Is Star Scientific the Perfect Penny Stock?

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There's been a fairly vocal group of people who've offered up lots of anecdotal evidence about the positive benefits they've derived from Anatabloc, the anti-inflammatory formulation from Star Scientific (NASDAQOTH: RCPI  ) , but there hasn't been as much science behind it to prove it. Until now.

The dietary supplements maker released a preliminary study that analyzes the impact of anatabine on thyroid health. Anatabine is at the core of Star's formulation, and it's thought that it could be used for treating chronic inflammation associated with disorders such as thyroiditis, cancer, arthritis, Alzheimer's disease, and multiple sclerosis. While its Alzheimer's claims have generated a lot of controversy, the just-released results seem to back up the claims for it for treating the thyroid gland.

Indeed, although the full study is not yet ready, one of the doctors working on it was all but enthusiastic about what it portends: "To see antibodies that may have been elevated for years beginning to come down in a significant way after three months of supplementation is exciting." If it works this good after just three months, he said, he can't wait to see what happens with longer periods of supplementation. They've already had a few individual cases showing better results, with some even having their thyroglobulin levels return to normal.

While it would seem to provide some vindication to investors who have hung by Star's side through thick and thin (and there's seemingly been more thin than thick at times), it should be noted that the breathless doctor is someone who works for the supplement maker's subsidiary, Rock Creek Pharmaceuticals. It's not like we'd expect to him say the supplement's a dog.

Up in smoke
Anatabine is a naturally occurring chemical that's found in tobacco, and it formed the basis for Star Scientific's original product, CigRx, that reduced a smoker's cravings for tobacco. It also developed the StarCured curing process that prevents the formation of carcinogenic toxins in tobacco called TSNAs, and used that to create various very low-TSNA products. Interestingly, that ended up causing Star to bite that hand that fed it.

Reynolds American (NYSE: RAI  ) was previously tobacco company Brown & Williamson -- a subsidiary of British American Tobacco and the makers of Kent, Lucky Strike, and Pall Mall -- and had loaned Star money to buy curing barns for its StarCured tobacco. When the two cigarette companies merged, Star severed their business relationship and ended up suing Reynolds for patent infringement and subsequently wrangled a $5 million settlement from them. While that ought to have been a cause of celebration, Star's stock actually fell because the payment was seen as too small, particularly when some investors were expecting $1 billion or more.

About face!
Following what can only be described as a phyrric victory for Star, it changed its outlook and business model from being one focused on tobacco and cigarette derivatives to one more akin to being a biotech and pursuing dietary supplement advances, hence the development of Anatabloc. It also changes its peer group from one that included Reynolds, Altria, and Lorillard, to one that pits it against other supplement makers like Nu-Skin, Herbalife, and Usana Health Sciences.

Considering the pyramid scheme charges being thrown at the supplement purveyors, it's not surprising that some look at Star's colorful past and wonder whether it's also leading investors astray.

No doubt investors are counting on the advances it's been reporting to put those allegations to bed at last. Originally Anatabloc was marketed exclusively toward physicians, but earlier this year Star sought to bring the supplement to a more mass-market audience and signed an agreement with GNC (NYSE: GNC  ) to sell Anatabloc through its online store.

Penny for your thoughts
The anecdotal evidence continues to mount in Star Scientific's favor, and if it can get unbiased confirmation that Anatabloc is all it's been made out to be, there's little doubt it will end up smoking the naysayers and short-sellers. While Anatabloc believers have let me know the supplement's worked for them, is there any concern Star's just blowing smoke up our butts? Let me know in the comments section below.

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  • Report this Comment On January 18, 2013, at 1:35 PM, BostonBlackJack wrote:

    "Thanks" Rich for another MF article done with spotty research - made to impugn Star Scientific. I will not bother to correct your history of Star's tobacco litigation since Star is essentially out of the tobacco business.

    But please note: Reynolds was not "previously" Brown & Williamson. Reynolds ACQUIRED B&W.

    For MF readers who are not familiar with Star Scientific:

    1) GNC not only offers Anatabloc in its "online store," but the fact is that GNC also carries Anatabloc in 4,000 "brick and mortar" GNC stores.

    2) Doctor Curtis Wright is not the only doctor who has gone on the record regarding the benefits associated with Anatabloc. One of them is Dr. Paul Ladenson, the John Eager Howard Professor of Endocrinology and Metabolism and Professor of Medicine, Pathology, Oncology, and Radiology & Radiological Sciences at Johns Hopkins University Medical School.

    From the very same press release where you pulled Dr. Wright's quote, Dr. Ladenson is also quoted:

    "Data from this rigorously conducted, placebo-controlled, double blind trial show that anatabine-treated subjects had progressive decreases in circulating thyroglobulin antibody levels.... Current treatment for autoimmune thyroiditis is limited to end-stage disease when irreversible gland damage necessitates lifelong thyroid hormone replacement. The prospect of a novel nutritional or pharmaceutical intervention that could preserve thyroid health represents an encouraging advance. Further clinical studies are now warranted."

    Dr. Ladenson was given 2012 Lewis E. Braverman Award by the American Thyroid Association (ATA) in September for "demonstrated excellence and passion for mentoring fellows, students, and junior faculty and has a long history of productive thyroid research." Dr. Ladenson delivered the keynote address at the ATA annual meeting.

    Key phrases from his quote: "double-blind trial," "novel" and "encouraging advance."

    The science behind anatabine citrate speaks for itself. It's unfortunate that the words from a highly-respected expert in the area of thyroid disease research did not get mentioned in your article, but thanks anyway.

  • Report this Comment On January 18, 2013, at 1:50 PM, chipbuster wrote:

    My piece of anecdotal data is:

    1. It has helped/"cured" my secondary hypothoidism

    2. I no longer have pain from rheumatoid arthritis even in the two finger joints that are permanently damaged.

    3. My PSA score was cut by more 50% in 4 months.

  • Report this Comment On January 18, 2013, at 5:11 PM, fjl1946 wrote:

    I'm a user of Anatabloc and an investor because the results of taking the Anatabloc since it came out and CIGRX for 6 mos. before that! I tried it for a long time shoulder problem,rotator cuff, it has helped imensely for that plus my alergies ,my prostate, my arthritis, and my overall health! I have not had as much as a cold since 2011and everyone around has been sick with colds and flu!! Maybe it is just knock on wood ,i don't know, but I will be taking it for as long as I can get it!! FJL

  • Report this Comment On January 29, 2013, at 6:25 AM, anatabloc wrote:

    about StSI/anatabloc, love it, I was a basket-case waiting for knee surgery, now I skipped that and I go to the gym daily, lost over 30 pounds, feel better all the time, and I quit smoking without even a thought about it. Hell I could go on and on. It's a good thing except the price, I hope it becomes a drug so my insurance can pay for it, as I am out of work and can barely make it. What more can I say, business & politics is a brutal mix.

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