More Evidence that Sirtuins and SIRT are Below Radar

This is an excerpt from an article written by the president of one of the many resveratrol manufacturers:

"Will humans commonly live 120 years and beyond, beginning anytime soon? "If red wine pills do slow the aging process, the public hasn't responded to the news headlines. Resveratrol pills aren't in the top 100 selling herbal supplements," say Bill Sardi, of Resveratrol Partners LLC (dba Longevinex®)."

The fact that resveratrol is still not in the top 100 selling herbal supplements is further evidence, IMHO, that the story for Sirtris is still well under the radar screen of wall street investors. Think about it for a minute. With all the hoopla about resveratrol, the mouse study and Sirtris, can it be that there are still over 100 other supplements still outselling resveratrol?? If the vitamin set hasn't recognized a supplement with such startling potential than it is clear that the story on Sirtris has yet to be told and sold. This tells me that Sirtris Pharmacueticals is still somewhat of an enigma to investors and that irrational exuberance is still a long way off.

If SIRT lives up to its promise it may very well become the greatest story stock ever told.

Pharmion Just Getting Started with Sirtuins

From a recent Pharmion SEC Filing:

"The Company made significant progress in the third quarter advancing its product pipeline. Pharmion initiated several clinical studies across its portfolio, including a Phase 3 study in small cell lung cancer for Amrubicin, Phase 1 and Phase 2 studies in solid tumors and CLL for MGCD0103, opened centers and began enrolling patients in the dose escalation study for oral Azacitidine, and commenced our research program targeting sirtuin inhibitors. Research and development (R&D) expenses totaled $29.1 million for the third quarter of 2007, compared to $16.7 million for the third quarter of 2006. For the nine months ended September 30, 2007, research and development costs totaled $72.0 million, compared to $50.2 million for the nine-month period ended September 30, 2006."

It is very interesting to see that a large cap pharma is just now initiating its research into Sirtuins. Sirtris has over 140 patents in this area and with this intellectual property is attempting to position itself as the gatekeeper of Sirtuin technology. These patents could prove to be especially valuable as this field of science progresses.

Waiting for Irrational Exuberance

We have seen it many times in the stock market. An idea, a concept, a dream that takes a company's stock price to valuations that can never be justified.

It happened to Ballard Power Systems, when the promise of a fuel cell car that emits only water put its stock into the stratosphere. Early investors made windfalls until the stark realities of putting a hydrogen fuel cell car on the road brought BLDP's stock price back down to stark reality:



It also happened to Human Genome Sciences when it began work on mapping the human genome. The excitement generated pushed HGSI from the single digits to over $100 a share. Only problem? Nobody was thinking about where the profits would come from:



Ideas, concepts or dreams that can capture the imagination of investors and cause them, en masse, to behave irrationally and drive a stock price up to unsustainable heights don't come along every day. More practically, recognizing these gems before the masses isn't so obvious. If one is lucky enough to come across a BLDP or an HGSI before the exuberance kicks in then one is sitting on a potential gold mine. The biggest challenge will be determining when the exuberance is peaking and/or the underlying story is failing to keep up with the dream and gold mine threatens to transoform into into a deadly land mine.

In my view Sirtris Pharamcuticals fits the bill of a company with a story that can capture the imagination of the masses. The underlying concept is exciting and relatively simple to understand:

1) Those who partake in a calorie restriction diet live longer and stay healthier.
2) Recent research has shown this "cause and effect" is due to the activation of certain enzymes within the body's cells, called sirtuins, that seem to put the body into some kind of heightened defensive state.
3)When taken in high doses, resveratrol, a naturally occurring compound found in grape skin and other plants, seems to activate sirtuins without the need for calorie restriction.
4) SIRT is the leading company trying to take this concept to the next level by developing treatments for diseases of the aging such as type 2 diabetes and cancer.

Whether SIRT succeeds in its ultimate mission is still open to conjecture and may not even matter as long as it sees success in early clinical trials, SIRT is in the bottom of the first inning of this story and, in my view, a little more progress will allow SIRT to capture investors' imagination like HGSI and BLDP did in the recent past. HOW CAN ONE NOT GET EXCITED ABOUT THE FOUNTAIN OF YOUTH???

Hopefully, SIRT will differentiate itself from BLDP and HGSI by making its dream a reality. However, even if SIRT fails in its ultimate goals, this dream is one that can capture investors' imagination.

Type 2 Diabetes Progress Continues

The progress continues....

http://www.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20071213005158&newsLang=en

... and SIRT management is sharing its findings in the most appropriate forums.

Elixir: Another Sirtuin IPO on Calendar

Another sirtuin company is looking to raise funding in an IPO. Also based in Cambridge Massachusetts, Elixir Pharmaceuticals has a couple of other drug targets other than Sirtuins that it has licensed from other companies. One of the most interesting aspects of the pending Elixir IPO is that one of its co-founders recently defected from Elixir to join SIRT:

http://www.xconomy.com/2007/11/19/sir2-roads-diverged-elixir-co-founder-joins-rival-sirtris/

It seems to speak very highly of the potential of Sirtris that Leonard Guarente, who some feel may be a future Nobelist, left his own company to join its main rival in the area of Sirtuins. Mr. Guarante is credited with discovering that the activation level of the Sir2 enzyme increases the lifespan of mice, yeast, worms, and other organisms.

