Micro-Cap Review Fall 2011

QuarTer 2 • 2011 microcapreview.com

Can Patents Create Positive Black Swan, Super Growth Opportunities?Dr. Gordon Chiu [15]

Biotechnology: Investing in Improving the Human ConditionJohn Calcagnini [18]

Stellar Biotechnologies Q&ASheldon Kraft [45]

U.S. Jobs Depend on Funding Micro-cap CompaniesChester Paulson [67]

The Deadliest DeficiencyDr. Lawrence May [61]

Biotech • MedTech Life Sciences • Healthcare Issue

Pro-Pharmaceuticals, Inc.Small Biotech Company Fights Cancer with a Big Drug (21]

[58] XBRL-What you need to Know Now! (VFilings)

$5.00

www.microcapreview.com Micro-Cap Review Magazine 3

E D i T o r i A l

This Publication is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Micro-Cap Review Magazine and its employees are not, nor do they claim to be registered investment advi-sors or broker/dealers. This magazine contains forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 relating to companies’ future operating results that are subject to certain risks that could cause results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements. This publication undertakes no obligation to update these forward-looking statements. Micro-Cap Review Magazine, its owners, employees, their families and associates may have investments in companies featured within this publication and may elect to sell these investments or purchase additional investments in these companies at any time. However, the policy of our editorial staff is to avoid any pre-publication trading of featured stocks or sales until the release date of the magazine. In order to be in full compliance with the Securities Act of 1933, Section 17(b), where the publisher has received payment for advertisement/advertorial of a security, the amount and type of consideration will be fully disclosed. All information about the Company contained within an advertisement/advertorial has been furnished by the respective Company and the publisher has not made any independent verifications of such information and makes no implied or express warranties on the information provided. Readers should perform their own due diligence before investing in any securities mentioned. Investing in securities is speculative and carries a high degree of risk. All MicroCap Review Disclaimers apply http://www.microcapreview.com/dis-claimer.php before investing view www.sec.gov/investors

Ever since I first heard the word bio‑

tech, I have been fascinated by the

field. The term comes from the com‑

bination of biology and technology. My fas‑

cination with the subject actually originated

with my parents.

My dad attended Dartmouth University

and then enlisted and became a chief phar‑

macist’s mate in the U.S. Navy. He served in

WWll, Korea, and Viet Nam. He often shared

his reading materials with me at home.

Growing up I was exposed to The Physicians

Desk Reference (PDR) and technology mag‑

azines, such as Mechanics Illustrated and

Popular Mechanics to name a few.

One of my father’s hobbies was the study

of pharmaceuticals. He was interested in

understanding how drug combinations and

cocktails worked. He looked into treating

the side effects of drugs with other drugs.

His hobby ultimately became an obsession

after my mom was first diagnosed with

Parkinson’s disease. At the time, around

1970, there was no cure, and few treat‑

ments were available. In later years, only

experimental drugs like El Dopa were avail‑

able. Even to this day there is no cure for

Parkinson’s disease.

My mom was part of the El Dopa experi‑

mental drug program. My dad helped design

the first drug cocktail solutions to reduce the

side effects of El Dopa for Parkinson patients.

I credit my dad with saving my mom from

the side effects El Dopa, such as lock jaw,

nausea, and skin rash. At many breakfasts,

our family would have a discussion about an

experimental drug that my father had read.

He would hand to me the literature to read

so that night we could discuss it.

To this day I am fascinated by new develop‑

ments in biotech, medtech, and life sciences.

In fact, when I became a Wall Street invest‑

ment banker, my first IPO was for a micro‑

cap company called Nastech Pharmaceutical.

Later in my career I underwrote Biotime,

which began as a micro‑cap company. I am

no longer an underwriter of companies.

Today I am a cheerleader for entrepreneurs

in these fabulous industries who devote their

careers for humankind’s benefits.

I knew then and I know now, “One day

we will all be patients!” We have no choice

but to support these biotech, medtech, life

sciences, and healthcare companies. Today’s

experimental biotech molecule or apparatus

is tomorrow’s treatment or cure. n

Sheldon “Shelly” Kraft

www.microcapreview.com

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Micro-cap ReviewP.O. Box 4216Metuchen, NJ 08840-1848T 646-837-0351F 212-202-6020

PUBLISHER

Sheldon [email protected]

Wesley [email protected]

EXECUTIVE EDITOR

Lynda Lou Kane Kraft

WRITERS

Leslie BardolinoJohn CalcagniniGordon ChiuBarbara DuckJohn FaesselBill GarlandFrank GrossmanRobert Handfi eldChet HebertLynda Lou Kane KraftSheldon Kraft

Jack LeslieLarry MayErik NelsonElvis OxleyChester PaulsonCharles PayneStephen RobbinsLaura SteinMarshall StermanSeth Yakatan

ACCOUNTING

Jennifer [email protected]

ADVERTISING

Sheldon [email protected]

BUSINESS DEVELOPMENT

Ron [email protected]

CIRCULATION

Ashkan [email protected]

GRAPHIC PRODUCTION

Tony [email protected]

PRINTER

Vintage Filings, a division of PR Newswire646-243-7994

WEBMASTER

Kelvin [email protected]

Micro‑Cap Review Magazine is published Quarterly, Spring, Sum‑mer, Fall, Winter POSTMASTER send address Changes to Micro‑Cap Review Corporate Offi ces. © Copyright 2009 by Micro‑Cap Review Inc. All Rights Reserved. Reproduction without permission of the Publisher is prohibited. The publishers and editors are Not responsible for unsolicited materials. Every effort has been made to assure that all Information presented in this issue is accurateand neither Micro‑Cap Review Magazine or any of its staff or au‑thors is responsible for omissions or information that is inaccurate or misrepresented to the magazine.

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A Micro-Cap Company Service Provider

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Q ua rt e r 2 2 0 1 1

Featured Articles6 Searching for a Micro-cap Biotech Fund by Erik S. Nelson9 Lights, Camera, Action for SNN VPRs by Lynda “Lulu” Kraft15 Can Patents Create Positive Black Swan, Super Growth Opportunities? by Dr. Gordon Chiu24 Oncology Drug Research Enters New Era by Bill Garland42 Bar Code Solutions for those Pharmaceutical and Medical Device Recalls That Never End by Barbara Duck48 Life Sciences Drive Global M&A Deals by Seth Yakatan64 Saving the World, One Orphan Drug at a Time by Dr. Frank Grossmann

Finance & Investments10 Ask Mr. Wallstreet: Micro-Cap, Not Micro-Crap Stocks by Sheldon “Shelly” Kraft31 Medical Tourism in Southeast Asia by Leslie Richardson51 On the Market: Commentary and Insights by Dr. John Faessel58 XBRL-What You Need to Know Now! by Vintage Filings

Comics75 Wall Street Chicken

Profi led Companies12 Forex International Trading18 Global Hunter Securities21 Pro-Pharmaceuticals28 Revolutions Medical Corporation36 LifeTech Capital41 Advaxis Incorporated 45 Stellar Biotechnologies, Inc.50 Wound Management Technologies, Inc.55 BioTech Medics, Inc.

Viewpoints67 U.S. Jobs Depend on Funding Micro-cap Companies by Chet Paulson68 Internet IPOs-The Time (and Need) Has Come! by Marshall Sterman70 Washington Healthcare Update by Elvis Oxley73 Review of Hong Kong Mines and Money Conference, Mar. 22-26 by Laura Stein74 Full Bore or Bust! by Charles Payne77 Finding the Medicinal Peace by Rabbi Stephen Robbins, PSY.D.

Legal, Tax & Accounting81 The Compliance Corner by Chet Hebert82 Ombudsman by Jack Leslie

Health & Fitness61 The Deadliest Defi ciency by Dr. Lawrence May


n By Erik S. NElSoN

When I was asked to write an arti‑

cle on micro‑cap biotechnol‑

ogy mutual funds and exchange

traded funds (ETFs) I thought, how hard can

it be? While I wasn’t expecting many ETFs

to exist in the micro‑cap biotechnology or

pharmaceutical space, I thought there would

be at least one or two. It turned out that I

could not find a single ETF. While I was not

completely surprised by this, I was somewhat

surprised that no one had attempted to open

this area of the market to the broader invest‑

ing public. After all, the biotech industry is

one of the great success stories of American

business. The biotech industry has been a

major force in creating jobs and improving

the quality of life. It is also one of the few

areas of the U.S. economy where innovation

and discovery are still taking place.

The biotech and pharmaceutical indus‑

tries are similar industries with potentially

great returns. These industries can also

F E AT U r E D A r T i C l E

Searching for a Micro-Cap Biotechnology Fund


be very difficult for the average investor to

understand because of the technology and

discovery processes, not to mention the real

prospects for the product being developed.

I will be the first to admit that I do not

have the knowledge to know for certain

whether biotech and pharmaceutical prod‑

ucts under development will receive Food

and Drug Administration (FDA) approval.

As a result, I believe diversification and pro‑

fessional management are the key to invest

in the micro‑cap biotech and pharmaceuti‑

cal space.

In researching micro and small‑cap bio‑

tech and pharmaceutical funds, I found only

one mutual fund and no exchange traded

funds. I wondered why that was so. What

is it that makes this space unattractive to

an ETF but workable for a mutual fund?

I wanted to gain some insight into that

question to help me better understand the

performance and evaluate the mutual fund

in this market.

In looking at the overall characteristics of

the micro and small‑cap market, I discov‑

ered a couple of key items which are going

to make things hard for a mutual fund but

exceptionally difficult for any ETF in this

space.

First, there’s a lack of information about

micro and small‑cap companies. Few ana‑

lysts cover companies in this space, and most

do not have the budgets to attend the many

conferences and trade shows. This means

that fund managers who want to invest in

this space have to do a lot of the research

themselves. And the more complex the prod‑

uct, the more difficult it is to assess the

company, which makes it tougher to analyze

and invest in biotech and pharmaceutical

companies.

Second, there’s a general lack of liquidity

in the micro and small‑cap space. Herein lies

the single biggest reason why ETFs have not

entered this space. Exchange traded funds

typically post their positions and their hold‑

ing percentages on Web sites. This simply

won’t work well when there is limited liquid‑

ity in the micro and small‑cap market. With

the real‑time creation of shares in an ETF, we

can only imagine the possibilities for sophis‑

ticated traders to front run the buying and

selling of the positions owned by the ETFs.

It would create unbelievable havoc. Mutual

funds do not have this problem. Trades in

mutual fund shares are considered to occur

at the end of the day. Mutual funds have

much greater flexibility with their invest‑

ment decisions and cash holdings. This

allows them to better navigate the rough

waters of the micro and small‑cap market.

The only mutual fund that I found to

invest in the small‑cap biotechnology space

is the Franklin Biotechnology Discovery A

(FBDIX). It is part of the Franklin series

of mutual funds from Franklin Templeton

Investments (www.frankintempleton.com).

The fund has been around since 1997 and

has approximately $327 million under man‑

agement. The fund invests at least 80 percent

of its net assets in the equity securities of

biotech companies. The fund appears to

have a dual class structure, one with a sales

charge, and one without. I recommend the

Advisor share class because it has a better

rate of return.

The biotechnology and pharmaceutical

sectors are tough industries to invest in.

Last year the funds posted a 17.28 percent

return for the Advisor share class with a

five‑year annualized return of 3.99 percent

and a lifetime annualized return of 8.12 per‑

cent. Unfortunately over the last 10 years,

the average return has been a negative 0.58

percent.

When considering an investment in this

fund, one of the key questions to ask is

how well does the fund stack up with the

overall market and the biotech/pharmaceu‑

tical sectors? The answer is somewhere in

between. The Franklin Biotech Discovery

A fund almost splits the difference in the

performance of the two sectors. I looked at

the performance of the Amex Biotechnology

Index ‘BTK’ and the Amex Pharmaceuticals

Index ‘DRG’ over the same period. Granted

those two indices track large‑cap stocks, but

they are the best representatives of those

two sectors for the period in review. The

Amex Biotechnology Index ‘BTK’ was the

better performer of the two indices. For

the 1‑year, 5‑year, 10‑year, and compara‑

tive lifetime (starting in 1997) periods, the

index returned 37.7 percent, 17.5 percent,

8.3 percent, and 18.9 percent. Unfortunately

the Amex Pharmaceuticals Index ‘DRG’

faired far worse. It returned ‑1.08% percent,

‑1.15% percent, ‑4.15 percent, and 1.15 per‑

cent for the same periods.

