BioCryst: Influenza Update
- Ivanhoe's Oyu Tolgoi: Got to believe
- Xtra-Gold: Answers, but we need more
- Detecting change: A website
- New Orleans 1-800 648-8411
Ticker Trax™:A Stockhouse Exclusive
BioCryst Pharmaceuticals (NASDAQ: BCRX, Stock Forum): This is the down-and-dirty on the developer of antiviral influenza treatment peramivir. I present these notes just as I scrawled them. No editing. RumoUrs? Yes, for once, they are in here, too – and we go with the British spelling because most RumoUrs are Useless. (You asked for it.)
(We here at home are adding to our BioCryst stake, ahead of what almost surely will be an Emergency Use Authorization for intravenous peramivir to treat hospitalized H1N1 flu patients in the USA. We now own 63,000-odd shares of the NASDAQ-traded stock. Stocks trader and consultant David A. Banister this morning, Monday, said the shares as he interprets them are a short-term “massive buy.” Mr. Banister issued the BioCryst alert Monday to his https://www.activetradingpartners.com subscribers.)
BioCryst’s peramivir might serve both a preventive measure and an intravenous treatment for hospitalized and at-risk influenza subjects. There is no way of knowing whether this H1N1 virus is mutating slowly, quickly or not at all. But the Type A influenza almost certainly is the most transmissible virus ever documented. Some estimates put 40 percent of earth’s population at risk of infection.
I 
have been in touch with BioCryst, The Alabama and South Carolina company is low key and loath to stoke a media frenzy that might come amid an influenza pandemic. I have, as we know from the many reports Ticker Trax has issued since December 2008, instituted Google alerts about peramivir and the government stockpiling process.
Now, after a reminder from New World Investor’s Michael Murphy on Friday, I am revisiting www.ChangeDetection.com for specific web page entry changes on various government and quasi-government sites. Mr. Murphy at the wealth-creating service was first to point to Friday’s Federal Register entry for peramivir from the U.S. Health & Human Services Department. I talked to Michael Murphy about his coverage of BioCryst, which has been as positive as our own, as logical as our own and as technically sound as our own … and often even better.
The vast “upside” with emerging pharmaceuticals developer BioCryst belongs to lab workers who employ crystallography to identify new molecular compounds, mostly in the area of auto immune diseases. There are BioCryst compounds in clinical testing for influenza, leukemia, gout and, if I am not mistaken, psoriasis. For these, we have chief medical officer William Sheridan and his teams to thank.
With regards to H1N1, the tipping point (Malcolm Gladwell term) might occur when governments contract for 300 milligram doses of the protein inhibitor peramivir. BioCryst, as Mr. Murphy points out,has forged partnerships in Mexico and Brazil, in Israel and in China. “I think the next two they will announce will be India and Europe,” says Michael Murphy, who has been writing about life sciences companies and managing investment portfolios for about 30 years. “These are sales relationships only …not to get peramivir approved for sale in those countries but to get it approved for their stockpiles. BCRX will pay a commission on the sale, retaining all profits.”
Such partnerships are necessary if BioCryst’s peramivir is to fortify nations outside of North America with the antiviral treatment. BioCryst already has a licensing partner in Japan, pharmaceutical behemoth Shionogi & Co. This pact covers Japan and Korea and included clinical testing of intravenous peramivir on humans. The trials in that part of Asia were a success.
Other peramivir partnerships would feature consultants and “connected” business people who can secure government stockpile orders for pandemic-prepared governments. It is likely that few folks outside BioCryst’s laboratories and executive offices know what price such doses might sell for and how many doses could be delivered this influenza season in the Northern Hemisphere.
BioCryst CEO Jon Stonehouse probably has a good idea on pricing. Mr. Stonehouse is the sales executive who years ago took the little purple pill Prilosec to the No. 1 sales spot on the global pharma-totem pole. Jon Stonehouse is running BioCryst with the internal goal of achieving sales milestones from specific and proprietary molecular compounds. Any rumoUred (note the U for useless) sales of BioCryst to drug giants such as GlaxoSmithKline make shareholder sense only at dollar levels that approach and perhaps surpass the $1 billion transaction mark. Getting there involves a tripling of current share price.
