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Actionable news in RPRX: Repros Therapeutics Inc.,

Red Flags at Repros Therapeutics

“What's in a name? That which we call a rose, By any other word would smell as sweet.” -- William Shakespeare in Romeo and Juliet

Does an old discarded penny stock traded under a flashy new name smell sweeter to investors? Apparently so. Shares of Repros Therapeutics (NASDAQ:RPRX) have risen sharply, more than doubling since September of last year. However, I wonder if many shareholders in Repros have forgotten, or maybe never learned, that Repros is the same corporation as the discredited and oft-sued Zonagen. In 2006, after numerous failures, Zonagen changed its name to Repros and hoped to shove two decades of failure under the rug. Well, it's past time to go looking in the closet to see what sort of things Zonagen and its long-time CEO Joesph Podolski might not want you to know.

At this point, I should credit Manuel Asensio and his book Sold Short for opening my eyes to the story at Zonagen. Manuel is a notable short-seller who issued a flurry of negative reports on Zonagen as its stock fell from a climax of more than $40 per share down to under a buck. Here's a chart of Zonagen from 1995 through 2003 that shows the complete pump and dump of its shares.

What led Zonagen's shares from under $5 to up to $45 before completely collapsing? Zonagen was founded more than twenty years ago to try to develop birth control methods based on modification of the zona pellicula—a part of the ovum. The company bought the rights to the research of Dr. Bonnie Dunbar and attempted to create a contraceptive vaccine. Her research, which had been progressing well, ground to a complete halt according to Brian Wallstin of the Houston Press newspaper in his article “Biological Disaster.” In it, Brian explains how Zonagen stole her work. She ended relations with the company and sued them. Zonagen would not develop any commercial product from research relating to the zona pellicula—despite naming itself after it.

After this, Zonagen needed something new with which to excite investors. Its next project would be to create an adjuvant. These are products modify the effects of the active ingredient in a drug without having any direct effects of their own. However, Zonagen's attempt, ImmuMax, was merely an attempt to patent and cash in off a widely researched generic product: shrimp shells. The compound...


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