By Sven Olson
If you’ve been a retail investor for any period of time, then you’ve seen the newsletters, websites, and other bullish outreach platforms that try and persuade your investment. You’ve received the emails that promise large returns for penny stock companies, most of which have no real operational base or plan for the future. But every now and then, there are companies that start as an OTC stock that go on to rise and become large corporations and legitimate businesses. In this article I am looking at two companies in particular, with minimum downside, large upside, and have an excellent chance at success.
Advanced Medical Isotope Corporation (OTC:ADMD)
The first thing you need to identify in an OTC company that could appreciate in value is a catalyst. And I am not talking about a catalyst provided by the company. I am talking about an economical catalyst, or a need that the small company could fill. This is where Advanced Medical Isotope Corporation comes into play, because it’s not as though the company is light years ahead of all other OTC companies, but rather had the perfect situation fall into its lap.
Nordion’s (NYSE:NDZ) luck has run out, and once the NRU reactor in Canada closes its doors, the company will have no effective strategy to deliver medical isotopes to the U.S. The company does have reserves, but delivering medical isotopes is a race against time, and Nordion cannot possibly deliver the needed medical isotopes from other countries in Europe or Asia.
Advanced Medical Isotope becomes relevant through a process of elimination. The company has a working relationship with the University of Missouri nuclear reactor, also called “MURR”, which is one of the only reactors in the U.S. that can handle our country’s medical isotope demand.
We, in the U.S., consume most of the world’s Mo-99, which along with its derivative, is the most used medical isotope in the world. We use it in drugs, medical devices, and even in certain appliances. When the NRU reactor closes we will lose most of this supply. Yet because of the relationship that Advanced Medical Isotopes has with the MURR reactor, it is in prime position to control this space, and has publically said that it could control 50% of global Mo-99 demand, pending legislation in the U.S.
Up until recently the U.S. has shown no signs that it wishes to produce its own medical isotopes. But back in June, the U.S. announced steps to ensure the supply of medical isotopes, while minimizing the use of highly enriched uranium (HEU). In the same press release, the U.S. government specifically mentioned Mo-99 and said that it is accelerating commercial projects that produce Mo-99 without the use of HEU.
Basically, the U.S. is saying that it realizes the need for supply and will move forward with projects as long as the medical isotopes can be produced while minimizing HEU.
HEU is a very dangerous substance, a material slated to be secured under the President’s four-year lock-down agenda. Thankfully, in addition to Advanced Medical Isotope’s relationship with MURR, it also has its own technology in which Mo-99 can be produced with a single electron, therefore consists of Low Enriched Uranium (LEU). With that being said, it looks as though Advanced Medical Isotope has everything in its favor, and at this point it is simply a waiting game for the NRU reactor to close, which should be very soon.
Once the NRU reactor closes, Nordion will lose most of its $80 million in last year’s revenue from its medical isotope business. As a result it has lost 35% of its value in the last three months, since announcing that Canada would not be reconstructing its last hope at salvaging its medical isotope segment, the MAPLE facilities. Advanced Medical Isotope could earn $50-$60 million of that revenue, with the production of Mo-99 alone. The company’s current market cap is $15 million; therefore if you consider a price/sales ratio of 4.0, Advanced Medical Isotope could reach a market cap of $200 million, or $2.60 in the next three years.
OncoSec Medical Incorporated (PINK:ONCS) Making Cancer Therapeutics More Effective
Novel cancer vaccines remain one of the most profitable and most important industries within biotechnology. It is a space we have not yet mastered, as cancer remains a disease in which there are no cures. However, we are making progress, and the FDA has shown in recent years that it is more accepting of innovating and more effective therapeutics that target cancer in a direct manner.
So where does OncoSec Medical come into the equation in regards innovating cancer therapeutics? The company is developing a system, both a chemotherapy and an immunotherapy based platform that uses electrical currents to decrease the side effects associated with a drug while increasing its uptake. It has been reported that the uptake of an agent can be 4000 fold with the company’s platform, therefore requiring less of the agent, which causes fewer side effects.
The key behind the company’s platform is the presence of electrical currents. These currents create a temporary pore, which then allows the agent to be sent directly to the tumor. In other words it allows the agent to be transported more effectively. Like I said, the FDA has been accepting to therapeutics/technology that allow for a targeted approach and minimal side effects, which should benefit OncoSec.
Once again, the question might be, “what separates this technology from other promising OTC companies?” We all know that OTC companies have a tendency to make their products sound promising, and rarely disclose any risks. But, the reason that OncoSec is different is because of both its clinical studies and the fact that it can be used with any chemotherapy or immunotherapy agent to decrease side effects and increase uptake, thus providing the company with a golden opportunity.
In a trial that was reported last month, the company showed that 95% of all patients treated with bleomycin demonstrated a response to the therapy. This means that 95% of patients saw an increase in uptake and decreased side effects when treated with the chosen agent, bleomycin. This is an approved agent that has been used for many years, and was chosen because of its availability and its acceptance among physicians. However, as the company progresses it will begin to use other therapies; more effective forms of treatment that will ultimately create better results.
All cancer treatments use a select delivery method to treat cancer. In recent years companies have developed therapeutics to target specific cells or tumors. OncoSec’s system is based around this notion, basically giving these therapeutics a boost. And what’s even more encouraging is that OncoSec’s platform does not take from the effects of immunotherapy or chemotherapy agents, it simply improves them. With such benefits, and minimal safety risks, this platform should be widely accepted within the healthcare community.
Thanks to data from two trials, OncoSec has rallied 60% in the last six months, yet trades with a market cap of just $25 million. The potential revenue for this platform is limitless, because it can be used with any agent and will most likely be used on other cancers besides just metastatic melanoma, or Merkel cell carcinoma (MCC). When you incorporate the potential combinations of agents that can be used with the product, future studies on various cancers, and a platform that has no reason to fail, this is a stock with incredible upside over the next few years.
Disclosure: Long ADMD and ONCS.