news is that we have been duped for about the last 50 years about what causes heart attacks and heart disease. News flash…it isn’t fatty food nor cholesterol. New studies have shown that cholesterol actually protects the heart as does fatty acids. Sugar may be your biggest enemy for heart disease. That is why the sugar industry back in the 1950’s/1960’s falsely put the blame on fats for creating the rising tide of heart disease. Thus we have a whole industry of lo-fat foods which are not very healthy.

All that aside, you will never get Big Pharma to admit that most of their statin drugs are causing more harm than good. What’s his face is behind the curve on this one and most investors will not bother to do their own research about drugs, the latest studies or alternative health care. All they see, as usual, are $$$ staring them in the face. ESPR might still be good for a few whirls or on the dance floor as long as Big Pharma is successful in burying the truth, a practice they are extremely expert at. A possible double for a $5,000 subscription price is hardly any bargain. You might be better off in spreading that 5 grand around on about 8-10 well researched prospects selling for pennies on the dollar.

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rubber
rubber
Irregular
Reply to  yukonjack
July 18, 2018 6:57 pm

I agree with you 100%. Forty five years ago I was diagnosed with high cholesterol (300 Total) and was put on statins that caused me other problems. I gave up taking statin drugs and was told by doctors over the years that I was a sitting time bomb.
I am 76 now still have high cholesterol but have no cardiac problems or high blood pressure. If I had been taking statins all those years would have probably died of some other organ failure. I too have done lots of research on the subject and find
this was a major scam from day one.

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Peter
Peter
Member
Reply to  rubber
July 21, 2018 2:15 am

Also research shows that once you are over 70 years old and have no history of heart disease those with higher cholesterol levels live longer.

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eleanor
eleanor
Irregular
Reply to  yukonjack
July 18, 2018 8:53 pm

Totally agree with you. The problem is pharmaceutical companies are so good at selling the drugs and hiding the truth. The consumers don’t always know the complete truth and even if they do, it’s much easier to pop a pill than making life style changes which is a whole lot of work. The whole situation is sad.

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Rusty Brown in Canada
Rusty Brown in Canada
Member
Reply to  yukonjack
July 19, 2018 9:49 am

I too agree with these comments. I was put on statins etc. and scheduled for a high-priority triple bypass 18 years ago. I demurred on the surgery and tossed the pills and instead altered my diet to low-carb and bought a mountain bike after researching the whole concept on the net. Now I shovel snow in winter and mow the lawn in summer and hardly ever use my nitroglycerine. The local cardiologist looked at my original angiogram and said that he “wouldn’t expect many guys in my condition to be alive at this point”. That was 9 years ago. I don’t need my body chemistry tweaked six ways to Sunday with all these arcane pharmaceuticals and their grotesque side-effects.

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Opposeablethumb
Irregular
Reply to  yukonjack
July 20, 2018 7:42 pm

My family typically lives into their 90’s (previous 2 generations / both sides). I have high cholesterol, assume they did as it is mostly hereditary. Stopped taking statins 2 years ago and feel spry in the morning as opposed to bent over and stiff. Sold ESPR at a profit and will not support it again. Your brain runs on cholesterol!

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JayBee
JayBee
Guest
Reply to  yukonjack
July 21, 2018 5:16 pm

Your last two sentences (“A possible double for a $5,000 subscription price is hardly any bargain. You might be better off in spreading that 5 grand around on about 8-10 well researched prospects selling for pennies on the dollar.”) sum up my thoughts exactly. Good job, Yukon Cornelius!

J.T.
J.T.
Member
July 18, 2018 4:57 pm

Last night the Oxford Commu. was pushing an unknown small company with a DNA changing process to rid all diseases, saying the stock is $3.00 a share, but you must join to find out the secret name of the company, saying that it has hundreds of patens. What is the name of this company?

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StockMidas
Reply to  J.T.
July 18, 2018 7:47 pm

I am subscribed to Oxford Club – Why? – No one knows. Their site is so convoluted, incomprehensible and totally impenetrable that it is impossible to find the said punt. The only accessibility is for solicitation to subscribe to more of their guruish punts. Will I renew my subscription – I somehow do not think so ….

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StockMidas
July 18, 2018 5:06 pm

It will be a discovery of majestic proportions to discover a drug which is effective for dyslipidaemias – incorrect / elevated ratios of the sub-fractions of cholesterol since the total cholesterol value per-se should be of limited significance whether treatment is warranted. The known but mostly unrevealed side effects and medium to long term sequela of taking statins borders on making them unfit for human ingestion.

Investing in Esperion Therapeutics, Inc. (ESPR) should be viewed a “Binary Approach” – if Bempedoic Acid achieves FDA approval & registration status the share price of ESPR will undoubtedly skyrocket.

If not successful, taking into account that the cost for an FDA application and registration can run into the billions, the price will in all likelihood tank, which will exacerbate the current status of a downward trend, trading in the “Double Death Cross” zone below 100MA & 200MA with very little volatility despite a RSI of 10 and Beta value of 3.58. Worth the Gamble ..?

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pmb2pmb
pmb2pmb
July 18, 2018 5:40 pm

In its May press release announcing its phase 3 trial result of its cholesterol-lowering drug, Esperion had to admit that there were 13 deaths in the treatment group as opposed to only three in the control group which may make future FDA approval more difficult to obtain. In addition, its senior executives are facing a class action law suit for allegedly making “false and misleading statements and/or failed to disclose to investors that the Company’s cholesterol-lowering medication entailed serious undisclosed safety risks, including death” resulting in investors this spring suffering major financial losses as a result of buying the stock at artificially inflated prices which fell sharply when the results were finally announced. Caveat emptor!

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