How would I rate the Franklin Biotech

Discovery A fund in comparison? It is not

too bad. This is a very tough sector to invest

in. Even the best fund managers are going to

have a tough time matching the result of the

best performing sector indices. It should be

noted that the Franklin Biotech Discovery

A fund has out‑performed the Dow Jones

Industrial Average, which has posted returns

of 11 percent, 1.95 percent, 0.79 percent, and

3.23 percent for the same periods.

Many investors with holdings in small

and micro‑cap companies in the biotech

and pharmaceutical sectors are interested in

advancing societal goals. Investors believe

that they are not only helping to bring

important drugs to the market, but also to

create jobs. Those who are committed to

invest in small and micro‑cap companies in

these sectors should consider the Franklin

Biotechnology Discovery A (FBDIX) mutual

fund. It is a solid option. n

Erik S. Nelson is the president of Sterling Investment

Services, Inc. (www.sterlinginvestments.com).

Sterling is a publisher of a weekly market commen‑

tary and a daily trading newsletter. Mr. Nelson is also

the president of Coral Capital Partners, Inc. (www.

coralcapital.com). Coral Capital provides advisory

services to private and publicly traded companies.

He can be reached at (404) 816‑8240 or enelson@

sterlinginvestments.com.

SNN is using Video Press Releases, known as the VPR™ for all future announcements and press releases Los Angeles, California, 2011. The SNN Incorporated, ww.snnwire.com, www.stocknewsnow.com, Founder and CEO, Sheldon Kraft, is using the SNN Video Press Release called a VPR ™ to release his company’s press releases and announcements about his company. The VPR™ is joined to the company’s pre-approved text press release and together they can be widely distributed and disseminated by using the SNNwire.com system. The VPR™ is distributed by email to financial news websites, stock market websites, investors, investment bankers, professionals like CPAs and lawyers, IR and PR firms, money managers, private equity fund managers, private practice wealth managers, shareholders, stockbrokers and more than 45 social networks including stocknewsnow.com Sheldon Kraft, SNN Founder and CEO stated, “I know my VPR™ will be watched by the masses. Before the creation of the VPR™ I never knew who read my text press release. Today most people would rather watch a VPR™ than read a text press release.” SNN management recognizes that each and every public and private company CEO needs exposure to new investors and shareholders. The SNN VPR™ is user generated and user friendly, it is unedited, and delivered in real-time once uploaded to SNNwire.com for wide spread distribution by the CEO. “Just think that for the first time an investor can watch a CEO VPR™ conveniently. SNN technology allows for the immediate distribution of an information video, and a CEO can look his investors in the eyes every time he releases news,” added Sheldon Kraft.

W I R E . C O M

CEOs, Send Your Video Press Releases Now“Start Spreading Your Financial News”

StockNewsNow Video Press Releases VPRTM SNNLive Wall Street Views Entertainment

SNN Incorporated4766 Admiralty Way # 13004Marina del Rey, Ca. 90295

(213) 706-3000

I N C O R P O R A T E D

SNN INCORPORATED IS A GLOBAL FINANCIAL PUBLISHING, MEDIA & ENTERTAINMENT COMPANY

Sign InCreate an Account

SNNLiveAd040111.indd 1 4/8/11 4:22 PM


I have been the person behind the cam‑

era of SNNLive since its beginning. My

colleague, Shelly Kraft, does the video

interviews. I work the camera and try to

make everyone in front look as good as pos‑

sible. SNNLive has produced more than 3700

videos of CEO interviews. Most of the inter‑

views are available online at SNNwire.com.

Before working for SNNLive, I was an execu‑

tive TV producer. My career in television has

spanned more than 25 years. I was the pro‑

ducer of Power Profiles on Financial News

Network, which was acquired by CNBC.

Power Profiles featured short stories of Wall

Street and business executives.

SNNLive provides CEOs an outlet to tell

their company’s story in an interview for‑

mat. Many do not like to be on camera and

appear nervous at first, but I ease their worry

by giving them calming instructions. A video

interview on SNNLive can require a few

takes but the majority take just one. After the

session, a CEO ends up with a short video

that he/she can distribute to shareholders,

Wall Street firms, investment funds, and

interested individuals.

SNN VPR™ (video press releases) are

SNN Inc. main product. These videos are

user generated by a CEO or other top execu‑

tive in the company. Usually the subject

company produces the video of the CEO and

uploads it, along with a text press release, to

SNNwire.com for distribution.

Many people have written to me about

how to produce a good video press release

for SNN VPR™. The following guidelines

will be of help.

Q: I am a public company CEO. What can

I do to look more natural on camera?

A: You have to be comfortable, but what

does that really mean? You should make

a cheat sheet with bullet points. The cheat

sheet can be taped to the side of the camera

at eye level, so that you can refer to it without

appearing like you’re reading it. You should

practice from that paper a few times before

doing a take. It might require a few takes,

but that is okay. Each session should begin

with a hello and end with a thank‑you. If you

appear welcoming to viewers, they will have

a favorable impression and try to follow up.

Q: How should I refer to my text press

release while I am doing the VPR?

A: You can only say or paraphrase what

is in the text press release, so refer to the

subject, highlight the headline, and advise

your viewers to also read the text. You should

have passion about what you are saying. Be

excited.

Q: Do I need a professional camera or

cameraman to shoot a VPR™?

A: No, you just need a webcam. Technology

has come a long way. User‑generated means

that you can use a laptop camera or an iPod 2.

Q: What should I do if I cannot remem-

ber what I want to say?

A: Write it down on a cue card in beats…

or bullet points and then expand off of those


Lights, Camera, Action for SNN VPRs

n By lyNDA “lUlU” krAFT

points. The video should only be about one

and a half to three minutes max. That can be

a long time to speak, so give yourself a cue

card to refer to. Practice may not make per‑

fect, but sooner than later it will be old hat.

Q: At what pace should I speak?

A: Speak like you would talk on the tele‑

phone or when you have a conversation with

someone. You should sound conversational

and not reporter‑like.

Q: Where should I look?

A: Look directly into the camera. Pretend

the camera is your audience.

Q: What should I wear?

A: It only matters what you wear on the

upper half of your body…business suit,

sports jacket, or business casual should work.

Q: What should the background behind

me look like?

A: The background can be of your office

. . . so sit with a bookshelf behind you and

photos on the wall…frame the shot and look

at it and see what you like behind you . . .

keep it professional. n

Lynda Lou (Lulu) Kane Kraft is the president of SNN Incorporated. She has over 25 years experi‑ence in broadcast television. In her career, she has interviewed thousands of politicians, celebrities, and personalities. She previously worked as an executive producer and TV show packager. In her role, she created programs for television networks, including Financial News Network and Lifetime Television. She also worked for various syndicated shows pro‑duced by studios, such as KingWorld, Telepictures, and Buena Vista. Her work was honored with various Emmy and Cable Ace award nominations. Ms. Kraft graduated with a B.A. degree in political science from George Washington University. Her academic background included studying in Moscow (Moscow University), Berlin, and Paris (through London School of Economics).


Rules say these stocks are under five bucks

in price (Penny Stock Rule) and under $300

million in market capitalization (accepted by

most) and fall somewhere between nano‑cap

and small‑cap stocks. Every stock has a story.

Many have gone through symbol changes,

name changes, or stock splits. Some have

gone in and out of corporate bankruptcies.

The story of each stock is fascinating in and

of itself.

When I first walked onto Wall Street back

in April 1984, I knew little about the stock

market. I soon learned by buying & selling

stocks of IPOs, micro‑cap companies, all

penny stocks. I said many times, “I didn’t

know the difference between a penny stock

and IBM.” To me every stock had a story.

Doing due diligence meant knowing every‑

thing about the origin and history of each

stock. A “good story” was a “good story,”

regardless of what exchange the stock traded

on or at what price.

I fell in love with penny stocks from day

one. My first penny stock was a “house”

stock. It ended up being one of the biggest

wins of my career. Nastech Pharmaceutical,

NSTK, went from a $.01 per unit to $1.84

per unit (1 unit consisted of one common

share, an A warrant and a B warrant) and

eventually traded in the teens,“became a

teenager”.

Needless to say I was smitten. I shied away

from the more expensive $5 and $10 stocks

and stuck with my penny micro‑cap babies,

many of which are now legendary. I made a

business out of underwriting new micro‑cap

IPOs at my firm, Emanuel & Company. We

ended up underwriting or co‑underwrit‑

ing more than 300 micro‑cap stocks over

more than 10 years, mostly micro‑cap penny

stocks.

Our clients were from all walks of life.

They were owners of sports teams, members

of the military, school teachers, psychiatrists,

newlyweds, airplane pilots, money manag‑

ers, and even members of the clergy. Penny

micro‑cap stocks attracted money like blood

attracted sharks–the hotter the issue, the

bigger the buzz; the bigger the buzz, the big‑

ger the premium in the aftermarket. Some

of these clients were real characters who

had been smitten like me. Others had lost

money on the big board. The big board

investors had bought $50 stocks from wire

house brokers and had paid big commis‑

sions win or lose, and in some cases had lost

big money. So now, these investors came to

me. They too knew little or nothing about

F i N A N C E

A S K M R . W A L L S T R E E T

Micro-Cap, Not Micro-Crap StocksCall them what you will‑penny stocks, un‑listeds, fallen

angels, pink sheeters, OTCs, and emerging growth stocks. They are back, and back with a vengeance!

n By ShElDoN “ShElly” krAFT

micro‑cap companies while other investors

came because they couldn’t find anything

about the micro‑cap market and we had the

news. Even to this day, investors cannot find

much information about micro‑cap stocks,

because scant research is available except for

“paid for research,” which is somewhat less

meaningful than full coverage, but of course

there are exceptions in the paid research

category.

At my Wall Street firm, I alone had over

5,000 active and semi‑active accounts. I

worked from eight o’clock to eight o’clock

almost every day and had five registered

assistants. I rarely left my desk for more than

a week and took time off only for the births

of my children. Even at the hospital, my

work didn’t end. My wife’s doctors were also

clients. After the doctors delivered the baby,

they gave me buy orders to enter when I got

back to my desk! The birth of my third child,

my gorgeous daughter, was one that I will

always remember for its added humor. For a

simple child birth, eleven doctors and three

anesthesiologists were needed in the operat‑

ing room. All of them were clients. That was

a great day all around, although the baby’s

mother was none too pleased...

For me it was simple. Risk versus reward.

I never allowed people, rich or otherwise,

to place more money than what they could

afford to lose. I explained that these stocks

were mostly IPOs of startups and companies

that had a great new idea. I told investors

that they could lose their entire investment.

In later years, I was first required to say it,

then required to have each investor sign off

that they accepted the risk. We always dis‑

cussed the downside risk. We also discussed

such things as growth potential and the right

time to sell micro‑cap stocks. Before the

Internet investors relied on me to find news

about companies. Most of the information

came from public announcements of cor‑

porate press releases. People’s lives, actions,

and activities depended on news. After all,

most micro‑caps had little or no earnings or

research following, as stated earlier. I had the

news early when it came out publically. Back

then I had every news outlet available from

Dow Jones, Reuters, Bloomberg, etc. My five

registered assistants would answer phones,

give updates, and feed buy and sell orders

through me.

Trading in penny stocks was addictive.

