A Miracle in Woburn

Porter Stansberry suggests the next "boom" will be in cancer treatments without side effects…and he believes some investors will make billions. That’s, um, "billions" with a "b". Let’s take a look…

From the outside, the building is fairly non-descript. It looks like your typical low-slung, tech start-up warehouse.

But inside the clean rooms, racks of genetically identical mice and medical technicians wearing telltale white gowns tip off the visitor that something more important than computer programming is happening.

What’s happening inside is the beginning of a medical revolution.

The facility I visited isn’t owned by Merck or Wyeth, the giants of the vaccine field. Nor is it owned by Bristol-Myers Squibb or Novartis, the leaders of conventional cancer therapies.

Nevertheless, the technicians inside this building in the sleepy suburb of Woburn are making the first safe and effective vaccines for cancer.

These vaccines are different than the vaccines you’re familiar with – like the mumps or measles vaccines you got as a child. These vaccines – like the kind you might get for rabies – are administered after you’ve been struck by disease. These vaccines activate your immune system to fight a disease that’s already in your body.

And, for late state cancer patients, this technology is proving to be a lifesaver. Let me give you the rough version of how it works.

One of the biggest challenges to fighting cancer is that cancer isn’t a foreign invader in your body. Cancer is your own cells, gone haywire by genetic defect. And because these tumors "look" like healthy tissue your immune system doesn’t rally to protect you from their relentless and out of control growth.

But…what if it were possible to "teach" the most powerful forces of your own immune system to selectively attack only the cells in your body that have turned cancerous? What if you could protect against cancer in essentially the same way we protect against the flu? What if you could cure cancers without chemotherapy, radiation or massive surgery…?

In fact, you can.

A determined, very successful entrepreneur, Dr. Garo Armen (a founder of Immunex), and a brilliant, Harvard- trained immunologist teamed up with an all-star cast of biotech’s top managers to produce the first individualized vaccine for cancer. Their vaccine – custom made for each patient – captures the genetic signature of your cancer and passes it along to your immune system, allowing your body to fight back against cancer and win – all without the side effects of conventional therapies.

And today the group is nearing the finish line. They’re in the final phase of FDA testing (Phase III), they’ve used their vaccines safely in hundreds of patients and they have proved beyond a doubt that their vaccines can save even the sickest of cancer patients. Perhaps most impressively, the company has received the FDA’s coveted "fast-track" designation – the first personalized medicine ever to be awarded that priority by the FDA.

My friends at the Daily Reckoning have done a masterful job of warning, predicting and anticipating the current economic downturn.

Of course, as a Daily Reckoning subscriber, you already know this. My question for you – and for Bill Bonner – is tougher: What will lead this economy out of recession…?

It won’t be the industries that led us into it, that’s for sure. What comes next will be something new, something unexpected.

Walt Disney founded his company in 1929. Ford Motor was launched in 1908, in the shadow of the panic of 1907. Intel launched the first DRAM memory chip in 1971 and then suffered for years under the weight of the 1973/74 bear market. And the personal computer industry was born in 1981 when IBM launched the PC in the midst of a terrible recession.

So…what great new businesses will bloom under the cold misery of our down market?

Last week, as I walked the halls of this state-of-the-art medical manufacturing facility in Woburn, Massachusetts, I couldn’t help but be impressed by what I saw… and I couldn’t help thinking this is the type of facility that will emerge at the forefront of the next boom. It’s the first in a new wave of medical technology: personalized medicine.

It’s a breakthrough treatment for cancer – any kind of cancer – without the tortuous side effects of conventional therapies. It’s these technologies that will lead the world out of recession by lowering – by orders of magnitude – the cost of health care while increasing the quality of life for everyone.

I’ve been following the company’s progress for nearly two years. I’ve visited their production facilities and next month I’ll meet again with the CEO, Dr. Garo Armen, in New York to go over all of the final details of commercialization. Building the company for eight years and raising nearly half a billion dollars, Dr. Armen has built a technology and a business that will be worth $10 billion or more.

Today – because of the bear market in biotech – his stock trades for just $11.00 per share, valuing the company for only $400 million. This is your chance to buy into the next boom, at venture capital prices.

Good investing,

Porter Stansberry,

for the Daily Reckoning
february 27, 2002

P.S. You don’t have to take my word for it.

I’ve written a full report on the entire field of next generation cancer therapies. Two years in the making and representing an investment of nearly $250,000 on my part for the cost of the extensive research necessary to produce it, this report carefully explains – and even names – the leading companies in the field of next generation cancer therapy.

And because I’ve named all of the companies in the report, you can double-check every claim I make and every fact I mention. I’ll even tell you the name of the company I told you about above – Garo Armen’s company – and explain to you how other complementary technologies will help spur a medical revolution.

"Enron saved their butts," says Jack Welch.

The only man to rival Alan Greenspan for misplaced veneration, former GE CEO Jack Welch, has launched a scathing attack on the bulge-bracket investment banks of Wall Street, reports the British rag The Independent.

"The fraud perpetrated by the investment banks over dot.coms was 50 times worse than what went wrong with Enron," says Welch. Of course, to follow that line of thinking you’d end up with the head of every Wall Street bank pleading the 5th in a foldout chair before a line of Senators.

