I’ve been getting a lot of questions about the latest “teaser video” from Patrick Cox for his Breakthrough Technology Alert — it’s the one that starts with a story about how “Robert has Alzheimer’s” and that a “breakthrough” gives him hope. And, of course, Cox will be “forced to remove” the presentation on November 11, so you simply must subscribe RIGHT NOW!

So what is this company?

Well, the teaser, though long and droning as most of these “presentations” are (this one didn’t have a text version, so I won’t quote heavily from it — I’ll just share the gist), did give a few details that lead me to point the finger at one company in particular.

What are those details?

The basis behind the spiel is that Alzheimer’s treatment is awaiting a blockbuster drug, which is undoubtedly true — even the limited treatments now available, like Aricept from Pfizer, apparently do no more than help with symptoms (I’m no biotech expert, as the paragraphs below will probably make painfully clear). Of course, this has been true for decades, and the disease has proven to be one of the more difficult foes out there, crushing the hopes of researchers in academia, in tiny biotechs, and at the big pharma companies. Nothing has really worked, and investors in Alzheimer’s cures have been crushed time and again.

But Cox goes a bit further — he says that the big pharma researchers, and most of the other researchers, are all going down the wrong path, trying to fight the amyloid plaque buildup that most people appear to believe is the cause of Alzheimer’s (again, I ain’t no expert). He seems to agree with Dr. Robert Smith, who is probably the most vocal opponent of the “amyloid blockers,” that the solution lies elsewhere.

I don’t know if Cox also agrees with Smith that the amyloids might actually be protecting the brain, and that the new amyloid-targeting drugs could do more harm than good — there was a good interview with Dr. Smith on this topic a few months ago by a Forbes writer, you can see it here.

So this company that Cox is teasing is apparently pursuing a different type of treatment that actually helps to fight the disease (instead of just fighting the symptoms), and it is going to enter Phase 1 trials “in the coming weeks” — Cox describes this as a catalyst, and thinks that once the drug enters trials and gets mainstream media attention the shares could go to $10 or $15 (he describes the stock as being around $3 now, though the ad is dated October 2010 so I don’t know what the date might be for that price).

He also provided some more clues — that the drug far exceeds Aricept in “actual disease modification”, and that it is very effective at low doses. It’s a small molecule drug that can be taken orally, and their idea is unique (unlike the amyloid blockers, if they’re right “they’ll be right by themselves.”)

And of course, without being very specific he tosses around references to 7,000% and 17,000% gains, which we can probably all agree would be quite lovely (I think I’ve had a 10,000%+ return just once in my life, the result of a lucky options speculation on a company that was taken over at a steep premium, and I think my head grew four sizes that day as I swelled with pride … only to shrink again the next time I did something stupid).

So who is this “Tiny Company” that he thinks can “Stop Alzheimer’s in its Tracks?”

I think he must be teasing: Anavex (AVXL, trades over the counter).

It’s very hard to be definitive when faced with a surfeit of clues as I am today, especially because I’m not willing to listen to that “video” again, but this is a good match — Anavex has made advances in the understanding of sigma receptors that lead them to think they can trigger responses that protect the nervous system from things like Alzheimer’s and epilepsy, and apparently sigma receptors can also target cancer cells.

If that doesn’t make sense, it’s because I don’t understand the science — you can see the basics about their drug discovery platform here, and their pipeline here.

And yes, Anavex is expected to enter Phase 1 trials for their lead compound in Alzheimer’s patients by the end of this year — I don’t know if they have filed the IND application fully or whether there are still potential roadblocks before human testing, but they hired a contract research organization to enroll and run the trial and the FDA process, and in the press release for that they noted that they expected Phase 1 to begin dosing by the end of the year, in healthy volunteers, and Phase IIa to start testing efficacy by early next year. If I had to guess I’d say that the initial Phase I safety results would make news only if they’re bad — what everyone’s looking for is an effect on the disease, so my guess would be that those Phase IIa trials are more likely to get a lot of attention next year. Of course, anything could move the shares, and the beginning of phase I trials may well cause some sort of stock reaction as well.

Oh, and for what it’s worth, the publicity information about the drug also echoes much of what Cox said, about effectiveness and low doses and an “excellent safety profile.”

And if Anavex sounds familiar, it may be because I identified this same stock as the solution to another Alzheimer’s drug tease (by Brian Hicks that time) over the Summer, that one went under the headline of The End of the Grey Plague, and while the company has clearly made some progress since then the primary caution is still probably the same: This is still a preclinical research firm that won’t make any money unless and until they either partner with another company on one of their compounds, sell one of their compounds, or actually make it through the development timeline and release a product (that would be at least many years away, clinical trials can take several years, the FDA is particularly careful about novel compounds, and they’ve not yet begun phase 1 for their lead drug).

It’s also worth noting that discovery-stage biotech companies are a lot like exploratory mining stocks: management tends to be almost pathologically optimistic, and indeed it would be impossible to do their job, in an industry of long odds, without that optimism. These kinds of companies always sound like they’re on the verge of something great when you read about them — some of them are, of course, but I don’t know which ones … and even when it works almost as well as they think it will, it almost always seems to take far more time to get to that point than investors are led to expect. Older Anavex presentations that I’ve seen clips of from 2007 and 2008, for example (like this one), noted that they expected to have four drugs in clinical trials by now, including this Alzheimer’s drug that they refer to as Anavex 2-73 (though even that optimistic forecast didn’t have them getting the first drug through Phase III until at least 2013).

So you’re betting on a drug, and indeed on a whole family of potential drugs based on their “sigmaceptor” technology, that, as far as I can tell, haven’t yet been tested in humans.

That’s not to say it’s necessarily a bad bet — the animal testing results, at least as I read them in their press releases, do sound quite encouraging, the market is definitely immense if they get it right, and it would not be at all surprising for a big pharma company to try to snap them up if they show promising results in human trials — even very early trials, since the potential market is so big and the company so small.

They have apparently raised a little bit of money this year, since the cash balance tipped back above a million dollars in the last quarter, but it is worth noting that they seem pretty cash-poor to me and have accumulated a deficit of about $20 million and that, with their clinical trial ambitions growing, they’ve recently been losing money (or investing money, depending on how you interpret it) more quickly than before. The funding need for clinical trials will only grow — the further along you get in the FDA approval process, the more the trials cost. They may well have partners ready to finance these trials, I don’t know and I didn’t check into their funding needs more closely than that.

They have about 22.5 million shares outstanding if you ignore a few million warrants and options, so the current share price of about $3.70 gives the company a market cap of right around $80 million. So clearly this tiny little stock could move prodigiously if Patrick Cox changed his mind, or if any news comes out … or even just because I happen to be writing about it today. It doesn’t take much for these little microcaps.

So how much might one be willing to pay for this stock? Is $80 million fair?

Well, if they can cure Alzheimer’s they’re clearly worth billions — but if their sigmaceptor technology doesn’t eventually lead to any drug discoveries that reach the market, they’re probably not worth anything. What they’re worth in the time before we discover whether one of those extremes is likely to be the truth is anyone’s guess, and I imagine that Patrick Cox is probably a far better biotech guesser than I am. If I’m right about this being Patrick Cox’s pick, then he probably likes their chances even as I imagine he must concede the riskiness inherent in these tiny biotechs … but it’s not his money at risk that we’re worried about, of course, it’s yours. What do you think? Let us know with a comment below.

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