We’re closing in on the end of May, so will Dylan Jovine’s teased “takeover target” be getting an offer one of these days? It seems a bit foolish to hold your breath while waiting, but one never knows — and we’re a bit curious as to what the stock might be, so we’ll dig through and figure out what he’s hinting at in these teaser pitches for his Takeover Targets service ($997/yr).

Jovine claims great prescience with his ability to predict takeovers, but cites only a couple examples of past recommendations he has made that worked out with a premium acquisition bid — and that’s probably because this is a game of odds, if you recommend a couple different takeover targets every month my guess is that you would be extremely lucky (or skillful, I’ll allow) if you end up with one or two a year actually getting a takeover offer.

One way to increase your odds is to go fishing in biotech, since mergers and acquisitions are very much part of the steady flow of business in pharmaceuticals — and the stock Jovine is hinting at today is in that sector. The business is really set up for smaller biotech companies to do the initial R&D for new drugs, often with partnership funding from big pharma companies, and then sell out to a big pharmaceutical firm when a drug is proven enough to be likely to get approval… either during the initial days of expensive large-scale Phase 3 clinical trials, or around the time that a drug is getting approved and they need to plan for manufacturing and distribution, things that little biotech companies rarely have the stomach, capital or skill to take on. A nice, fat buyout is a very common “exit” for a biotech stock, maybe even as common as the negative “exit” (clinical failure that leads to years of desperate search of the next viable dug candidate and, when cash runs dry, a quiet bankruptcy).

That’s one challenge I find with these kinds of investments — you can’t really analyze them like most businesses, even if you knew that the drug would get approved you would have a hard time guessing what they might charge for it, or what their margins might be, so in many cases it ends up being an assessment based on the odds of success, which I don’t have the scientific chops to guess at, measured against the size of the “market” for the drug either in its first approval or in the expansion that investors always hope for (ie, from getting initial approval for a very rare cancer, to eventually becoming a first-line treatment for something huge, like non-small cell lung cancer), and further colored by comparing the market cap of the company to past biotech takeovers in similar disease areas. I guess there’s a logic to it, but it’s not an area where my take on it is likely to help you very much… which is why I almost never speculate on biotech stocks, I am always acutely aware that there’s a strong likelihood that the person I’m buying the stock from understands the science and the pharmaceutical market a lot better than I do.

So that’s my caveat up front, but we can at least get into this particular “secret” stock for you, get you some info to chew on, and let you start your own research — and I bet a great many Gumshoe readers have a much stronger biology and chemistry background than I do, so maybe you can take the analysis several more steps than I’d dare.

First, though, we gotta find the stock. Here’s the intro:

“Dylan Jovine, EX-CEO of Wall Street Investment Bank, Has Agreed to Share His Top Takeover Target with You!

“We didn’t think it was possible, but after a year of begging and pleading, he’s finally agreed to:

“Divulge the details behind Takeover Targets, his proprietary investing system responsible for picking a different takeover every 17 days!

“Show you exactly how to capitalize on the historic biotech merger wave to generate once-in-a-lifetime massive profits.

“Hand-deliver to you his #1 TAKEOVER TARGET for May– and you’ll get it today – giving you the chance to get a quick 300% return.”

That’s poppycock, of course — Jovine has been pretty aggressively selling this takeover-focused newsletter subscription for well over two years now, and those “secret” details about his proprietary trading system have been part of the ads from the beginning. We’ve only covered one of his prior pitches for Takeover Trader, and that language was pretty similar at the time. That pitch turned out to be for Denali Therapeutics (DNLI) back in February of 2020, and as of today that looks like a bust, it hasn’t been taken over, but DNLI did get wildly hyped and go up 300-400% following a big partnership from Biogen later that year, so maybe he recommended selling it before clinical failure led to the abandonment of its first drug in clinical trials, beginning its long slow decline (it’s now back around where Jovine first teased it, near $20).

In the biotech world he also pitched Clovis Oncology (CLVS) in early 2021 for a different high-cost newsletter, and it seems to me that he has pitched Editas (EDIT) about every other month since 2018 as his “cut and paste disease from your body” stock in ads for his entry-level letter — EDIT has been a perennial disappointment since it’s splashy 2016 IPO, as the CRISPR story fails to generate economic traction for them despite some patent court wins, Clovis has been more of a traditional biotech bust (failed drug, down from $8 to about 60 cents).

