Wonder Why The Institutions Keep Buying Star Scientific?

| About: Rock Creek (RCPI)

Star Scientific Inc. (STSI) - It's the science.

Indeed, a fat settlement from Reynolds American (NYSE:RAI) would have been nice, but none of the institutions are betting their bucks on a lawsuit for a payoff. Licensing of their BDL patents going forward to others maybe. Almost universally the institutional contact I receive regarding Star has to do with the evolution of the science. In addition, the scientific alliances think the major research institutions would like to see Star's tobacco products disassociated from their health-related endeavors, and this may have speed up the company's interest in the settlement with Reynolds.

The short game is now shot-out with the Reynolds settlement a thing of the past. Now it's all about the ascendancy of the science of Anatabine the active ingredient in Anatabloc and its potential benefits for mankind.

So what Star brings to the market is a compound i.e. Anatabloc that possesses the ability of to throttle back only the harmful immune system components of inflammation without the destructive immune system suppression; this is / will be a breakthrough of significant proportions in the treatment of inflammatory conditions.

Institutional ownership at a new high today

  • 52,178,062 shares now held by institutions, that's a new high as of today.
  • 28,946,951 - Total Shares held by 116 institutions - a new high. (19.79% of shares) (Less than 5% holders) - For details, see Nasdaq here
  • 23,231,111 shares held by TradeWinds Investment, (a Beneficial Owners of MORE than 5%) (15.9% of shares) [SEC PRE14A] See EdgarOnline here
  • Also - (insiders) all Directors and Executive Officers as a Group own 28,383,173 shares (17.5% of shares) See EdgarOnline here.

That's a total of 53.19%.

It should be noted that nonbelievers are also plentiful regarding the shares of STSI as there is a large short interest of 30,619,836 shares (also a new high as of today) a large percentage of which has been around for well over two years. My comment is that much has changed over the last two years with most of the science not existing prior to that. Shorts should be worried as both the science and sales of Anatabloc continues to advance.

Key, informative and positive info from the 10-Q, regarding settlement

  1. While we have settled our ongoing litigation with RJR, we continue to pursue means of collecting royalties for our curing technology through licensing arrangements and through monitoring of the curing practices of industry participants other than RJR that may infringe on our tobacco curing patents which were affirmed by the United States Court of Appeals for the Federal Circuit.
  2. We are [continuing to explore licensing opportunities for its patented low-TSNA tobacco curing process and related product technology.
  3. In addition, the Company will continue to seek opportunities to generate revenues through royalties from the patented tobacco curing process for which it is the exclusive licensee.
  4. Star will continue to monitor industry practices regarding nitrosamine levels in order to vigilantly protect its valid patents, which were affirmed by the United States Court of Appeals for the Federal Circuit and left unchanged by the Supreme Court, as a result of the joint dismissal of the petition for certiorari as part of this settlement.

And are you missing this MAJOR Star theme?

Regarding TNF-alpha

The most well-known measures of inflammation are CRP (C - reactive protein) and TNF-αlpha (Tumor Necrosis Factor). A Google search yielded 5,550,000 results for TNF-alpha.

As follower of the Star science so well understand we now know that Anatabine/Anatabloc lowers CRP and TNF-alpha in humans. (See below for details.)

But, did you know that there's a flourishing market out there for TNF-alpha suppression drugs that is at least $22 billion per year (Remicade, Simponi, Humira, Enbrel, etc.). Johnson & Johnson (NYSE:JNJ) brings in around $8 billion per year from this market alone! Also - know that there are 'lot's of nasty side effects from these drugs. See below for bits on Remicade and Simponi.

Terrific results continue to flow regarding the science

The Star press release of Oct. 24, 2012 states: The committee reviewing the data found that the administered doses of anatabine were safe, well-tolerated, and showed clear evidence of a biological effect on CRP and the immune system, as manifested by CRP and an inflammatory marker called Tumor Necrosis Factor Alpha (TNF-alpha). (Link here.)

The figures reflecting the decrease in CRP levels after anatabine supplementation are as follows: 11 of 18 (61%) diabetic subjects on metformin had a CRP reduction. Taken as a whole, 42 of 99 (42%) subjects had a decrease in CRP after only one month with anatabine supplementation. Link the source of these metrics from the Star press release here.