When was the last time someone could

buy a $10 stock and sell it short‑term at

$20? Suppose the person took $10,000 and

bought 1,000,000 shares of a $.01 stock

instead. What would he/she do if the stock

doubled, which meant all it had to do was go

to $.02? Inside I am laughing, because I have

been there so many times. Suppose that same

stock that someone bought at $.01 went to

$.10. It would now be worth ten times the

original investment or $100,000. Negatively

speaking, that same $.01 stock is very close

to zero. That’s the risk; lose it all. A $10 stock

has risk too, doesn’t it? Once it starts going

south, the selling first begins. I have seen and

witnessed that ugliness too. The difference is

that a $10 stock is not susceptible to the same

wild gyrations of a penny stock, but it can

and does happen. Most investors would be

happy to have a 30 percent gain with a small‑

cap or a large‑cap stock, but not most of my

clients. I lived in entrepreneur, take‑a‑risk

heaven. Penny stock investors would plow

money into a stock with a good, “true” story.

Once they had the right information, they

would become not only a fan but a player.

My referral business was second to none.

Many of these newcos, pubcos had amazing

new technologies and exciting new products

and services. I used to say that even XEROX

was once a penny stock!

Let’s shoot forward to 2011. What’s going

on now with micro‑cap stocks? Micro‑caps

have come a long way. We have micro‑cap

ETFs. We have micro‑cap indexes! We have

micro‑cap research analysts! We have nearly

10,000 stocks listed on the OTC markets,

thousands of junior mining and explora‑

tion micro‑cap stocks listed on the TSX

Venture Exchange, and tens of thousands

more worldwide. Oh, and let’s not forget an

entire magazine and Web sites completely

devoted to this space. As the publisher of

Micro‑Cap Review magazine, SNNwire.com,

and StockNewsNow.com, I rejoice in bring‑

ing to this sector the integrity and honor it

deserves. There are always bad apples in all

barrels of business for sure. I love the pas‑

sion, spunk, and dedication of micro‑cap

CEOs.

Ladies and gentleman, I have interviewed

more than 3,700 micro‑cap CEOs on cam‑

era. Many of them have never been in front

of a camera until their interview with me.

We do the interview for FREE and provide

it to them unconditionally for their own use

in social networks etc.It starts with my well

known opening line, “Welcome, ladies and

gentlemen. We are coming to you live, live on

SNNLive. And today we are at this financial

conference and I have with me here the CEO

of ABCD Company. Welcome to SNNLive.”

The CEOs get their three‑ to five‑minute

interview. To many, it is the greatest thing

since sliced bread!

I am enthralled by them and their stories.

They feel safe in the interview, because as an

ex‑stockbroker I know what they can and

cannot say. I draw out of them more than

what they knew they had in their heads.

Many are nervous, I make them glib. Some

are downright scared, I relax them. Who bet‑

ter than me to interview them? Heck, I am

like the godfather of penny stocks. SNN Inc.

provides media coverage to the micro‑cap

market and gives investors information on

the Internet, including every social network‑

ing means out there.

If someone is reading this article to the

end, he/she is a penny stock devotee, a fan

or player, or just curious. Let me warn you

right now. If you make money on your first

penny micro‑cap stock buy and sell, any‑

thing can happen thereon including addic‑

tion. Be forewarned and forearmed. You can

lose your entire investment, so bet what you

can afford to lose and not above it! n


ProFilED CoMPANiES

The Next Generation of Online Trading:

Forex International TradingIf you are a trader, you should pay close

attention to this: since 2001, retail FX daily

trading volume has increased over 5,000

percent going from approximately $6 bil‑

lion in daily volume to over $300 billion in

daily trading volume. That makes daily retail

FX trading volume larger than daily trad‑

ing in all U.S. equity markets combined. If

you have ever been stuck in a trade with no

bid or not enough size on the bid or ask to

get out of your position,

you will understand why

trading volume is critical

for active traders. The ulti‑

mate risk in any trade is

not being able to get out

of your position. Hard to

believe? Just ask the guys

at Long‑Term Capital,

Bear Sterns, and Lehman

Brothers.

Unlike trading the equi‑

ty markets with maybe a

10:1 leverage, and that’s if

you’re lucky to be catego‑

rized as a “prop” trader,

FX traders in the United

States can typically lever‑

age trades up to 50:1 and

offshore 100:1, with some

firms allowing as much as

400:1, which should give

even a river boat gambler

some pause.

So even if you’re an

experienced equity and

option trader, you should

seek training and initiate

a demo account until you

are comfortable with the

fast‑paced nature of the

Are you aware of the foreign exchange

(FX) markets and the growing

trends? You may not realize that

you too can trade FX markets just like the

professionals. This article may give you the

insight on how to manage your currency

According to Wikipedia, “The foreign

exchange market (forex, FX, or currency

market) is a worldwide decentralized‑over‑

the‑counter financial market for the trad‑

ing of currencies. Financial

centers around the world

function as anchors of trad‑

ing between a wide range

of different types of buyers

and sellers around the clock,

with the exception of week‑

ends. The foreign exchange

market determines the rela‑

tive values of different cur‑

rencies.”

While the exchange

of currencies is as old as

money itself, trading cur‑

rencies in the modern era

only began during the 1970s

when the United States lift‑

ed the gold standard and

allowed its currency to float

and the exchange between

other currencies to be deter‑

mined by the market.

For three decades, this

market was almost exclu‑

sively used by governments,

banks, large corporations,

and hedge funds. Small

investors did not have the

information or competitive

access to these markets to

effectively trade in them. In

the late 1990s, this began to change with the

proliferation of home computers and the

Internet.

Since 2001, the daily volume in the for‑

eign exchange market has grown from $1.2

trillion to almost $4 trillion. YES, you read

that right, almost $4 TRILLION according

to the Bank for International Settlements.

This is the most active and liquid market

in the world.


market. In 24 hours of trading what will

your comfort level be?

For those of you who are investors, this

is potentially a profitable market for you as

well. The FX market has experienced explo‑

sive growth over the last decade. In fact, the

retail side has seen over 150 percent annual

growth in the last three years alone. The Aite

Group, which is a research firm in the finan‑

cial services industry, has estimated that in

2010 there were approximately 8.3 million

retail FX traders. Aite also has estimated that

there are 110 million retail

online investors worldwide.

So why is this important?

Well for those of you who

are avid readers of books

about investing, you may

remember Harry Dent Jr.’s

books The Great Boom

Ahead, The Roaring 2000’s,

and most recently The

Great Depression Ahead.

In his “The Great Boom

Ahead” he discusses his

S‑Curve Theory of Market

Penetration. “The S-Curve

maps the market penetration of a new prod-

uct or technology, from marginal begin-

nings to mainstream popularity.” - Harry

S. Dent, Jr. In layman’s term, the time it

takes to go from 0.1 percent market penetra‑

tion to 10 percent market penetration is the

same time it will take to go from 10 percent

market penetration to 90 percent market

penetration. So why is this important? If you

recall, the Aite Group estimates that retail FX

traders are now approximately 8 percent of

the online investment community and retail

volume is almost 8 percent of FX trading

volume, which has all happened in the last

decade. If Harry’s Theory is right, the num‑

ber of FX traders is expected to grow to over

90 million traders.

So who stands to benefit from 90 million

FX traders? Forex trading platforms and

forex education/training companies

The FX trading platform has proven over

the last decade to be profitable. Several U.S.

forex companies are represented on Inc. 500

Fastest Growing Companies List in 2010.

Training and education for investment plat‑

forms have begun to prove their value over

the past few years as well with the likes of

Think or Swim being acquired in 2009 by

TD Ameritrade for an estimated value of

over $600 million and more recently Schwab

announced acquisition of Options Xpress

for an estimated $1 billion. If both Schwab

and TD saw this much value ($600 million

to$1 billion) in acquiring educated high vol‑

ume option traders (a much smaller market

opportunity), how much do you think they

would pay for educated FX traders?

So who are the publically‑traded com‑

panies in this market? Surprisingly, there

are only a few. Of the nine companies pro‑

filed below only four are pure plays in the

forex market; FXCM, Gain Capital, Forex

International Trading, and Finotec. When

you do your due diligence, you will find that

only three of these companies are profitable,

FXCM, GCAP, and FXIT. While all of these

companies are positioned to capitalize on

the explosion in the FX marketplace, Forex

International Trading could see the great‑

est percentage growth. Forex International

Trading (OTC: FXIT) has been around since

2009, although only trading publically since

December 2010. The company has been

reporting triple digit, year‑over‑year growth

in the reporting of its monthly matrices.

The company is focused on novice or first‑

time traders. The company’s offshore plat‑

form for non U.S. residents, www.ufxbank.

com, does well compared to its publically

traded peers with a worldwide Alexa rank‑

ing of 29,546. The other three companies;

FXCM, whose website is www.fxcm.com,

ranks 24,227 worldwide and has been around

since 1999; Gain Capital, whose website has

the best worldwide ranking of the group with

their site www.forex.com with a ranking of

7,837 has also been around since 1999; and

finally Finotec, www.finotec.com which has

been around since 1997, has

a ranking of 269,822. These

ranking are important

because as you may have

already guessed, forex trad‑

ing lives on the Internet. As

a result Forex International

Trading feels it has an edge

since its’ offshore platform

is completely Web‑based. If

the explosive growth comes,

the company is well posi‑

tioned to capture market

share as the market evolves.

PrOFIles OF PublIcally

Traded cOmPaNIes ThaT

OPeraTe reTaIl FOrex

PlaTFOrms

Profile source is provided by www.

Bloomberg.com, and market cap and trad‑

ing volume information are provided by

www.Yahoo.com/finance as of April 22,

2011.

CitiGroup (NYSE: C)

Market cap – $132 billion

3 month avg. trading volume – 434 million

shares

Citigroup Inc. is a diversified financial ser‑

vices holding company that provides a broad

range of financial services to consumer and

corporate customers around the world. The

company’s services include investment bank‑

ing, retail brokerage, corporate banking, and

cash management products, and services.


UBS (NYSE: UBS)

Market cap ‑ $70.8 billion

3 month avg. trading volume – 3.8 million

UBS AG is a wealth management, invest‑

ment banking, and asset management firm.

The company provides a variety of financial

services to individuals, institutions, corpora‑

tions, governments, and financial intermedi‑

aries around the world.

Barclays (NYSE: BCS)



Barclays PLC offers commercial and

investment banking, insurance, financial,

asset management, and related services.

The company’s banking subsidiaries oper‑

ates branches in the United Kingdom and

overseas.

IG Group (LSE: IGG)

Market cap ‑ £1.66 Billion


shares

IG Group Holdings PLC runs a spread

betting market, trades as principal and mar‑

ket maker for foreign exchange, contracts

for difference, and acts as a fixed odds book‑

maker. The company hedges unmatched bets

and trades, and offers investment products

worldwide to a retail and professional client

base.

FXCM (NYSE: FXCM)


3 month avg. trading volume – 366 thousand

shares

FXCM, Inc. offers foreign exchange trad‑

ing services over the Internet. The company

allows customers to trade currency pairs on

the over‑the‑counter foreign exchange mar‑

kets. FXCM earns fees by adding a markup to

the price of each trade.

Interactive Brokers Group

(NASDAQ: IBKR)

Market cap ‑ $696 Million


shares

Interactive Brokers Group, Inc. is an auto‑

mated global electronic market maker and

broker specializing in routing orders and

executing and processing trades in securities,

futures, and foreign exchange instruments.

Gain Capital (NYSE: GCAP)



shares

Gain Capital Holdings, Inc. is an online

provider of retail foreign exchange trading

and related services. The company provides

customers with access to the global over‑the‑

counter foreign exchange markets through

a trading platform with information and

analytical tools.

Forex International Trading

(OTCBB: FXIT)



shares

Forex International Trading Corp. operates

an online trading platform for forex markets

to non‑U.S. residents. The company focus‑

es on providing individual and institutional

investors with a platform for buying and sell‑

ing currencies, precious metals, and commod‑

ity futures. Forex also offers on‑site training

and education through a subsidiary company.

Finotec (OTC: FTGI)

Market cap ‑ $847 thousand

3 month avg. trading volume – 928 shares

Finotec Group, Inc. develops applications

which enable Internet trading in financial

markets. The company provides brokers,

dealers, banks, and other customers with

online foreign exchange trading systems.

So Traders…. here ‘s a challenge for you:

Find a platform and company that is inter‑

ested in training you to make money in the

FX markets.

Manage your risk. Remember liquidity is a

trader’s best friend.

