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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
  • Star Scientific Inc. –Transitioning From “Story Stock” To Corroboration By Revenue 0 comments
    Feb 22, 2012 2:19 PM | about stocks: GNC, LO, MO, RAI, RCPI

    Dr. John L. Faessel
    ON THE MARKET

    Commentary and Insights

    Star Scientific Inc. -Transitioning from "Story Stock" to Corroboration by Revenue

    Corroborate
    transitive verb
    To confirm or support (facts, opinions, etc.), esp by providing fresh evidence

    Star Scientific Inc. (CIGX) Nasdaq

    More often than not, perhaps, "story stocks" tend not to make fully real the original hypothesis or proposition that drove their narrative to begin with. Not so with the shares of Star Scientific. Recently, has broken above six-month highs fired by a substantial volume increase, and for those of a technical bent there's been a compelling validation with a series of higher lows and new highs in the metrics of on balance volume and money flow, which just posted 10-month highs.

    Indeed, 's market value is no longer a reflection of expected future potential or favorable press coverage: instead it's a story about the building of what could be a Colossus of revenue from its flagship "over the counter" non-prescription product, Anatabloc™.

    As a longtime watcher (and shareholder) of the steady, brick by brick foundation of the storyline, I can only say that "this time" the original premise is playing out quite dramatically with increase sales that testify to the work of a quite savvy crew of very interested players, who track the steadily growing order numbers from vendors of the product.

    Originally, Anatabloc™ was sold only online through the Star Scientific website and then from the Amazon and Facebook pages. More recently, General Nutrition centers (NYSE:GNC) NYSE also began selling Anatabloc™ online, and from what we hear about the brisk sales (even leading to back orders) there are rumors that it won't be long before the product is carried in many of 's over 7,600 locations in 53 countries. Let's note here that Star's CigRx™, a tobacco smoking cessation product, is also carried in some Rite Aid and CVS stores, so I'd imagine it won't be long before we hear that Anatabloc™ is carried in those huge chains as well. Importantly, relationships are forming with health care providers and other well-known and successful retailers who could add to the visibility, market legitimacy, and efficacy of Anatabloc™.

    As the Anatabloc™ story continues to unfold and build more and more traction, testimonials are piling up from a broad spectrum of athletes and people who train them attesting to the effectiveness of Anatabloc™ in mitigating a variety of inflammation-related problems. What's particularly impressive is the product's range of effectiveness: discomfort and pain in shoulders, knees, back, legs, and elsewhere are reduced when the compound is taken regularly. Last week it was announced that Fred Couples is the company's first Brand Ambassador for Anatabloc™. Couples is a 32-year veteran of the PGA Tour, with over 50 professional tournament wins including the Masters (1992), and has been twice named the PGA Tour Player of the Year (1991, 1992). In Couples' words: "I started taking Anatabloc™, and within a few days, I simply started feeling better…. There has been a difference in how I feel, both when I wake up in the morning and throughout my day. Anatabloc™ was an amazing find for me and I continue to feel better."

    Other professional athletes such as NFL All-Star Jeremy Shockey, who has had an exceptional 10-year pro career, and tennis stars Jimmy Arias, Aaron Krickstein, Rob Seguso and legendary coach Nick Bollettierri are already using Anatabloc™. I hear that the word is spreading like wildfire among the athletic community, as of course "all" want to have the edge. Prominently, Anatabloc™, an over the counter anti-inflammatory product, has none of the deleterious steroidal side effects, nor is it a forbidden, pharmacologically active "doping" anti-inflammatory substance banned by the sports authorities.

    For those new to the Star Scientific story I'll give a brief recap of the science that has many observers, me included, believing that something quite momentous and fortuitous for humankind is developing here.

    The short version is that Star discovered that a naturally occurring alkaloid (anatabine) found in peppers, eggplants, green tomatoes and tobacco (the Solanaceae family of flowering plants) has quite dramatic effects on reducing low-grade inflammation.

    Studies at the Roskamp Institute showed that anatabine / (RCP-006) - now marketed by Star as Anatabloc™ - is more than four (4) times more effective than either Celebrex or Voltarol in reducing inflammation and was shown to be more than three (3) times more effective than Lipitor in reducing inflammation in whole human blood. These are drugs that require prescriptions from a physician and their sales are in the mega-billions: Lipitor sales in 2010 alone were $10.7 billion. Let's note that the Roskamp Institute is funded by the National Institutes of Health and private donations.

    Star believes, and is willing to state in the patent application and make claims to the effect (54 claims made), that anatabine / Anatabloc inhibits, reduces, mediates, moderates Nuclear factor kB [NF-kB]'s in hundreds of conditions and reduces the risk of developing such disorders. NF-kB's are a blood protein that acts as a first immune system responder to harmful cellular stimuli while controlling many of the genes involved in numerous inflammatory diseases, such as arthritis, sepsis, gastritis, inflammatory bowel disease, asthma, among many others. Notably NF-kB is associated with elevated mortality, especially from cardiovascular diseases. A quick Google search of NF-kB brought up 3,070,000 results.

