My Top Pick for 2012

Jan. 26, 2012 11:14 PM ETRCPI-OLD, IDCC, XPER, DNDN5 Comments
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Long Only, Special Situations, Biotech

Contributor Since 2009

I have been a technology investor for over twenty-five years. My investing style includes a combination of Fundamental Analysis with Technical Analysis used for entry and exit points. I have followed several stocks involved in patent litigations including Rambus (RMBS), Interdigital (IDCC), Tessera (TSRA) and Star Scientific (STSI). I follow the actual trials, read the transcripts and the briefs and attempt to handicap the outcomes. I attend various hearings, trials, and oral arguments whenever possible, including appeals to the CAFC, and occasionally attend hearings/trials at various District Courts and the ITC. I have attended over 30 oral arguments at the CAFC and I have a good feel for the various judges. Star Scientific (STSI) is my favorite stock for 2014. STSI has transformed themselves from a tobacco company to a Biopharma company in 2012 and 2013, and this year we will see the true value of the company now that scientific researchers are running the company. Star Scientific will also probably be changing their name in 2014, and may choose to become known as Rock Creek Pharmaceuticals (their division that produces Anatabloc). Although STSI has exited the tobacco manufacturing business (and settled with RJR for a paltry $5 Million), they still own key tobacco curing patents that have been validated by both the USPTO and the CAFC, and these patents don't expire until 2018. Star's new TSNA BDL patent (granted in 2012 by the USPTO) doesn't expire until 2030. I expect STSI (Rock Creek) to have a banner year in 2014 as the world starts to learn the miraculous ability of Anatabloc to treat a variety of auto immune diseases and other conditions associated with NF-kB inflammation (including MS, Rheumatoid Arthritis, Asthma, Crohn's, Parkinson's, Traumatic Brain Injury, Alzheimer's, and various types of cancer, etc). Rock Creek Pharmaceuticals should have more and more peer reviewed medical journal articles on the efficacy of Anatabloc coming out in 2014. I also expect that Rock Creek will file several drug applications (IND's) with the FDA in 2014. In addition, I expect Rock Creek Pharmaceuticals to team or partner with one or more Big Pharma companies for various human ailments as they pursue these IND's. For all these reasons, I expect Star Scientific to be at least a $10 stock before the end of the 2014, and possibly much higher than that.
and the winner is.....Star Scientfic (CIGX).

It was a difficult choice between Star Scientific (CIGX) and Interdigital (IDCC) for my top pick in 2012. Also in contention was Tessera (TSRA) and Dendreon (DNDN). Although TSRA is significantly undervalued, it simply doesn't have the same upside on a percentage basis that CIGX and IDCC have.

I think TSRA will sign major new licensees in early 2012, and they are a likely acquisition target for a company like Qualcomm or Sony, so they could easily be a triple in 2012 (especially if they figure out the best way to monetize their money losing Digital Optics division and the disruptive MEMS patents).

Dendreon (DNDN) needs to recover from their stumble in launching Provenge when their management set unrealistic expectations. But, they too could triple in 2012. By the end of Q2, DNDN should be showing significant progress as new infusion centers come on line and doctors are more willing to recommend Provenge to their patients now that the reimbursement policies have changed.

IDCC has the IP that covers 4G/LTE, both for handsets and for the infrastructure side. In my opinion, IDCC could also be a double or a triple in 2012 when the dust settles, especially if a bidding war eventually ensues.

But I predict that Star Scientific (CIGX) will be the big winner in 2012. CIGX has the possibility of being another "It Stock" ala QCOM in 1999. If you have never read this article in Money Magazine, I highly recommend you read it...if only for nostalgia purposes. I think CIGX has the possibility of being at least a tenbagger in 2012.

Why am I so high on Star Scientific? First...a little history.

Star Scientific is a small money losing company located outside Richmond, VA that developed and patented a methodology to cure tobacco that virtually eliminates the formation of the primary carcinogen in tobacco (TSNA's or tobacco specific nitrosamines). They patented a process to cure tobacco that controlled the heat, humidity, and the aerobic conditions in the curing barns that reduced the TSNA's to below detectable levels (BDL). Those patents were just recently validated by the US Patent and Trademark Office and by the Federal courts. Later this year Star will likely be filing new lawsuits against RJ Reynolds and Philip Morris, but that is not the interesting part of this story. The interesting part of the story revolves around the health effects of another compound they found in tobacco.