Jovine claims to have recommended one takeover every 17 days, with a 97.5% success rate over this first two years of this program. We’ll have to take him at his word for that, I suppose, and to guess at what “success” means.

So what hints do we get about that specific takeover target today? I thought you’d never ask… here’s some more from the ad:

“I’m going to take you behind the scenes and introduce you to a company we believe could be taken over any day.

“That’s because they’ve invented a precision-medicine that attacks melanoma on a genetic level and could how that disease is being treated.

“And not just melanoma. All told, this genetic breakthrough has the potential to treat all solid tumors such as lung cancer, pancreatic cancer, and breast cancer.”

OK, so that’s a good start — it’s got a huge addressable market, those are all very “big” cancers and, despite some good progress in recent decades on new treatments, still lots of room to improve patient outcomes.

He repeats his three “ingredients” for any takeover deal, which are all pretty logical.

I’ll summarize: 1: Cheap stock; 2: Board willing to consider a takeover; 3: Potential buyers.

When it comes to biotech you can certainly argue about #1, whether or not the stock is priced attractively, but pretty much all biotechs are willing to consider a takeover offer, there are few founder prima donnas who want to keep control, and they’re essentially all burning cash… and all big pharmaceutical companies are always looking to acquire attractive new drugs.

Other clues? This is an immuno-oncology drug — here’s how Jovine puts it:

“It attacks melanoma in a completely new way….

“What they learned is that you can boost a patient’s own immune defenses to kill cancer cells…

“The company quickly submitted the treatment for approval a few months ago after 36% of patients responded well to the treatment!”

We’re also told that “the same technology can be used to attack other solid tumors,” so he calls it a “platform technology.” Which always makes investors see dollar signs.

And he throws in some numbers…

“… the company looks like it’s going to win FDA approval on its melanoma drug.

“Now there are 1.6 million people diagnosed with solid tumors each year.

“Assume that each patient is worth, on average, $158,000 a year.

“That makes it a $252 billion market.

“But remember, this is a platform technology. It gives Big Pharma a bigger slice of the

“That’s why Big Pharma has just spent $100 billion buying competitors with similar platforms.”

That leads to some potential takeover partners — he says that Eli Lilly (LLY), Pfizer (PFE) and GlaxoSmithKline (GSK) have already acquired other cancer biotech “platform” companies (and says he recommended those takeover targets at the time, Loxo Oncology, Array Biopharma and Tesaro, respectively), so Bristol-Meyers (BMY) or AstraZeneca (AZN) would be the most logical buyers (he thinks AZN, since it already has a partnership with this secret stock the CEO of this company “just sold another biotech to AstraZeneca,” so that’s another clue… though he says “the company has reportedly held talks with Gilead and Takeda” as well).

So Jovine sees a 300-700% gain ahead for buyers of this company, based on his expectation that oncology-focused biotech companies are sold for 2-3X expected future pipeline sales, and his assertion that sales are expected to be $12 billion a year for this company… and he tells us it already has “solid Phase 3 results” for melanoma and “a deal could be announced any day”.

What, then, is the stock? Thinkolator sez he’s teasing Iovance Biotherapeutics (IOVA),w hich is actually pretty easily confirmed by the fact that a couple of the images in Jovine’s ad were pulled from past Iovance investor presentations.

But I was interested to see that Iovance down here at $15 or so has a market cap of less than $2.5 billion — so if you’re looking at 2-3X that hypothetical $12 billion in sales that would be something like a $30 billion valuation. We’re a LONG way from that, which got me looking back through old emails… and I found a note that another reader had submitted, way back in January of 2021, about this same stock being Jovine’s favorite takeover target at that time. Back then, it had a market cap of $6-8 billion, so if that was the starting point perhaps that’s when he came up with the 300% gains target. I haven’t seen that ad from January 2021, it didn’t make it into our archive at the time, so that’s just a guess. It’s extremely common for newsletter promoters to re-use the same copy in their ads, often without updating to reflect changes to the price of stocks since they first ran.

