3 Biotech Stocks That Could Change the World
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By George S. Mack, The Life Sciences Report
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Every investor is in search of a breakthrough that will change the world. Patrick Cox has seen it all before as an insider at Netscape Communications before it was acquired by AOL Inc. (NYSE: AOL) at the end of 1998 and before Microsoft Corp. (NASDAQ: MSFT) ever noticed that that the world was shifting under its feet. The browser revolution began with the straightforward idea that all computer operating systems could be networked with seamless cross-platform ease. I recently interviewed Cox, now editor of Breakthrough Technology Alert and Technology Profits Confidential, for the story “Biotech Ideas That Will Change the World” in The Life Sciences Report. He sees a new revolution in progress as stem cell technologies and targeted therapies begin to change the entire paradigm of medical practice.
Saying Cox is optimistic may be an understatement. "Just as people were incapable of understanding the magnitude of the change in terms of computing and networks," he says, "Most people are incapable of understanding how extremely fast biotechnologies are now moving and their impact on health, life spans and equities."
Investors have been exposed to two decades of hype around stem cells. As an investor myself, I want to know when these technologies are going to be validated by major drug companies. "The first big pharma collaboration and deal has already been cut, and that is with Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) which has an agreement with BioTime Inc.(BTX) for its stem cells for retinal disease," says Cox. "Teva is paying for that entire process, so I think that it's going to move forward relatively quickly." In October 2010 BioTime said that its majority-owned Cell Cure Neurosciences unit in Israel and Teva, also based in Israel, would collaborate on development of Cell Cure's OpRegen formulation for management of age-related macular degeneration (AMD). OpRegen is Cell Cure's proposed embryonic stem cell-derived therapy, which contains retinal pigment epithelial cells. "It's a question of regulatory approval, not of developing the science which is already completely worked out," he says. "I don't second guess the regulators, but I think that the dynamics of health care are such that we desperately need these existing cures, and these regenerative therapies will therefore going to be accelerated. They have to be."
I ask Cox about the traditional steps that normally require 15–20 years of development time to produce a new therapy. "You're saying that it can take 15 or 20 years, but many of these technologies have already been in the works for 15 or 20 years. So we don't have to wait that long," he says. Speaking specifically about stem cell technologies, "These are not small-molecule drugs, which is the old model where if you found an interesting molecule you would modify it, then get a patent, then try it in animals and then people for safety and hopefully get one to the market. That's a 15–20 year process. But with regenerative medicine, we're duplicating processes that are going on right now in your body, so we know they work."
It's not an overstatement to say that Cox loves Provectus Pharmaceuticals Inc. (PVCT: OTC), which he refers to as "a fantastic story." German scientist Paul Ehrlich (1854 – 1915) conceptualized the idea of a "magic bullet" when he noted that he could stain diseased cells while healthy cells of the same type were left unstained. His theory was that perhaps in the same fashion those diseased cells could be targeted for a cure . A century later investigators are still searching for magic bullets. The quirk of fate in this case is that Erlich was working with coal-tar derivative rose bengal, which is the ingredient of Provectus' PV-10 now in clinical studies targeting cancers. The company is now preparing for a phase 3 trial of its PV-10 candidate in melanoma patients. I want to know when I should buy Provectus. "Don't even look at the price for five years," he says. "Come back then and buy me a beer."
Electroporation is not a new technology. It basically refers to increasing cell membrane permeability with an applied electric current to the tissues. OncoSec Medical Inc. (OTC: ONCS) is a company that is testing drugs in humans using electroporation in hopes of getting drugs across cell membranes to the cytoplasm and nucleus thereby making them more efficacious. "It's an important company," says Cox. "It doesn't want to be thought of as a device company, but it has a patent on the use of electroporation for the delivery of drugs." With a $10M market cap and being down close to 90% over the past 12 months, one has to step back and look carefully at the company. But OncoSec has three phase 2 clinical trials in progress for metastatic melanoma, Merkel cell carcinoma, and cutaneous T-cell lymphoma. Cox says the tiny market cap doesn't alarm him a bit. "What it (OncoSec) needs to do is demonstrate efficacy," he says. "And I think it's going to do that."
At the other end of the market valuation spectrum is Star Scientific Inc. (NASDAQ: CIGX) with a $550M market cap. "If you're a timer, that's the one company that you should be watching most closely," he says. "Its sales are just skyrocketing, but there are several other things going on that could change its status dramatically and very quickly." He's referring to patent litigation of 10 years duration between Star and R.J. Reynolds Tobacco Co. (a unit of Reynolds American Inc. (NYSE: RAI) having to do with a method of curing tobacco that reduces nitrosamine carcinogens quite dramatically. In January a federal court referred the case to a U.S. Magistrate judge for possible settlement. "So that is potentially a multibillion dollar award," he says. But Cox says there's a better reason to own the stock. Those skyrocketing sales he spoke about are coming from the company's nutraceutical Anatabloc (containing anatabine citrate) which "Has pretty astonishing effects on inflammation-related diseases," he says. "I have nightmares where the FDA has banned it, and I've run out. It's changed my life." He adds, "This stuff is going to have a very measurable impact on demographics, on health care costs, and on practically everything."
Author George S. Mack of The Life Sciences Report personally and/or his family own shares of the following companies mentioned in this interview: None
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