While Star Scientific was working on ways to benefit smokers from their knowledge of tobacco, they started searching for the substance in tobacco that caused addiction (they suspected there was something in addition to nicotine and they were correct). They found another substance in tobacco similar to nicotine called anatabine. It's a minor alkaloid in tobacco (and also in green tomatoes, eggplant, peppers, and cucumbers) that Star discovered had some remarkable properties to reduce inflammation.

They started marketing a product called CIGRx (a stop smoking product) about 18 months ago. People taking CIGRx to stop smoking started noticing unforeseen health benefits (especially those with autoimmune diseases). FYI, CIGRx has .3 mg of anatabine, and their new product, just released in late August is called Anatabloc and it has 1 mg of anatabine (or ~3.3 times as much).

The company got independent medical experts involved from Johns Hopkins and from the Roskamp Institute in Sarasota, FL (an independent research facility on aging and Alzheimers partially funded by NIH). These experts have all been studying the anti-inflammatory response for patients taking Anatabloc (code name RCP-006). They have now verified that Anatabine (Anatabloc) has some remarkable properties to reduce inflammation. Because it is a nutraceutical, Star Scientific was able to get it to market much faster than a drug because it did not have to go through the FDA drug approval process. They also found a way to synthesize it artificially and make pure Anatabine. It is now available by mail order over the internet at The product is safe because it is a nutraceutical (found in everyday foods such as tomatoes, eggplants, and peppers at lower concentrations). We can't eat 20 pounds of green tomatoes every day (~the amount of Anatabine needed for the immune response), but we can take six tablets (lozenges) of Anatabloc. Attached below is a good background article on inflammation that was in Time Magazine a few years ago. In a nutshell, it says that inflammation may be the root cause of a variety of illnesses (including auto immune diseases, heart disease, Parkinsons, Alzheimers and many cancers).,9171,993419,00.html

People have now been taking Anatabloc for several months and have experienced relief from a variety of afflictions related to autoimmune diseases and other serious conditions. Here is a recent news piece from a CBS affiliate station in Michigan (WNEM) where a reporter interviewed a woman participating in one of the Anatabloc human trials. They also interviewed the local doctor (Dr. Dale Wislson) who was coordinating the trial. Watch the video linked below (and pay close attention to what Dr. Wilson says near the end about participants in the trial showing a "marked response"). These results should be released in early 2012.

Here is another video testimonial from world reknown Tennis academy director, Nick Bollitieri, along with former ranked tennis players Jimmy Arias, and Aaron Krickstein

Here is a short video on the inflammation process at a cellular level and how Anatabine stops it (the JAK Stat inflammation process).

Testimonials on the internet started appearing about 12 months ago, shortly after people started using CIGRx. The anti-inflammatory properties of anatabine was helping a variety of people with autoimmune diseases. I saw some of these testimonials myself, yet I was extremely skeptical of all this until I learned that physicians from Johns Hopkins and the Roskamp Institute had verified these anti-inflammatory properties. Dr. Paul Ladenson (Director of Endocrinology and Metabolism at Johns Hopkins), Dr. Patruzo Caturegli of Johns Hopkins, and Dr. Michael Mullan (Director of the Roskamp Institute in Sarasota, FL) had tested Anatabloc and were fully convinced about the efficacy for reducing inflammation (they are now giving seminars to other physicians).

My Experience with Anatabloc

I wanted to see for myself if this stuff really worked, so in early July (before Anatabloc was available, I started taking CIGRx). At the time, my Rheumatoid Arthritis was about 90% under control from Humira and Methotrexate. But since I started taking CIGRx (in September I changed to Anatabloc), I have seen significant benefits. In the past, I couldn't play 18 holes of golf without the joints in my hand becoming inflamed to the point I couldn't play golf the next day. On a recent beach trip with the family, I was able to play golf with my sons for 4 straight days (36 holes on two days), without any swelling whatsoever. My asthma is better than it has been in years and I no longer even use an Albuterol inhaler. My tennis elbow and knees no longer ache (three knee surgeries from 2 meniscus tears and a torn ACL). Other additional benefits I have noticed are my sinuses are clear, I sleep better, I have more energy, and my urine stream is much stronger. There are numerous other similar positive stories now being reported on the internet.

