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Dr. John L. Faessel is a seasoned and respected Wall Street professional with industry-wide recognition for expertise in market strategy and analysis. He is widely recognized for his insights in public companies. For over 20-years Dr. Faessel’s ON THE MARKET reports have been widely distributed... More
  • CIGX - Best Idea Update – Now a Biotech? 0 comments
    Feb 10, 2011 1:23 PM | about stocks: RCPI

    2-10-2010

     

    Dr. John L. Faessel                  

    ON THE MARKET

    Commentary and Insights

    Faessel Publishing LLC

    Dr.Faessel@onthemar.com

     

     

    CIGX - Best Idea Update –

     

    Star Scientific Inc. (CIGX) $1.87 Nasdaq

    Market-cap $223 million

     

    CIGX now a Biotech Company?

     

    (CIGX) files patent application for administering anatabine isomer to treat chronic low-level inflammation. Licensing and co-venturing possibilities abound...

     

    Many years ago I recall Professor Dardin in one of my early Pathology classes referencing inflammation, the biological response of harmful stimuli, with the Latin quotation, “Calor, dolor, rubor, and tumor: Heat, pain, redness, and swelling.” (The four classical signs of inflammation originally recorded by the Roman encyclopedist Celsus in the 1st century A.D.) Little did Dr. Dardin know that today the study of inflammation would be on the front burner of medical research for causing a multitude of pathologies.

     

    Yesterday, Star Scientific announced that the subject of their provisional patent application, a pure form of a single isomer of anatabine could be administered to treat numerous disorders, including those with inflammatory components, aberrant immune response and / or inappropriate cell proliferation. The application indicates that the disorders which may be treated with this discovery include inflammation occurring in brain swelling or neurodegenerative disease such as Alzheimer's disease, multiple sclerosis and Parkinson's disease. (CIGX) said that, “This isomer can be administered in a composition containing a therapeutically effective dose of anatabine to treat chronic low-level inflammation.”

     

    This new find must a drug because the pertinent isomer molecule does not occur in nature, but, the naturally occurring molecule – ANATABINE – probably / likely provides the same benefits, but at lower dosages – and this is available now in CigRx™.

     

    Not only does this monumental announcement add another arrow to the quiver of Star Scientifics’ numerous company making thrusts*, but it now suddenly morphs the company into a new category or sector; that of a dynamic Biotech with legions of possibilities. Yesterday's announcement was not understood by the market, but I am positive that Big Pharma has been shaken by this breakthrough news and is marshaling its forces to participate in the discovery in some form, likely that they are still reeling over this “out of the blue” news. (CIGX) knows the impact of this information and has revealed in the press announcement that they are working with McColl Partners LLC on “structuring a controlled auction for bidding by pharmaceutical companies for licensing and/or co-venturing relationships.” McColl Partners is an independent investment banking firm co-founded by Hugh McColl, former Chairman of Bank of America (NYSE:BAC).

     

    Some time ago Time Magazine in a five-page cover story gave a comprehensive overview of inflammation, titled; The Secret Killer - The Surprising Link between Inflammation and Heart Attacks, Cancer, Alzheimer's and Other Diseases. (2/23/2004) -  Link at: http://www.time.com/time/magazine/article/0,9171,993419-1,00.html

    Do not fail to read this article to arm yourself with the extensive number of inflammation's deleterious effects in numerous grave conditions and of the comprehensive research being undertaken.

     

    Several quick bits from Time Magazine:

    ·         Inflammation chews up nerve cells in the brains of Alzheimer's victims."

    ·         "Inflammation destabilizes cholesterol deposits in the coronary arteries, leading to heart attacks and potentially even strokes."

    ·         "It turns out that statins don't just lower cholesterol levels; they also reduce inflammation."

    ·         By 1997, Dr Paul Ridker and his colleagues...had shown that healthy middle-aged men with the highest CRP levels (a marker for inflammation found in blood) were three times more likely to suffer a heart attack in the next six years..."It's thought that the benefits of [satins] are due in part because of their ability to reduce inflammation within atherosclerotic arteries.”

     

    Medical research is now unwavering in their belief that low grade inflammations, once they becomes chronic, do significant harm to the body. Today clinicians treat many diseases like asthma, arthritis, periodontal disease, lupas, cancer, ulcers, heart disease and many others with anti-inflammatory drugs to neutralize, dampen or block the inflammatory process.

     

    Let's recall that the ancients found the bark of the willow tree to have anti-inflammatory effects; we now know that substance to be aspirin. Could it be that from tobacco (a source of anatabine) a new treatment for all these woes could be realized?