    Star's provisional patent application discloses that, "S-(-)-anatabine positively correlates with reduction of the inflammatory activity." (My emphasis)

    The Star patent also claims that Anatabine can be used to reduce elevated blood levels of inflammatory markers such as C-reactive Protein [CRP]. The American Heart Association website says that "individuals with elevated levels of CRP have a risk about 2 to 3 times higher than the risk of those with low levels. Over a dozen major studies demonstrate that baseline levels of CRP in apparently healthy men and women are highly predictive of future risk of heart attack, stroke, sudden cardiac death, and the development of peripheral arterial disease." A Google search of C-reactive protein [CRP] brought up 5,520,000 results.

    Star has completed the first human clinical trial showing that Anatabloc™ lowers CRP levels in human blood.

    Investors led by large institutions are connecting the dots: over 40% of shares are owned by institutions, a new high in ownership. The obvious conclusion has to be that the deeper they delve into the particulars of the science, the more it becomes clear that the possibilities of what could be a true "panacea" remedy now exit - a potion, as it were, to fight off a multitude of known and still unspecified ailments, including aging.

    It should be noted that nonbelievers in the shares of CIGX are plentiful as there is a large short interest of 19,950,108 shares, a sizeable percentage of which has been around for well over two years. My comment is that much has changed over the last year with the above-mentioned impressive news and, especially, the sales of Anatabloc™. Clearly it's now a whole new ball game. Shorts should be worried as both the science and the sales of Anatabloc™ continue to advance impressively, confidently.

    The tidal wave of science is building as regards the many benefits of anatabine / Anatabloc™, and this research is led by an all-world register of names in science and medicine. Astonishingly, the quantum leap here is the ability of anatabine to throttle back only the harmful immune system components of inflammation without triggering destructive immune system suppression; this is or will be a momentous breakthrough of historic proportions in the treatment of inflammatory conditions.

    Now, for more essential backdrop we quickly review the eminent credentials of the scientists and institutions that support and conduct the testing of anatabine / Anatabloc™. Don't fail to peruse their full resumes via hyperlink.

    1. The Roskamp Institute's main goal is to discover new and effective treatments for Alzheimer's disease. Roskamp is funded by the National Institutes of Health and private donations, and is conducting research using anatabine / (RCP-006) / Anatabloc™ on Alzheimer's disease, gastroenterology, rheumatology, cancer, auto-immune diseases (lupus), and cardio-atherogenesis (the process of atheromatous plaque development in arteries), among other conditions.

    2. Michael Mullan, M.D. PhD, is Director of Roskamp Institute. His degrees include LMSSA (Medicine), MRCP (Psychiatry), and Ph.D. (Molecular Genetics) from the University of London, England. It is he who along with Roskamp's Associate Director, Dr. Fiona Crawford, found that the genetic cause of Alzheimer's disease and its onset were directly related to the accumulation of a protein called beta-amyloid, which makes up the telltale plaque that accumulates in the brains of people with Alzheimer's.

    3. Paul W. Ladenson M.D., was trained at Oxford University and Harvard Medical School, and is now Director of Endocrinology and Metabolism at Johns Hopkins Medical School where he is Professor of Medicine, Pathology, Oncology, and Radiology & Radiological Sciences.

    4. Mr. Richard L. Sharp is member of the Johns Hopkins Medicine Board of Advisors and the founder and a board member of Crocs Inc. (NASDAQ:CROX), as well as former Chairman of Circuit City and Carmax. Mr. Sharp is a former board member of Star Scientific. It was reported late last year that Mr. Sharp bought 100,000 shares of Star in the open market, see; http://secfilings.nasdaq.com/filingFrame...

    Of note: Dr. Ladenson and Dr. David S. Cooper, another notable professor of medicine and Director of the Johns Hopkins Thyroid Clinic, presented the "feature" Paul Starr Award Lecture at the recent 81st annual meeting of the American Thyroid Association conference. The lecture was entitled, "The Medical Treatment of Hyperthyroidism: Past, Present, and Future."

    I suggest that readers of this report avail themselves of the patent application for a serious review. Send request to Dr.Faessel@onthemar.com

    Now then: over and above Anatabloc™ there is another aspect of the Star Scientific story, having to do with the recently announced news regarding a settlement with Reynolds American Inc. (NYSE:RAI) [the old "RJR"]. Briefly, settlements with Reynolds, Phillip Morris (NYSE:MO) [twice the size of Reynolds], and Lorillard (NYSE:LO) are more that a possibility, with potential sizeable cash payments coupled with a royalty stream to Star. The impact of the continuing future huge free cash flow on Star's 135 million shares makes a compelling and uncommon investment opportunity in itself.

    View a CBS news affiliate WNEM-TV video about Anatabloc™ and inflammation shown in the Flint/Tri-Cities market in Michigan that features Dale Wilson MD, one of the principal investigators in the clinical trial being conducted in the Flint area. In the video Dr. Wilson states that, "Anatabloc™ turns chronic low grade inflammation off." Link available at:

    http://www.youtube.com/watch?v=StVre96Vzr8

    If you missed my previous reports-more specific in detail and scope on each of these themes-or wish to receive my Best Ideas for 2012, send a request to: Dr.Faessel@onthemar.com

    Disclosure: I am long CIGX.

    Additional disclosure: Disclosure: I'm an investor in Star Scientific shares and have bought shares on the open market and have no other affiliation with the company other than as a shareholder.

    Themes: long-ideas Stocks: GNC, LO, MO, RAI, RCPI
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