Shareholders in the world of venture capital (Kleiner Perkins, for instance, which was buying shares for $14 and $16 each years ago, if I recall correctly) and funds (warrant and stock holders of BioCryst) probably will not take anything less than fair value-plus one penny for BioCryst and its innovative methodology of drug discovery, pioneered more than 100 years ago by Louis Pasteur of France. Now, if Monsieur Pasteur were here today, he might (or might not) be capable of formulating fair value. I sure as heck cannot, thus the $1 billion figure, or approximately $27 a share (fully diluted with warrants and options and conversions, I think).
What else we know is this: hospitalized influenza patients are testing the bed limits of North America, India and other facilities. Some 90 percent of all hospitalized patients in North America, hospitalized for influenza that is, are being diagnosed with the Type A H1N1 ‘swine flu.’
Thus far, the type A virus (it's been around at least since the 1918 outbreak) is showing slightly higher than seasonal influenza mortality rates ... but widespread transmission among humans.
A scientific paper not yet published summarizes what any casual reader might have hypothesized at least five years ago, when several popular books on influenza were published:
"Vaccines are being deployed in some well-resourced countries but are generally not available to the public. It appears that little if any protection is offered from previous seasonal influenza vaccines. In the spring of 1918, epidemiologic observations indicated the likely emergence and spread of another influenza virus (H1N1) that caused few deaths. However, later that year, transmission resurged and was associated in two waves with increased illness and deaths. (Bold font is mine -- Thom.) We cannot predict whether the 2009 pathogen will follow a similar temporal pattern and evolve toward increased virulence. Even if vaccine development and delivery could be achieved within six months, an aggressive schedule, large supplies of vaccine against pandemic (H1N1) 2009 may not be available until late 2009."
Vaccines might or 
might not be the answer. Antiviral treatments, including powerful peramivir, already show shortened symptoms and reduced pain from H1N1. Here is the article posting at the CDC web site: click here.
An Emergency Use Authorization for peramivir might arrive as soon as Monday (today) from the Department of Health & Human Services, with guidelines from the CDC, or Centers for Disease Control in Atlanta. Such an authorization allows physicians to order the antiviral agent for intravenous use in hospitals and clinics. Peramivir already has approvals for case-by-case use in emergencies. Stockpiling orders from governments, starting theoretically with Japan, maybe South Korea, Mexico, Brazil, Canada and we go from there, would start BioCryst’s bankable shares on their way toward the $1 billion mark.
- Xtra-Gold Resources Corp. (OTO: XTGR) is Planetary Prospect No. 9 for subscribers. President James Longshore and geologist Yves Clement this week provided answers to questions I posed to the extremely high-risk project Xtra-Gold is attempting in Ghana. The questions investigate timelines to success … or failure for the tiny prospector in Ghana’s Kibi Gold Belt.
I 
find the answers thus far less satisfactory than our eye-opening tour of the project. At least two doctorates in geology or the economics of geology are coaching me in my examination of tiny X-Tra Gold Resources – a company whose several concessions in the red clay and oxidized dirt of the Kibi Gold Belt one day could become as potent as Mongolia’s Oyu Tolgoi copper and gold discovery. Or, as happens with small and inexperienced companies, get snagged in a ditch, then buried and baked by the West Africa sun.
We are taking a hard line with this particular prospector and junior miners. Why? Because as likeable as its team on the ground is, Mr. Longshore, Mr. Clement and that group have little experience “proving out” a potential resource. Do we own the shares of this Planetary Prospect? Yes, as with all 9 Planetary Prospects. We here at home would like to add to our 6,000 shares, which we purchased at 97 cents or so in over-the-counter USA trading. Yet until we see further progress on the identifying of a continuous gold resource at the current concession that is undergoing drilling several hours’ drive from the capital of Accra, we cannot justify paying close to $1 per share for additional equity in the highly speculative and cash-thin Xtra-Gold. Eighty cents? Yes.
