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Expert Financial Analysis and Reporting

Advaxis: A Look at the Dizzying Trading Activity over the Past Month (ADXS, No opinion, $9.70)


My approach to my website in the two years I have been publishing is to in-depth research on a limited number of emerging biotechnology companies. To date, I have seldom written on companies on which I have not done a comprehensive analysis. However, I have done work on numerous other companies and sometimes have insights into them that may be of some value. Some subscribers have suggested that I write on companies even if I have not reached a conclusion about their stock prospects. With this note on Advaxis, I am heeding that suggestion.

This note mainly focuses on the trading activity in the stock resulting from reports on the company by two bloggers, a scathing bear article from Richard Pearson published on Seeking Alpha and a bullish article published by Adam Feuerstein on This report shows the enormous impact that bloggers without sophisticated knowledge of a Company can have on its stock. It is important to understand this phenomenon as the resultant volatility can shatter confidence if one does not have conviction on the reasons for owning the stock. Unfortunately, this volatility is a fact of life for investors in emerging biotechnology stocks.

Short Selling Attack on Advaxis Spurred By Richard Pearson Article; Some Thoughts on the Author

Advaxis was hit by a short selling attack on Tuesday January 20, 2015 after a report was published on Seeking Alpha by Richard Pearson. He is a frequent author on Seeking Alpha who describes himself as an activist investor. Since November of 2012, he has written articles on Seeking Alpha on 43 companies; in each case the initial report on the company was a sell recommendation. Prior to writing on Seeking Alpha, Pearson was a colleague of Adam Feuerstein at the and wrote 93 articles. In his “Street” mode he wrote primarily on small, highly speculative Chinese companies during a period of frenetic underwriting activity for such companies. To the best of my knowledge, almost every one of his articles was a buy.

His Chinese gambit didn’t fare well as many of these companies suffered sharp price declines. This apparently prompted him to make a switch to the sell side. I think that his disclosure on Seeking Alpha says it all. “The author currently holds a short interest in ADXS and has provided fundamental and/or technical research to investors who hold a short position in the stock. The author may choose to transact in securities of one or more companies mentioned within this article within the next 72 hours.”

Here is what he is saying.

  1. He is short each stock before an article is published.
  2. His articles recommend that investors who then read his articles sell or short the stock. This means that if these investors do act on his advice and short the stock, he has traded ahead of them.
  3. He alludes to an interaction with other short sellers, but doesn’t specify if they are providing him information for the articles. These investors may also be trading ahead since he discloses that they have established a short position prior to his report.
  4. He makes an explicit statement that he may do a transaction immediately after publication of his article which means that he may cover his short. This would be at a time when other investors, if they were to follow his recommendation, could be selling or shorting the stock at a time when he is covering his short. We have no way of knowing.
  5. This disclosure clearly states that he is trading ahead of his recommendation and warns that he may be trading against his recommendation shortly after the article is published.


Pearson’s actions can be seen as unethical, but has he crossed the line into something more serious? We would have to have concrete information on the five points noted above if we were to reach such a conclusion. However, in the comments section of the Advaxis article on Seeking Alpha, someone who goes by the pseudonym OdysseustheGreek makes this cogent observation. I quote.

“I will say as someone who has watched this author (Pearson) work for a couple of years now he is very good at what he does.

He follows stocks that have experienced big run ups and large retail ownership and then comes the article using a combination of old and outdated information mixed with current information to portray a story that isn't really accurate...or at best is misleading.

Interestingly enough this "analysis" is almost always accompanied by major put activity beforehand...almost like somebody knows this article is coming out in advance. And then of course, this is followed by announcements of lawsuits by ambulance chaser attorneys.

This short operation run against ADXS was hugely successful for the author and his friends. They are like a well-oiled machine when they run these attacks. It should have a name, like the Pearson Playbook or something.

....... the short network that loads up positions with advance notice of these attack articles? Is that not a form of insider trading?

