This was the early method of performing a lobotomy. And just 50 years ago, they were carried out not only on severely mentally ill people, but also on moody teenagers, or housewives who’d lost their enthusiasm for domestic work. Seriously. Over 40,000 Americans were lobotomized, often with catastrophic results.

Thankfully, they’re a thing of the past. But it made me think about how medicine has changed over the years and what practices were once acceptable. Just a few hundred years ago, for example, you wouldn’t have questioned the “doctor” for putting leeches on you any more than you do today for prescribing an antibiotic.

What other common medical practices will be outdated in the years to come – and more importantly what will replace them? As someone who follows the health care sector, I believe I have the answer to the next big thing in health care: Immunotherapy and regenerative medicine…

How Immunotherapy is Changing the Playing Field

Immunotherapy has been around for decades in the forms of vaccines, allergy shots, etc. It involves introducing something into the body to create an immune response. For example, when you receive a flu shot, you’re essentially training your body’s immune system to respond to specific infectious agents.

And then there are more serious diseases – like cancer.

Over the past few years, we’ve seen new cancer medicines receive approval, with even more in development.

With greater technology and intensive ongoing research, we may one day look back at chemotherapy (the equivalent of carpet-bombing your body in order to kill cancer) as barbaric as we do lobotomies.

And with regard to immunotherapy drugs, the body’s immune system specifically targets the cancer, typically resulting in fewer side effects than chemotherapy.

Several well-known cancer drugs already employ this technique – for example, Genentech’s Avastin and Herceptin and Bristol-Myers Squibb (NYSE: BMY) and ImClone’s (now Eli-Lilly) joint-partnership with Erbitux. All three have become blockbuster drugs for these companies.

Three Small-Cap Firms That Could Cash in on Immunotherapy

But there are also many small-cap health care companies engaged in immunotherapy research, which stand to make piles of money for shareholders if they develop a successful drug. Here are some names to look into…

• Dendreon Corp. (Nasdaq: DNDN): Prostate cancer is the most common cancer among American men and is the second-highest cause of cancer deaths. Dendreon’s leading drug candidate for prostate cancer, Provenge, could be approved in 2010.
• Cel-Sci Corp. (AMEX: CVM): The company’s Multikine drug, which treats head and neck cancer has completed Phase II trials and its scientists are currently working on an H1N1 flu drug, too.
• Northwest Biotherapeutics (OTC BB: NWBO): The firm has several drugs in various phases of clinical trials for brain, prostate and lung cancers, including DCVax-Brain, DCVax-Prostate and DCVax-LB for non-small cell lung cancer. It also has DCVax-Direct, which treats ovarian, head and neck cancer.

Three “Regenerators” for Your Health Care Sector Watchlist

In addition to immunotherapy drugs, the field of regenerative medicine is also flourishing and holds some excellent growth potential, as we’re still in the early stages of understanding the power of stem and other regenerative cells. Here are a few names to kick off your research…

• Cytori Therapeutics (Nasdaq: CYTX): The company already has a product approved in Europe (Celution 800/CRS) and Asia (Celution 900/MB) for breast reconstruction following a partial mastectomy. The firm is currently running clinical trials in several cardiac areas, too.
• StemCells Inc. (Nasdaq: STEM): The company currently has clinical trials in progress for drugs that treat diseases of the central nervous system and liver.
• Geron (Nasdaq: GERN): It’s involved in both immunotherapy research for cancer and stem cell investigation in spinal cord injuries.

Keep in mind that most of these stocks are very small, so their trading can be volatile. In addition, they may need to raise funds to aid research and development, so do your due diligence.

However, I’m confident that over the coming years, firms like these will be at the forefront of new, more effective and safer ways to treat some of the world’s worst diseases.

Hoping your longs go up and your shorts go down,

Marc Lichtenfeld

Source: How to Profit from Immunotherapy & Regenerative Medicine

Don’t tell me we’re not doing anything for readers of of free service, the TFN eNews, and visitors of our TFN home page.

On August 20, we posted a free TFN Special Report, The Top Swine Flu Vaccine Stocks under $20, in which we recommended three stocks.

One of them, Sinovac (AMEX:SVA), gave us 30% gains on Aug. 28.

