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CIGX The Science Builds as Institutional Investors and Insiders Increase Holdings

Dr. John L. Faessel                  

ON THE MARKET

Commentary and Insights      

 

Update: Star Scientific - Profit Potential Abounds

 

The Science Builds as Institutional Investors and Insiders Increase Holdings

A Brief History of a Fast-Developing, MUST WATCH Science

Institutional investors are continuing to pile into shares of Star Scientific (CIGX) as the shares have retreated and while the science advances.  Premier institutional investor names now pack the investor list of (CIGX). Since the last reporting period in June institutional ownership has increased significantly, from 91 to 111 financial institutions that now hold over 42,000,000 shares, a new high in total share count by my tally. In addition, net insider purchases of (CIGX) over the last 6 months were just over 4 million shares.  I am not alone in my belief that Anatabloc™ could become a multi-billion dollar product.

 

If this science continues to progress and the soon-to-be-released results of the numerous human studies come in affirmative, the effect on shares of Star will be profound and bring to shareholders one of the great paydays in history. To grasp the sheer weight of the science beginning to surface on how Anatabloc™ lowers low-grade inflammation is to awaken to its potential as a panacea treatment: a possible a cure all for a simply mindboggling number of bodily infirmities I know that’s a mouthful of a statement, but read on...

 

Now for the brief history:

Back in 2007, researchers at the Harvard School of Public Health found that after analyzing 11 separate studies, smokers were found to be 73% less likely to suffer from Parkinson’s disease than those who didn't smoke. Dr. Honglei Chen, the study's lead researcher said, “the information could guide the development of studies on various tobacco components... to help understand the relationship between smoking and Parkinson's disease.” The study went on to state the obvious—namely that “further research could determine which chemicals are responsible for bolstering the brain against the illness.” Importantly, the study also found that more years of smoking were associated with less risk...

More recently the Wall Street Journal (3/22/2010) reported on the smoker / Parkinson’s connection.

 

Next, Star Scientific (CIGX) discovered that anatabine might be the ingredient in tobacco that is responsible for these startling and interesting outcomes. Star went on to synthesize the compound and scientists at the Roskamp Institute began to test the product.

On 10/4/2010 the Roskamp Institute announced that human clinical trials of anatabine for the treatment of Alzheimer's disease were soon to begin. These studies are now well underway: 

Roskamp Institute directors and biomedical researchers Michael Mullan (MD, Ph.D.) and Fiona Crawford (Ph.D.) were key members of a pioneering team of scientists who more than a decade ago discovered that the onset of Alzheimer’s was directly related to the accumulation of a protein called ß-amyloid.

Roskamp testing shows that when the anatabine compound (now called Anatabloc™) that was developed by Rock Creek, a Star Scientific subsidiary, is applied to cells, ß-amyloid is reduced. The compound also appears to encourage new neuronal cell growth.

Rock Creek also filed a patent indicating that C-reactive Protein [CRP] markers are lowered when the anabatine compound is applied to cells. The provisional patent application discloses that, “S-(-)-anatabine positively correlates with reduction of the inflammatory activity that results in elevated blood levels of inflammation markers such as [CRP].”

Obviously, the market for an effective drug or compound for Alzheimer's would be met with resounding acceptance.

Johns Hopkins University endocrinologist Paul Ladenson had conducted studies in 2004 among a group of flight attendants and found reduction of thyroiditis / Hashimoto’ s disease related to inhalation of second hand cigarette smoke. The data showed a reduction of the disease although the study (that showed smoking could be good for you) was ‘put aside’ because of the many ills of tobacco. However, once alerted to the new Roskamp studies, Johns Hopkins scientists began new research on the anatabine compound. Link to the Johns Hopkins Journal of Clinical Endocrinology and Metabolism article abstract:

Other studies were then initiated in Flint* Michigan (a growing study of 200-300) and more recently in Pisa** Italy (of 500 thyroid patient participants). See detail below; (* & **).

The Roskamp Institute then began to publish its ‘inflammaging research’ revealing how (RCP-006) Anatabloc™ is over four (4) times more effective than either Celebrex or Voltarol and three (3) times more effective that Lipitor in reducing inflammation in whole human blood. Lipitor and Celebrex are recognized to have advanced anti-inflammatory properties and have sold in the $billions. Over the life of the patent (since 1998) Lipitor sales are thought to be approaching $100 billion. Lipitor sales in 2010 alone were $10.7 billion.

