Golly, most people who might subscribe to investment newsletters are baby boomers.
And most of that generation is just a few years past their midlife crisis… so you can be pretty sure that a “silent epidemic” will get them to read your ad, yes?
Apparently so, if the questions rolling in to Gumshoe HQ over the last day or two are any indication — Ernie Tremblay’s ad about this “silent epidemic” (and how you can get rich from it) has hit both the greed and fear receptors pretty hard.
The pitch, of course, is really about making money by subscribing to Tremblay’s Biotech Insider Alert over at Money Map Press ($1,875 after your “instant rebate” — more on that in a moment), and the carrot to get you to sign up right away is that there’s a “tiny $7 company” responding to the crisis, with a stock, naturally, that he thinks will be shooting higher any moment now.
Several of you have already figured this one out, and there’s been a bit of chatter about it on some of Dr. KSS’s biotech discussion threads, but I thought I’d check the clues for you and run through it to confirm what the stock is for all of you who have questions and aren’t members of the Irregulars or participants in those chats. Here’s how Tremblay gets us excited:
“CDC Issues Nationwide Warning:
“Silent Epidemic Ravages Boomers — Kills Every 58 Seconds!
“A tiny $7 company is responding to the crisis, providing a patented, mass-market breakthrough that could save you — and 75 million Americans — from a grisly, premature death.”
Subtle, right? It gets better…
“At this moment, a silent epidemic is sweeping the globe, and has made its way to the United States.
“It’s not HIV…
“And it’s not Ebola.
“According to the Center for Disease Control (CDC), it’s over 6,500 times more prevalent than Ebola… and 1,000 times more deadly.”
And while most teaser ads from newsletters are satisfied with filling your eyes up with images of piles of gold and yachts and Maseratis, sparking that greed impulse as we look for the next blowout momentum stock that will correct all of our past financial mistakes, this one lays it on heavy with the fear, too …
“The scary thing is, you could already be infected with this virus and not know it.
“In most cases, the virus slipped in years ago, and has quietly been ravaging your body, completely unnoticed.
“Now, some signs may have appeared in the beginning.
“You might have felt a bit sluggish.
“You felt a bit fatigued.
“Maybe you had some trouble sleeping through the night.
“And you might have experienced some joint pain and stiffness in your knees or fingers.
“Problem is, by the time the real warning signs appear, it may be too late.”
Seriously? Is there a baby boomer alive who hasn’t felt a bit sluggish, had trouble sleeping, had some joint pain? Now we’re going to freak out a few million people and make them think they have Hepatitis C because they’re not 25 anymore?
Yes, that’s what this is all about — the Hepatitis C Virus, often abbreviated as HCV. I won’t go through the details of how it works, or what it is — you’ve almost certainly read some about it, and you can go through Tremblay’s ad here if you’re curious. Or visit the CDC’s web page on Hep C for patients — and yes, to be fair, baby boomers are more likely to have HCV (and many of them don’t know it) than are younger or older people, probably at least partly because of the environment in which they grew up (pre-blood screening, IV drug use and shared needles for some, etc.), and yes, the CDC does have a press campaign urging boomers to get tested. And you can have it without knowing it, and the CDC really does want all boomers (and other at-risk groups) to get tested whether or not they have any symptoms. Mostly, I expect, because testing them now can actually do some good, since dramatically better treatments/cures have been released over the past year or so than were available previously.
Tremblay does offer a backhand compliment for the drugs that are curing HCV — implying that investing in Gilead (GILD) and/or AbbVie (ABBV) is still a good idea as they are leading the charge with their incredibly effective cure(s) for Hepatitis C, but he says that the company selling the test for HCV is the one that you should really be looking at. (Though he doesn’t name those two stocks either, so whether he prefers one or the other I don’t know.)
Here’s more from the ad:
“Now that there’s a cure, people can get treatment and return to robust health.
“Simple solution. But remember:
“Most people don’t know they have the virus.
“That’s right. Of the 200 million people infected with HCV worldwide, roughly 150 million of them DO NOT KNOW they have the virus….
“Consequently, the Center for Disease Control (CDC), has launched an UNPRECEDENTED emergency response campaign to put an end to HCV.
“The first essential step?
“A massive U.S. Government initiative to get people at risk TESTED for HCV…
“That includes every single one of America’s 75 million Boomers…
“And herein lies a once-in-a-generation opportunity…
“You see, a tiny $7 company based in Bethlehem, Pennsylvania has developed the first FDA-approved quick test for HCV.
“The test is fast, easy, and nearly 100% accurate. And it only takes 20 minutes to get results!
“At $95, the test is also affordable.
“And for people at risk – like the 75 million Boomers – the U.S. Government has ordered insurance companies to pay for the test.”
So… who’s the company that’s going to rake in gobs of cash because they’re the first ones with a quick test for HCV? A few more clues:
“Although they are tiny, this company has an elite management team with combined medical industry experience of more than 235 years at places like Johnson & Johnson, Abbott Labs, Bristol Meyers, and Pfizer….
“The company’s CEO… serves on the U.S. Presidential Advisory Committee on HIV/AIDS….