Anatabine Test Results

Anatabine has passed numerous studies in mammals and is now being used in several clinical trials with humans. Attached below are links to Anatabloc's (code name RCP-006) anti-inflammatory test results released from the The Roskamp Institute. They reveal that Anatabine (Anatabloc) reduces inflammation much better than Aspirin, Advil or Celebrex (by a factor of four or more). Other test results on mice and rats have shown Anatabine to be non-toxic even at extremely high doses (100 times the equivalent recommended dose for humans). The first product that Star Scientific sold with anatabine was CIGRx to help smokers stop smoking. CIGRx only had .3 mg of Anatabine or about 1/3rd the anatabine content that is in their new product (Anatabloc has 1 mg). Over 170,000 people have taken CIGRx to stop smoking with no reported side effects or drug interactions, so anatabine is apparently safe. Below are the results published by the Roskamp Insitute on the ability of Anatabine to reduce inflammation.

After all my due diligence, I believe Anatabloc will have significant benefits for numerous auto-immune diseases associated with inflammation (including Rheumatoid Arthritis, Asthma, Crohn's Disease, MS, etc.). Recent testimonials on the internet also support the fact that it has greatly benefitted people with other conditions associated with inflammation associated with NF-kB (including cancers, Alzheimers, Parkinsons etc.). Although Anatabloc is only available by internet mail order, and has only been on the market for about 4 months, there have been dozens of anecdotal stories of miraculous cures posted on the internet. For is one posted by someone who was apparently cured of bladder cancer.

There are dozens of testmonials like this, from Plantar Fasciatis to Periodontitis. The world is waiting for Star to release peer reviewed medical journal articles and studies of on-going human trials on Anatabloc. The first medical journal article (on In-vivo and In-Vitro effects of Anatabine for Alzhiemers) was just released about 3 months ago, but more should be coming out in early 2012.

One issue that Star faces is the advertising limitations of selling this product as a nutraceutical. The FDA has been known to come down hard on companies that make unsubstantiated claims of health benefits, so Anatabloc usage has mostly been spurred by word of mouth. The company will severely limit their advertising until there are independent peer reviewed physician reports on the human studies. Numerous peer reviewed studies on Anatabine should start showing up in the press and in legitimate medical journals in 2012. Star Scientific is now holding educational seminars for Physicians (being conducted by Dr. Paul Ladenson, the Director of Endocrinology and Metabolism at Johns Hopkins) and Dr. Michael Mullan (Director of the Roskamp Institute). In October they held three seminars in VA, MI and CA. They also have a facebook page for Anatabloc. The first peer reviewed article on Anatabine's possible use in Alzheimers recently came out in the European Journal of Pharmacology. Patrick Cox (a technology stock analyst who has toured the Roskamp Institute and talked to physicians at Johns Hopkins involved with Anatabloc studies) wrote an article about Anatabloc (attached below) that explains the huge upside of a nutraceutical that can stop NF-kB inflammation.^2011-03-18+Anatabine+Issue_noPortfolio.pdf

Here are a few of the testimonials that have been posted on the Investor Village CIGX board....

I personally know about three dozen people who have taken Anatabloc, and all but two have reported positive benefits (some have reported numerous positive benefits). I'm sure it won't help everybody, but it seems to help most people. These positive reports are not a simple placebo effect, because I know of several people (myself included), who have their symptoms return when not taking Anatabloc for several days.

At present, all we know is that Anatabloc does assist in preventing the NF-kB inflammation process from going haywire in the body. So, in theory, any human disease condition caused by excess NF-kB inflammation could be helped by Anatabloc.

In case you are interested, here are a few human diseases where NF-kB inflammation plays a role.