Today, the arguably largest and slowest-moving of the pig flu trip stepped on the gas. On Aug. 20, I recommended you “buy Dr. Reddy’s Laboratories Limited (NYSE:RDY) under $16.50 for possible gains of 10-15% throughout 2010.”

Today, our Indian generics wallah is trading at $20.43. In our TFN tracking portfolio, this clocks in as a 25.95% gain.

I say we take it!

Source: Take 26% Gains on Indian Pharma Giant Dr. Reddy’s (RDY)

You may have read about the discovery, recently, of a new and radically more effective mosquito repellent. Based on molecules found in black pepper, it was not discovered using traditional laboratory methods. Instead, it came about through computer simulations based on knowledge of mosquito cell biology. This is just the tip of the bioinformatics iceberg.

Until recently, cell biology has been something of a “black box.” We could observe how cells functioned, but had little insight into the actual mechanisms. Now, though, scientists are learning how cells work on the molecular level.

Using mathematical models and new technologies for detecting molecular processes, researchers are extracting raw data from DNA and modeling the ways genes work and interact. To understand this field, you should view your own genome as a giant software program for manufacturing proteins.

The process of unraveling and decoding the DNA software involves massive amounts of data collection. Then, once collected, correlation and other forms of computer analysis are performed on those data to figure out cause and effect. How big is this challenge?

Consider this: Each human cell contains about 3 gigabytes (3 billion bytes) of pure data and instructions. If this information were written in book form, it would require 5,000 volumes, each 300 pages long. That’s 120 times larger than the kernel of the Windows operating system, which is about 25 megabytes of code. This data resides, of course, in each cell’s pinpoint-sized nucleus. The human body, in turn, has approximately 100 trillion of these 3-gig cells.

Add to this complexity about 5,000 different proteins expressed by each cell. Different cells, however, express different proteins. These proteins, the proteome, behave as computer commands and serve to communicate between cells.

The decoding of all these systems is, obviously, a huge computational challenge. It has only just begun and it would not be possible, in fact, without recent advances in computer technologies. As more powerful computing comes online, the pace of bioinformatics discovery will accelerate. Quantum computing, because it is particularly suited to sorting out cell biology, will enable a “quantum” leap in understanding.

Today, there are three main areas of research in computational biology. These are genome analysis, protein structure prediction and drug design.

• Genomic analysis is, as you would expect, the statistical analysis of genes. As more and more DNA is analyzed in conjunction with individual medical information, more is known. Among other reasons for performing this analysis, scientists are looking for the genes that cause or contribute to diseases.

• Protein structure predictions are based on computer models that integrate information about the function of these proteins. This is an immense task, as there are tens of thousands of proteins. Ultimately, understanding the proteome will enable truly personalized medicine, with minimal side effects for patients.

• With the knowledge gained from understanding the genome and proteome, computer models of target proteins can be created. Using these virtual proteins, drugs can be designed and tested using in silica simulations before testing in the lab.

The development of these virtual molecules, the heart of computational biology, is ending the practice of shooting blindfolded while hunting for drug candidates. Instead of randomly testing different drug candidates and analyzing the results, the field of candidates can be significantly narrowed using simulations. This radically improves the “hit rate,” increasing the speed of drug discovery and lowering costs.

Moreover, computer cell simulations improve as additional data are collected and integrated back into the models. Significant advances have already taken place in this transformational space. Medicine, incidentally, is only one area that is benefiting from bioinformatics. Many of the benefits are taking place in the agricultural sector. The genetic engineering of microorganisms is another area of enormous potential.

This new science of building and experimenting on virtual molecules may be the most important new experimental tool since the scientific method was codified by John Stuart Mill in the 1840s. As Moore’s law (the exponentially increasing power and cost-effectiveness of computers) continues to prove true, so will the power and importance of bioinformatics.

Regards,

Patrick Cox

Source: When Computers Meet Cell Biology

The share price for Vical Incorporated (NASDAQ:VICL) jumped over 15% earlier this month on the news that a U.S. patent had been granted for its Vaxfectin-formulated DNA influenza vaccines.

Now with the addition of rumors of a buyout offer from generic drug giant Teva Pharmaceuticals Ltd. (NASDAQ:TEVA), this company is rapidly becoming a superstar!