Have fun and try to get some sleep;

24‑hour, 5‑days‑a‑week markets can be

addicting.

Investors…. here’s a challenge for you:

Find a company that has a platform that

is easy for first‑time traders. Remember, if

Harry is right, there will be 80 million first‑

time traders.

Look for a company with global expo‑

sure – FYI, 75 percent of online traders are

offshore.

Platforms with education and trading

have received pretty good premiums in the

past.

Scale into your positions to make sure the

company is performing and…..

HANG ON. n

Disclaimer: This corporate profile is based upon information provided by the issuer or company rep‑resentative. The information is not intended to be, and shall not constitute, an offer to sell or solicitation of any offer to buy any securities. It is intended for information purposes only, and to increase awareness of the company profiled.

Safe Harbor Statement: The statements in this advertorial or profile relating to future products, partnerships, technology, and positive direction are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some or all of the aspects anticipated by these forward looking statements may not, in fact, occur. Factors that could cause or contribute to such dif‑ferences include but are not limited to contractual difficulties, demand for the Issuer’s common stock, and the company’s ability to obtain future financing. Micro‑cap Review Magazine may have received pay‑ment to publish and print this advertorial or corpo‑rate profile. Micro‑cap Review Magazine disclaimers apply and may be reviewed at www.microcapreview.com/disclaimer.php. Before investing in any security, you are strongly advised to review all public filings of the issuer of such security, which can be found at www.sec.gov, as well as warnings published by the SEC at www.sec.gov/investors and to consult with your professionals.


Smart investors need to be in an invest‑

ment early to capture returns close

to or greater than 10 times. Often

investors can’t manage the risks of picking

the right opportunity. Finding positive black

swan “super growth” opportunities is both a

science and an art. Doing so requires looking

at the classic five M’s:

1. Management: What kind of

leadership team is at the helm?

2. Market: What is the market size,

potential market share (domestic/

international)?

3. Materials Research and Discoveries

(MRDs): Does the company own

copyrights, patents, or trademarks?

4. Model: Does the business model

make sense (roadblocks, scalability,

use of proceeds, etc.)?

5. Money: What kind of structure and

support exists (investments, grants,

loans, private or public structure)?

The chart below shows the powerful

effects that proper materials research and

discoveries (MRDs) can have on a company’s

growth. It is electrifying. Proper MRDs can

create forces that help companies attract top

management talent, achieve optimal market

size, strengthen the business model, and sup‑

port funding.

cOmParIsON OF

INTellecTual PrOPerTy

versus PhysIcal PrOPerTy

Some countries and individuals feel that

ideas are like air. Ideas are available in infi‑

nite quantities and should not be classified as

intellectual property. This is wrong. Brilliant

ideas are not infinite. In fact, brilliant ideas

are scarcer than physical property, such as

cars, food, land or homes. Often a great deal

of thinking, time, and effort has gone into

such ideas. Therefore, people should under‑

stand that property theft and information

piracy are the same. Illegally downloading an

album, a movie, a book, or materials created

by someone else is equivalent to stealing.

Companies that understand intellectual

property laws can better protect their own

patents and develop intellectual properties.

Here are some case studies of companies

that have generated value from intellectual

property.

FOur case sTudIes

Black Swan Case

Study #1: The “Oxygen

Transmissible” Contact

Lens; Patents in Silicone

Hydrogel Technology

Disclosure: Dr. Gordon Chiu does

not hold any interest in the following

companies.


Can Patents Create Positive Black Swan, Super Growth Opportunities?A Key Requirement in Healthcare & Technology

CIBA Vision, a division of Novartis

(NYSE:NVS), is a global leader in research,

development, and manufacturing of opti‑

cal products and services, including contact

lenses and lens care products.

These patents were the subject of a pro‑

tracted global litigation with Bausch &

Lomb. The case resulted in a 2004 license

granted to Bausch & Lomb in exchange for

a royalty payable to CIBA through 2014 in

the United States and on net sales outside

the United States until 2016. Note: annual

sales estimates ranged from $1.95 billion to

$3.5 billion.

Black Swan Case Study #2:

The “Cancer Vaccine” Patents;

Immunostimulatory Composition,

U.S. Patent 6,210,662

Disclosure: Dr. Gordon Chiu does not hold any

interest in the following companies.

The opportunity and magnitude of

returns from “cancer vaccine” patents will

continue to spawn numerous rewards in

this field.

n By Dr. gorDoN ChiU

“The World’s Most Demanding Industry Requires

the World’s Most Knowledgeable Experts”

Join us at our

Quarterly Conference

June 15-17, 2011 at

the St. Regis Hotel in

Atlanta, Georgia

National Investment Banking Association (NIBA) is a not-for-profit 501(c)(6) national trade association of regional and independent

brokerages, investment banking firms, and related capital market service providers.

www.nibanet.org


Example #1: Dendreon Corporation

(NASDAQ:DNDN), an initial investment of

$4/share in 2009 increased to $31.85/share at

market close on 7 March 2011 (696 percent

increase).

Example #2: ImmunoCellular

Therapeutics Ltd (OTC: IMUC), an initial

investment of $0.15/share in 2009 increased

to $2.37/share at market close on 7 March

2011 (14,800 percent increase).

Black Swan Case Study #3: The

“MIMVI” (OTC BB: MIMV); Patent

Strategies in Progress

Disclosure: Dr. Gordon Chiu has been hired as

the Chief Advisor for Mimvi, Inc.

Apple and Google are at war with each

other. The two are not providing indexed

results for each other’s applications. By decid‑

edly offering their own operating systems

and the smartphone itself, neither Apple nor

Google will take a future search position

for each other’s mobile applications. Mimvi,

Inc. is slowly building a patent portfolio

for agnostically searching mobile computer

applications on all mobile platforms (i.e.

iPhone, iPad, Android, Blackberry etc).

Mimvi, Inc. Announces Patent Filing

for “Intelligent” Mobile App Search and

Recommendation Technology. http://www.

g lobenewswire.com/newsroom/news.

html?d=204204

Mobile App Co., Mimvi Launches the

World’s First Discovery Engine for Health

Apps

http://www.globenewswire.com/news‑

room/news.html?d=208168

Black Swan Case Study #4: Focus

Metals (TSXV: FMS); Patent

Strategies in Progress

Disclosure: Dr. Gordon Chiu has been hired as

the Chief Scientist for Focus Metals, Inc.

Comments from February 23, 2011: http://

finance.yahoo.com/news/Focus‑Metals‑

Forms‑Graphene‑iw‑2128088253.html?x=0

Graphene is a form of carbon. It is a novel

material that is not only the thinnest material

known in science, but also the strongest. As a

conductor of heat, graphene outperforms all

other known materials. Graphene is nearly

transparent. It is so dense that not even heli‑

um, the smallest gas atom, can pass through

it. Like diamonds, graphene is an allotrope

of carbon, but with game‑changing charac‑

teristics. Graphene has been mentioned in

recent accolades, including the 2010 Nobel

Prize in physics. As a combination, graphene

is potentially more useful than copper. When

graphene is mixed with plastics, the resultant

material turns into a conductor of electricity

with robust mechanical and heat resistant

properties. Graphene could revolutionize the

Band‑AidTM adhesives industry. Graphene

has unique properties to prevent bacterial

growth (i.e. E. coli) while allowing human

cells to regenerate.

The European Union has cited graphite

to be a critical and strategic resource. Few

people would have thought graphene to be

as important. In fact, it is significantly more

valuable than graphite, and yet is derived

from graphite.

Investors should have a very solid plan of

action in industries that have high valuation

and growth prospects resulting from patent

development and acquisition.

cONclusION

Remember that the definition of a black

swan is a game changing situation that

presents itself when least expected. How a

black swan, positively or negatively affects

you, depends on which side of the event

you are on. When we look back at 2011, the

disaster in the Middle East or the earthquake

in Japan will be two negative black swans

that affected investors, globally. Yet as a

direct result, rebuilding and alternative safer

methods for energy will receive significant

positive interest from investors and govern‑

ments worldwide. Nassim Taleb is the author

of the book, The Black Swan. He provides an

interesting read on how some industries and

people benefit from a black swan event while

others’ suffer. By understanding how to pre‑

pare early, an investor can de‑risk a project

while also yielding positive results. n

Dr. Gordon Chiu is an execution‑driven business‑man with more than 15 years of combined domestic and international experience in biomedical, chemi‑cal, cosmetic, medical, and technology industries. He has been invited to serve on the board of public and private companies and to provide vital advice to the board while increasing overall shareholder value.

His solid background and broad experience has allowed him to accomplish and advise in areas of Alzheimer research, breast cancer research, derma‑tology, drug addictions research, green technology, and antimicrobial research. He started his career as a research scientist at Pfizer Inc. and Merck & Co., Inc. and has healthcare and marketing experience with strong links to Wall Street and Asia.

His educational background began with a B.S. degree in chemistry from Rensselaer Polytechnic Institute, graduating summa cum laude. He gradu‑ated with an M.S. degree in chemistry from Seton Hall University with high honors. Additionally, Dr. Chiu was accepted as an M.D./Ph.D. candidate under the National Institutes of Health’s Medical Scientist Training Program for four years at the Mount Sinai School of Medicine where he also researched, devel‑oped, consulted, and advised Dr. Huachen Wei in the department of dermatology in skin cancer research. Seeing the opportunity to impact foreign policies in healthcare, he transferred his credentials to the fully accredited University of Bridgeport School of Naturopathic Medicine to receive his doctorate in naturopathic medicine.

With this unique background, he has investigated the validity of foreign treatments and their success level for public health. He has also been chosen to serve as an advisory role in the identification of low cost solutions (i.e. non‑invasive diagnostic equip‑ment) for emerging countries that cannot afford to maintain armies of physicians across numerous sub‑specialties. His years of experience and continuous involvement have created deep relationships within the scientific, business, and medical communities. Dr. Chiu has developed and owns methodologies called directed combinatorial algorithmic librar‑ies (D.C.A.L.) that are used in various commercial applications, composition development and research.

Disclosure: Dr. Chiu has been appointed as an inde-pendent adviser to SNN.


bIOTechNOlOGy:Global hunter securities

ProFilED CoMPANiES

Investing In Improving The human condition

It was not that long ago that the

Biotechnology industry commercialized

its first drug Lilly/Genetech’s Insulin in

1982. Today, Global Hunter Securities (GHS)

sees the industry as being still early in its

product life cycle.

GHS has made long‑term commitments

to both research and investment banking in

this fast‑growing and U.S.‑dominated sec‑

tor. Our analysts are committed to covering

sub‑sectors including oncology, metabolic

disorders (diabetes and obesity), central

nervous system disorders (Alzheimer’s dis‑

ease, depression, pain, insomnia), regenera‑

tive medicine (stem cells and vaccines) and

orphan diseases. They see countless exciting

investment opportunities in the small cap

segment of this sector. Additionally, we have

a group within our sales and marketing team

dedicated to getting these companies in front

of fundamental buyers that manage $50‑$1B

in assets. This focus and expertise gives us

a unique understanding of the dynamics of

the space, from an investor’s perspective.

In this article, we give a brief overview

of the biotechnology sector and discuss

growth opportunities and challenges that

are on the minds of investors. According to

PhRMA, The Pharmaceutical Research and

Manufacturers of America, 2009 revenues in

the U.S. biotechnology and pharmaceutical

industries were $57 billion and $286 billion

versus $27 billion and $161 billion in 2000,

representing compound annual growth of

8.7% and 6.6%, respectively. This represents

growth of about double that of the broader

economy.

There is no shortage of investment oppor‑

tunities in the space and most investors

should have some representation in biotech

in the context of a balanced portfolio. We

estimate that there are 400 public and 1400

private biotechs in the U.S. today, a number

that continues to grow. Their stories tend

to be catalyst‑driven and we would suggest

simply buying mutual funds or ETFs unless

you have the understanding of the sector

and the time to monitor news like partner‑

ing announcements, clinical trial results and

drug approval PDUFA (Prescription Drug

User Fee Act) dates.

