Advaxis, Inc. engages in the research and development of live cancer vaccines targeting cervical, head and neck, breast, prostate, and other cancers using a bio engineered bacterium, Listeria monocytogenes to activate the immune system. Results are very promising. The stock trades at 14 cents a share… I’ve heard this one before.
The street is littered with penny biotech companies promising the cure to cancer and delivering only a capital loss. The set up was fairly simple. Purchase controlling shares of a shell company (or start your own), create a good story, pump out a constant stream of press releases, sell your shares, and get out before having to deal with the FDA. I heard stories of a “scientist” and pitch man doing this on three different occasions.
But what about the exceptions? A rocket like Human Genome Systems (NASDAQ: HGSI) that would turn a $15,000 investment into a new social class? The answer is threefold: A legitimate company, a promising product the street questions could work, and a management team better suited for science than hyping stock. Turn that same microscope on Advaxis and this is what you get:
Company Legitimacy:
•Advaxis is based on technology developed by Dr. Yvonne Paterson, professor of microbiology at the University of 
•In December the company announced its collaboration with the National Cancer Institute in beginning a Phase II clinical trial of the Company’s lead drug candidate, ADXS11-001 in the treatment of advanced cervix cancer in women. This trial will be conducted by the Gynecologic Oncology Group investigators and largely underwritten by the National Cancer Institute (NCI).
•In October the company completed funding sufficient enough to get through Phase II trials for ADXS11-001. The company will run two trials with the NCI the third. Total shares outstanding including dilution for warrants is approximately 150 million.
Determining penny stocks legitimacy can be a daunting task at times. But can you name one pump and dump that had an Ivy League professor as a head scientist and a phase II trial administered and funded by the NCI?
A Promising Product:
Although the Phase I trial for ADXS11-001 was designed to assess safety, not efficacy or survival of women with advanced, recurrent, metastatic cervix cancer, Advaxis noted the following facts (published in the medical journal Vaccine):
•Four of thirteen evaluable patients,experienced tumor reductions.
•Two patients had their lesions disappear.
•Fifty-three percent survived more than one year; a median survival rate of 347 days versus the NCI median survival rate of 115 to 185 days. One year historic survival rate is five percent.
•Three of the thirteen patients were still alive at over 1,000 days, post-dosing with the drug, as of September 29, 2009.
Even strong results like these are overshadowed on Wall Street by the past failures of “cancer vaccine companies”. The sentiment among biotech investors seems to be that cancer vaccines won’t work. We have our promise and our doubt.
Good Scientists, Bad Promoters:
This is where the management of Advaxis shines. If news is not buried somewhere in an 8-K, it’s often placed with a small wire service and barley acknowledged. Don’t expect daily news in an attempt to inflate the stock price like with some small biotech companies. The attitude here seems to be “if the product works the stock will go up in due time.” Throw in a late 10-Q filing slapping the dread E at the end of the company’s symbol for exactly one day earlier this year and you start questioning if these guys should be allowed out of the lab.
But as always it comes down to risk and reward. A small biotech does not fall to 14 cents without doubt, and it does not shoot to $30 without a viable product. Advaxis has the promise and the doubt. It’s your job as an investor to weight both sides and place your bet. Or you can continue searching for that next rocket.
(Disclosure: JR Williams owns Advaxis in his personal account)