We saw the potential for Vical here at TFN. Readers that acted on our FREE recommendation of VICL in our Aug. 20 Report, The Top 6 Swine Flu Vaccine Stocks Under $20 are sitting on gains of around 46%!

The rumors could prove true

In early August, Vical announced an agreement with a subsidiary of Teva (Abic Marketing Limited) allowing Abic exclusive marketing rights for the company’s drug Allovectin-7 in Israel.

In return, Vical is to receive upfront and milestone payments.

The company is currently enrolling patients for the Phase III trial of Allovectin-7 in Israel for the treatment of metastatic melanoma.

Teva may perceive Vical as a worthwhile purchase. If you own shares of Vical, we recommend you hold on for now.

Source: Vical (VICL) Just Keeps on Giving

I guess it’s not surprising that renting his house to college kids made him a little paranoid. He often showed up at random times to make sure there was no revelry taking place. Once, he chased away some of my buddies as we were watching “Monday Night Football” (I guess the keg in the corner didn’t help our argument).

This no-nonsense, unattached attitude is the perfect way to approach the stock market and your investments. After all, most investors have had stocks that we thought were our friends, but that ultimately turned on us and caused pain.

The trick is to not become emotionally attached to them.

This is easier said than done, so if you find yourself hanging onto stocks for too long, or investing more with hope and emotion than sound reasoning, allow me to give you some tips…

When it Comes to Emotions, Adopt DeNiro’s “Heat Mentality”

I was fortunate that my stock market education started at a trading desk, where we executed trades according to how the market and stocks were performing. Period. Nobody cared if the stock had a low P/E ratio… whether the company had the next great biotech drug… or was run by a terrific management team.

To us, stocks merely represented three or four letter symbols. That’s it. In some cases, I didn’t even know the names of the companies and couldn’t have told you much about their businesses.

Sounds a bit clinical, doesn’t it?

It was. And it served me well. I learned that you shouldn’t get emotional about stocks. They’re simply investment vehicles in which to park your money. Granted, you can be in a stock for five minutes or 20 years, but you should never form a relationship with them.

As Robert De Niro’s character said in the movie, “Heat”: “Don’t allow yourself to get attached to anything you cannot walk away from in 30 seconds flat if you feel the heat around the corner.”

Think about it. Many of us have owned a favorite stock – perhaps for years. Oftentimes, the longer you hold it, the more difficult it can become to sell it – even when you know you should.

We form an emotional attachment to the business that often has nothing to do with how the stock is performing – or how much money we’re losing from it.

This can be an issue, particularly in the biotech and health care spaces …

It’s Easy to Form Emotional Attachments to Early-Stage Companies

One of the key price catalysts for a biotech or health care company is when a medical advancement is made. For example, a new cancer drug is approved, a company sees strong clinical trial results, etc.

Not only are we happy that our investment is worth more, but we also feel good about being involved with a company that saves lives or alleviates suffering.

For that reason, some investors form particularly emotional relationships with early-stage companies that show great promise.

In The Xcelerated Profits Report, I recommended Medivation (Nasdaq: MDVN). The company is currently developing one of the most promising drugs to combat Alzheimer’s Disease – Dimebon.

When I made the recommendation in August 2007, I believed Dimebon would work and that the potential reward was worth the risk. Aside from the human issues surrounding Alzheimer’s, it was strictly a financial decision. And if the drug is successful or not, the decision to recommend selling the shares will be made for financial decisions only.

You Must Separate Emotion From Reality

That said, I’ll be terribly disappointed if the drug is a dud. Not only for my subscribers, but also for millions of Alzheimer’s patients and their families. The disease runs in my family, so it’s especially personal.

However, I won’t let those emotions get in the way of taking a profit or cutting a loss. If it doesn’t work I’m not going to hang on to hope, looking for some morsel of data that justifies holding onto the stock. The bottom line is that if the drug isn’t proven to be safe and effective, I don’t want to own the stock anymore.

Biotech investors often tell me that they can’t/won’t sell a stock because they’ve become emotionally invested, as well as financially. This isn’t surprising -dreams of riches and a better world are wrapped up in these tiny companies.

But you simply cannot allow that to happen, otherwise you risk taking a double hit if things don’t pan out in your favor.

So how can you remove emotion from the equation if you’re not using a stop? Fight emotion with emotion.