     

    Anatabine is found in tobacco as well as in peppers, eggplant and green tomatoes. The minor alkaloids found in tobacco leaf are nornicotine, anatabine and anabasine. They are present in low percentages compared to the major alkaloid, nicotine. Anatabine is a constituent of the particulate matter found in mainstream cigarettes smoke. Fresh Nicotiana tabacum, the plant variety most commonly used for the production of cigarette tobacco, contains 3.9% anatabine. (Source: Merck Index).

     

    Nicotine has a “half life”, or effectiveness of approximately one hour, while anatabine has a half life of up to 8 hours. (Source: Stratton K., Shetty P., Wallance R., et al. “Exposure and Biomarker Assessment in Humans”, Clearing the Smoke, Institute of Medicine, 2001). However, animal studies have shown that anatabine is not strongly addictive the way nicotine is. Star also believes that CigRx, with anatabine levels comparable to what you’d get from one cigarette – but without exposing one to nicotine – can temporarily reduce the urge to smoke. Link at: http://cigrx.com/science.php

     

    * I like to say about Star that the “connect the dots” rational could make (CIGX) a stock for the ages. Here is a quick look in their quiver. The company is now marketing CigRx™, an over-the-counter (no Dr. prescription required) Tic-Tac type non-nicotine nutraceutical made from natural ingredients that temporarily reduces the urge to smoke. Just picture the market. Wow! And you can purchase it very simply online; www.cigrx.com. Gross cigarette sales are $325 billion a year. Tobacco use will kill 6.5 million people in 2010 from cancer, heart disease, emphysema and other diseases. Moreover, 40% of those who smoke try to quit each year.  That's just a part of the story; There are several other looming, potentially hugely market moving dimensions to (CIGX) that are percolating and ready to pop, like the Roskamp studies related to a potential Alzheimer cure / treatment, plus the mega lawsuit against tobacco giant RJ Reynolds, that is being orchestrated by the powerful law firm Sidley and Austin LLP (a major patent law impresario that has lost just a couple of patent suits over their long history) that alone drove the stock to just below $6 last year. In addition to the newly announced human trials, Roskamp is working with researchers at Johns Hopkins School of Medicine for other medical applications of the compound. I believe that we will hear more on this endeavor soon. If that’s not enough to boggle your mind, there’s even more home run potential; (CIGX) has applied to the FDA for approval to advertise its proprietary BDL (Below Detectable Levels) technology that can lower the nitrosamine (the harmful part of tobacco complex) content to the zero level. Importantly, they are the one and only company that can do that. Imagine if they get FDA approval on that one? “Big Tobacco” will have to license the BDL technology ASAP I believe. Now add in the possibility of a buyout. Big Pharma is always in search of significant new revenue sources and with the fact that smoking issues are so huge worldwide; wouldn't some enterprising Pharma company become involved with either a type of licensing agreement or even a buyout?  Perhaps, Big Tobacco will also have an interest I’m sure. Institutional ownership continues to grow. Currently 78 financial institutions hold about 24% of the shares. Last November insiders and 5% holders bought an "additional" $14 million worth of shares plus warrants (with a 6-month lock-up too I believe.)

     

    Now, consider for a minute the names that hover over this story: Harvard University, Johns Hopkins University, Roskamp Institute, InVentiv Health, McColl Partners LLC and Thomas Lee Partners - and not least the mighty and prestigious law firm Sidley & Austin orchestrating the patent infringement law suit.

     

    Let me muse on and paw at just this aspect a bit more. Can you see the names mentioned above teaming and partnering with a company if it didn’t have “the goods” (like my dad used to say)? Now recall InVentiv, spending millions on a nation-wide CigRx™ rollout. I’m a believer that InVentiv’s media testing of CigRx™ will expand to much larger part of the USA in the next few weeks – that means revenues probably becoming material in Q2 as they expand product awareness. With 13 million shares short, someday there will be an explosive reaction to the upside.

     

    To watch the CigRx™ infomercial: http://www.cigrx.com   

    Website: http://www.starscientific.com

     

    I might also add that tobacco giant Brown & Williamson [now part of R. J. Reynolds (NYSE:RAI)] paid (CIGX) $80 million some years ago for their efforts in developing (CIGX)’s dissolvable tobacco products. That’s the lawsuit story—“for another time”…

     

    I have purchased shares of Star Scientific in the open market.

     

    If you missed any of my previous (CIGX) reports or for the complete list of my Best Ideas for 2011 send an e-mail request to: Dr.Faessel@onthemar.com

     

     

     

     

     

    Stocks: RCPI
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