As a case in point, biotechs often trade up

going into PDUFA dates, which are statutory

dates that the FDA must respond on NDA

(New Drug Application) or Biologics License

Application (BLA) filings. The most com‑

mon responses are Approval Letter, mean‑

ing the drug has been granted marketing

approval, and Complete Response Letter,

which typically requests further informa‑

tion. Biotech stocks can have tremendous

and sudden volatility – both up and down

‑‑ based on these announcements, which is

why monitoring the names and being on top

of the stories is critically important.

One area where we expect significant

breakthroughs is in cancer therapies that

target a specific biomarker associated with a

disease or subset of that disease. Companion

diagnostics that help identify subgroups of

patients that benefit from these drugs will

be important from the standpoint of the

patient avoiding therapies that have nasty

side effects and limited efficacy. For exam‑

ple, Herceptin for the treatment of early

stage breast cancer is a drug with a compan‑

ion diagnostic for patients that are human

epidermal growth factor receptor 2‑positive

(HER2+). Since only approximately 25% of

breast cancer patients have tumors charac‑

terized as HER2‑positive, the proper iden‑

tification of these patients can help ensure

they receive an optimal treatment regimen,

presumably with Herceptin. In general,

therapies that are more selective for cancer

cells, as opposed to cytotoxic agents, are

expected to lead to significant improvements

in survival. Breakthroughs such as Herceptin

are one reason 5‑year survival rates in breast

cancer have improved from approximately

75% in the mid‑1970s to approximately

90% in 2005 (American Society of Oncology,

Clinical Cancer Advances, 2010).

Stem cell therapies for indications such

as critical limb ischemia, improving heart

function, and repairing spinal cord injury

are other opportunities that are exciting

from scientific, patient care and investment

standpoint.

Obesity is another condition that has an

enormous societal cost and this represents

a multi‑billion opportunity for the biotech

industry. Though there have been a number

of regulatory setbacks in this space recent‑

ly, including Vivus, Orexigen and Arena

Pharmaceuticals, this simply means the

door is open for newcomers. Smaller play‑

ers, like Arrowhead Research, have internal

n By JohN P. CAlCAgNiNiManaging Director anD HeaD of HealtHcare investMent Banking,

gloBal Hunter securities


programs in obesity that are worth explor‑

ing.

The expected increase in covered lives that

is associated with healthcare reform and

demographic trends all bode well for the

biotech industry. The global population is

aging and living longer.

Some of this expected growth will, of

course, be offset by price and reimbursement

cuts, competition, patent expirations and

potentially regulatory delays, but on balance

we see the biotechnology sector remaining

one of the fastest growing segments of the

U.S. and global economy. This opportunity

is not without risks and challenges.

Large Pharma is confronted with patent

expirations in 2011/2012 on blockbuster

drugs like Lipitor and Plavix, which, in our

view, will ultimately compel large pharma‑

ceutical players to partner earlier than they

have been accustomed to or acquire small

cap biotechs.

Biotech Access to Capital. A topic of

keen interest among biotech investors today

is handicapping the FDA’s drug approvals,

given that the agency has, by some accounts,

been “moving the proverbial goal posts”

with respect to the safety and efficacy data

hurdles that must be met before drugs can be

approved. Others would simply describe the

agency as increasingly unpredictable.

Our conversations with venture capitalists

make it clear that they have grown increas‑

ingly leery of early‑stage biotech invest‑

ments as a result of an inability to accurately

predict the clinical timeline and investment

horizon for a drug. This unpredictability

does serve to make the US an increasingly

uncertain development environment for an

industry that is currently dominated by U.S.

companies which may, in turn, negatively

impact the breadth and magnitude of new

product developments domestically while

foreign competitors step up their develop‑

ment investment.

A recent study released by BIO and

BioMedTracker claims that the success rate

in bringing new medicines to market in the

past six years is only about half of what it had

been previously. The study finds that drugs

moving from early stage Phase I clinical tri‑

als to FDA approval is roughly ten percent,

down from around 20 percent in reports

covering earlier years. According to the

Center for Drug Evaluation and Research,

there were 26 drugs approved in the U.S. in

2010 versus 34 in 2009.

According to the Tufts Center for the

Study of Drug Development, it costs approx‑

imately $1.2B to develop a new biotechnol‑

ogy drug. While this specific figure has been

debated due to questions about the funding

of basic research, pharmaceutical company

tax breaks, and related issues the cost and

risk of developing new drugs is clearly indis‑

putably high. A perusal of a representative

group of biotech company balance sheets

reflects retained losses in the hundreds of

millions. This unequivocally represents the

costs of drug development. Tufts estimates

that the average time from first clinical trial

to FDA approval of a drug is approximately

8.5 yrs. Arguably the most important aspect

of the process involves successful navigation

of the regulatory steps leading to approval.

The FDA’s mandate is to protect the public

and weigh the cost‑benefit to society of drug

approvals. This puts them in a challenging

position – it’s tough to make everybody

happy ‑‑ and some recent FDA decisions

have created turmoil in the venture commu‑

nity, which historically invested in biotech

companies with an expectation that the

clinical pathway and timeline was defined.

Visibility on the clinical pathway and time‑

line appears to have changed in recent years.

One area where some investors feel the

FDA has changed the rules of engagement

is Obesity drugs. Orexigen’s Contrave is an

obesity drug that had an FDA panel recom‑

mendation for approval with a post‑approval

study on cardiovascular outcomes. However,

the FDA countered its own panel’s recom‑

mendation by issuing Complete Response

Letters that contained unexpected, new,

requirements prior to granting approval and

required the company to complete another

trial pre‑approval. This was an enormous

setback for the company.

In another case, the FDA surprised ana‑

lysts with a requirement for a QT prolon‑

gation study before they would approve

Amylin’s diabetes drug, Bydureon, sending

the company’s shares plummeting.

Yet, despite these risks, biotechnology rep‑

resents a very exciting industry for invest‑

ment in firms that are improving the human

condition. GHS welcomes opportunities to

guide companies and executives in the sector

to successful achievement of their financial

objectives.

The Global Hunter Securities (GHS) Life

Sciences Investment Banking and Capital

Markets teams are dedicated to providing a

full range of financial services to biotechnol‑

ogy companies whose stock market capital‑

izations are sub‑$750 MM. We specialize in

equity financing & M&A advisory work for

small cap biotechnology companies and are

increasingly being recognized in the mar‑

ketplace for our close relationships with the

fundamental buyers that manage $50‑$1B+

that can be instrumental in getting our

clients better terms when doing an equity

financing. We work with our clients actively

to help them achieve their long‑term objec‑

tives in financing, business development,

sales and trading and other areas. In gen‑

eral, our team has bulge and major bracket

experience in executing a wide range of life

science transactions – a breadth of transac‑

tion experience not seen among our direct

competitors. n

Stem cell therapies for indications such as critical limb ischemia, improving heart function, and repairing spi-nal cord injury are other opportunities that are exciting from scientific, patient care and investment standpoint.

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ProFilED CoMPANiES

small biotech company Fights cancer with a big drug

dOING baTTle aT The

cellular level

Davanat® fights cancer by interacting with

galectins. These are protein molecules that

are produced in abundance by cancer cells.

Galectins hide the cancer cells from the

body’s immune system. Davanat® binds to

galectins to help the body’s immune system

better detect and kill cancer cells. In essence,

Davanat® removes the cloak that allows

cancer cells to evade the body’s immune

response to foreign cells.

In addition to revealing the cancer cells,

Davanat® limits damage to normal cells dur‑

ing chemotherapy. Chemo’s indiscriminate

attacks on normal cells explains why muco‑

sitis is such a common side effect. GI tract

cells replicate quickly. Without an agent like

Davanat®, chemotherapy is unable to distin‑

guish between the fast reproducing cancer

cells and fast reproducing normal, healthy

cells. When Davanat® is approved, patients

will have a better quality of life during and

after chemotherapy.

POTeNTIal FOr sweePING

ImPacT ON caNcer

TreaTmeNT

The use of Davanat® in chemotherapy has

key benefits: increased survival, fewer nega‑

tive side effects, and reduced cost. Pro‑

Pharmaceuticals is working to gain FDA

approval for Davanat®. The FDA requires a

company to start with a specific indication

when seeking approval for a new drug. Pro‑

Pharmaceuticals decided to use Davanat® to

Lucienne has been a survivor for much

of her life. During World War II

she almost starved to death at the

hands of Nazis in occupied Holland and was

orphaned. She endured a divorce and ended

up raising four children alone. Later in life she

found that she had lupus and underwent two

spinal fusions. Yet, Lucienne pressed on over

the decades, always positive, ever energetic,

equal to anything that might come her way.

She was in her 80s and living in the San

Francisco Bay area when she was confronted

with a grim reality. She had late stage cancer.

The symptoms were bad. Even worse, she

suffered from the intolerable side effects of

cancer treatment. The chemotherapy created

so many toxic side effects that Lucienne told

her doctor and her family that she would

rather die than have to take more of it.

But luckily for Lucienne, she wasn’t out

of options. Her son‑in‑law and her doc‑

tor convinced the U.S. Food and Drug

Administration to grant her compassionate

use of a pre‑Phase III drug called Davanat®.

It is a companion drug used during chemo‑

therapy to help kill cancer cells and prevent

damage to normal cells. Davanat® is made by

Pro‑Pharmaceuticals, a drug company based

in Newton, Mass. Under her oncologist’s

supervision, Lucienne agreed to try chemo

one more time, as long as it was adminis‑

tered with Davanat® and would not cause

the horrible side effects.

Much to her and her family’s relief,

Lucienne experienced fewer adverse side

effects with the new drug. Moreover, she

gained the tumor‑fighting benefits of the

full dose of the chemo treatment. Davanat®

has enabled participants, such as Lucienne,

in Phase II trials to experience the benefits

of chemotherapy with substantial reduc‑

tions in nausea, diarrhea, and lesions in the

G.I. tract (mucositis). The drug also helps to

reduce the loss of white blood cells during

chemotherapy. Davanat®has helped study

participants sidestep the dark side of chemo,

an obstacle to treatment and a detriment

to quality of life. Perhaps the most striking

result of the Phase II trial was patient sur‑

vival. The median longevity for end‑stage

cancer patients increased by 46 percent.

The bIG Idea FrOm a small

Team

Big pharmaceutical companies tend to focus

on more complex cancer treatments. Pro‑

Pharmaceuticals, however, has focused on

simpler, large molecule solutions with huge

implications. The company discovered a rel‑

atively inexpensive solution based on poly‑

saccharides (sugar molecules).

“Our simple carbohydrate (sugar) mol‑

ecules are easily producible at a fraction

of the cost of the in‑fashion cancer ther‑

apy approaches that are being employed

by many biotech and large pharmaceutical

companies,” says Peter Traber, M.D., who is

the CEO of Pro‑Pharmaceuticals. Further,

the proprietary molecule that makes up

Davanat® has a long shelf life. �This is of

particular value in an American economy

where healthcare costs are skyrocketing and

in other countries where climate and storage

conditions may be a problem.


treat metastatic colorectal cancer for Phase

III trial. The Phase I trial (all solid tumors)

and the mechanism of action indicate that

Davanat® will work with multiple types

of chemotherapy and on all solid tumors.

The American Cancer Society estimates

that there are about 150,000 new patients

diagnosed with colorectal cancer each year.

Patients typically live over two years. About

300,000 patients are treated each year, half

new and half being treated for the second or

third time.

Once Davanat® gains approval for colorec‑

tal cancer, Pro‑Pharmaceuticals will target

other types of solid tumor cancer. The use of

Davanat® will grow through two paths: treat‑

ment for colorectal cancer and treatment for

other types of cancer. Demand for Davanat®

is expected to grow for many years.

lOOkING FOrward, lOOkING

sOuThward

Pro‑Pharmaceuticals plans to introduce

Davanat® first in Colombia, South America.

The Colombian market has about 24,000

new cases of colon cancer annually. Standard

treatment procedures mainly use the most

popular chemotherapy drug ever developed,

5‑FU. This is the very chemo drug that

Davanat® was tested with in Phase I and

Phase II trials with such success.