Links to see the Roskamp research and comparisons:

http://rfdn.org/inflammaging.html

http://www.rfdn.org/inflammaging2.html

http://www.rfdn.org/inflammaging3.html 

 

Star has filed patent applications with the US Patent & Trademark Office and the World Intellectual Property Organization relating to the formulation of the RCP-006 compound and its multiple uses.  

I am preparing to publish a follow-up report after I complete my review of the recently published 223-page international patent application titled, “Use of Anatabine to Treat Inflammation and Methods of Synthesizing Anatabine (patent # WO 2011/119722 A2)

 

The next major research milestone was the peer review of a scientific abstract on anatabine / Anatabloc™ published by The European Journal of Pharmacology. The research abstract was titled “Anatabine lowers Alzheimer’s Aβ production in vitro and in vivo.” Below a few riveting excerpts from the journal abstract:

(1) We observed that at a dose of 2 mg/kg, anatabine significantly lowers plasma CRP levels confirming that at this dosage anatabine displays an anti-inflammatory activity in vivo. (2) We observed that anatabine dose dependently inhibited NFκB activation by TNFα in HEK293 NFκB luciferase reporter cells whereas nicotine was ineffective. (3) A statistically significant reduction in plasma CRP levels was observed.” (4) The research showed that when anatabine is given to mice it lowered brain levels of both A-beta (1-40) and A-beta (1-42) abnormal substances that lead to amyloid formation and damage to brain tissue.  

 

This was the first of what I believe will be many abstracts and articles peer reviewed by leading scientific and medical journals, providing further credibility as to the beneficial effects of Anatabine / RCP-006 / Anatabloc™.* (For a pdf of this peer reviewed abstract, email a request to Dr.Faessel@onthemar.com )

Following this validation of its research by The European Journal of Pharmacology, Star began to inform medical, scientific, and Big Pharma attendees of a series of well-attended meetings in Virginia, Michigan, and California about the research. The three conferences featured presentations by the above-mentioned Michael Mullan, M.D. PhD, Director of Roskamp Institute and Paul Ladenson, M.D., Director of Endocrinology & Metabolism at Johns Hopkins University, as well as Patrizio Caturegli, MPH, M.D. Associate professor of Pathology and Endocrinology at John Hopkins. (See Star press release of 10/31/2011.)

Of particular note: At a meeting at the Roskamp Institute which I attended in June 2011, Dr. Ladenson stated that, “aside from (RCP-006) there is no known compound that stops thyroiditis.”

Also vital to the big picture, especially in bringing credibility to anatabine, was the recent presentation at the 81st annual meeting of the American Thyroid Association*** by Ladenson**** and his Johns Hopkins colleague Dr. David S. Cooper***** entitled, “The Medical Treatment of Hyperthyroidism: Past, Present, and Future”.  It was the “feature” Paul Starr Award Lecture of the conference.

Just over two months ago (8/30/2011), Star Scientific began selling Anatabloc™ online and by phone and the product is now marketed in 43 countries (Star press release of 10/18/2011). The Anatabloc™ web site where the product can be purchased is: http://anatabloc.com/

Put simply, Anatabloc™ inhibits NF-kB. Think inflammation... NF-kB is a key player in the body’s inflammatory response: it has a central role in regulating the immune system’s response to infection. The product targets chronic inflammation that is related to a multitude of bodily woes: it is present in a number of coronary and vascular diseases and in auto-immune diseases such as thyroid disease, diabetes, macular degeneration, asthma, Crohn’s, Alzheimer’s, Parkinson’s, Irritable Bowel Syndrome, cancers, arthritis and numerous other conditions―and that includes ageing. See: http://www.bu.edu/nf-kb/

The market for a product like Anatabloc™ that reduces low-grade inflammations is of staggering proportions.

I believe that the building science, peer reviews, forums with physicians and scientists, and important presentations at medical conventions chronicled above regarding the potent effects of anatabine on inflammation are fast gaining traction not only with the medical and research community, but with investors and the man on the street. Well over 100,000 people have now taken Anatabine / Anatabloc™ / (RCP-006) including my wife and me. Every day I hear anecdotal stories of remarkable successes/healings. What I have heard personally is that this compound appears to have extraordinary effects on numerous bodily afflictions that we all experience, especially in ageing.

The recent peer review by the European Journal of Pharmacology and the “feature” Paul Starr Award presentation at the American Thyroid Association by renowned Johns Hopkins researchers bring to Star new authority, credibility and standing that until recently were missing ingredients of the “narrative.” It is now only a matter of time until major media outlets follow with coverage as they grasp the weight of the Star Scientific story.

