Martinez-Ayme Securities Initiates Coverage On GeneMax Corp. (GMXX) With A Sell Recommendation
MIAMI, Nov. 7 /PRNewswire/ -- Martinez-Ayme Securities, a Member of the National Association of Securities Dealers CRD #109838, today released its research report on GeneMax Corp. (OTC Bulletin Board: GMXX) with a sell recommendation in a 3 page research report entitled "Fundamentals Do Not Support Current Valuation; Buyers Beware."
12 MONTH PRICE OBJECTIVE: $2.00 RECENT PRICE: $12.35 PER SHARE
OTC BB: GMXX MARKET CAP: $188,000,000
CAPITALIZATION: AUGUST 2002 COMMON STOCK: 15,160,119 SHARES
RECOMMENDATION: STRONG SELL/FUNDAMENTALS DO NOT SUPPORT CURRENT
EVALUATION
RISK RATING: EXTREMELY SPECULATIVE 52 WEEK RANGE: $12.35 TO $0.15
NINE MONTHS ENDING: Sep, 30 2002 NET SALES: $0.00 NET EARNINGS: $0.00
RECOMMENDATION: SELL 30 DAY AVERAGE VOLUME: 113,582
GeneMax Corp., a Nevada corporation and formerly known as "Eduverse.com" currently trades on the OTC Bulletin Board under the symbol "GMXX" and on the Frankfurt Stock Exchange under the symbol "GX1". The Company has commenced the closing of the acquisition of GeneMax Pharmaceuticals Inc. ("Eduverse.com"); the shareholders of GeneMax Pharmaceuticals and Investor Communications International, Inc., a Washington corporation ("ICI") entered into a share exchange agreement.
GeneMax Pharmaceuticals was formed in Delaware during 1999, and its British Columbia, Canada subsidiary was formed in 2000. GeneMax Pharmaceuticals is a biotechnology company specializing in the discovery and development of immuntherapeutics aimed at the treatment and eradication of cancer, and therapies for infectious diseases, autoimmune disorders and transplant tissue rejection. Management of the Company believes that the global market for effective cancer treatments is large, and that immunotherapies representing potential treatments for metastatic cancer are an unmet need in the area of oncology.
GeneMax has had a meteoric rise in price over a quick period of time, reflecting very favorable publicity from Internet investment advisories, which received cash compensation from ICI. Martinez-Ayme Securities is unaware of any fundamental news to justify these inflated prices. We believe that there will be no clinical data available until phase 1 of the clinical trial is completed which will take at least 2 years. The company issued approximately 2.7 million shares in a private placement in May and June ranging in prices as low as $.0125 a share. The total of over 2.7 million issued represents over a 15% dilution. The company's shares at current price levels have a market capitalization of approximately $200 million. Despite positive market interest in biotech, and pharmaceuticals industry forecasts for the "cure of cancer" the shares can move lower on current weak fundamentals. Martinez-Ayme Securities believes GMXX shares should not be purchased at this time, but are rather a candidate to be sold since the production plans have to go through many years of clinical trials before they can actually get the TAP therapy into production and distribution worldwide and are at least about 18 months away from beginning clinical trials. They will have to go through three phases of clinical trials: Phase 1 and Phase 2 -- each lasting about a year; Phase 3, which involves many clinical sites and lots of doctors and hundreds of patients, presumably some in Europe, North America and Japan. Before they can try this approach in humans, the Food & Drug Administration wants proof that it is safe to insert the gene; as a result we believe the stock is exceedingly overvalued.
The Product -- GeneMax has a patent position on the two technologies they are licensed in. They have U.S. Patents and other European and Japanese coverage as well. GeneMax lead product compound, which is the TAP, was given an allowance from the U.S. Patent Office for the use of a TAP-1 gene against all cancers in the fall of 2000. In the spring of 2002, GeneMax was finally awarded a patent. The history of development of this was many years in the making -- it was 1994 that the University of B.C. had first applied for this patent and it took many years of laboratory testing to prove that the technology worked not just with a small cell lung cancer cell line in mice but establishing that it worked also with a melanoma and prostate cancer cell line, and it is with all of the data that they were finally awarded a very broad patent for the use of their TAP-1 gene against all cancers.