"Naturally," writes our own Sean Corrigan in London, "Jack didn’t mention that most of the ‘fraud’ was perpetrated through the medium of CNBC, affectionately known as ‘BubbleVision’. CNBC is, of course, a division of NBC, whose parent company is…that’s right, Mr. Welch’s GE."

Eric, what’s going on in New York?


Eric Fry on Wall Street…

– Consumer confidence faltered and so did the stock market…at least until a swarm of supremely confident stock investors rushed in to buy stocks. The Dow’s triple-digit decline early in the morning narrowed to a 30-point loss by day’s end. The blue chip index closed at 10,115, while the Nasdaq fell 3 points to 1,766.

– But while the financial market that everyone cares about – the stock market – finished the day with modest losses, the financial market that almost no one cares about – gold – put in a much more productive day at the office. The yellow metal jumped $5.30 per ounce to close at $298.20. Now, that’s confidence! It requires the confidence of Noah to invest in something as derided as gold. But you never know; it might rain.

– The consumer confidence index fell to 94.1 in February from January’s revised 97.8. We consumers aren’t superhuman, after all. No matter how many Capital One credit cards we may have in our wallets, we are still susceptible to occasional bouts of anxiety and uncertainty.

– The "surprising" drop in consumer confidence was really not very surprising, given the fact that the stock market has been falling since early January. Stock prices and consumer confidence have been dancing toe-to- toe for some time. In fact, the two have become so closely correlated that a bizarre kind of feedback loop has developed: the stock market falls (especially that wacky NASDAQ part of the stock market), which causes consumer confidence to fall, which causes the stock market to fall some more, which causes consumer confidence to fall… You get the idea.

– The numbers inside the consumer confidence numbers contained no obvious silver linings. The "current conditions" component dropped from 98.1 in January to 94.8 in February. The forward-looking "expectations" index tumbled four points from 97.6 to 93.6.

– Interestingly, despite the theoretical recovery now underway, employment prospects continue to dim. Consumers who said jobs were plentiful fell to 17.8% from 18.4%. The fact that stocks sold off so briskly after the consumer confidence numbers came out yesterday illustrates just how dubious the market’s underpinnings are.

– I’m reminded of the scene from "Mary Poppins" where the children float up to the ceiling by thinking happy thoughts. As long as they keep the happy thoughts in mind, they merrily defy gravity – a lot like the market. But the moment that sad thoughts enter into their minds, down they go.

– Only two days ago, the headlines were brimming with stories about resurgent consumer spending. Twenty-four hours later, we find that the consumer is having second thoughts…and that’s not a happy thought for the stock market.

– Gauging confidence is a tricky task – a little bit like herding cats. But in a stock market that lacks so many of the conventional tangible virtues like low valuations, strong earnings growth and honest financial statements, confidence becomes a vital support for share prices. So trying to figure out which way consumers and – by extension – investors are leaning becomes a pretty important exercise, even if it may be a futile one.

– And confidence may prove to be a very fleeting support if stories about accounting shenanigans continue to surface.

– "The equity markets are now left to grapple with the revelation that the information on which investors based their decisions is seriously flawed," a successful hedge fund manager I know wrote recently. "Whether companies will improve their reporting faster than investors lose confidence is one of the key questions facing the equity markets."

– The hedge fund manager continued: "Today, the sad fact is that one of American capitalism’s primary features is complicity – complicity among insiders and outsiders, among attorneys and accountants, among directors and executives, among regulators and politicians. It is a culture of complicity that weaves together the interests of key players into a web that functions to obscure the truth."

– Hardly the kind of thing that instills confidence, is it?

– All is not lost however, provided that investors seek out the truth, rather than the happy stories from Wall Street that invariably carry a "Strong Buy" rating.

– "I want to remind you," professional short seller James Chanos told Congress recently, "that it was those ‘unAmerican, unpatriotic’ short sellers that did so much to uncover the disaster at Enron and at other infamous financial disasters during the past decade (Sunbeam, Boston Chicken, etc.). While short sellers probably will never be popular on Wall Street, they often are the ones wearing white hats when it comes to looking for and identifying the bad guys!"


Back in Paris…

*** So… the Consumer Confidence numbers were not as confident as the month before. "What did you expect?" asks the Mogambo Guru. "What is there to be confident about, for crying out loud? There is not one bright spot anywhere on the face of the globe. Did you actually think that citizens, businesses and governments could all assume back-breaking debt loads, for now-gone consumables, and that nothing bad would happen?

"There is a theory that the Great Depression of the 30’s was the result of the advent of installment debt, introduced so that Americans could buy the cars that Henry Ford was making. Then, as now, we went whole-hog into debt to acquire the cars, and other things (including stocks), and the debt burden proved catastrophic. I think there is a great deal of truth in that theory, beyond simple temporal coincidence. And it will prove to be more catastrophic this time around, as the problem is much, much bigger."

*** What’s going to pull us out of this mess? Porter Stansberry suggests one possibility, below…

Addison Wiggin

The Daily Reckoning