More peer reviews are forthcoming in prestigious medical publications and  interest on the part of financial institutions continues to build as both market for and opportunity for investment in inflammation products grows.

It should be noted that nonbelievers are plentiful re the shares of CIGX in the form a large short interest of 17,685,658 shares, of which a large percentage has been around for well over two years. The number of shares short is down 766,125 shares from the last reporting period of two weeks prior. I'd simply comment that a lot has changed over the last year, driven by the above mentioned flow of news related to Anatabloc™.  It’s now a whole new ball game, and shorts should be worried as the science continues to advance.

 

Star just reported its Q3 financials, stating $10.4 million of current assets in cash and cash equivalents. The 10-Q stated that Star may decide to seek additional funds before the end of Q1, 2012. Revenue was minimal and there were just over 135 million shares outstanding. Total current liabilities were $5.5 million, long-term debt $3.16 million, and total liabilities $8.69 million. 

 

Anatabloc™, which was launched on August 30, was only available for roughly one month of Q3. To this Jonnie R. Williams, Star Scientific's CEO, commented: “We are pleased with the pace of sales of our dietary supplements, which increased approximately 35% in October from the previous month, and we anticipate that as we expand the marketing program for Anatabloc™ we will see continued growth.”

 

Star has revealed that it is working with McColl Partners LLC at “structuring a controlled auction for bidding by pharmaceutical companies for licensing and/or co-venturing relationships.”

My belief is that the recent opportunistic retreat in share price presents us with an occasion to buy more, or begin new positions.

 

The Roskamp Institute, funded by the National Institutes of Health and private donations, is conducting research using (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.

* The “Flint” study, in which Star Scientific and the Roskamp Institute have obtained institutional review board approval for a multi-site human clinical trial. This testing involves the treatment of neurological conditions as well as conditions associated with elevated blood levels of C-reactive protein [CRP], a marker of disease due to inflammation. My cardiologist tells me that a high CRP is actually predictive of a heart attack. The New England Journal of Medicine says that, “C-reactive protein is an inflammatory marker believed to be of value in the prediction of coronary events.” And 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.”

Anatabine is said to lower CRP.

** The Pisa study, involving about 500 subjects with symptoms of thyroid disease, is being conducted at the University of Pisa Medical School, Pisa, Italy. The participants have recently completed another thyroid study at the University Medical School.  This trial is set to get underway in during the (this) fourth quarter 2011. See the August 30, 2011 press release:

*** Link to the program at the 81st Annual Meeting of the American Thyroid Association:

**** Dr. Ladenson is the John Eager Howard Professor of Endocrinology and Director of the Division of Endocrinology and Metabolism at Johns Hopkins University, where he is also Professor of Medicine, Pathology, Oncology, Radiology, and International Health. In 2007, Dr. Ladenson was also named a University Distinguished Professor. Dr. Ladenson has served as editor-in-chief of the Journal of Clinical Endocrinology and Metabolism and is past president of the American Thyroid Association. He is a past recipient of the American Thyroid Association's Paul Starr Award for career achievements in thyroid research. His research interests focus on thyroid cancer, thyroid hormone analogues, and health economic aspects of thyroid disease management.  Dr. Ladenson was raised in Missouri and educated at Dartmouth College, Oxford University, and Harvard Medical School. He completed his training in Internal Medicine and Endocrinology and Metabolism at Massachusetts General Hospital.

***** David S Cooper MD is Professor of Medicine and International Health at the Johns Hopkins University School of Medicine and the Bloomberg Johns Hopkins School of Public Health, and Director of the Johns Hopkins Thyroid Clinic. He is a Contributing Editor of the Journal of the American Medical Association (JAMA), and is the Deputy Editor of the Journal of Clinical Endocrinology and Metabolism. He is the current Chair of the Subspecialty Board for Endocrinology, Diabetes, and Metabolism of the American Board of Internal Medicine.  Dr. Cooper is the past Treasurer and the past President the American Thyroid Association, and is also the recipient of the American Thyroid Association’s Distinguished Service Award.  Cooper is a graduate of Johns Hopkins University.  He received his medical degree from Tufts University School of Medicine where he was elected to Alpha Omega Alpha, and completed his Internal Medicine residency at Barnes Hospital/Washington University School of Medicine. He completed his Endocrinology Fellowship training at the Massachusetts General Hospital/Harvard Medical School. 

 Disclosure: I am long CIGX and have bought shares on the open market, and have no other affiliation with the company other than as a shareholder.