The company believes the country’s regu‑

latory body will quickly approve the drug

by as early as the second half of 2011. To

help market the drug, Pro‑Pharmaceuticals

is working with ProCaps, a leading Latin

American distribution company located in

Barranquilla, Colombia. Colombia has a

reciprocal agreement with 12 other Latin

American countries, which should allow

additional approvals relatively quickly.

aPPlIed TO caNcer vaccINes

More doctors today are fighting cancer using

immunotherapy (i.e., with vaccines). In fact,

many new cancer drugs are vaccines, such

as Provenge, the recently approved vaccine

for prostate cancer produced by Dendreon.

Cancer researchers are looking at the use

of Davanat® to improve the effectiveness

of cancer vaccines in immunotherapy. The

Ludwig Institute for Cancer Research (LICR)

in Brussels is doing just that. Scientists at the

cancer research institute are looking at the

potential benefits of using Davanat® with its

cancer vaccine for metastatic melanoma.

Studies have shown that galectins inhibit

tumor‑specific T‑cells, which are important

to a healthy immune system. Researchers at

LICR found that the effectiveness of their vac‑

cine was limited by galectins secreted by the

melanoma. Because Davanat® binds to the

galectins, the researchers believe that adding

Davanat® to the vaccine therapy will enhance

the activity of the tumor‑killing T‑cells, which

will improve the effectiveness of the vaccine.

Our experimental observations on cul‑

tured cells suggest that treatment of can‑

cer patients with Davanat® could correct T

cell function and that combining Davanat®

with an anti‑cancer vaccine could induce a

more efficient and long‑lasting anti‑tumoral

immune response, says Dr. Pierre van der

Bruggen of the Ludwig Institute.

Researchers at LICR have defined a Phase

I/II trial using their vaccine and Davanat®.

They expect approval to initiate the trial

this year.

beyONd caNcer, healING

lIver FIbrOsIs

Pro‑Pharmaceuticals is working on another

game‑changing application for their galec‑

tin‑targeting compounds, but this one is

unrelated to cancer. Company scientists have

found that other polysaccharides may be

used to treat liver fibrosis.

In experiments, Pro‑Pharmaceuticals has

shown that its polysaccharide compounds

can reverse the formation of fibrotic tissue

in diseased livers of rats. This discovery

resulted from a collaboration with Mount

Sinai School of Medicine in New York City,

a world leader in fibrosis and liver dis‑

ease research, and Dr. Scott Friedman, the

school’s Director of the Division of Liver

Disease. Researchers at Mount Sinai and

Pro‑Pharmaceuticals hope to find a better

alternative to the current treatment for late‑

stage fibrosis/cirrhosis – liver transplants.

According to the American Liver

Foundation, more than 25 million Americans

have been afflicted at some time with liver

and biliary diseases. The number continues

to grow due in part to an increase in younger

patients suffering the consequences of child‑

hood obesity. Liver and biliary diseases are

even more of a problem outside the United

States as a result of Hepatitis C, which leads

to liver fibrosis/cirrhosis in most patients.

According to Dr. Friedman, “The need

for an effective therapeutic solution for liver

fibrosis is acute, and this innovative project

could significantly advance treatment in this

critical area. The efficacy and safety of Pro‑

Pharmaceuticals’ approach appears to be

unique, and thus, these studies should be of

the highest priority.”

Dr. Friedman’s team has begun testing

several of the company’s galectin blockers as

anti‑fibrotic liver therapies.

rOckING success raTes, NOT

The bOaT

Perhaps one of the worst human traits is the

unwillingness to change. In innovation cir‑

cles, habits of yesterday are one of the great‑

est inhibitors to advance new approaches

and solutions. And in the health field espe‑

cially, resistance to change is almost iconic.

Pro‑Pharmaceuticals’ products do not dis‑

place other science or solutions. The com‑

pany’s galectin‑targeting compounds only

complement existing treatments or offer

a treatment where none existed before.

Resistance from competition should not

slow Pro‑Pharmaceuticals’ entry into the

market. The advantages of Davanat® are

clear: increased survival, significant reduc‑

tion of harmful side effects, and potential

cost savings. Adding Davanat® to current

cancer therapies should be an easy choice for

physicians. n

144Opinions.com

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n By Bill gArlAND

INTrOducTION

In 2009 oncology became the leading reve‑

nue producer for pharmaceutical companies,

surpassing cardiovascular therapeutics. This

event reflected an increased investment in

oncology research and development (R&D)

in the last decade or so. The emphasis on

oncology research occurred despite many

substantial risks, e.g., uncertain trial end‑

points, a scarcity of clinical trial enrollees,1

and an explosion of new and barely digested

knowledge about cancer biology. Currently

the sales for oncology drugs are $52 billion

annually, $17 billion more than the next

therapeutic category, lipid regulators like

Lipitor©.2 Sales growth for oncology prod‑

ucts is also high, averaging 16 percent from

2005 to 2009. Oncology is now the leading

revenue contributor for Roche with sales

predicted to grow from $17.2 billion in 2008

to $25.9 billion in 2013.3 By 2013 oncology

will also be the leading revenue producer for

Novartis.3 Despite these impressive results,

the oncology therapeutic area is currently

undergoing its first major transformation

in many decades. This transformation has

significant implications for investors. This

article explores the principal features of

this transformation and changes that would

likely result from it.

Old eNvIrONmeNT

The previous environment for oncology

therapeutics was very attractive. Few nega‑

tive issues existed for the major compa‑

nies (“Big Pharmas”). The barrier to entry

for new companies was high. The experi‑

ence and competency curve for oncology‑

specific R&D, regulatory, and worldwide

sales activities was steep. The emerging bio‑

technology and biopharmaceutical firms

(“Mini Pharmas”) modeled themselves

after the established pharmaceutical compa‑

nies. Regulatory requirements were largely

unwritten and were promulgated by the

U.S. Food and Drug Administration (FDA)

in closed meetings with the 15 or so Big

Pharmas. Scientific information about the

causes of cancer was limited, leading to a

common approach of treating cancer with

agents that impartially kill all cells (cytotox‑

ics). This approach assumed that the faster

growing cancer cells would be eliminated

faster than the slower growing, healthy cells.

Typically, the FDA required only a modest

success rate to approve a new drug, usually

only a 20 percent positive response in the

patients administered. Capital requirements

for local marketing and drug manufacturing

were high, because the bargaining power

of service suppliers for out‑of‑house work


Oncology Drug Research Enters New Era Discovery/Development


(contract research organizations, i.e., CROs)

was strong. In contrast, the bargaining power

of the individual scientists who invented the

product was weak, as was the bargaining

power of the patient who needed the drug.

The traditional purchasing pattern was not

price sensitive: the consumer (patient) did

not buy, and the buyer (the physician) did

not pay. Payers—insurance companies, gov‑

ernment institutions, hospital suppliers, mail

order pharmacies—had limited influence on

the use of a particular drug. Because many of

the mainstays in anti‑cancer treatment were

relatively old cytotoxic agents, generic substi‑

tution of newer drugs with older drugs was a

potential threat, and this threat was magni‑

fied because only a relatively few oncology

agents were routinely used to treat patients.

Companies, however, successfully reduced

this threat by marketing newer agents for use

with older drugs. Finally, the relatively small

number of Big Pharma companies (i.e.,

those with significant R&D and sales/mar‑

keting, not just research) could easily limit

competition with unwritten arrangements

that influenced companies to differentiate

products based on narrow product charac‑

teristics, such as convenience of dosing and

not on price or innovation/effectiveness. As

a result, these firms mostly sold “me‑too”

drugs. In this environment, there was little

reason to establish strategic alliances with

competitor companies, support vendors, or

academic investigators.

FOrces/dIsruPTers

PrOmOTING chaNGe

In recent years, powerful forces have dra‑

matically altered the old environment. These

forces mostly affected Big Pharmas negative‑

ly. The barrier to entry for new companies is

now significantly lower. Layoffs and consoli‑

dations have resulted in thousands of skilled

workers moving to smaller biotechnology

and biopharmaceutical firms. Regulatory

requirements worldwide have been slowly

but systematically codified under a nego‑

tiating process labeled “The International

Conference of Harmonization (ICH).” New

biotechnology and biopharmaceutical firms

(“Micro Pharmas”) now model themselves

not on Big Pharmas. Instead, Micro Pharmas

rely on a more streamlined model that is

based on highly focused project teams. This

model leads to faster “make‑buy” decisions

and significantly lowers the cost of product

discovery and development. The attractive‑

ness of buy decisions is increased because

of the emergence of new CROs in low‑cost

environments in China, India, and Eastern

Europe. The near universal adoption of the

ICH regulatory guidances increased confi‑

dence in work performed in these low‑cost

countries. In addition, increased competi‑

tion among the now more numerous CROs

have resulted in lower prices. The explosion

of scientific knowledge about cancer has

resulted in redefining the disease in terms

of multiple molecular targets (within the

tumor and in the tumor environment), mul‑

tiple stages of disease progression (initiation,

growth within an organ, metastasis to distant

organs, widespread disease), and specific

treatments tailored to an individual’s genetic

makeup. Also, regulators are now more will‑

ing to approve drugs based on increased

time of disease‑free post treatment rather

than just survival, an easier to achieve clini‑

cal goal. From an organizational perspective,

these changes are more easily realized by

multiple small organizations, each studying

one target rather than a large organization

studying multiple targets. Such small organi‑

zations, however, amplify the role and lever‑

age of the individual scientists. In fact, many

universities and similar organizations like

MD Anderson in Houston and Memorial

Sloan‑Kettering in New York are now start‑

ing the equivalent of Micro Pharmas within

their institutions to more effectively link

the inventor/scientist to the R&D process.

The National Institute of Health (NIH) is

fully supporting these efforts with funding

and specific “translational” programs like

NIH‑RAID4 and is even itself considering

developing drugs in‑house.5 Further, large

Pharmacy Benefit Management (PBM) orga‑

nizations like Medco have taken over most of

the tedious activities and responsibilities

from Big Pharmas. The Internet has allowed

Micro Pharmas to directly market agents to

patients and oncologist. Finally, the payers

are now exerting greater control over what

drugs to administer and at what price. Payers

are now asking, “Does the effectiveness of the

drug justifying the cost? What is the evidence

that a particular patient would benefit from

a particular drug?” Payers are particularly

emboldened in the oncology area because

of growing public frustration that the “war

on cancer” has resulted in very limited gains,

despite expenditures of billions of dollars of

private and public funds6 compared to other

major diseases.7 For example, highly touted

anti‑cancer agents, like Roche’s Avastin,©

provide only marginal benefits. These drugs

often are not effective in treating cancer and

can cost $75,000 to $100,000 per year. Some

have criticized this focus on overall low ben‑

efit/cost ratio achieved with many of the new

drugs as ignoring the needs of the limited

number of patients who benefit from treat‑

ment with drugs like Avastin.8

emerGING eNvIrONmeNT

The emerging environment for oncology

drug R&D favors Micro Pharmas organized

around one or a few molecular targets.

Because Micro Pharmas are small and have

limited capitalization, they perform only

in‑house activities that are not available at a

CRO or other service provider. The remain‑

ing activities are all “farmed out.” Besides

The attractiveness of buy decisions is increased because of the emergence of new CROs in low-cost environ-ments in China, India, and Eastern Europe.


establishing efficacy with its novel agent,

the Micro Pharma must also identify which

cancer patients would most likely respond

to its products, as well as how the predicted

response compares to the response from

alternative therapies. This is true especially

for older anti‑cancer therapies that are no

longer covered by patent protection. Because

of the polypharmacy aspect of the new treat‑

ment environment, understanding interac‑

tions of Micro Pharma’s agent with other

administered drugs becomes more critical to

market acceptance of a new agent. Ideally, no

drug‑drug interactions with the new agent

are acceptable. In clinical trials, the develop‑

ment of the business case for the new agent

becomes equally as important as developing

the scientific medical case.

keys TO mIcrO Pharma’s

FuTure success

Success in the new environment will require

companies to strengthen old skills and

acquire new ones. Companies will need to

harness new competencies:

• Have an established worldwide network

of service providers that can produce data

acceptable to the regulatory and medical

communities while minimizing cost. Service

providers can be CROs, university laborato‑

ries, or even competitor companies.

