Today we’ve got another ridiculous promise, made to sell you a subscription to a very expensive and nonrefundable newsletter — sound familiar?
This time it’s Jim Pearce advertising Investing Daily’s Radical Wealth Aliance, which will run you $2,495 (“on sale” from $5,000) with no hope of a refund (they offer the “if you don’t like it, we’ll give you another year for free!” guarantee)… and your reward will be the promised land: What Pearce says is an “opportunity to collect a 4,550% gain from the ‘end of pain in America.'”
Like many biotech newsletter ads, this one promises both that you’ll be doing good and that you’ll get rich — after all, you get to help “end Big Pharma’s sick opiate scam” even as you roll around in your massive piles of money, and who doesn’t hate the opiate companies right now?
Nobody should ever spend $2,495 to learn about a “secret” stock, of course, particularly if they don’t even know if that newsletter is right for them… so we’ll sniff out the clues in the ad, get you an answer from the Thinkolator so you can think for yourself about the stock being teased, and then you can make your own call, on your own time, about whether or not you want to pony up a couple thousand dollars for Radical Wealth Alliance.
Like pretty much all the nonrefundable high-priced products we’ve looked at, this one also comes with a deadline — they say they have “only 210 slots” and that you have to act by February 25, just a few weeks away! Odds are pretty good that this “deadline” doesn’t mean much beyond “I’m afraid that if you think it over, you won’t pull out your credit card… so hurry!” … but we’ll check out that “catalyst” as well to see if there’s news coming down the pike.
Here’s the headline of the ad that caught my eye, just to get you started:
“BREAKTHROUGH ALERT: A Duke University doctor just discovered an addiction-free CURE for chronic pain, and it’s about to replace opioid pain meds forever. On February 25th, his breakthrough is about to end Big Pharma’s sick opiate scam and send one tiny west coast stock VERTICAL”
Sounds good, right? Curing pain without addiction… that sounds like something we obviously need. What else do they say to pique our interest?
“A safe, addiction-free CURE for pain that’s about to hit the market with ZERO competition – It’s a miracle drug that targets a brand-new pathway… completely different from opioids. Which means it causes no tolerance, psychological effects, or dependence. On top of that, nowadays doctors are prescribing HALF the number of prescriptions they used to, and Trump is planning to slash that number by another third within 3 years… and he could erase them altogether. If that happens, this drug could be the only effective pain medication on the market.”
Great! What else? Do we get any hints about the actual company?
“The small research company with the patent is 1/600th the size of Big Pharma titans like Pfizer, Eli Lilly, and Merck – Which means there’s near-unprecedented room for growth. In the wave of new safe pain medications being developed, they’re the only company to have reached human trials so far… which gives them a mile-long lead in the all-important FDA approval race”
OK… how about some absurd promises?
“In fact, it’s almost guaranteed that this miracle pain drug will surpass even Oxycontin as one of the fastest-selling drugs in history.”
And, of course…
“Only 1 Company in the World Owns the Patent on the First Ever Addiction-FREE Cure for Pain…”
And what’s with that February 25 date? We’re told that…
“Just one small research company owns the patent. On February 25th, it’s poised to take Big Pharma’s $26.3 Billion pain market by storm — and hand you the biggest investment payout of your LIFE”
And we’re told that it’s already in clinical trials — with some recent results that were impressive:
“Scientists tested the new drug in a Phase 2a clinical trial… and the results were outstanding.
“Eleven men & women started the trial.
“Each one had severe chronic abdominal pain to begin with, lasting months or even years.
“In just 2 months, the new drug significantly reduced their pain.”
And while there are already Phase 2a clinical trials, we’re told that this was somehow “discovered” in early 2019, which is essentially impossible (it takes time to go from discovering a biochemical pathway to developing a drug and initiating clinical trials)… from the ad:
“In early 2019, a doctor from Duke University discovered a brand new addiction-free biochemical pathway to treating chronic pain.
“And on February 25th, his announcement is going to change the world and mint countless new millionaires.”
So what’s the story? Thinkolator sez the stock being teased is Arena Pharmaceuticals (ARNA).
The pain medication being touted in this pitch is Olorinab, which is a cannabinoid receptor 2 (CR2) agonist that is being developed for abdominal pain, such as that associated with irritable bowel syndrome, Crohn’s Disease or any number of other painful indications.
The only thing I’ve seen about specific results announcements from Arena regarding its Phase 2b CAPTIVATE trial for Olorinab (APD371) is that they expect to report data sometime in the next 6-12 months… in their words, “We look forward to seeing additional data from our Phase 2b CAPTIVATE trial which we expect to read out in the second half of 2020.”
Things are likely to be pretty busy for Arena over the next couple years, and they’re in good shape financially — they sold a significant drug not long ago (Ralinepag, to United Therapeutics (UTHR) for $800 million up front plus possible milestones and royalties), so they’re well financed with close to $1 billion in cash. That’s why the stock looks to some degree like a “value” stock right now, at only about 2X book value and with the big one-time earnings jolt from selling that drug driving their trailing PE ratio down below 5 — but you can ignore that PE, that will revert to a negative number this year as the sale rolls off and they spend hundreds of millions of dollars on drug development. They now have designs on building a company with a meaningful portfolio of drugs… focused, for the most part, on gastrointestinal diseases.
