To Be a successful biotech investor, one of the skills you need is the ability to identify RED FLAGS.
Sometimes companies say or do things that just don't add up. Knowing how to recognize these instances will help you avoid losses on your road to biotech investing success.
In today's Red Acre Review we go over a recent move by a small German Company that was such a glaring RED FLAG that even my 12 year old son immediately recognized that this company's data was not on the up and up. (My 12 year old is smart - but he's no biotech investor).
Watch the video below to learn exactly what this company did that was so egregious.
Details
Affiris AG issued a press release and held a video press conference announcing a breakthrough in Alzheimer's treatment. The company claimed that their drug AD-04 halted clinical progression of Alzheimer's when given to patients in a phase 2 clinical trial.
In reality, the drug being tested in the phase 2 trial was AD-02, a monoclonal antibody. The drug talked about in the press release, AD-04 WAS THE PLACBEO in the phase 2 trial. Instead of acknowledging that the trial failed to meet it's endpoints, the company decided to make the placebo thier lead pipeline candidate.
Affiris claims that because their drug candidate AD-02 was "obscure" (i.e. cloudy instead of see-through), that the placebo (now called AD-04) was not a simple saline solution. The company says the placebo just happened to have a profound effect on the progression of Alzheimer's disease.
This is the most egregious RED FLAG I have seen in the last few years in biotech investing. Calling a placebo an active drug based on a failed clinical trial is scientifically unsound. Furthermore, since the original drug was a monoclocal antibody meant to activate the immune system, the trial involved giving injections several weeks to months apart. A placebo that has no active peptide should not have any prolonged effect on the immune system.
Investors would do well to avoid companies that use this kind of faulty logic. We are aware of at least one other company conducting a phase 3 clinical trial RIGHT NOW that makes a similar argument as Affiris regarding a "cloudy" drug requiring development of a specialized placebo.
Now it's YOUR Turn
Leave a comment below outlining the most egregious RED FLAG you've come across in your biotech investing.
