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1. Viral Genetics (VRAL) $0.036 Award Speaks for Itself. Awarded $1.5 Million.
Yesterday Viral Genetics announced that Scott & White Healthcare in Temple, Texas has received an anonymous gift of $1.5 million that will go toward cancer cell research led by M. Karen Newell Rogers, Ph.D, who is Viral Genetics (VRAL) Chief Scientist.
That's a gift, in case you missed that. If the same amount of money came directly to Viral Genetics, from an institutional investor, with the typical PIPE discount, it would result in Viral Genetics having had to sell close to 100 million shares.
So while it might not sound like a lot of money -- it is in fact a lot of money. And we don't have to worry or be concerned with the 100 million shares later being sold into the market, which usually comes at the worst possible time (Murphy's Law).
So we were thinking...
Imagine you're sitting around one afternoon on a sunny Texas winter day and you notice you have a spare million dollars (or five, or ten) sitting around and you think to yourself, "...you know maybe I should give Texas A&M a call and see if I can get another library named after me. Or maybe a wing of the hospital. I haven't done that before."
And then suddenly, a light bulb goes off, and you think, "Wait a minute. I got it. Why don't I instead find out what one of their most promising medical technologies is that they're working on (logically assuming they don't want to fund their 22nd most promising), and then write a check to help them advance it along. Then -- I'm not only helping a good cause -- I'm helping a "specific" good cause !"
So let's think about that scenario. It's one thing to endow Harvard or Stanford or Texas A&M with $10 million, trusting that they will do some good with the money. But imagine instead going into such an institution and saying, "Look. Here's $10 million. I want you to cure acne. I read you're working on a promising acne cure. You've got the scientists and researchers. You've got the facilities, tools and patients. And the work your doing, I've read is patented. But all research costs money, so here's $10 million. Use it for that."
Then take that to the logical and best possible conclusion; imagine if they actually find a cure. Talk about a charitable celebration. Break out the Texas ribs and Champagne, we're having a BBQ !
And if you haven't caught our drift. This is far, far preferable to an equity offering (with the exception that it doesn't come along with "potential" support from the Investment Banking firm). If the advancement of science could be furthered by donations (which a great part of course is) it's win, win for everyone involved.
Anonymous donations: tinyurl.com
We'll also note it is nothing short of amazing that Viral Genetics (VRAL) continues getting grants and gifts from individuals and institutions -- who obviously believe that the Company has science worthy of it. Grants and gifts aren't motivated by greed, they're motivated by advancing science that the gift or grant giver, has determined is worthy of advancement and thus worthy of the gift or grant. Pretty cut-and-dried.
In addition to the latest award, generosity (capital, research staff and/or facilities) has been bestowed upon Viral Genetics (directly or indirectly) by:
1. Dr. Shattock, whose research is supported by a Grand Challenges for Global Health Initiative program grant, co-funded by the Wellcome Trust and Gates Foundation.
2. Texas Emerging Technology Fund.
3. Texas Life Sciences Collaboration Center.
4. Opportunity Austin.
5. Economic Development Department for the City of Georgetown.
6. The University of Colorado at Colorado Springs.
7. Texas A&M.
8. Texas A&M Health Sciences Center.
9. University of Vermont.
10. Scott & White Healthcare.
11. Time for Lyme.
12. Turn the Corner Foundation.
And gracious help from:
Dr. Luc Montagnier (Nobel Prize winner)
Dr. Baruch Blumberg (Nobel Prize winner)
Dr. Eric Rosenberg (Harvard)
Dr. C. Everett Koop (Former U.S. Surgeon General)
Dr. Leslie Z. Benet (UC San Francisco (ret), Merck, Amgen, Boerhinger Ingelheim)
Randall Riley (Former Texas State Representative)
Marshall Phelps (Corporate Vice President for IP Policy and Strategy, Microsoft)
Richard Gerstner (Former Head of IBM's PC Group)
Anthony Freda Jr. (Villanova University)
John Sheehan (Sheehan Boyce, LLC)
Hugh Austin (ICN Network)
..and
Haig Keledjian
Arthur Keledjian
Dr. Karen Newell Rogers
Monica Ord
Michael Capizzano
Robert Berliner
It even amazes us, when we read it all in one list. We apologize in advance if we forgot anyone. Without all of the help, from all of the above -- we're not sure if Viral Genetics would be around today and have gotten this far, without a $50 million secondary.
Scott & White meets Viral Genetics Video: youtube.com
Video Interview with Haig Keledjian, CEO: youtube.com
Some final thoughts on the award, remember that this research work (Investigator-initiated clinical trials) is being done "with" Scott & White, at Scott & White.
This is considerably different than walking into Scott & White, handing them a check for $1.5 million and asking them to conduct a clinical trial -- solely on your behalf in an outsourced type manner. This is a collaboration.
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2. What Is the Money For ?
In the press release, they noted that the $1.5 million gift will go toward cancer cell research led by M. Karen Newell Rogers, Ph.D, director of the Center for Cell Death and Differentiation at Scott & White and Texas A&M Health Science Center and that in addition, the funding will be used to support clinical work.
So in our opinion this relates to Viral Genetics' MDT, or Metabolic Disruption Technology.
Our favorite quote from the release (and please remember this, if there is only one thing you remember): "We hope this gift enables us to move rapidly from the laboratory into early-phase clinical trials and new treatments for cancer patients."
While MDT is listed as the third of Viral's "ready to approach the FDA" technologies, if something "statistically significant" comes from this trial and you did not read and re-read the above quote, you will have no one but yourself to blame.