Three Ways to Take the Emotions Out of Your Investment Decisions

#1: Write Down Your Reasons:

When you buy a stock, write down the reasons why you’d sell and post it somewhere near your computer. Perhaps it’s when the stock hits a certain price, or when news on a particular drug comes out.

Whatever the reason is, write it down on paper and stick it in a visible place. That way, when your catalyst hits, it will be tougher for you to justify to yourself why you’re going against your original idea.

#2: Phone a Friend:

This doesn’t just work for “Who Wants to Be a Millionaire.” Telling a friend or family member your reasons for selling a stock is even better than writing the reasons down for yourself.

After all, you’ll face some serious peer pressure if you suddenly change your mind and refuse to take profits or cut a loss. Outsiders aren’t as emotionally involved as you because it’s not their money on the line, so they should be able to make you see that your original reasons are still right.

#3: Conduct an Annual Portfolio Review:

Review your portfolio at least once a year. Take a look at every stock and ask yourself why you’re still holding it. If your answer sounds more like a justification than a legitimate reason, dump it.

Any time there is money involved, emotions run high. Of course, it’s easier to get less attached to stocks in other sectors. For example, many investors have no problem letting industrial stocks go when their trailing stops are triggered.

But it’s your job to remove as much of it as you can and focus on decisions that will benefit your portfolio.

Marc Lichtenfeld

Source: Three Ways to Stop Making Emotional Investment Decisions

For a bunch of financial writers, we sure do a lot of talking. There is no debating we have a lot of interesting discussions around the TFN office. Yesterday we got into an in-depth conversation about penny stock investing.

The question: what does the perfect small cap look like?

Of course, each of us had differing opinions based on our own theories and experiences, but we came to one obvious conclusion. Give us a small cap that has the books of a Blue Chip and we will show you a winning pick.

As if it was some sort of divine intervention, our conclusion was proven to be deadly accurate this morning.

When I initially recommended SpongeTech (OTC BB:SPNG) to Hot Stock Confidential subscribers on August 13, I said, “The company’s balance sheet reads more like a blue chip than a speculative penny pick.”

It’s true. SpongeTech was highly undervalued. It was buying back its shares and is growing like the national debt.

The recommendation was only made two weeks ago, but already it has paid off. I advised readers to sell half of their positions for gains of 30% today. By locking in at today’s price, we can afford to ride out any future volatility.

Room for more

Almost instantly after sending out the sell alert, another “small-cap Blue Chip” popped up on my screen.

The headline from the Associated Press reads, “Kewaunee Scientific raises dividend to 10 cents.”

My first thought… who in the world can raise their dividend in this economy?

For any investor who has ever studied signaling theory, this is the ultimate buy signal from the company’s management. It shows that Kewaunee’s (NASDAQ:KEQU) top brass is confident growth is going to exceed shareholder expectations organically.

Investors rewarded the company by increasing its share price by as much as 8% during the session.

Of course, digging through the company’s books, it is obvious this company is a Blue Chip in a small-cap shell.

With a market value of just $33 million, many of this company’s brethren barely have revenues worth noting. Kewaunee flexed its muscle by sporting a top line of $104 million last year. Best of all, the company turned the sales into a net profit of $4.2 million.

A 4% margin is not worth shouting about, but it sure beats what Ford (NYSE:F), Boeing (NYSE:BA) or Hone Depot (NYSE:HD) did during the same period.

Now, with a market cap of $33 million and $4 million in earnings, we get a price/earnings (P/E) ratio of 8.25.

Home Depot’s ratio stands at 20. Boeing comes in at 15. And Ford, well, it may be a few years until it finds a positive figure for the ratio’s denominator.

Of course, with any small cap, liquidity is a major risk factor. With $25 million in debt, investors should certainly watch Kewaunee’s leverage. But it is nothing worth crossing this one of your buying list for.

After all, aren’t liquidity concerns an issue at almost every Blue Chip these days? The Dow was built (and crashed) on debt.

As a manufacturer of laboratory equipment (cabinets, vent hoods and work surfaces) Kewaunee is in a strong position to take advantage of Washington’s trillion-dollar spending spree. As the biotech industry continues to grow and as more and more high-tech school labs are built, Kewaunee’s phone is going to be ringing a lot.