On this page are listed several diseases in which activation of NF-kB has been implicated. For general reviews on the role of NF-kB in disease, see Aradhya & Nelson (2001), Kumar et al (2004), Yamamoto & Gaynor (2002) or Baldwin (2001). For specific diseases see the listed references, which can be found either on this site (under References) or at PubMed (through the linked references).

Table 1: General Diseases

Disease Review/Paper

Ageing Chung et al, 2002; Adler 2007; Csizar 2008
Allergies Cousins et al, 2008
Headaches Reuter et al, 2003
Pain Tegeder 2004; Niederberger 2008
Complex Regional Pain Syndrome Hettne et al, 2007
Cardiac Hypertrophy Purcell 2003; Freund et al, 2005; Sen 2005
Muscular Dystrophy (type 2A) Baghdiguian et al, 1999
Muscle wasting Hasselgren, 2007
Catabolic disorders Holmes-McNary, 2002
Diabetes mellitus, Type 1 Ho & Bray, 1999; Eldor 2006
Diabetes mellitus, Type 2 Yuan et al, 2001; Lehrke et al, 2004
Obesity Gil et al, 2007
Fetal Growth Retardation Mammon et al, 2005 Hypercholesterolemia Wilson et al, 2000
Atherosclerosis Ross et al, 2001 ; Li & Gao, 2005
Heart Disease Valen et al, 2001
Chronic Heart Failure Frantz et al, 2003; Gong et al, 2007
Ischemia/reperfusion Toledo-Pereyra et al, 2004; Nichols, 2004
Stroke Herrmann et al, 2005
Cerebral aneurysm Aoki et al, 2007; 2009
Angina Pectoris Ritchie, 1998
Pulmonary Disease Christman et al, 2000
Cystic Fibrosis Pollard 2005; Carrabino 2006; Rottner 2007
Acid-induced Lung Injury Madjdpour et al, 2003
Pulmonary hypertension Sawada et al, 2007
Chronic Obstructive Pulmonary
Disease (COPD) Barnes, 2002 ; Rahman & Kilty, 2006
Hyaline Membrane Disease Cheah et al, 2005
Kidney Disease Guijarro 2001; Camici, 2006; Guzik 2007
Glomerular Disease Zheng et al, 2005
Alcoholic Liver Disease Zima & Kalousova, 2005
Leptospirosis renal disease Yang et al, 2001
Gut Diseases Neurath et al, 1998
Peritoneal endometriosis Gonzalez-Ramos et al, 2007
Skin Diseaes Bell et al, 2003
Nasal sinusitis Xu et al, 2006
Anhidrotic Ecodermal Dysplasia-ID Puel et al, 2005
Behcet's Disease Todaro et al, 2005
Incontinentia pigmenti Courtois & Israel, 2000
Tuberculosis Zea et al, 2006
Asthma Pahl & Szelenyi, 2002
Arthritis Roshak et al, 2002 ; Aud & Peng, 2006
Crohn's Disease Pena & Penate, 2002
Colitis (rat) Chen et al, 2005
Ocular Allergy Bielory et al, 2002
Glaucoma Zhou et al, 2005
Appendicitis Pennington et al, 2000
Paget's Disease Lin et al, 2007
Pancreatitis Weber & Adler, 2001 ; Gray et al, 2006
Periodonitis Nichols et al, 2001; Ambili et al, 2005
Endometriosis Guo, 2006; Celik et al, 2008
Inflammatory Bowel Disease Dijkstra et al, 2002; Atreya et al, 2008
Inflammatory Lung Disease Park & Christman, 2006
Sepsis Wratten et al, 2001; Abraham, 2003
Silica-induced Chen & Shi, 2002
Sleep apnoea Lavie, 2003
AIDS (HIV-1) Hiscott et al., 2001
Autoimmunity Bacher & Schmitz, 2004
Antiphospholipid Syndrome Lopez-Pedrera et al, 2005
Lupus Okamoto, 2006; Oikonomidou 2007
Lupus nephritis Zheng et al, 2006,
Chronic Disease Syndrome Maes et al, 2007
Familial Mediterranean Fever Onen, 2005
Hereditary Periodic Fever Syndrome Jeru et al, 2008
Psychosocial stress diseases Bierhaus et al, 2004
NeuropathologicalDiseases Pizzi & Spano, 2006
Familial amyloidotic polyneuropathy Mazzeo et al, 2004
Traumatic brain injury Hang et al, 2005
Spinal cord injury Brambilla et al, 2005
Parkinson Disease Soos et al, 2004, Mogi et al, 2006
Multiple Sclerosis Satoh et al, 2007
Rheumatic Disease Okamoto, 2006; Greetham et al, 2007
Alzheimers Disease Collister & Albensi, 2005
Amyotropic lateral sclerosis Xu et al, 2006
Huntington's Disease Khoshnan et al, 2004
Retinal Disease Kitaoka et al, 2004
Cataracts Yang et al, 2006
Hearing loss Merchant et al, 2005; Lang et al, 2006
Cancer Gilmore 2002; Lee et al, 2007 (see Table 2, below)