There’s some logic to that — they have partnered or sold drugs in the past, including their (once heavily teased) weight loss drug Belviq to Eisai a few years ago, but if they have two compelling drugs that can be sold to the same kinds of GI doctors, then there’s a chance to invest more efficiently in building a sales force and a company around those drugs… which seems to be their plan. At least for now.
The lead drug candidate is etrasimod, which they say is a “potential best-in-class” treatment for ulcerative colitis and Crohn’s Disease, among other indications, and that’s in Phase 3 trials now with results likely in the second half of 2021, with a new drug application submission to the FDA probable (assuming those results are good, of course) in 2022.
Olorinab is at least a couple years behind that, absent some shocking results that shake up the typical approval timeline — though it will certainly be interesting to see what the results are, since I’m pretty sure this is the first Olorinab trial that includes a placebo comparison, and the placebo effect can sometimes be dramatic in pain medications.
Their other programs are very early stage or are really R&D partnerships or projects in the lab — they are just about to start their Phase 1 trial of APD418 for decompensated heart failure, so that could eventually turn into something notable – it’s a drug that also just got FDA “Fast Track” designation just a couple weeks ago (that really just means that they get more input from the FDA during the development process, and are eligible for accelerated or priority review because the drug is designed to address a big unmet need).
But as to that February 25 deadline? Well, we will likely hear some news from Arena on February 26, because that’s the day on which they’re scheduled to report their quarterly financials… but it’s not likely that there will be meaningful news about their lead drug programs in three weeks. They just did the rounds of investment conferences and their strategic update in January, only a few weeks ago, and posted an updated presentation for investors here that indicates we shouldn’t expect any big news from their GI trials in the next few months.
I don’t know whether they’ve fully enrolled for the CAPTIVATE trial yet for Olorinab, so it’s possible that we could get an update at some point before they’ve planned that data release in the second half of the year (they started the trial in July, and it requires about 16 weeks per patient, so there might even be just an “enrollment completed” press release at some point, though that’s not really necessary), but this is a fairly small trial, with 240 patients spread across four different dosage regimens (including placebo), so I doubt they’d want to jump the gun and release any real information before the trial is complete — and since they’re well-funded already for their clinical work and don’t need to raise money right now, they don’t necessarily have to focus on keeping the stock price elevated in the near term (the more a company needs to raise money by selling new shares into the market, the more likely they are to issue a lot of extra press releases).
And as for other clues from the ad, I did actually look — the person who arguably deserves the credit for discovering this compound (in 2017, not 2019) is Dr. Robert Jones, who was a longtime executive and “drug hunter” at Arena (he works elsewhere now and has no connection to Duke University)… though yes, the current head of R&D and former Chief Medical Officer at Arena, Dr. Preston Klassen, was on the Duke faculty, and before that he was the Head of Clinical Development, so I guess he or the current Chief Medical Officer Dr. Chris Cabell (also with a Duke connection) would be a reasonable person to present the results to investors whenever they do come out (not February 26, but perhaps later this year). I don’t know that they had anything to do with discovering or pushing the drug forward in clinical trials, or if it’s part of their ‘life’s work’ in a meaningful way, as the ad teases… but sure, they match the clues.
And yes, the Phase 2a trial for Olorinab was arguably 100% successful — in that 11 out of 11 patients “with evaluable data” after week 8 (out of 14 total patients enrolled) exhibited a “clinically relevant improvement” in abdominal pain of at least 30% from baseline. Apparently the other three didn’t have “evaluable data” after the full term of the trial, or dropped out of the trial for some other reason. I’m absolutely not an expert on clinical trials or drug development, but it strikes me that’s a very small group of people, and the measure of abdominal pain is almost certainly somewhat subjective (there was no placebo, from what I can tell, it looks like the comparison was to the normal baseline amount of pain).
The good news for sufferers, I suppose, is that this cannabinoid receptor agonist looks like it might help with abdominal pain… and that it’s believed to be peripherally selective, which I think means it acts directly on the pain without entering the central nervous system, which should mean that it’s not likely to be addictive in the same way as opiates, or have other nasty side effects (like constipation, which would be an obvious problem for Crohn’s or IBS sufferers).
Whether it’s going to be a meaningful pain medication for those with gastrointestinal diseases, or, indeed, if it’s effective for any other kinds of pain, is still really yet to be determined. And no, this is definitely not the only non-addictive pain treatment in clinical trials around the world, or even the only cannabinoid receptor agonist that people are investigating for pain-killing properties (whether it’s the best or most promising, I have no idea, but this seems to be a pretty active area of research).
We probably won’t know much more on February 26 than we do today, sadly, but sometime in the second half of this year we’ll probably learn, in a somewhat larger trial whether the dosage matters and whether the drug is more effective at pain control than the placebo. And that could certainly impact the share price.
As to whether you’d like to ride along with Arena while it looks to answer those questions and develop this and other drugs, well you’ll have to make that call — the drugs sound interesting, and they are well-funded and focused on a fairly small number of projects, and will know a lot more about their two lead compounds over the next 18-24 months, so it’s likely that something will happen to the stock by 2022… the problem won’t be a lack of news. Whether the news will be good or bad, though, I’d just be guessing. If you’ve a guess of your own, or other input on Arena or these clinical trials, feel free to share with a comment below… thanks for reading!