by Travis Johnson, Stock Gumshoe | March 10, 2009 11:21 am
Today’s ad for our sleuthing pleasure comes in from Andrew Snyder of TodaysFinancialNews.com (TFN) — he works on Hot Stock Confidential from TFN, but today he’s trying to sell us a new service called TFN Strategic Trader, which seems to be a weekly options alert service that will cost you about $1,300 a year.
And as the heart of the ad, he’s teasing us that he’ll tell us about a favorite investment … as soon as we sign up for his service. Thankfully, he lays it on nice and thick with hints and hyperbole, so let’s dig in and see if we can identify the company for a fair bit less than $1,300 (we’ll start with “free.”)
“When this tiny firm proves its ‘Genetic Switching’ technology, the average investor could see gains of 300%.
“But make the right moves by May 15 and your investment could surge by over 1,100%!
“By May 15, 2009, investors will see positively filthy gains of 50%… 125%… maybe even 300%, thanks to one company’s discovery of a very powerful “genetic switching” secret.
“The average investor could be pushing wheelbarrows of cash to the bank.”
You had me at “filthy gains” — didn’t even need to pull out the image of “wheelbarrows of cash,” but still, I love a good wheelbarrow as much as anyone.
So what, specifically, is this company?
“As you read this, there’s a tiny $5 company working on a revolutionary new “genetic switching” technology. If its initial tests are positive—and early indications point at a runaway success!—your $5 investment could soar to $8, $14, or even $25.
“This company’s revolutionary technology was voted one of the top innovations for 2008 by Scientists magazine and Wired.com.
“The company could be just months away from developing a cure for AIDS, cancer, sickle cell anemia, and Lou Gehrig’s disease. Absolutely amazing stuff!
“… this tiny $5 company has literally found a way to turn genes on and off!”
And he says of the researchers who made the key discoveries:
“Their discovery has turned their employer into one of the most powerful companies—if not the most powerful company—in the world.”
Now that, my friends, is some good hyperbole — how can you resist investing in the most powerful company in the world? Especially if it’s valued at just $195 million and you can buy it for five bucks a share?
And of course, the urgency — otherwise, why would you rush to subscriberightnow!
“The opportunity will absolutely, irrevocably disappear on May 15. Gone forever at the market close. ”
That’s by using the “power of leverage” — a point he makes, somewhat frighteningly, by talking about being a wilderness guide in Alaska and carrying a shotgun for “leverage” over grizzly bears.
There’s even a photo of Andrew toting his gun … which means I may have to consider a new rule. Included in my ten standard rules for teaser ads have been admonitions that we should be extra careful of ads where the adviser brags about his luxury car, or shows photos of his car or his mansion. There might have to be a special rule for those who show photos of themselves holding weapons, we’ll see if it becomes a trend.
OK, so this is all about leverage, specifically options trading, and his use of the “May 15” date must mean that he’s recommending an options trade with a May expiration (May 15 is the last day of trading for standard May equity options, which expire on May 16).
Which is neither here nor there, of course — the key question is, what’s the company?
And the mighty, mighty Thinkolator should be able to help you there, too … this is:
Sangamo Biosciences (SGMO)
This is a tiny company — back in February when this ad was first written, it was trading at about $5 and had a market cap of just under $200 million, as teased. The shares are climbing today, but from a much lower level — you can pick this up for about $3.20 as I type this, if you so choose, and the market cap is therefore closer to $130 million. So yes, it’s very small, and if even 5% of Gumshoe readers rush out and buy it right now you will move the price higher, so please be careful and take your time if this is indeed a stock you’re interested in. It’s wildly volatile already, and it’s not like they’re going to suddenly become profitable — there’s probably no need to rush.
What is this revolutionary “gene switching” technology? Sangamo’s patents cover Zinc Finger Proteins (ZFPs), which are used to target specific genes and switch on or off, or otherwise modify, specific neighboring genes. It may be more accurate to say this is a “gene editing” technology. They do a pretty good job (far better than I could, at least) of explaining it on their website here.
The article that is mentioned from The Scientist (not “Scientists”) Magazine is here — it’s number three on the list. I didn’t see the actual full Wired “top list” for 2008, but they’ve written about this technology a few times — one interesting note from them on the potential in HIV/AIDS is here.
From what I’ve been able to learn in a quick scan of science literature and blogs, Sangamo does indeed have a remarkable hold over the patents in this key area — but so far, they may not have exercised those patent rights very aggressively, and they’ve been letting “open source” science efforts use and share various ZFN samples (or whatever they’re called) without purchasing them directly from Sigma-Aldrich, their commercial partner (that’s a big chemical company). I’d assume that this is a way to expand research using this key tool, and that they probably believe it’s more important to get more discovery underway using this technology than to control every scientist’s research right now. Not sure, it could just be that the commercialization hasn’t really gotten started yet.
Sigma does have some business going on, this is not just a patent library — they have two drugs in trials (very early trials — one in or near Phase II for Lou Gehrig’s Disease and for DN [Diabetic Neuropathy, I think], one just beginning Phase I for HIV/AIDS.) They’ve also licensed their protein technology in agriculture, to Dow AgroSciences, and they have the deal with Sigma-Aldrich for commercializing ZFN for researchers, and they believe they have opportunities to license their technology to or form partnerships with biotech research companies like Genentech, Amgen, etc. In each of the last two years they’ve lost about 60 cents a share, though the fourth quarter saw a few significant milestone payments and other deals that brought increased revenue.
And analysts think they’ll do about the same this year and next — this is a well-followed company, especially for one so small, and the seven or eight analysts on average (according to Yahoo Finance) think they’ll continue to lose between 50 cents and 60 cents a share this year and next. If that’s the case, they’ll either need to make some new deals to bring in additional revenue, take on some debt, or issue more equity — they have about $60 million in cash available to them and no debt, which ought to be enough for a couple years at their current burn rate, but I have no idea how much their early stage clinical trials are going to cost in the months ahead — generally, these trials get significantly more expensive as they progress. They stated in their last earnings release that their goal was to have at least $45 million in cash at the end of 2009.
So, there you have it — you can trade options on Sangamo if you like (they do have a May expiry, if you think it’s worth trying to match what Andrew seems to be touting). I’ve taken a small option position in these guys myself, a very speculative and small one, partly because the company seems, um, really cool. I try to keep my wild tangential bets in the options arena to keep them from costing me a lot of money, and this seemed like an interesting one to take a flier on.
May 15 is only about two months away and anything could happen, but if they do stick to their calendar of releases they should at least be issuing their second quarter report before then. The company is presenting at a conference today, and at another one next week if you’d like to see their latest investor info — you should be able to access the presentations on their website here.
Full disclosure: As noted above, I do own some speculative options in Sangamo Biosciences. I will not trade in those options or in any other investment mentioned above for at least three days.
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