I am not saying to buy shares of the company right this instant – prices have risen a lot of the last six months – but it is worthy of your watch list.

I know it is at the top of mine. Our subscribers may be reading more about this winner in the months ahead.

Source: A Small-Cap Blue Chip

The St. Louis-based Monsanto said in June that its fiscal third-quarter earnings fell to $694 million, or $1.25 a share, from $811 million, or $1.45 a share, in the same period a year ago. Sales slipped to $3.16 billion from $3.54 billion last year. The company also said its annual earnings would likely be at the low end of its $4.40 to $4.50 a share forecast range.

That’s not very impressive for a company that last year posted record net sales of $11.4 billion for fiscal 2008, a 36% jump from fiscal 2007. But there’s also good news for Monsanto investors. Chairman and Chief Executive Officer Hugh Grant said last week that his company is poised to achieve its long-term goals by producing more efficient products and streamlining production.

“We have committed to using our technology to double yields in our three core crops – corn, soybeans and cotton – by 2030, while reducing our use of key resources by one-third per unit produced,” Grant said. “Innovation has us well on our way to achieving this, with our most robust pipeline ever. We’re on the verge of an unprecedented technology explosion that will deliver the types of products growers want most – those that offer greater yield and value.”

By 2012, Monsanto expects its gross profit from its core seeds and traits business to be between $7.3 billion and $7.5 billion – about 2.5 times its 2007 level. Grant said this increase will be facilitated by the development of seven new “high impact technologies” that by 2020 will boost revenue by $3 billion.

“These projects came to be through a disciplined investment in seed and biotech that is unmatched in the industry,” Grant said. “We consistently invest 14% to 15% of our total net sales for seeds and genomics in research and development for breeding and biotechnology.”

It’s true that Monsanto’s commitment to research and development have made it the dominant player in the market for genetically modified seeds. But Monsanto has become a victim of its own success.  It is currently locked in an ugly legal spat with its chief rival in the biotechnology E.I. du Pont de Nemours & Co. (NYSE: DD), which has led to accusations that Monsanto is a monopoly – an accusation that has drawn the attention of the federal government.

DuPont Gets Dirty

Conflict between the agribusiness arch-nemeses erupted earlier this year when Monsanto sued DuPont, and its subsidiary Pioneer Hi-Bred International Inc., for unlawful use of its proprietary “Roundup Ready” herbicide tolerant technologies in soybeans and corn.

DuPont doesn’t deny “stacking” soybeans with the Roundup Ready trait with its own Optimum GAT trait, but instead argues it is not violating Monsanto’s patent by doing so.

“We fundamentally disagree with Monsanto’s position that they can use their current trait monopoly to prevent the introduction of competitive seed products for U.S. growers,” DuPont spokesman Dan Turner told Reuters. “This is yet another example of Monsanto trying to flex its anti-competitive muscle in the market, by stifling healthy competition among seed producers that are looking to grow yields for those that matter most — the farmers,” he added.

The conflict escalated Monday, when Monsanto CEO Grant sent a letter to DuPont Chairman Charles O. Holliday Jr. accusing the company of a “serious breach of business ethics.”

“Your lobbying and communications that paint your company as a victim of limiting technology licenses is dishonest, disingenuous and downright deceitful,” Grant told Holliday in the letter.

Furthermore, Grant decried the use of “masked third parties” to “attack” Monsanto as
“misleading to the public and a serious breach of business ethics far beyond honest competitor behavior.”

It’s likely that by “masked third parties” Grant meant the Organization for Competitive (OCM) Markets, a nonprofit group that claims Monsanto controls 90% of the market for genetically modified seed. The Lincoln, NE-based organization claims to take on big agricultural companies in defense of small farmers and consumers, but it was recently revealed DuPont gives the group financial support.

“We’ve supported OCM for a number of years as we have dozens of organizations that are aligned with our belief around what’s in the best interest of our farmer customers,” DuPont spokesman Dan Turner told St. Louis Today. “However, we don’t disclose the amount that we give to OCM or any other organization.”

Turner couldn’t name any of the other organizations that DuPont supports, the paper said.

Is Monsanto Being Thrown Under the Anti-Trust Bus?

In July 2008, the OCM started the Crop Seed Concentration Project an initiative target specifically at Monsanto, which the group says controls 90% of the market for genetically modified seed, a figure Monsanto disputes.