Also, known by Star followers is that the ever growing number of anecdotal stories of improvement in many of the conditions mentioned above (and likewise referenced in Star's International Patent - WO 2011/119722 A2) contains numerous references to relief from conditions like Crohns, ulcerative colitis and autoimmune diseases in general and a host of other inflammatory conditions. The Johns Hopkins thyroid study funded by the Walton Family result are due in December per the recent 10-Q.

The provisional patent application WO 2011/119722 A2 discloses that, "S-(-)-anatabine positively correlates with reduction of the inflammatory activity."

Here is what the patent says:

[100] Anatabine can be used to reduce elevated blood levels of inflammatory markers such as CRP.

If you would like copy of the Star patent application send me a request here.


Given the very positive trial comments on diabetes, and given the already positive results on thyroid, and given the hundred (thousands) of first-hand results from Anatabloc and considering what a public company would likely be valued with all this 'going on' plus the prospects I remain not only bullish going forward − but very much so…

About Star's cash position: Remains about the same as previous 10-Q's

As of September 30, 2012, per 10-Q Star had approximately $10.2 million of working capital, including approximately $9.5 million of cash and cash equivalents in current assets.

As of June 30, 2012, per 10-Q Star had approximately $9.8 million of working capital, including approximately $10.6 million of cash and cash equivalents in current assets.

As of December 31, 2011, per 10-Q Star had approximately $8.6 million of working capital, of which approximately $10.2 million was cash and cash equivalents.

About REMICADE - generic Infliximab is a monoclonal antibody against tumor necrosis factor alpha TNF-alpha used to treat autoimmune diseases. Remicade's market has expanded with approvals for rheumatoid arthritis, ankylosing spondylitis, psoriatic arthritis, ulcerative colitis, and pediatric Crohn's disease. Remicade is marketed by Janssen Biotech, Inc. a wholly owned subsidiary of Johnson & Johnson,

SIMPONI® is a human monoclonal antibody that targets and neutralizes excess TNF-alpha, a protein that when overproduced in the body due to chronic inflammatory diseases can cause inflammation and damage to bones, cartilage and tissue.

Simponi is marketed by Janssen Biotech, Inc. a subsidiary of Johnson & Johnson

Oct. 24, 2012 - Star release regarding Johns Hopkins thyroid study in humans.

The 150 patient study titled "A Multi-Site, Double-Blind, Randomized, Placebo-Controlled, Parallel-Group Trial to Evaluate the Safety and Potential Effects of the Dietary Supplement Anatabine on Antithyroid Autoantibodies and Thyroid Function in Subjects with Autoimmune Thyroiditis" is fully enrolled and expected to complete in December of this year. The purpose of the study is to investigate the potential role of Anatabloc® formulations for nutritional supplementation in supporting the health of the human immune system. The ASAP thyroid study was planned as a human follow-up of a successful animal study, "Anatabine Ameliorates Experimental Autoimmune Thyroiditis, Endocrinology. 2012 Sep; 153 (9):4580-7." In the initial animal study, mice receiving anatabine had lower incidence and severity of experimental autoimmune thyroiditis, lower anti-thyroid antibody levels, and lesser declines in serum thyroxine as compared with untreated mice.

May 8, 2012 - Star release re Roskamp Institute Animal studies

In addition to the better motor performance of the mice, there was evidence of suppression of the normal inflammatory response that accompanies neuronal destruction in this model. In the affected animals that did not receive supplementation with an anatabine formulation, the spleen pro-inflammatory molecules, such as IFN-gamma, IL-8, IL-6 and TNF-alpha (which are all significantly raised by the induction of inflammation), were markedly elevated relative to control animals. In the mice that received the anatabine supplement, these inflammatory molecules were all reduced to normal levels [see figure 2]. These preliminary data all suggest the company's specially formulated anatabine supplement has a highly beneficial effect in this model of MS. The report, Roskamp Institute Reports Beneficial Effects of Nutritional Supplementation with Anatabine in an Animal Model of Multiple Sclerosis is available on the Roskamp Institute website at here

Latest from the Salk Institute - could be very interesting for Star. Link here.

See Star's new patent application, Methods of Administering Anatabine to Treat autism Spectrum Disorders and Seizure Disorders, here.

Disclosure: I am long STSI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.