This article was originally posted on August 27, when we first saw these ads circulating… apparently lots of folks missed it, and the ads are running hot and heavy again, so we’re re-posting it here to help answer a flood of new reader questions. The stock teased has popped 40-50% or so on the Stansberry attention, but we have not updated or revised what follows since 8/27:
Well, there’s no question about which teaser pitch Gumshoe readers want me to cover today — the tsunami of requests for coverage of Dave Lashmet’s “20X gains” pitch for a weight loss drug is a little overwhelming.
And we aim to please, so let’s put the Thinkolator to work for you. The ads are from Lashmet’s Stansberry Venture Technology newsletter, which generally focuses on tech and biotech names… and Lashmet is apparently riding high from some big gains in Inovio (INO) due to the COVID-19 vaccine race, so he’s got some past 1,000%+ gains to use in bolstering his claim that this obesity treatment is going to turn into 2,000% gains. The offer is for what they say is an unusual “sale” price of $2,500/yr, and like most high-end letters that’s completely nonrefundable. So let’s look into it and see if you want to think over the stock before you make that kind of nonrefundable commitment, shall we?
Here’s how the pitch is introduced, with talk about a “disease spreading across the nation”…
“I’m not talking about COVID-19. This disease leads to 10 times as many deaths every year.
“And despite the fact some of the biggest drug companies in the world have poured billions into finding a cure…
“The breakthrough from one tiny drug company is set to take the prize.
“This company – which is a fraction the size of big pharma competitors – is on-track to be the first drug maker to enter this market with a unique product.
“They have the only drug that can treat this disease at the source of the problem.”
That disease, of course, is “obesity,” which probably shouldn’t be thought of as a single disease but is certainly a dangerous condition that impacts health in many ways. And we all know the size and scope of the problem, of course, we see it when we walk the streets — and some of us see it in the mirror, particularly after being cooped up with easy access to the solace of junk food and beer for the last five months. I know I’ve put on my ten pounds during these “stay at home” coronavirus months.
Then the ad itself launches, this is from the beginning of their long sales presentation…
“One company’s product will fulfill a fantasy shared by nearly every American. (You may want it yourself, if you can get your hands on it.) That’s why a 2,000% gain could be low.
“But once this hits mainstream headlines, this opportunity will likely disappear overnight.”
So what clues do we gather from the presentation?
That the stock is under, or at worst somewhere near $50 a share, and is considered “small,” at least compared to big pharma.
And that their clinical trial results have been phenomenal…
“Over 80% of patients in one study saw life-changing results. And their families were amazed.
“One medical write-up called the results ‘unprecedented’ in ‘natural history.'”
And there’s a little veritas added by some brand-name science authorities…
“The New England Journal of Medicine and Nature ran feature stories on this breakthrough, calling the results “profound.”
“But the news was hidden behind scientific headlines like this: ‘Melanocortin 4 Receptor'”
Lashmet says that there are a few factors making this story fly below the radar for investors … it uses those scientific terms like that above and people have grown more skeptical of weight-loss drugs, it isn’t approved yet, and they have intentionally targeted a small subset of the market to start. Here’s a bit more from the ad:
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“Outside of a few researchers, doctors, and a small group of lucky patients, almost no one knows about this new drug yet… or how it’s about to change the world.
“The fact is, no drug ever created has been able to do what this one can.
“With almost no side effects… especially compared to the severity of this condition.
“By our calculations, up to 70% of the United States population could soon be prescribed this medication.
“That’s 38 times more than the single most-prescribed drug in the world today, the arthritis drug Humira.”
And on that skepticism:
“… tapeworms, fad diets and supplements all have one thing in common. They pretend to treat what research firm McKinsey has dubbed “a critical global issue”: obesity.
“None of these alleged obesity cures have any basis in science, of course. They are not rational.
“It seems generous to call them a fiction, instead of simply a scam.
“The truth is, they’ve done untold damage.
“A popular drug in the ’90s, Fen-Phen, was found to cause heart damage in many patients. The drug maker ended up paying out $3.75 billion in legal claims.
“But as sad as it is, all of these ineffective and false claims actually give us a huge advantage today.
“They’re part of the reason why almost nobody’s paying attention now, when a real science-based cure for obesity has finally arrived.”
And on the FDA timeline…
“… it’s weeks away from FDA approval. So, when MarketWatch reviewed the top drug makers for anti-obesity pills this past May… this small biotech didn’t make the list.”
And then on that targeted group, which Lashmet implies is essentially making the company seem like it’s hiding this anti-obesity secret…
“You won’t find the words ‘general obesity’ anywhere on this company’s website.
“In fact, they added words like ‘rare genetic deficiencies’ and ‘rare genetic disorders’ to their company slogan and About Us page.
“Because they report that their drug only treats around 2,500 children with a rare genetic condition.
“Why would a drug company go to such efforts to hide the fact their drug could cure hundreds of millions of people?
“As it turns out, there are 350 million reasons why.”
That’s a reference to the priority review voucher this company received for targeting a rare pediatric disease — apparently AbbVie once bought one of these “golden tickets” for $350 million, so it’s a valuable hidden asset of this secret company now. And as we’ve seen from other drug companies plenty of times, it’s fairly common for a drug to be tried out first in a very targeted population, where clinical trials can be relatively small and inexpensive and where the pathway to approval is seen as easier, since the unmet need is high for those patients… then, once the drug is approved, it can be prescribed off-label if it’s seen as safe and effective for other patients, and they can use their initial success to fund more clinical trials that expand the universe of possible customers for that medicine.
What else does Lashmet say to get our clues going?
“… after months of studying this company and their miracle drug… I can say: FDA approval is practically guaranteed.
“The FDA is expected to rule any day now.
“How do I know this?
“Because even regulators called this drug a “breakthrough.”
“And the FDA doesn’t use that word casually. It comes with a special drug designation that guarantees a ruling within six months…”
How about some hints about the actual clinical trial results?
“… this new discovery has yielded weight loss results never before seen in the 50-year history of biotech.
“On average, obese patients in trials lost around 25% of their weight in 12 months.
“Meaning a 250-pound man could lose more than 50 pounds in a year and a half. Using a simple drug with virtually NO side effects – no sweating or sacrifice.