• Be recognized as technically the best

or almost the best in their drug niche. To

achieve this goal, the Micro Pharma needs

to establish an effective method for rapidly

channeling information into the company

from academic collaborators, including sci‑

entists responsible for inventing the product.

• Have “best in class” competency in the

following areas:

• Cancer therapeutic research, particu‑

larly with methods to establish what type

of tumor, and at what stage of a specific

tumor’s development, the new drug should

optimally be used.

u Cancer therapeutics development, par‑

ticularly designing clinical trials against

molecular targets which are present in both

common and uncommon tumor types.

Should clinical trials be designed to address

a specific molecular target not necessarily

a specific tumor type, or to automatically

increase the enrollment of patients with the

disease types who appear to benefit (adap‑

tive design9)?

u Knowledge and avoidance of significant

drug‑drug interactions.

u R&D of cancer diagnostic/prognostic

assays to support both the clinical develop‑

ment of the treatment and the test(s) needed

to establish whether a patient would benefit

from the treatment. Any resurgence of the

“blockbuster mentality” so common and

addictive for Big Pharma must be resisted, as

well as trivializing the difficulties involved in

achieving approval for diagnostic/prognostic

tests for cancer (no new major cancer bio‑

marker have been approved for clinical use

in the last 25 years10).

• Assembling a compelling story to both

oncologist and the patients to permit rapid

enrollment of patients in clinical trials,

despite the many competing test products

and the resistance of most cancer patients to

receiving an unproven treatment.

• Have a comprehensive knowledge of reg‑

ulatory requirements worldwide. In the past,

Mini Pharma personnel typically received

their training at Big Pharmas. However, this

will be less likely given the ongoing massive

cutbacks in Big Pharmas. A possible source

of new personnel will be academicians who

possess only minimal regulatory knowledge.

• Be realistic about how far along the devel‑

opment path to take the new agent(s) before

turning responsibility over to Big Pharma

(partner at a time that optimizes benefit to

shareholders). In this respect, the big payoff

for investors in these Micro Pharmas will

most likely be a sale of the company to a

Big Pharma as opposed to growth to achieve

Mini Pharma or Big Pharma status. n

William Garland is the CEO of AngioGenex, a New York‑based biopharmaceutical start‑up company focused on advancing cancer care by targeting the Id (inhibitor of differentiation) pathway for effective cancer treatments and useful diagnostics/prognostics tests. Garland is a pharmaceutical R&D veteran with a combined 34 years of experience at Hoffmann La Roche (20 years), Centaur Pharmaceuticals (6 years), Atairgin Technologies (1 year), and virtually concur‑rent positions at Lpath Inc. and Tosk, Inc. (6 and 7 years, respectively). He has managed R&D groups with as many as 100 scientific and administrative personnel, and considers himself competent in all aspects of drug discovery and development. Garland received a BS degree in chemistry from the University of San Francisco and a PhD degree in medicinal chemistry from the University of Washington. He has authored or co‑authored over 100 scientific publications.

(Endnotes)1 Kolata G. Lack of study volunteers hobbles cancer fight, New York Times, 3 August 2009.2 IMS 2010: Fastest‑growing therapeutic classes by sales.3 Goodman M. Sales trends by therapeutic area:2008‑2013E, Nature Reviews Drug Discovery, September 2009.4 NIH‑RAID, NIH Rapid Access to Interventional Development, http://nihroadmap.nih.gov/raid/5 Harris G. Federal research center will help develop medicines, New York Times, 22 January 2011.6 Kolata G. Advances elusive in the drive to cure cancer, New York Times, 23 April 2009.7 From Reference 6: For the period 1950 to 2005, the death rate from cancer in the US fell only 5% while the death rate for heart disease and stroke decline 64 and

74%, respectively.8 Review and Outlook: The Avastin Mugging, Wall Street Journal, 18 August 2010.9 Berry D. Bayesian clinical trials, Nature Reviews Drug Discovery, January 2006.10 Diamandis EP. Cancer biomarkers: Can we turn recent failures into success? Journal of the National Cancer Institute, 12 August 2010.


revolutions medical’s revvacTm safety syringe

ProFilED CoMPANiES

NecessITy Is The mOTher OF

INveNTION

Nurses and doctors give millions of inocu‑

lations each year. Frequent handling of

syringes subjects healthcare workers and

patients to potential health risks. Syringes

can transmit bloodborne diseases. Needle

accidents sometimes occur and can be dead‑

ly. A few years ago, Ron Wheet saw this

danger and wanted to do something about

it. He recognized that healthcare profes‑

sionals needed a better syringe. Like most

entrepreneurs, he recognized an unmet need

and then set out to fulfill it.

Rebecca Johnson was working as a nurse

at the Medical University of South Carolina.

She had graduated from nursing school

at the top of her class 10 years ago. One

day in 2008 while she was throwing away a

used syringe, she accidentally pricked her‑

self. She had always prided herself on hav‑

ing good hand‑to‑eye delivery of medicine

with a syringe. But this time was different.

The night before, she had gone without

sleep while caring for a sick child. Johnson

became a statistic overnight. About 800,000

people in the United States had been afflicted

each year by syringe accidents.

Rebecca Johnson immediately contacted

her husband at a nearby hospital. Her hus‑

band, a doctor himself, told her to start the

series of tests. The standard tests would take

months to complete and would cost thou‑

sands of dollars. Johnson filled out the acci‑

dent report, dreading what might happen.

She knew accidental needle pricks can be

dangerous. A syringe can transmit 20 differ‑

ent bloodborne pathogens. These pathogens

can cause a variety of diseases, including

Hepatitis B and C and HIV. One needle

prick can ruin someone’s life and career.

Fortunately, healthcare workers will have

access to a safer syringe soon. Starting in

May 2011, Revolutions Medical Corporation

(OTCQB: RMCP) will begin marketing a

state‑of‑the‑art safety syringe. The RevVacTM

is a revolutionary product. It features an

auto‑retractable, vacuum design to help

eliminate accidental needle sticks.. The U.S.

Food and Drug Administration (FDA) has

cleared it for commercial use. When used,

Revolutions Medical Corporation’s auto‑retractable, vacuum safety syringe is finally here. With cutting edge technology, the RevVacTM

Safety Syringe addresses the #1 concern of health care workers by virtually eliminating needle stick injuries and reducing the spread of bloodborne diseases.


the needle is retracted from the patient into

the barrel of the syringe after the medicine

has been administered. The RevVacTM Safety

Syringe does this instantly and passively

without user intervention. This vacuum

safety feature cannot be deactivated and

remains protected until final disposal. The

RevVacTM Safety Syringe will virtually elim‑

inate the possibility of accidental needle

sticks. Its small design means that there is

less hazardous waste to dispose. Hospitals

can save not only on disposal costs, but

also on syringe costs. The RevVacTM Safety

Syringe is priced less than other syringes.

Revolutions Medical Corporation

designed the RevVacTM Safety Syringe with

the health care professional in mind. It is

arguably the safest syringe in the world.

It is priced below other “spring” loaded,

auto‑retractable syringes. And it has the

lowest disposable cost. The RevVacTM Safety

Syringe has many features and benefits:

• 100 percent auto‑retractable; needle

retracts directly from the patient;

• Passive safety feature that requires no

intervention;

• Locked safety feature that cannot be

deactivated;

• Simple and intuitive to use;

• One‑hand operation;

• Hands and fingers kept behind the nee‑

dle;

• No reuse of syringe

Revolutions Medical has introduced an

innovative product to the healthcare indus‑

try. The RevVacTM auto‑retractable, vacuum

safety syringe is a major breakthrough in

syringe technology. The company spent mil‑

lions of dollars and several years on research

and development. Revolutions Medical will

begin marketing the RevVacTM Safety Syringe

in May 2011 and expects to receive the first

product shipments from its factory by the

end of the second quarter of 2011. With this

launch, Revolutions Medical will provide

healthcare professionals with a better and

safer syringe.

rONdald wheeT, ceO aNd

chaIrmaN OF The bOard

Rondald (“Ron”) Wheet is the CEO and

Chairman of the Board of Revolutions

Medical Corporation. Since joining

Revolutions Medical in 2005, he has helped

the company achieve major milestones. He

orchestrated the company’s acquisition of

Clear Image, upgraded the company’s stock

trading from the Pink Sheets to the Over‑

the‑Counter Bulletin Board (OTCBB), and

helped the company secure several U.S. and

international patents. Under his leadership,

Revolutions Medical received FDA approval

for its RevVacTM Safety Syringe.

Prior to joining Revolutions Medical, Mr.

Wheet had over 15 years of experience in the

investment banking industry. He worked for

several registered broker dealers and helped

small‑cap companies, particularly those in

the medical industry, raise capital. In 2002,

he started a consulting business to advise

micro‑ and small‑cap companies on capi‑

tal financing, strategic partnerships, public

relations, professional recruiting, and the

mechanics of public offerings.

Mr. Wheet graduated from the University

of Towson with a Bachelor of Science degree

in finance and international business. He was

the president of the Metropolitan Exchange

Club of Charleston, S.C. He received the

South Carolina Palmetto Patriot Award in

2009.

ThOmas O’brIeN, PresIdeNT

Thomas O’Brien has more than 25 years

of general management experience in the

medical device industry. He has a strong

background in marketing and sales of medi‑

cal products in both domestic and interna‑

tional markets. He previously held execu‑

tive positions with medical industry lead‑

ers, such as Pfizer; Toshiba; and Technicare

Corporation, a company owned by Johnson

& Johnson. Mr. O’Brien played a key

role in the worldwide launch of Magnetic

Resonance Imaging. He served as president

or CEO of several corporations, including

Cosmetic Technology International, a sub‑

sidiary of Palomar Medical; Energist USA, a

United Kingdom company; Med‑Aesthetic

Solutions International, an Australia com‑

pany; and Biotrack, Inc.

Mr. O’Brien graduated from the University

of Maryland with a Bachelor of Arts degree

in foreign languages. He served in the U.S.

Air Force Security Service and also worked

at the National Security Agency. At the NSA,

he was a Chinese linguist with top secret

crypto clearance. n

Contact: Thomas O’Brien, President

670 Marina Dr, 3rd Floor,

Charleston, SC 29492

Phone: (843) 971‑4848

Fax: (843) 971‑6971

E‑mail: [email protected]

www.RevolutionsMedical.com

US Stock Symbol: RMCP

Revolutions Medical Corporation designed the RevVacTM Safety Syringe with the healthcare professional in mind. It is arguably the safest syringe in the world.

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Access to advanced modern health care

is no longer limited by a country’s

boundaries. Today, more consumers

than ever are traveling to destinations around

the world to obtain first‑class, cost‑effective,

medical care. Additionally, as more investment,

medical personnel, and patients are crossing

borders—developing economies and busi‑

nesses are reaping the economic benefits that

accompany the expanding global health care

market. Medical tourism is the term used when

individuals travel to another country primarily

for medical care. Medical tourism is still in its

infancy, but is well on its way to become a major

growth industry for the 21st century.

Today’s medical tourists are typically mid‑

dle class consumers with purchasing power.

They are “pulled” to foreign markets by lower

treatment costs, high‑quality standards, high

patient mobility, and the possibility of com‑

bining medical care with a vacation. They

are “pushed” from their home country by

high treatment cost, inadequate insurance, and

long waiting lists or unavailability of service.

Modern technology is also an important con‑

tributor in facilitating the industry’s growth.

Potential medical tourists can find and arrange

for healthcare service anywhere in the world

from the convenience of a home computer.

Many countries in Southeast Asia under‑

stand this unique opportunity. Thailand,

India, and Singapore are considered the front

runners in targeting international patients

pocket health care expenses, U.S. consumers

are becoming more price sensitive. As a result,

more U.S. consumers are likely to go overseas to

get better medical care or a better value on sur‑

gical procedures. Today, U.S. health care expen‑

ditures make up 16 percent of the country’s

GDP, 50 percent higher than any other country.