“… they’ve developed a close relationship with the FDA….
“FDA Commissioner Dr. Margaret Hamburg – along with U.S. Congressman Charles Dent – traveled to the company’s headquarters to tour their facilities.”
And we’re told that, so far, this company’s test sales are “a mere $7.3 million” — but Tremblay thinks that will change quickly with this new testing promotion campaign from the CDC as they urge all boomers to get tested.
And, of course, since Tremblay’s publisher is such a good chap, he’s going to offer a $125 voucher so you can pay for your $95 test AND a $30 copay for your doctor’s visit.
Does that voucher ring a bell from earlier? Yep, it so happens that this $125 voucher takes the form of a $125 discount on their $2,000 newsletter price, bringing it down to $1,875… but hey, everyone’s gotta make a living, right?
There’s more reason for optimism, too, because apparently this company has a joint venture deal with one of the HCV cure sellers:
“In an extraordinary move, the drug company that manufactures the curative medicine – a $90 billion mammoth – has formed a joint venture with the tiny $7 test manufacturer.
“As a show of good faith, the drug manufacturer agreed to pay the tiny test producer up to $350 million just for the right to promote the HCV tests.
“Because most people have no clue about their risk for HCV, the test manufacturer has a mere $7.3 million in annual test sales.
“The $350 million they could receive from the drug maker represents a 4,700% sales surge.”
And that, of course, starts to get those dreams of wealth floating in our brains. He gets quite specific, too, with numbers that sound just so darn reasonable that we can’t help but get rich (right?):
“Let’s do the math… and to make this as conservative as possible, let’s only use U.S. sales based on 10% of Boomers getting tested.
“Based on projected U.S. sales of $1 billion, and an industry average price-to-sales ratio of 10.3, we’re looking at a one-year target price – before any splits – of $183 a share.
“Considering you can own the stock today for $7, that’s an astronomical 26-fold jump.”
So who is it? Yes, as others have noted this is OraSure Technologies (OSUR), a little $300 million diagnostics and testing company — in addition to their HCV rapid test they have similar tests for influenza variations, HIV, testing kits for drug screening, those little devices you can use to freeze off warts, and a few other relatively minor products. And they were occasionally mentioned last year for the possibility that they might develop Ebola tests, though that’s less of a “real” story (no mention of Ebola on their website), their real business is in HIV testing and drug testing and, now, in HCV testing.
And since he was kind enough to tell us that the “curative medicine” maker is a $90 billion behemoth, we can confirm that, yes, it’s AbbVie that OraSure has a deal with — that’s roughly ABBV’s market cap (Gilead is almost twice that size).
Will OSUR take off? I have no idea. With this much marketing from Ernie Tremblay’s publisher, and a fairly easy-to-solve teaser puzzle, it’s likely to be jumpy for as long as they’re promoting it heavily — but when it comes to real life, I would assume that adoption of this new testing regimen will be dramatically slower than that “conservative” $7 to $183 projection that gets everybody drooling would indicate.
The company has had some success with the HCV rapid test, which they call OraQuick HCV, they reported sequential growth from the fourth quarter to the first quarter of something like 25% in sales for that product, so that’s positive, and they are talking it up as one of their major growth potential products — but they’re not suggesting that they’re going to go from $100 million in annual revenue to $1 billion on the strength of that test, at least not in the foreseeable future. —
Analysts aren’t suggesting that, either, they’ve got OSUR lined up for roughly 10% earnings growth per year over the next couple years. You can get a pretty good sense for where the company thinks they are, and what their expectations are, by reviewing their last conference call transcript from last week, when their first quarter report disappointed analysts and drove the stock down by 20% or so.
And that’s about all I can tell you on this one — just wanted to get it out there as a “bonus” teaser solution since I know so many folks were asking about it. What’s the current testing regiment for HCV? Is there a problem with it? I don’t really know, but this one is apparently the fastest one, with at least some kind of results available in 20 minutes from a fingerstick in the doctor’s office (it’s not a home saliva test like some of their other products, so you can’t do it yourself — has to be at a doctor’s office or clinic or pharmacy or something).
Whether that’s better or worse than the traditional blood tests that might be used for screening otherwise, I have no idea — nor do I know if the cost is competitive or the results more or less reliable or valuable. It’s not clear to me that there’s any speed urgency in HCV testing, since we’re talking about the folks who don’t even have symptoms, but certainly I can see how accuracy and cost and convenience would matter… and there will be, if the CDC is successful, probably lots more people getting tested — though that’s been a gradual rampup already as effective cures have gotten into the rotation, it’s not as though a switch will be flipped and suddenly 75 million baby boomers will be tested next week, and I have no idea whether this particular test will necessarily be used over other tests.
All I really know is that this is the stock being teased by Tremblay, investors were a bit disappointed with their last quarter (and analysts brought down their earnings forecast for 2016 from 13 cents to 11 cents per share, so it’s trading at about 50X 2016 earnings), and you can go forth and do with that info what you like. Feel free to chime in with a comment below if you’ve got an opinion on OraSure or their prospects.