Clinical Trial Calender: viralgenetics.com
The clinical work is the same "Investigator-initiated" clinical trials announced earlier, which is the initiation of a multi-departmental effort to study metabolic disruption as adjuvant therapy to treat end-stage cancer, including melanoma, ovarian, and breast cancer patients
Let's define "adjuvant" therapy, because this is extremely important to understand -- and which is also what excites us about the science and which is also what excites as a potential future driver of the stock price. A major driver.
An adjuvant (from Latin, adiuvare: to aid) is a pharmacological or immunological agent that modifies the effect of other agents (e.g., drugs, vaccines).
In plain english, this means that Viral has a drug compound meant to work with "other" drugs or treatments, with a goal of making those "other" drugs or treatments more effective.
Let us repeat, "...a goal of making those "other" drugs or treatments more effective."
Of course the first question you might have is "what other drugs or treatments?" Unfortunately, that information has not been publicly released. But we do know this from the earlier release:
"Among the drug combinations to be tested are two compounds already approved by the FDA for other uses."
Hmmm. Yeah. Already approved by the FDA. We like the sound of that.
This is why we say, if something "statistically significant" comes from this trial and you chose instead to watch from the sidelines (and everyone is of course entitled to their own opinion and investment strategy), you will have no one to blame but yourself.
Gift Press Release: tinyurl.com
Clinical Trial Release: tinyurl.com
Below are our favorite paragraphs from the Clinical Trial press release. And of course, know that no matter how much money is backing the advancement of science*, no matter how many Harvard (or Texas A&M) researcher's are working on it, no one knows in advance what will create "statistically significant" results. This is why they call it research.
We favor the following quotes, because Dr. Newell Rogers, did a great job at explaining it in terms we should all be able to understand.
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(from the press release)
"By interfering with cancer cells ability to get the fuel they need, we can essentially starve them making those cells more susceptible to chemotherapy and radiation," said Newell. "This approach also makes the cells more visible and vulnerable to the bodys own immune system. This unique, two-fold approach potentially will result in the death the drug resistant cells that are the major cause of most cancer deaths
Newell's research indicates that when the tumor cells' energy strategies are interrupted with "metabolic disrupting" agents, the consequences are two-fold: the cancer cell can no longer use that strategy for energy and the disruption is accompanied by a "danger flag," that appears newly visible to the immune system. The consequence is selective tumor cell death.
Among the drug combinations to be tested are two compounds already approved by the FDA for other uses. One blocks a distinct survival strategy that tumor cells use. The other neutralizes an important growth factor for many tumors. These were chosen, in part, because this treatment could be quickly brought to market following a successful physician's trial and completion of the FDA approval process.
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One final thing is to understand, currently there are numerous treatments, for the numerous types out cancers in the market. And there are numerous companies involved. Each company would be happy to find an adjuvant, which makes their drug or treatment more effective.
Why is this important ? Well this means more opportunities for Viral Genetics to prove up "statistically significant" results. Maybe MDT works well with ovarian cancer treatments. Maybe MDT works well with breast cancer treatments. Maybe MDT works well with glioblastoma treatments. Maybe MDT works well with melanoma treatments.
Maybe it works well with all of them.
Opportunities means licensing opportunities.
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2. Viral Genetics Big Picture.
Big picture here, while Viral Genetics (VRAL) is getting a fire storm of interest from the medical community and from educational institutions (an undeniable fact proven by their ability to attract two Nobel prize winning researchers to advisory board), Wall Street has pretty much overlooked the Company. We attribute this malady -- in part owing to their low stock price and low market valuation.
While the medical community may not be concerned with Viral's stock price (or even care if they're public), it's the first thing (and typically the last lately) that Wall Street looks at.
Dr. Montagnier: nobelprize.org
Dr. Baruch Blumberg: nobelprize.org
We say "overlooked" because everyday, we see small early stage biotech companies take down $10 million, $30 million or $15 million. And these aren't IPO's, but rather secondaries and or private placements into companies which are already publicly traded. And these companies, while low priced, typically have market valuations of $200 million and up.
As example, recently these relatively unknown Biotech start-ups received:
Pluristem (PSTI) $3.16: $35 million
tinyurl.com
EnteroMedica (ETRM) $2.70: $29.8 million
tinyurl.com
YM Biosciences (YMI) $2.27: $43 million
tinyurl.com
BioSante (BPAX) $1.90: $18 million
tinyurl.com
And then the biggie, Biovex (private): $1 billion from Amgen for Phase III development.
tinyurl.com
(PS, read this: Biovex's OncoVex has demonstrated encouraging anti-tumor activity in clinical studies for the treatment of melanoma and head and neck cancer, and BioVex is currently enrolling patients into pivotal Phase 3 trials in both indications," said Roger M. Perlmutter, M.D., Ph.D., Amgen)
In case you didn't read what we read, that's up to $1 billion for "encouraging" anti-tumor activity. That's $1 billion for something which has not been proven, something which has not yet been approved. Yeah.
Another reason we say "overlooked" is because of the current valuation. And by valuation, we do not mean the current selling price, but rather the overall market capitalization near $20 million.
With a $20 million market cap, the shares would have to increase by five-fold, before attracting any small cap institutional interest (not a bad thing, right).
So you can look at that two ways. You can just deal with it for what it is and say "oh well" to yourself...or you can "man-up," suck in all the stock you can** and bury it away, hoping something like the Biovex event (or something remotely similar) happens to Viral Genetics.
Yahoo has a nice "industry browser" which let's you sort Biotech companies by market value. Just click on the column heading which says Market Cap to sort.
biz.yahoo.com
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