I don't have a problem with shorting in general. I do question what probably is a bunch of insiders with information about this buying a bunch of puts and shorts in advance.

Like I said, you guys (Pearson et all) are very good at this. You're pros at this. But let's not pretend this well-oiled machine is some kind of champion for truth and justice. You guys have an operation that allows you to make 30% to 60% profits or more in a few days or weeks. Then you move on to the next target.”

I am a careful student of Pearson’s articles and my opinion is that he has almost no understanding of the technology base of the companies that he writes about. I think that this is made clear by a comment that he made in a similar attack article on Northwest Biotherapeutics. He frequently cites Adam Feuerstein articles as a research source. In the NWBO article, he cited Feurstein’s comments as a reason that Pearson was negative on DCVax Direct. He relied on Feuerstein’s research in which Feuerstein said that when you plunge a giant needle four times into a tumor mass, then take a scan of that tumor mass, you will find damage. Feuerstein without citing any evidence suggested that the biological effect attributed to DCVax Direct is actually due to the hypodermic needle. He concludes that the drug is not as effective as grapefruit juice.

Pearson actually had a slightly different take. He said “The fact is that Mr. Feuerstein missed the point in his statement. It is not the needle itself, which is causing necrosis and collapse. Instead it is the injection of a liquid - ANY LIQUID - which causes the destruction. Even an injection of simple saline solution into a tumor could cause substantial destruction.”

Other than their own expertise, Feuerstein and Pearson offered no sources for these opinions which I view as utterly ridiculous and absurd. Is there anyone who agrees with them that either sticking a hypodermic needle into a tumor or injecting saline into the tumor will lead to an immunotherapeutic and tumor response? For a balanced discussion of DCVax Direct data please see this report.

My Experience with Advaxis

I have no dog in the Advaxis fight. I have called on the company several times in the past few years and heard several management presentations. Their technology comes out of the distinguished academic research center at the University of Pennsylvania. The gist of what the Company is trying to do is to trick the body into recognizing cancer as a bacterial infection and to launch an immune response. Their products are cancer vaccines. I am extremely interested in immuno-oncology and cancer vaccines and I find this approach novel and interesting. However, I have not yet seen clinical results that would cause me to dive deeper into the stock. I do note that two highly experienced and sophisticated investment firms with expertise in biotechnology investing, Adage and T. Rowe Price, combined recently to invest $17 million in the company in December.

As I said, i have done no detailed work on Advaxis and cannot refute Pearson’s article point by point. The disturbing thing about Person is that he presents only negatives. There is utterly no effort to present positives in addition to negatives; virtually everything about the Company is negative in his view. However, another investor did take Pearson to task on his article. If you want to see his detailed rebuttal to the Pearson article you can check this article. The most salient point in this rebuttal is that Pearson alleges that Advaxis misrepresented clinical data. The author shows that Pearson was in error on this extremely damning comment.

Adam Feuerstein Springs to the Defense of Advaxis

On January 27, 2015 after the market had opened, Adam Feuerstein of all people sprang to the defense of Advaxis. He disputed the Pearson article and laid out the basis for a bullish view of the company in a piece entitled Advaxis: Legit Reasons to Take Another Look at Under-Appreciated Cancer Immunotherapy. This article really surprised me as Feuerstein has been a strident critic of cancer vaccines being developed by other companies. For example, he has written 21 negative blogs on Northwest Biotherapeutics in the past year. I think that it is hard to be positive on the cancer vaccine approach of one company and be stridently negative on another. The common objective of cancer vaccines is to stimulate the immune response to cancer and there may be several ways of doing so. If you buy into this concept, it is inconsistent to be positive on one approach while stating that the other has no chance of success. It may be the case that one approach is better than another, but there is no way of judging that at this time with the data we have to work with.

It is also strange that in an article on March 7, 2014 when Advaxis was at $5.00, Feuerstein wrote a highly negative article on Advaxis. Now at a price of $8 to $9, he has become a bull. He doesn’t explain the reasons for his shift in opinion.