There have certainlhy been some waves of interest about Iovance’s lead therapy, which is called lifileucel, and there were takeover rumors a couple years ago, though there were also apparently some delays in the trials that quieted those rumors. Here’s a little excerpt from a FierceBiotech story from a little over a year ago, when optimism about lifileucel getting a quick approval was much higher — they explain it much better than I could:

“Lifileucel (formerly LN-144) is a tumor-infiltrating lymphocyte (TIL) therapy that grew out of research at the National Cancer Institute. It follows a similar protocol to CAR-Ts: Lymphocytes are harvested from the body, exposed to interleukin-2 to boost their growth and activate them, and then reinfused into the patient to fight their cancer.

“Unlike CAR-Ts, however, the TILs don’t need to be genetically modified, which raises some questions about patent protection.

“The excitement around lifileucel lies in its potential to target solid tumors, which CAR-Ts have not yet been able to tackle effectively. And Iovance is going after some big cancers: it has mid-stage clinical trials running for lifileucel as well as follow-up for LN-145 in post-PD-1 checkpoint inhibitor melanoma; head and neck cancer; non-small cell lung cancer (NSCLC); and cervical cancer. It picked up a breakthrough designation from the FDA for the latter.

“The biotech could be in a position to file for use in melanoma later this year after agreeing to the duration of follow-up needed from its ongoing trial in this form of skin cancer. However, that timeline has been delayed by questions about the best assay to use to determine the potency of the TIL.

“At the last readout, lifileucel achieved an objective response rate of around 35%, with a median duration of response not reached after 28 months of follow-up….

“One key issue facing all cell therapies is manufacturing. The complex production process can place a brake on sales, as Novartis discovered with Kymriah. Mindful of that, Iovance has been building a dedicated cell therapy center in Philadelphia and has completed cleanroom construction.

“It should be ready to process clinical material later this year and operate at commercial scale in 2022. So far, Iovance says its TIL products have a greater than 90% manufacturing success rate, but questions remain about TILs’ economic potential and patentability. Bullish supporters think these issues will be ironed out and the data so far indicates the potential for blockbuster sales.”

Iovance is still focusing on building out their processing facility in Philadelphia, so presumably their optimism remains unchecked, and in their last corporate update they now say they plan to submit their “biologics license application” to the FDA in August — this is not really a drug, it’s a therapy, so it’s not quite the same as a New Drug Application (NDA). And they’ve also filed to begin clinical trials of their first genetically modified TIL therapy that builds on lifileucil (TIL stands for Timor Infiltrating Lymphocyte), and several other TIL therapy trials are underway for other cancers or in combination with other therapies. And, importantly, they say they have sufficient cash ($516 million) to fund their current and planned operations “into 2024.”

I’ve seen quite a few personalized medicine teasers over the years, and the medicine always sounds so fantastic… but the follow-through on this kind of work as a business is really challenging. I particularly remember Dendreon, which developed a drug for prostate cancer called Provenge, and which seemed very effective — but it also required harvesting samples from the patient, processing them at Dendreon’s facility to train the patient’s cells to fight the cancer, and then re-infusing the patient with their trained cells, and it was not a good enough treatment to overcome the challenge of that process, Dendreon kept burning cash, eventually borrowed a bunch more, and ended up in bankruptcy despite the continuing optimism displayed by many of their shareholders almost to the bitter end.

Probably Iovance doesn’t face quite the same competitive challenges as Dendreon in terms of other advanced treatments, and I’m sure they’ve learned from Dendreon’s logistical challenges, and from other challenges from similar “collect a patient sample, process it, re-infuse the patient with the personalized treatment” kinds of products, and that’s why they’re putting so much into getting their facility ready before approval, but it definitely makes the product and the sales process much more complex. That’s a lot tougher than having a one-size-fits-all drug that you can just distribute through the normal avenues and sell to all patients.

But that’s the only input I can really share here — and I’m sure the world has come a long way since Dendreon’s failure a decade ago… so now, I’ll pass it back to you, dear reader, do you see a great takeover opportunity here? Think it’s worthy of investment whether or not there’s a takeover? Do let us know, just use the happy little comment box below. Don’t worry, we don’t bite.

P.S. If you’ve ever tried out Jovine’s Takeover Targets, please do hop over to our Reviews page and let us know how it worked out for you — worth a subscription, or not your cup of tea? Your fellow investors want to know.