Dear Mr. Berko:

There’s a drug research company that seems to have patented a cure for Alzheimer’s disease. I know this is a long shot, but I was hoping that, since you seem to know a lot about drugs and medicine, you might know the name of the stock and drug. I think the drug I heard about begins its spelling with the letter “P.”

If you do, could you please tell me about the drug, how it works and what its chances are of success? Then can you tell me about the company and if you think it may be a good gamble? I’d like to speculate with about $10,000 or $15,000, toss my hook in the water and see if I can catch a big one to brag about.

R.O.

Springfield, Ill.

Dear R.O.:

The stock to which you are referring is Axonyx Inc. (AXYX-$6.26), pronounced “axe-zon-ix.” The drug is called Phenserine, and it could become a real razzle-dazzle blockbuster.

The drug, discovered in the saliva of the venomous Gila monster, lowered, without any evidence of toxicity, the amyloid precursor proteins and the amyloid peptides in the brain. This has important implications in the treatment of Alzheimer’s disease. Phenserine, in phase three clinical trails with 450 patients in Europe, has demonstrated uncommon and compelling successes. It demonstrably improves memory and cognitive functions (with zero toxicity) and actually slows down and halts the neurodegeneration caused by the disease.

If phase three trials continue to look promising, the Food and Drug Administration could approve the drug by early 2006. However, due to the potential onslaught of lawsuits against the FDA related to its approval of Merck’s Vioxx, the agency might delay approval until 2008 or 2009.

AXYX is also working with other therapeutic compounds that have the potential to successfully treat other degenerative neurological diseases such as Creutzfeldt-Jakob disease, bovine spongiform encephalopathy (mad cow disease) and scrapies disease in sheep. Though based in New York City, the company conducts its testing in Europe and Australia because the voluminous paperwork costs and the endless legal requirements in the United States double and triple the cost to develop drugs.

According to an acquaintance at the FDA, Phenserine could be the magic bullet and its evident efficacy in phase three clinical trails may be reported in a January conclusion and study. I’m cautioned to tell you that Pfizer, Johnson & Johnson and Novartis are also working to find an Alzheimer’s cure, but none seems to have approximated the success of AXYX.

In fact, some observers suggested that Pfizer (which badly needs a new drug in its arsenal) might be interested in making a bid for the company. It seems that Pfizer (and the others too, I’m certain) has a high regard for AXYX’s research and its novel discovery of the drug source, which has already been synthesized. And why not? If this compound is as successful as its phase two and phase three trials indicate, it easily could produce revenues topping $1.5 billion a year. Though that’s only 3 percent of Pfizer’s revenues, $1.5 billion could easily generate a profit of 40 cents on the dollar.

AXYX went public in late 1998 at $6 a share, moved up to $11 in early 1999 and whimpered back down the $6-$7 level until February 2000. Rumors of a takeover and several new drug discoveries exploded the stock price to $23 by May 2000. All of that excitement was for naught as AXYX then began a slow descent to penny stock status. By September 2002, the stock traded like lice and ticks between cats and dogs, tumbling to 30 cents a share. By May 2003, some folks recognized that the company was onto something and ran the stock over $9 by May 2004.

In the past four years, AXYX has burned through more than $27 million in cash. The company still has barrels of green and it expects to spend about $24 million this year and probably $24 million to $26 million in 2005. There are 52 million shares out and Barclays Global seems to be the largest holder with a June 2004 purchase of 2.5 million shares at $6.25. Though I’m led to believe that Phenserine may be the answer, I still don’t believe it’s the cure-all some think it is.

However, if you can afford the risks, and understand that this is an extremely speculative issue, then go ahead and buy 2,500 shares. If you do, then there are four possibilities:

1. You could lose your entire investment.

2. You might just break even or lose part of your investment.

3. You could make a bloody fortune even beyond your expectations.

4. After you buy the stock, it will trade flat as a flapjack for a year. You’ll get bored with the stock, sell it and take a small profit or loss. Then, four to six months after you’ve sold, management will announce its discovery and the stock will trade over $100 a share.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net.