Looking at the Price Action of Advaxis for the Past Six Weeks

The period from December 8, 2014 to January 28, 2015 saw some highly unusual stock price movement for Advaxis as the stock soared from $3.44 on December 8, 2014 to a high of $13.53 on January 16, 2015. Then the attack from the Pearson article on the morning of January 21, 2015 drove the stock to a low of 6.80 on January 22, 2015. As I write this article on January 29, the stock is at $9.70.

In the six months leading up to December, the stock traded between $2.50 and $3.00 and averaged about 300,000 shares per day. In the period from December 19, 2014 to January 28, 2015 the average volume was 2.2 million shares per day. The daily volume was seven times the previous normal trading volume. The stock price and volume trends are shown below. Note that the Pearson article was published on Seeking Alpha at 9:31 AM on January 21 and the Feuerstein article was published at 9:57 AM on January 27. The following shows the daily stock price and trading volume for the period Deccmber 8, 2014 to January 28, 2015.


Date High Low Close Volume
28-Jan-15 11.08 9.10 9.16 4,228,700
27-Jan-15 10.19 7.80 9.89 5,368,400
26-Jan-15 8.33 7.49 8.23 1,131,800
23-Jan-15 8.35 7.44 7.73 1,871,900
22-Jan-15 8.29 6.80 7.43 7,751,900
21-Jan-15 11.94 8.26 8.37 7,086,900
20-Jan-15 13.74 11.51 11.76 2,784,200
16-Jan-15 13.53 12.10 13.51 1,874,600
15-Jan-15 12.55 11.71 12.33 1,449,000
14-Jan-15 12.42 11.10 12.20 1,203,100
13-Jan-15 12.88 11.28 11.73 2,646,100
12-Jan-15 13.17 10.71 12.09 1,939,500
9-Jan-15 11.75 9.69 11.30 1,636,100
8-Jan-15 10.60 9.22 10.41 1,855,700
7-Jan-15 9.45 8.22 9.12 1,338,700
6-Jan-15 8.74 7.76 7.99   757,700
5-Jan-15 9.10 8.20 8.67   869,600
2-Jan-15 8.62 7.87 8.42   895,500
31-Dec-14 8.70 7.92 8.01 1,162,000
30-Dec-14 8.82 8.29 8.66    40,300
29-Dec-14 9.75 8.20 9.00 3,371,800
26-Dec-14 8.01 7.17 7.97   510,100
24-Dec-14 7.90 6.80 7.57   496,800
23-Dec-14 7.16 6.61 7.07 1,008,400
22-Dec-14 7.88 5.86 7.31 3,817,100
19-Dec-14 5.79 4.71 5.61   641,400
18-Dec-14 5.00 4.71 4.86   387,200
17-Dec-14 5.14 4.36 4.97   884,200
16-Dec-14 4.55 4.12 4.48   550,800
15-Dec-14 4.45 3.85 4.37 1,143,000
12-Dec-14 3.80 3.64 3.78   178,200
11-Dec-14 3.77 3.55 3.64   155,300
10-Dec-14 3.67 3.42 3.55    71,200
9-Dec-14 3.62 3.35 3.51   138,800
8-Dec-14 3.77 3.41 3.44   434,000

I want to first examine the possible reasons for the strong move in the stock which appears to have been spurred by information contained in 10 press releases made by Advaxis in the period from December 8, 2014 to January 20, 2015.

Looking at Possible Reasons for the Strong Price Move from December 8, 2014 to January 16, 2015

This string of press releases started on December 8, 2014 with Advaxis announcing that it was beginning a phase 1/2 trial of its cancer vaccine ADXS-PSA (ADXS31-142) in combination with Merck’s checkpoint modulator Keytruda in the treatment of metastatic prostate cancer. There is enormous investor interest in Keytruda with some analysts estimating sales of $5 billion by 2020. Investors took this press release announcement as evidence that Merck sees great promise in combining Keytruda with ADXS-PSA.