“Monsanto’s effort to enforce licensing agreements and protect its patent rights has dramatically altered American agriculture,” the OCM says on its Web site. “Monsanto has filed more than 100 patent infringement lawsuits against U.S. farmers.”

The OCD’s crop concentration campaign coincides with U.S. President Barack Obama’s vow to enforce antitrust laws that were neglected by the Bush administration, and its national convention attracted the representatives from the Federal Trade Commission, the Department of Justice, and the Commodity Futures Trading Commission.

“For many farmers and consumer advocates, we understand that there are concerns regarding the levels of concentration in the seed industry–particularly for corn and soybeans,” Philip Weiser, the new Deputy Assistant Attorney General, said at the OCM gathering, which took place in Monsanto’s hometown of St. Louis, Mo.

Weiser said federal regulators are “committed to examining” the level of competition in several agribusiness sectors

The Department of Justice and the Department of Agriculture will have a series of “workshops” to “openly discuss legal and economic issues associated with competition in the agriculture industry,” said Christine Varney, the assistant attorney general in charge of antitrust issues at the Justice Department.

“Monsanto welcomes the opportunity to be an active participant in the discussion and looks forward to these workshops,” the company said on its Web site. “There have been unsubstantiated allegations of a lack of competition in the seed market for several years now. We’re confident an objective review will reveal competition is alive and flourishing in the seed market.”

The workshops are scheduled to begin in January.

Source: Monsanto Focused on Long-Term Growth, but DuPont Dustup Draws Attention from Regulators

Moreover, there will be huge profit opportunities, in many enabling technologies, for those who invest accordingly. And today I’m going to tell you about a company that will hand you your best chance to make a transformational fortune.

We know that many current treatments work on some people, yet not others. Some drugs are safe for many people, but have dangerous side effects for others. This is because all of us have individual differences in our genetic code based on heredity and environment. Even slight differences can lead to very different reactions to medications.

This has created serious regulatory problems. Drugs are denied regulatory approval not because they do not work, but because some fraction of the population suffers adverse effects. As a result, we are often denied incredibly effective therapies simply because they are not universally effective.

This shockingly primitive state of affairs exists because, until very lately, we simply have not had the tools to get to the genetic roots of disease. Scientists and pharmaceutical companies haven’t precisely known how a particular drug’s chemical profile interacts with a genetic one. Medical science, in turn, has been unable to tailor drugs to work with a specific genetic makeup.

This is rapidly changing. Just a few short years ago, the human genome was first mapped. The genome, as you know, is the entire collection of genetic code that defines us at a biological level. Now scientists are studying single genes and their individual expressions.

It is meaningful, from the investor’s perspective, that Dr. Francis Collins, the head of the Human Genome Project, has just been selected by the Obama administration to head up the National Institutes of Health. Collins has long been a prominent champion for using the knowledge gained from human genome to accelerate personalized medicine.

This is important because institutional forces, with lobbying clout, always resist change. Much of Big Pharm, and its regulators, are vested in the “one size fits all” model. Many of the old players fear personalized medicine because it threatens the existing hierarchy. Collins’ presence at the top of the NIH will help counter this institutional resistance.

Incidentally, Collins has stated that genomics is currently where the computer industry was back in the 1970s – at the beginning of a technological revolution. While he was speaking in scientific terms, we should remember that the ’70s was also the right time to begin investing in a diversified portfolio of breakthrough computer technologies. Those who did so, despite claims that it was too risky or early, were made rich.

Dr. Collins is not alone in his views about personalized medicine. Former FDA director under G.W. Bush Dr. Andrew Von Eschenbach urges that the FDA approval process be overhauled and streamlined to help accelerate the adoption of personalized medicine. He is on record predicting that the medical industry will, in fact, undergo this profound metamorphosis.

I won’t pretend, by the way, that the prospect of socialized US medicine does not threaten the pace of this transformation. If American pharm’s prices and profits are controlled by the same people who run the Post Office and Medicare, it will not be good for R&D. It will not, however, stop progress. It will only shift it offshore.