GeneMax also has a second product. It is called Peptide Transfer Assay and this also has a U.S. Patent issued on it. Basically, this is a related topic to GeneMax's lead candidate in that it's a tool by which they can assess compounds for their ability to modulate the immune system. For example, they can screen through hundreds of compounds, whether they be natural products or man-made chemical libraries, or genes, or anti-sense compounds, and determine if any of these compounds have the ability to boost or suppress this antigen presentation -- in other words if they're modulating the immune system. For example, if GeneMax finds drug candidates, which suppress the immune system, this would be good for applications in autoimmune diseases or transplant surgery. On the other hand, if GeneMax found things that boost the immune system, this would be very good for cancer or viral applications.
FINANCE -- Management of the Company believes that an estimated $15,000,000 is required over the next three years for payment of expenses associated with the balance of pre-clinical development and commencement of phase I clinical trials for the TAP Technology and for corporate expenses. Company claims it is working on long-term financing, some of which was supposed to be completed in mid-September but to date there has been no announcement of any financing.
MANAGEMENT -- The present management has diversified experience, but there is no evidence that management has any ability in the area.
CONCLUSION -- The wild price action appears to indicate a promoted and inflated stock under which a thin float was utilized to spur a huge run-up in the stock price and it may subsequently decline. We believe the price of the shares may collapse under the selling wave projected by reality. The production plans have to go through many years of clinical trials before they can actually get to the TAP therapy into production and distribution worldwide and are at least about 18 months away from beginning clinical trials and then they will have to go through three phases of clinical trials: Phase 1 and 2 each lasting about a year; Phase 3 which involves many clinical sites and lots of doctors and hundreds of patients, presumably some in Europe, some in North America, some in Japan. This will take GMXX at least another two years so the earliest they are going to be in production is about 51/2 years.
ALL INVESTMENTS INVOLVE RISK. THE RISK INHERENT IN A PARTICULAR SECURITY MAY NOT BE APPROPRIATE FOR YOU. PLEASE CONSULT WITH YOUR MARTINEZ-AYME SECURITIES EXECUTIVE TO OBTAIN ASSISTANCE IN SELECTING APPROPRIATE INVESTMENTS. THIS REPORT IS PUBLISHED FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TO BE CONSTRUED AS AN OFFER OR THE SOLICITATION OF AN OFFER TO BUY OR SELL THE SECURITY. THE INFORMATION CONTAINED HEREIN IS BASED ON SOURCES THAT THE COMPANY BELIEVES TO BE RELIABLE BUT THE COMPANY MAKES NO GUARANTEE OR REPRESENTATION ABOUT THE COMPLETENESS OF THE STATEMENTS OR SUMMARIES OF AVAILABLE DATA CONTAINED HEREIN. THIS INFORMATION IS PROVIDED AS OF THE DATE OF THIS REPORT, AND IS SUBJECT TO CHANGE WITHOUT NOTICE. FURTHERMORE, THE INFORMATION IN THIS REPORT SHOULD BE CONSIDERED OUTDATED 90 DAYS AFTER PUBLICATION, OR SUCH EARLIER DATE AS CIRCUMSTANCES MAY REQUIRE, AND SHOULD NOT BE RELIED UPON THERE AFTER TO DEVELOP INVESTMENT STRATEGIES. MARTINEZ-AYME DOES NOT CURRENTLY MAKE A MARKET IN THE SECURITIES OF GENEMAX CORP. AT TIMES IN THE PAST WE HAVE MADE A MARKET IN THESE SECURITIES. NOR DOES MARTINEZ-AYME SECURITIES OR ANY OF ITS PRINCIPALS, MAINTAIN A LONG OR SHORT POSITION IN GENEMAX CORP.
Contact: Martinez-Ayme Securities
Reynaldo A. Martinez
305-271-3232
E-mail martinez@martinezayme.com
martinezayme.com
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SOURCE Martinez-Ayme Securities,
CO: Martinez-Ayme Securities, GeneMax Corp.
ST: Florida
SU: INO
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11/07/2002 09:31 EST |
