Today we’ve got an interesting tease that a few readers sent in — it’s from the White Cap Report folks, who generally look for potentially high-octane growth stocks, and it’s about some kind of biotech stock.
Here’s how they get our blood flowing this fine morning:
“California Biotech Cleared to Bypass FDA – Next Month – for 22,627% Gains
“Company’s new ‘Bio Seeds’ could cure eight diseases, including cancer and diabetes…
“Breakthrough set to storm 64 world markets, sparking cash windfall worth $498.2 billion…
“Six weeks from today, one tiny biotech company could make medical history.
“It could also make some smart investors very rich.
“No, the company hasn’t found another “miracle cure” for cancer.
“Nor has it created a “magic pill” for treating diabetes…
“This isn’t a new cure for heart disease… Alzheimer’s… arthritis… kidney failure… Parkinson’s… or macular degeneration…Are you getting our free Daily Update
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“It’s a single remedy that promises permanent cures for all eight of these devastating conditions.
“The Centers for Disease Control calls this breakthrough ‘the next evolution in medical treatments.’”
So … time is a little short today, which means I’ll spare you much of the sales letter and just jump to the idea: what they’re talking about with the invented term “bio seeds” are human stem cells.
And the stock they’re talking about is one that is primed to “bypass the FDA” when it rolls out new products — but they’re doing so not through some trick. They’re not trying to roll out a drug to pharmacies, they’re selling to researchers and academics, which doesn’t require the same kind of approval … or, of course, bring in the same kind of sales.
Here’s a bit of the specific tease about this company they’re touting:
“We recently flew 3,000 miles to meet the man behind this incredible breakthrough.
“Unless you work in the medical-research field, you don’t likely know his name. So we’ll just call him ‘Doctor X.’
“He founded and currently heads the company behind ‘Bio Seeds.’
“And what he revealed during our private meeting at the San Francisco Hilton could soon make investors very, very rich…
“How One Company Will Spark the Coming Boom
“Within the next six weeks, ‘Bio Seeds’ are set to storm dozens of medical markets around the world.
“Doctors will be able to use these ‘Bio Seeds’ to create cures for heart disease… diabetes… cancer… Alzheimer’s… Parkinson’s… arthritis… kidney failure and macular degeneration.
“As the doctor says:
“The great scientific interest lies in the potential of [‘Bio Seeds’] to transform into any cell type of the human body. These cells therefore show considerable potential as a source of new therapies for a host of currently-incurable diseases such as: diabetes, Alzheimer’s and Parkinson’s disease, heart failure, arthritis, as well as many other disorders that may be treated by replacing diseased or damaged organ tissues.”
“Just a few examples of these breakthrough ‘Bio Seeds’…
“The company’s XJJ-30 ‘Bio Seeds’ sprout into fresh heart cells…
“Its new 40W ‘Bio Seeds’ grow into fresh kidney cells…
“And the 4JF cells are designed to cure Parkinson’s…
“‘These cells have the potential to make everything in the human body… even on a commercial scale,’says Doctor X.”
OK, so that’s probably enough to narrow down which stock this is — there aren’t, after all, terribly many promising stem cell companies in the world. Let’s see how they describe this “bypassing the FDA” bit:
“Bypassing the FDA – Legally – Next Month
“Instead of introducing “Bio Seeds” to the patient market first, the company will employ a unique ‘launch strategy.’
“‘Bio Seeds’ will initially be available only to the global research market, which isn’t regulated by the FDA at all!
“As Doctor X says:
“We are implementing a near-term revenue strategy by seeking to develop and market [Bio Seeds] that can be used by researchers at universities and biopharmaceutical companies.
“‘These research-only products generally can be marketed without regulatory (FDA) approval, and are therefore relatively near-term business opportunities when compared to human therapeutic products.’
And that’s how the company will bypass the FDA as soon as next month, making some investors very rich.
“But why haven’t you heard about the coming event from CNBC, Jim Cramer, or The Wall Street Journal?
“Because the company has signed a secret distribution deal with the most powerful pharmaceutical company on Earth…
“Simple. They don’t realize that the company has signed a secret deal with the most powerful drug distributor on Earth.
“This company has more than 30,000 employees and distribution channels in 64 countries.
“According to our intelligence, the deal will finalize within the next six weeks.
“When it does, ‘Bio Seeds’ will storm past FDA approval and into dozens of markets worldwide, including the United States, Canada, Great Britain, China, India and Brazil.”
So which stock are they teasing us about today? It’s actually one that might sound familiar to some of my readers: BioTime (BTIM)
And I expect that the “Doctor X” they went to meet with is the man behind BioTime — and also the founder of Geron and former head of Advanced Cell Technology, and a legitimate leader in the stem cell science business, is Michael West.
BioTime is, it seems to me, a “picks and shovels” play in stem cells — they’re unlikely to develop a lifesaving treatment, but they may well have purified and produced the stem cell line or product that led to that treatment. I’ve written about the stock a number of times over the last couple years thanks to a number of Patrick Cox teasers about the world-changing nature of regenerative medicine, so if you were lucky enough to get on board way back in November of 2008 when Cox’s ads really started pushing this one (my article from back then is here if you’re curious) you’d be quite happy — the shares were around $1.50 then, and are right around $7 now. If you look at a BTIM chart over the last few years you’ll see several big spikes, many of which are from the attention brought by fairly large teaser campaigns from Patrick Cox for his Breakthrough Technology Alert (and, to be fair, from the attention that the stock subsequently got in these pages).
The stock is still small enough that most of the time, this new attention brings a surge in the stock price and then a fall back a few days or weeks later … but over time, the trend up has continued quite strongly ever since Michael West took over at BioTime and pushed them more aggressively into the stem cell business (that was 2007, though he was on the board previously).
If you’re interested in BioTime and aren’t one of my readers who’s been interested in this one for a while, Michael West gave a fairly long presentation at the recent annual meeting that gives a very good background on what they’ve done and what their plans are for their stem cell “platform” in the future. That presentation is available on video here.
I’ve been tempted by BioTime a few times, and may well speculate on these shares at some point in the future myself — they’ve grown over the years and are now AMEX-listed and part of the Russell 3000, so they may well break out as a leading company, and I do like that they’re not focused on a specific treatment or product … they may well have breakthrough products that owe them royalties at some point in the decades to come, but it seems unlikely that they’ll be funding expensive FDA trials for human testing of various treatments with the binary stock response such trials often bring to small stocks (ie, they either soar or crash).
So … I’m not smart enough to tell you whether or not BioTime is as good as they sound, or whether there will be huge scandals or problems that derail regenerative medicine and stem cell therapies, and whether or not they get a deal with a big pharmaceutical distributor it seems unlikely that they’ll flip a switch and become profitable any time soon (they trade at about 100X sales right now and lose about $3 for every $1 in sales, and have been acquiring small stem cell companies and their strategic facilities around the world) … but when I listen to Dr. West talk, I want to drink the Kool-Ade, too.
Whether the shares are worth $2 or $7 or $20 right now is certainly in the mind of the beholder, this is one of those “buying the future” stocks — I’d be a lot more comfortable with BioTime than with most biotechs that are developing one or two potential drugs, but it’s still certainly a tiny and speculative stock … and I can at least give credit to Patrick Cox for coming up with this one 18 months and a few hundred percent before the White Cap Folks (though their publishers are related). I’m sure there are many folks out there in Gumshoeland who are much more informed about stem cells than I am, feel free to share your thoughts on BioTime or the many other stocks in this group with a comment below.