Canada and much of Europe have squelched innovation in their countries by nationalizing health care. Rather than allowing drug companies the profits needed to fund future medical technologies, they mandate cheap care. This is why we regularly see politicians from these countries coming to the US to avoid long delays or get therapies unavailable in their own countries. I live in Florida, incidentally, and a million or so Canadians winter here annually. The weather is a factor, of course, but so is our superior medical care.

Many Asian and Eastern European countries, though, have learned from America’s past successes. They are more than willing to become the next medical science powerhouses.

I speak regularly with the CEOs of some of the most important breakthrough medical companies. Universally, they tell me the same thing. They are all constantly courted by Asian investors who come with the blessings of their political leaders. These American CEOs are saddened, as am I, by the prospect that they may be forced offshore. They are, though, unwilling to halt the progress of medical science in the misguided quest for lower medical costs. I maintain hope, by the way, that Americans will stop this self-destructive move toward socialist health care.

In Greek mythology, Proteus was the son of Poseidon, who could change his shape at will. From this comes the adjective “protean,” meaning versatile, flexible and adaptable. It is not coincidence that this also describes the proteins expressed by our genes.

By now, the public is somewhat aware of genome progress. Now that the code is cracked, however, we know that it was simply the first step in the process of developing truly personalized medicine.

Though our genome contains the basic information that determines our biology, our proteome is the entire domain of protein chemistry that regulates the structure and functioning of our individual cells. By extension, the proteome determines how each of our bodies function. Everyone’s proteome is unique, because each of us has a unique genome and has been exposed to unique environmental factors.

The human genome contains a staggering amount of information. If it were a book, it would contain a billion words. Yet consider this: Each individual gene can determine the cellular manufacture and function of many, many proteins. Genes are merely the instructions for making proteins. Unlike our genome, which stays mostly the same over time, our proteome is always in a state of flux.

Proteomics concerns itself with these proteins and their interactions. These interactions determine the course of nearly all human diseases. They also open up entire new avenues of treatments and investment.

One important proteomic avenue is cancer chemotherapy. A recent study of personalized medicine by Scottsdale Healthcare showed that when cancer patients were individually profiled at the molecular level, treatments were more successful. Tumors that had resisted shrinkage using several courses of conventional chemotherapy were successfully treated when the patient’s individual genetic makeup was used to customize treatment.

Many of these personalized treatments use therapeutic monoclonal antibodies directed against specific proteins. They work only, however, in specific tumors that strongly express that particular protein. For example, tumors need to develop new blood vessels in order to grow. If the protein instructions are known, antibodies can be developed that prevent new blood vessel formation by these tumors. Antibodies can also be developed against other growth factors that feed the tumor’s growth.

We have already seen big investor successes in this arena. Early investors in Genentech struck gold. Genentech (NYSE:DNA), now owned by Roche, was the first company to develop a targeted proteomic cancer therapy when it brought the breast cancer drug Herceptin to the market in 1998. Yet Herceptin is effective only in less than a third of breast cancer patients. In some, it can trigger dangerous cardiac side effects.

The FDA, therefore, has approved procedures to test the breast cancer for the genetic protein expression that is specifically targeted by Herceptin. Women can now be individually screened for overexpressing the particular HER2 protein that Herceptin targets.

Regards,

Patrick Cox

Source: The Impact of the Genome

I suspect that these defensive recommendations are worthwhile. They may, in fact, protect investors from the worst of this downturn. I don’t believe, however, that they are in any way trades “of the decade.”

First, we happen to be living through a radical acceleration of the medical sciences. This acceleration has not only left laypeople in the dust. Scientists are unable to keep up with research outside their own areas. As a result, the companies that own these breakthrough technologies are not widely understood or properly valued.

It is also true that health care stocks are traditionally countercyclical. This isn’t surprising since consumers tend to cut back on everything else before sacrificing medical care. It’s no accident that biotechs in our portfolio have done well.

There is, however, another aspect of companies that control these new medical technologies that makes them immune to downturns. Their initial customers include extremely wealthy early adopters.

One of the most notable economic developments of the last decades is the remarkable growth of “high net worth individuals” (HNWI). As defined by the U.S. Securities and Exchange Commission, HNWIs are people with at least $750,000 managed by the reporting investment adviser or whose net worth the investment adviser reasonably believes exceeds $1,500,000. Others define HNWIs as people controlling at least $1 million in assets excluding primary residence.