Please examine the questions and answers that follow and see what you think. Having seen the company’s properties, I am intrigued. I am excited about the possibility of a two million-plus ounce resource with economically sound grades.
Yet after examining the numbers, maps, drill results and my notes, I also must acknowledge that Keegan Resources (TSX: T.KGN) some four hours away in the Esaase District is far ahead of Xtra-Gold in its efforts to become the next significant gold producer (four million ounces or more?) in the West Africa nation. Keegan, once it sees a suitable close to the legal issues swirling around its correctly purchased property, almost surely will resume its upward share movement just as surely as we all climbed its steep and dusty Esaase slopes. Dan McCoy’s and Shawn Wallace’s (and Ivan Bebek’s) Keegan Resources has Maurice Tagami as project engineer. Hiring the almost-30-year veteran of open-pit mines and processing plants is akin to Ivanhoe Mines’ Oyu Tolgoi copper-gold project’s hiring of Freeport McMoRan’s John Macken to run the show. When Ivanhoe’s (TSX: T.IVN, Stock Forum) Robert M. Friedland did that several years ago, he was telling the world: ‘Our discovery in Mongolia will become a mine come heck or high water.’ And so it shall. Oyu Tolgoi, which I saw and endorsed in numerous articles and broadcast and stage appearances as early as 2003, will see a ceremonial signing of a government pact Tuesday at the Mongolia Parliament in the capital of Ulan Bator, or Ulaanbaatar as some write, along with partner Rio Tinto. Believe it.
I hope one day to say that Keegan’s smart looking concession and tidy prospectors’ camp on the Esaase will enter the Ghana Minerals Commission’s books as a producing mine. As with Mr. Friedland’s Oyu Tolgoi, I was there. I believed. Dr. McCoy and his team are taking magnetics, diamond and reverse-circulation drilling and strategic plotting and turning it into a science of supreme logic and mineral-ity. It is just, well, I despise lawsuits, and there are a few of those flying about Ghana right now. (Please see Ticker TraxPassword Secure Archivesfor full and previous reports from the field about Keegan Resources and Xtra-Gold.)
Keegan Resources is probably worth every penny of its $130 million market capitalization right now. ‘Bought deal’ purchasers of the May financing appear to be sticking with most of their $2.60 Keegan shares. I would love to say the same about XTRA-Gold’s $32 million market worth. I just need better answers.
As for the questions and answers, I must in part thank Dr. Paul Zweng, a Stanford University-trained geologist and former Mongolia gold mining CEO who now operates Resource Venture Partners LP from Honolulu. Dr. Zweng and one other doctor of geology helped me in this back-and-forth with Mr. Longshore of Xtra-Gold.
- First point: How does a small and underfinanced company such as Xtra-Gold go about defining with authority a potential resource? Is it using magnetics and other structural methodologies to track possible mineralization? Or must it rely merely on the sometimes reliable and sometimes not guesswork of soil samples, trenches and random or plotted drill holes?
- Mr.Longshore: We have chased the mineralization for roughly 2 km, as you saw in the field trip. Based on the initial drill results, it is too early to make definite conclusions because we do not have enough drill holes in the area. However, based on initial results we are seeing a continuous granitoid sill/dyke at surface that looks like it is continuous and has a definite signature. The signature is not linear and weaves back and forth, which makes the target more challenging. The granitoid sill/dyke definitely (looks like) a sausage (in terms of connectivity). However, based on the assays to date, I do not believe that the whole 2 km will be economic grades throughout. All the mines that I know of in Ghana are made up of several pits, pearls on a string. For example Newmont’s (NYSE: NEM) AhafoMine is made up of 13 different pits over many kilometers, with a combined resource of 20 million ounces (although Newmont does not publish this figure). Once we do more drilling, I believe that the Kibi Gold Mineralization will be several different pods or ‘pearls on a string.’ Remember, no two deposits are ever alike, so I am only giving my best guess on the information available to date. I believe the key to the whole thing is that we have drilled over a 2 km area, and we have got some excellent showing in several areas. With all this mineralization on surface (mostly oxidized), I believe there is something significant on the property. We have only scratched the surface and will also need to drill deeper.