Explanation For Recent SIRT Decline

On November 30th, SIRT stock price began a steep decent after an equally sharp rise. I had suspected that a venture capital investor had decided to take some money off the table but the insider trading reports had yet to confirm this. Now it is clear. Polaris Venture Management Company, a venture capital firm and owner of over 3,000,000 shares, disposed of 1,000,000 shares on November 30th. Since the sale is listed as a non-open market transaction, I suspect that Polaris purchased a derivative from a dealer, probably a collar, and that the dealer dumped the underlying stock as part of its hedge. A zero cost collar would cap an investor's upside and place a floor on his downside at no cost to the investor. The dealer would need to sell stock to hedge, often without much regard for price.

SIRT is a stock that has a potentially fantastic future, however, until the visibility of its potential is confirmed investors can expect volatility, exciting up days and stomach turning downturns. Keep an even keel!!

Meanwhile, SIRT announced today that the National Institute of Aging (NIA) has selected one of its SIRT1 activators for an Interventions Testing Program to study the effects of SIRT1 activation on aging. More evidence of SIRT's clear leadership in this exciting field.

Do your own DD.

A Good Entry Point for SIRT

SIRT has been very volatile over the last few weeks:

A sharp rise from $16 to $21 in late November was followed by a sharper decline to $14.50 in the next few days. It is easy to see that the sharp rise was related to the following press release that illustrated the huge potential in SIRT's game plan: http://biz.yahoo.com/bw/071128/20071128005806.html?.v=1 .

However, the subsequent decline is more puzzling. One theory on the sharp decline would be insider selling. Since it has now been longer than 6 months since SIRT's IPO, the underwriter's lock-up for insider selling has now expired. However, no insider sells of either officers or venture capital firms that provided the seed money have shown up in SEC filings. At this time I can only conclude that the sharp selloff is a result of speculative short term trading activity that we see all the time in today's markets.

I've listened to many presentations by firm management. The often giddy excitement shown by management in interviews, conference calls and investor presentations seems to be genuine although even they cannot know for sure if their efforts will eventually lead to blockbuster drugs. However, investing is never a sure thing and you must always do your own risk/reward analysis. I firmly believe that SIRT is a stock with tremendous upside, a potential ten bagger within a few years. However, one must put up with and accept stomach turning volatility.

The time to buy a story stock like SIRT, IMHO, is when the story hasn't changed yet the stock price has taken a hit. I believe NOW is that time, with SIRT trading under $15 and over 30% off its recent highs. Results of the firm's Phase 1B study on Type2 diabetes are due out within the next month and should provide a legitimate new catalyst to move SIRT to a new trading range.

Do your own DD.

The Genesis of the Age of Life Extention

In November 2006, to much worldwide press excitement, researchers released a report that showed how a component in grape skin, called resveratrol, significantly extended the lives of mice raised on a high fat diet. The biological mechanism that achieved these results in mice is both fascinating and exciting. It could hold the key to the body's ability to control, or at least, significantly slow down the aging process. Without getting into the hard core science of this new discovery I provide here a brief outline of the current understanding of this mechanism that may have brought us to the Genesis of the Age of Life Extention:

1) It has long been known that a diet that dramatically restricts calorie input by 30% to 40% has tremendous health benefits (but who wants to be hungry and scrawny??). This is referred to as the Calorie Restriction Diet ("CRD"). http://nymag.com/news/features/23169/ Lab animals and even some humans who have tried the CRD do not suffer from age related diseases such as diabetes and cancer for example.

2) Recent research has found that normally inactive enzymes in most living cells called sirtuins are activated when a cell is subject to a CRD. When a cell is getting normal nutrition sirtuins remain inactive. This defense mechanism is believed to be a surviving trait of the evolutionary process that would help protect an organism from long periods where nutrition is scarce.http://www.hopkinsmedicine.org/press/2003/January/030104.htm

3) When activated, a certain sirtuin has been shown to reduce glucose production levels and slow the aging process in mice. http://www.sciencedaily.com/releases/2007/08/070815154329.htm

4) High levels of resveratrol, a compound found in many fruits especially in red grape skin, have been shown to activate sirtuin enzymes in the body. http://www.drpressman.com/Library/Resveratrol.htm

5) A little company called Sirtris Pharmacueticals is the leader in sirtuin research and has numerous patents to show for it. SIRTRIS already has a proprietary stable formula of resveratrol in clinical trials to treat Type 2 diabetes. It has also developed a non-resveratrol based small molecule that is 1000 times more potent than its resveratrol based product. http://www.sirtrispharma.com/Science/Technology/tabid/3732/Default.aspx

I will be following this company through this blog as The Sirtuin Investor as I am fascinated by long term implications of sirtuins and the potential to earn substantial returns investing in them. Live longer requires having extra money, so pairing the two goals on this blog are the perfect complements.