Table 2: Constitutive activation of NF-kB in human cancer cells

Cancer type Reference

A: Primary tumors and tumor cell lines

Solid tumors (generally) Pacifico & Leonardi, 2006
Breast Nakshatri 1997; Sovak1997; Ahmed et al, 2006
Cervix Nair 2003; Kumar et al, 2005; Ramdass et al, 2006
Ovary Dejardin et al, 1999; Huang et al, 2000
Vulva Seppanen & Vihko, 2000
Prostate Huang 2001; Fradet 2004; Lessard 2006; Paule 2007
Kidney Oya et al, 2001, 2003
Bladder Horiguchi 2003; Kadhim 2006; Levidou 2008
Lung Zhang et al, 2007; Motadi 2007; Stathopoulos 2008
Mesothelioma Bertino 2007; Carbone & Bedrossian, 2006
Non small-cell lung Zhang et al, 2006; Tew et al, 2007; Jin et al, 2008
Liver Arsura & Cavin, 2005; Qiao et al, 2006; Seki 2007
Pancreas Jackson 2006; Sarkar 2006; Holcomb 2008
Esophageal/gastric Sutter 2004; Lee et al, 2005 Laryngeal Zhu et al, 2004; Pan et al, 2005
Stomach Sasaki et al, 2001; Wu et al, 2007
Colon Lind et al, 2001; Schottelius 2006; Aranha et al, 2007
Thyroid Visconti 1997; Pacifico 2004; Gombos et al, 2007
Parathyroid Corbetta et al, 2004
Melanoma Amiri 2005; Ueda 2006; Van den Oord 2007
Squamous cell carcinoma Loercher 2004; Kobielak & Fuchs, 2006
Head and neck Ondrey 1999; Chung 2006; Allen 2007
Endometrial (Uteris) Pallares 2004; Domenyuk et al, 2007
Cylindromatosis Kovalenko 2003; Trompouki et al, 2003
Hilar Cholangiocarcinoma Chen et al, 2005
Oral carcinoma Bindhu 2006; Mishra 2006; Sawhney 2007
Astrocytoma/glioblastoma Hayahsi 2001; Garkavtsev 2004
Neuroblastoma Bian 2002; Brown 2007; Widera 2007
Glioblastoma Raychaudhuri et al, 2007; Smith 2007
Hodgkin's lymphoma Bargou et al, 1996, 1997; Staudt, 2000
Acute lymphoblastic leukemia Kordes et al, 2000; Munzert 2004
Acute myelogenous leukemia Guzman et al, 2001
Acute T-cell leukemia (+/-HTLV-1) Arima & Tei, 2001; Horie 2006
Acute Non-lymphocytic leukemia Lei & Zhao, 2007
Chronic lymphocytic leukemia Furman et al, 2000 ;
Burkitts Lymphoma (EBV) Knecht et al, 2001
Mantle cell lymphoma Martinez et al, 2003
Myelodysplastic syndrome Fabre et al, 2007
Multiple myeloma Berenson et al, 2001; Gilmore, 2007
Diffuse large B-cell lymphoma Davis et al, 2001; Shaffer et al, 2002
MALT lymphoma Sagaert al, 2007; Inagaki, 2007; Du, 2007
Waldenstrom macroglobulinemia Leleu et al, 2008

Disclosure: I am long CIGX, TSRA, IDCC, DNDN.

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