I was not bulled over by the announcement because Merck is making their drug widely available to be studied in combination with many other new cancer therapies. Merck has said that Keytruda is currently being studied in 50 clinical studies of which 20 involve a combination with another company’s drug(s). It is also important to understand that Advaxis is paying for the conduct of the trial and Merck is just supplying its drug. I viewed this announcement as a modest positive, but I think the market reaction was based on the belief that this was a major endorsement of ADXS-PSA by Merck.

The immediate effect on the stock was modest as I think it should have been. However, management began to emphasize this development first with an appearance on Fox News on December 12, 2014.   It further emphasized this at a year end review on January 12, 2015. The association with Keytruda was an important reason for the upward price move as was an announcement on December 19, 2015 that two highly respected biotechnology investment firms, Adage and T.Rowe Price, had invested $17 million in the company. This to my knowledge was the first time that any major investors took a position in the stock and investors viewed this as a validation of the Company’s technology by sophisticated investors; I agree with this assessment.

I was very much surprised by the price movement which saw the stock increase four fold in just over a month for the period ending January 20, 2015. I have met with Advaxis several times as cancer vaccines are an area of biotechnology that I have a great deal of interest in and have some modest expertise. I have been cautious on the stock because I have not seen convincing clinical evidence that their vaccines are effective. I am not negative on the company, just agnostic. The price action in my opinion was over done.

Comments on Price Action after January 20, 2015

Note how Advaxis stock traded down sharply on January 20, the day before Pearson published his article. This would be consistent with some investors knowing that the article was pending and is the pattern seen with most of Pearson’s articles according to the comment by OdysseustheGreek that I previously referred to. There seemed to be some selling or shorting in the $12 to $13 price range on January 20. This was a nice trade as the stock hit a low of $7.00 two trading days after the Pearson article was published.  Astute traders could have realized profits of 40% to 45% in two days.

In the same way, Advaxis began to recover sharply on January 23 and January 26, the two trading days before Feuerstein wrote his article on January 27. Astute investors were buying the stock in the $7 to $8 range. As I write this note on January 29, the stock is trading at $9.70. Another great trade for the longs who got in early; they have realized a 21% to 38% gain in two trading days.

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  1. A very level-headed reasonable look into the nonsense that’s been going on surrounding Advaxis. The google document you linked by JusticeandEquality is a gold mine of information that completely decimates any doubt as to what that SA article was about. The fact that Adam’s article was outlined as a sort of response to this bogus SA article and states that it actually made valid points makes me question Adam’s actual intent in his reporting. Regardless, I say we let the science speak for itself. No doubt there will be more of this nonsense until we see the data for the combination therapies which will either breathe new life into Advaxis or destroy it. I am particularly bullish on Advaxis and expect very good results of these combination therapies. Time will tell, as always. Thanks for the insight.

  2. I do not think that either Pearson or Feuerstein come up with the content for their articles from their own research. They are dependent on others.

  3. Thomas Cunningham says:

    Why are these guys not investigated by authorities

  4. The Citizens for Responsibility and Ethics in Washington and The Washington Post have suggest that investigations should be done.

  5. Richard Pearson must have a tumor of 1500mm (taller than most kids) in his head to justify his riduculous example.

    AF clearly treasured Merck’s validation very much in his last article so he changed his bear camp. Apparently, he didn’t give a damn about UCLA, MD Anderson, King’s college, Fraunhofer institude, nor UK regulators nor German regulators. In his article, he called Agenus a “wanna-be” player. Clearly, Agenus’ deal with incyte did not impress him either.

  6. Pearson has no understanding of biotechnology. He is being fed information without being able to evaluate it.

    AF is amazingly inconsistent in the reasoning (usually scant) behind his recommendations.

    You might want to take a look at AF’s involvement in a nanocap stock called Brainstorm. The trading in the stock and AF’s bullish blogs are interesting.


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