- Ticker Trax: Fair enough, Still, what about geophysical data that can map out granitoid bodies? We recall having seen a magnetic survey that shows or suggests, anyway, a continuous body for 700 meters (not two kilometers) where the drilling is shown. This is a purple anomaly where TAD-018 (SW end) and TAD-012 (NE end) are shown in the accompanying map. Thus, why not have a geophysicist interpret these data to map out the granitoid bodies? The finished product would be a map with outlines of granitoid. Then (as I am told by wise and learned mineralogists, geologists and geophysicists, Dr. Zweng among them), the geologists overlay the gold-bearing structures on top of the granitoid bodies and voila: Where the two coincide are the drill targets. Drilling is terrific, and it was great and exciting to see all of the activity with my own eyes. Still, James, you are drilling before a geophysical interpretation of the mag survey.
- James Longshore: I agree with you in part. We have enough data now to have a geophysicist analyze the magnetics, chargeability and resistivity. We have already started this analysis, and hopefully we can get some data that helps us with the structure/mineralization. I believe the granitoid/sill is estimated over 800 linear meters in zone 2, but will confirm with Yves Clement (VP, exploration). However, as you know the structure is not linear, so the true width is much more. If you include zone 3, then the distance is roughly 2 km. Yves is working on geological mapping of the structure, and then we will have a structural geologist analyze the data to see if that can help us on the next drill program.
- Ticker Trax: Okay. Still, as I am advised, is 700 meters really enough these days? Let’s say the average true width is five meters and the avg. down-dip dimension is 300 meters. If the density is 2.65 g/cc, then the 700 meter strike length yields 2.8 million tonnes of ore. Even if the grade averaged 10 grams per tonne of gold, that’s only 900,000 ounces.
- Sandspring Resources’ Toroparu in the Republic of (English-speaking) Guyana is on my fancy list.The correct ticker, when it begins trading at the end of October, is SSP.P. Sandspring is producing
about 5,000 ounces of gold a year right now at the 100 percent-owned concession, all of it alluvial (basically panning for gold). A slew of new diamond-drill holes are showing a resource of 2.3 million ounces of gold and 260 million pounds of copper (Initial NI 43-101 Resource Estimate as defined by Canada securities rules). The property itself is called the Toroparu Gold-Copper Prospect, and it is in the Upper Puruni River Area, Guyana. The nation, the land of many waters, is South America’s only English-speaking one. (Here is the official government web site.)
- Great Panther Resources (TSX: T.GPR) CEO Robert Archer tells me third-quarter output figures will be out this week. I intend to purchase more shares of the Mexico silver miner.
- The New Orleans Investment Conference: Not to attend is unthinkable – if you can spare the time. Call this number and mention my name, which is “The Idiot Who Sees $4,000 Gold & $600 Silver.” Or just say Thom Calandra. The telephone number is: 1-800-648-8411. In New Orleans later this week, I’ll be presenting a no-holds barred Q&A workshop, participating in a panel with Rick Rule and others and discussing “Our Own District 9: Mexico, Ghana, Silver & Moly.” That’s Friday. Brien Lundin of The Gold Newsletter produces the conference, whichruns Oct. 8-11. This year will bring an excellent crop of counter-clockwise and contrary thinkers in the areas of mining, emerging markets, commodities and life sciences. Mr. Lundin has just added political maverick Ron Paul
That is all for now. This is probably the only edition of Ticker Trax for this week. Questions about our 9 Planetary Prospects? Feel free to call or ping me: thom.calandra at stockhouse.com. (All photos by Thom Calandra)
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