Regardless, the number of these people has been growing dramatically for decades, far outpacing inflation. If you pay attention to politics, you know how upset this makes people who worry about the big increases in income or wealth “disparity.” While the biggest concentrations of HNWIs are still in North America and Europe, the fastest growth, by far, is in China and India.

This category of people controls so much wealth that, even after the financial meltdown, they remain relatively unscathed. If you loose a third of a portfolio worth $2 million, which is below the average for many HNWIs, you still have lots of options.

The total wealth at the disposal of HNWIs is immense. Though it is difficult to know exactly, it is probably around US$40 trillion, along with the associated annual income it generates. Today, according to Merrill Lynch and Capgemini, there are more than 8.5 million of these people in the world. They and their immediate families comprise a population that may exceed 25 million people. Spending on luxury items by HNWIs and family members remains strong.

According to Bertrand Lavayssière, managing director of global financial services Capgemini, “Even as financial market turmoil impacted the United States during the second half of the year, luxury goods makers, high-end services providers and auction houses all found ready clients in the emerging markets of the world — most notably, China, India, Russia and the Middle East — thereby sustaining their own growth.”

Nothing better describes the market for emerging breakthrough health care. The market segment that continues to buy Ferraris, yachts and private jets will also buy regenerative therapies for themselves and their loved ones. I don’t doubt that certain metals will do OK in the years to come. Even they, however, are subject to the vagaries of the overall economy. HNWIs, however, are largely immune to the big economic fluctuations. When stem cell therapies bestow the power to rejuvenate hearts, livers, skin and cartilage, even at sky-high prices, there will be millions and millions of happy buyers.

I mention stem cell therapies specifically, by the way, because most of the important patents are concentrated in a few companies. We own, I am convinced, the key companies now. I will, however, be adding more in the future as new enterprises spin off and develop alternative approaches.

Incidentally, two major news magazines have had prominent stem cell-related stories in the last week or so. Both of these stories, in Newsweek and U.S. News & World Report, were marked by bias and error. That, however, is not the point. Nor is it new.

They do reflect the growing public awareness of stem cell technologies. One of the most interesting aspects of these articles is their limited, even insular, perspective. Both focus on the U.S. market.

HNWIs, however, are an international group, and they are used to traveling to get the best health care. As I’ve been saying since I started with Breakthrough Technology Alert, the U.S. market is overregulated and overtaxed. We are, unfortunately going to see these technologies come online elsewhere first.

Regardless, I believe regenerative medicine is the play of the decade. No, I take it back. It’s the play of the century. Go ahead and invest in resources. I believe in a diversified portfolio. However, I remain convinced that the surest way to join the ranks of HNWIs yourself is to bet on the willingness of the very rich to buy the ultimate resource: longer, healthier lives, i.e. “time.”

For transformational profits,
Patrick Cox

Source: Regenerative Medicine Is the ‘Play of the Century’

Many medical experts say that washing your hands with soap and water or an alcohol–based hand sanitizer are the most effective means of minimizing the spread of the swine flu.

I have been researching a small company focused on the development of pharmaceuticals for the treatment of cancer, cardiovascular, autoimmune diseases and viral infections.  BioCryst Pharmaceuticals Inc. (NASDAQ:BCRX) is presently conducting trials for a new flu treatment called Peramivir that is said to be more effective than Tamiflu.  Currently, the drug Tamiflu is the preferred treatment for swine flu.  On July 17th BioCryst Pharmaceuticals released positive results from two Phase III studies of intravenous Peramivir in patients with seasonal influenza.

If Peramivir proves to be effective in fighting seasonal influenza it could quickly become the leading anti-viral treatment for the flu.  And, BioCryst stock should head much higher if Peramivir is included in any national stockpiles of swine flu treatments.

Buying BioCryst stock is a speculative endeavor because its Peramivir drug has not been fully approved.  Please keep in mind that BioCryst is an extremely high-risk trade, as the stock is up 1,100% since November of 2008.

BioCryst Pharmaceuticals Inc. (BCRX) will announce its second quarter 2009 financial results today, July 30, 2009.   If you wish to purchase shares, you should wait until after the earnings announcement to avoid any possible downside surprises.

Best Wishes,

Ted Peroulakis

Source: The Swine Flu Play