Costs continue to increase at eight percent per

year, or twice the rate of the Consumer Price

Index. Given this rate, total U.S. health care

costs will consume about 20 percent of the

economy within the next six to seven years.

Additionally, employer’s medical costs have

increased 80 percent since 2001, causing many

organizations to lower plan benefits, eliminate

coverage, or propose more affordable solutions,

such as offering voluntary global medical travel.

F i N A N C E

A Growth Industry for the 21st CenturyMedical Tourism in Southeast Asia

n By lESliE riChArDSoN

for medical service. Taking the lead from

these countries, the Philippines, South Korea,

and Malaysia have moved to strengthen their

domestic health care and wellness sectors

to become more competitive in attracting

foreign visitors. The result is that Southeast

Asia has become a top destination for medi‑

cal tourism in the world. According to the

Medical Tourism Association, the region cur‑

rently represents 12.7 percent of the global

market. Furthermore, the Indian market

research company, RNCOS, predicts that

the Asian medical tourism market will grow

to $9.1 billion by 2012 with over 5.6 mil‑

lion health tourists visiting the region. Major

competitive advantages include the availabil‑

ity of state‑of‑the‑art hospitals with world‑

class medical equipment, five‑star accom‑

modations, highly‑skilled and caring medical

staff, and a wide range of low‑cost medical

procedures, such as hip and knee replace‑

ment, cosmetic procedures, orthopedic and

cardiac surgery, and cancer treatment. In

addition, to reduce the stress of international

travel, many health providers include services

such as travel planning and airport pickup.

According to some health care experts, the

rapid growth in medical tourism poses a real

threat to the U.S. healthcare system. The United

States is at risk of losing billions of dollars to

foreign competition. With increasing out‑of‑

Major medical procedures w/average total medical/hospital cost in a western-level hospital

Procedure Countries Cost as a % to U.S.

U.S. India Thailand Singapore Malaysia India Thailand Singapore Malaysia

Heart Bypass 130,000 10,000 11,000 18,500 9,000 8% 8% 14% 7%

Heart Valve Replacement

160,000 9,000 10,000 12,500 9,000 6% 6% 8% 6%

Angioplasty 57,000 11,000 13,000 13,000 11,000 19% 23% 23% 19%

Hip Replacement 43,000 9,000 12,000 12,000 10,000 21% 28% 28% 23%

Hysterectomy 20,000 3,000 4,500 6,000 3,000 15% 23% 30% 15%

Knee Replacement 40,000 8,500 10,000 13,000 8,000 21% 25% 33% 20%

Spinal Fusion 62,000 5,500 7,000 9,000 6,000 9% 11% 15% 10%

Deloitte Medical Tourism, Consumers in Search of Value, 2008


ImPacT OF medIcal TOurIsm ON The u.s.Estimated U.S. Medical Tourist Spending Abroad (In billions U.S. dollars)

Source: Deloitte Medical Tourism, Consumers in Search of Value, 2008


Furthermore, since employees have been asked

to share in the rising health care costs, their

out‑of‑pocket expenses have quadrupled over

the last five years.

INTerNaTIONal

accredITaTION

In 1999, the Joint Commission International

(JCI) was launched to evaluate the quality

and safety of international health care provid‑

ers. Since then JCI has accredited more than

300 public and private health care organiza‑

tions in 39 countries. Several other organiza‑

tions, such as the International Society for

Quality in Health Care (ISQUA), the National

Committee for Quality Assurance (NCQA), the

International Organization for Standardization

(ISO), and the European Society for Quality

in Health care (ESQH), have taken steps to

ensure that medical tourism facilities provide

the highest‑quality clinical care.

In addition, numerous organizations have

been formed to disseminate current informa‑

tion and trends in the medical tourism indus‑

try. The Medical Tourism Association,™ also

referred to as Medical Travel Association,

is the first membership‑based international

organization for the medical tourism and

global health care industry. The non‑profit

trade association launched a “pilot program”

to certify medical facilitators who are involved

in the coordination of patient care for patients

traveling from one country to another.

INvesTmeNT OPPOrTuNITIes

Currently there are only a handful of medical

service providers that target foreign consum‑

ers that are publicly traded as the majority

of investment capital is still primarily from

private and venture funds. Listed below are

a few of these publicly‑traded companies.

Fortis Health care (BOM:532843) is one

of the leading health care providers in India.

Fortis has a network of 55 hospitals with a

total of 8,000 beds in India and Mauritius. In

the first nine months of fiscal 2011, the com‑

pany’s operating revenue increased 75 percent

to $338 million and EBITDA increased 64

percent to $94 million over the same period

in fiscal 2010. During the third quarter of fis‑

cal 2011, revenue from cardiac, orthopedics,

neuro sciences, renal sciences, pulmonology,

gastroenterology, and other multi‑specialties

grew significantly from the prior year:

Category Q3 Revenue Growth(Fiscal 2011 vs. 2010)

Cardiac 41%

Orthopedics 105%

Neuro sciences 104%

Renal sciences 84%

Pulmonology 22%

Gastroenterology 45%

Other multi-specialties 88%

Bangkok Dusit Medical Services (BAK:

BGH) is the largest private hospital opera‑

tor in Thailand based on patient service

revenue. The company operates four major

hospital groups with 19 medical facilities.

The company’s 2010 revenue grew 9 percent

to $798 million and net profit grew 33 per‑

cent to $78 million from the prior year. In

2010, the top five international patient reve‑

nues came from Japan, the United Kingdom,

United Arab Emirates, the United States, and

Germany. The fastest growing regions were

from Qatar, Australia, and Myanmar.

Raffles Medical Group (SIN: R01) oper‑

ates in three segments: health care services,

hospital services, and investment holdings.

Raffles Medical has a network of 65 clinics

in Singapore and three clinics in Hong Kong.

The company runs Raffles Hospital located

in the heart of Singapore. The company also

offers health financing under its subsid‑

iary International Medical Insurers (IMI).

In 2010, the company’s revenue and net

profit increased 9.4 percent to $293 million

and 19.6 percent to $36 million from 2009.

The company has plans to expand Raffles

Hospital by 102,408 square feet, starting in

the second half of 2011.

Apollo Hospital (BOM: 508869) is a pio‑

neer in corporate health care in India and is

India’s largest private health care provider.

The company operates 53 hospitals with

over 8,500 beds. Apollo Hospital has a signif‑

icant presence at every point in the medical

value chain. It holds the leadership position

in cardiology and oncology. Revenues and

pretax profit for the first nine months of

fiscal 2011 increased 27.1 percent to $427

million and 14.9 percent to $31 million over

the same period in fiscal 2010.

Parkway Holdings (SIN: P27) is a leading

health care group in Singapore. It operates 16

hospitals with more than 3,000 beds in Asia. The

company has a team of more than 1,200 special‑

ists covering 40 different specialties. In 2010, rev‑

enues and net profit increased 15 percent to $882

million and 6 percent to $93 million from 2009.

The majority of patients are from Malaysia,

Bangladesh, Vietnam, and the Philippines.

In addition to hospitals and clinics, numer‑

ous companies in supporting industries bene‑

fit from the growth of medical tourism. These

companies include medical travel agents,

international health insurance providers, and

medical equipment providers. n

Ms. Leslie Richardson has over 15 years of investment management and equity research experience. She currently works for Elite IR as a senior partner and account executive. At Elite IR, she manages the inves‑tor relations programs for Asian‑based, U.S. listed clients. Previously, she worked for CCG Elite where she assisted Asian‑based, U.S. listed clients formu‑late key communication strategies. Ms. Richardson began her investment career at U.S. Trust Company. She later joined Odyssey Advisors as a portfolio manager and director of research. As an analyst, she focused on high‑growth industries, such as biotech‑nology, alternative energy, information technology, and telecommunications. She earned her M.B.A. degree from the University of Southern California. Ms. Richardson is based in Hong Kong.


Mary Jo, a twenty‑something

mother of two, lay dying in a

New York hospital. Her kidneys

were failing. She needed a transplant in a

hurry. After weeks of waiting, her husband

Barry proposed a solution. He offered to

donate one of his own kidneys. He did not

realize what was to happen. During surgery,

something went wrong. Doctors removed

Barry’s kidney and were tying off his renal

artery with a Hem‑o‑lok surgical clip. Little

did doctors know that the clip was defective.

The Hem‑o‑lok dislodged after surgery. At

29 years old, Barry’s luck ran out. He lay in a

hospital bed and bled to death.

Had doctors been able to check the

Hem‑o‑lok clip before surgery, they would

have known that it was a recalled prod‑

uct. Today we do not have a good way to

track and remove recalled medical products.

The problem of defective merchandise is

becoming rampant. New products are intro‑

duced into the market each year. Some are

legitimate, such as generic drugs. Others

are cheap counterfeits that may do harm.

Consumers may end up buying devices and

drugs without knowing their authenticity.

Today we have no universal system for track‑

ing drugs and medical devices in the United

States other than what the Food and Drug

Administration (FDA) publishes on its Web

site. The FDA’s Web site is incomplete and

stated that it had complied and had notified

the hospital. Someone at the hospital dropped

the ball, and a patient lost his life.

Some healthcare companies have set

up their own registries to track products.

These private registries have shortcomings.

Registries may cover a small category, and

the information may not be available to all

doctors and hospitals. Kaiser Permanente,

for example, has a system to track implanted

joints. The company has a list of patients

and doctors who have implants. The registry

data, however, is not available to all hospitals

outside their system. Other registries exist to

track specific products, such as orthopedic

joints and replacement parts. Even within

these narrow registry databases, recalled

products can be missed.

Another problem arises when a consumer

tries to return an over‑the‑counter recalled

product. Often the customer is turned away

because the recalled product is not on the

store’s recall list. The customer is then stuck

with a potentially defective product until the

store can update its records. It’s bad enough

that customers ended up with a recalled

product that may be potentially dangerous.

It’s even worse when they can’t return it.

There must be a better way.

The FDA has offered ideas to improve the

current process. The agency has suggested

the use of a unique ID for each device and a

database of all recalled products. These ideas

alone, however, will not solve the problem.

How does this ensure that information is

available to consumers, pharmacists, doc‑

tors, hospitals, and so on? It doesn’t.

Before a device is used in surgery, wouldn’t

it be better if doctors could use a cell phone

connected to the Internet and scan a bar

code on the packaging? That would cer‑

tainly do it and doesn’t take long at all. Many


Bar Code Solutions for those Pharmaceutical and Medical Device Recalls That Never End

n By BArBArA DUCk

requires a great deal of time and research.

Users may spend hours researching lot num‑

bers and later realize that it does not cover

the product categories in question. End users

need a better solution.

Drugs and medical devices are not fail‑

safe and suffer from breakdowns and quality

control issues like everything else. Luckily we

have the technology today to better monitor

such problems. The use of bar coding could

be the solution. Bar coding can now be used

with Internet mobile devices, such as smart

phones and wireless devices. Technologies

such as Microsoft Tags allow users to check

the recall status and authenticity of a prod‑

uct with a swipe of a mobile phone.

Current methods to track and return

recalled products are ineffective. The FDA

Web site, for example, tracks only certain

product categories. In the case of medical

devices, the FDA currently tracks about 14

types of medical devices, well short of the

number of device types actually used in

the market. Finding information on the site

requires time‑consuming research. Users may

review hundreds of serial numbers and/or lot

numbers published by the FDA and compa‑

nies. Users then have to manually compare

the information with the lot number on the

product label. If someone at a clinic or hospi‑

tal were to check a large batch of products, he

or she would likely make an error.

Many hospitals use radio‑frequency iden‑

tification (RFID) systems to track and locate

devices and drugs. The problem with this

method is that items can be missed if they

were not assigned an RFID code. Several years

ago, a major hospital with a good system for

identifying recalled devices found that doc‑

tors at more than 40 hospitals implanted

recalled devices in over 50 patients. In the

case of the Hem‑o‑lok clip, the manufacturer

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facilities don’t have a system and rely on the

FDA Web site. They have to research the

information, print out a long list, and then

find and pull the product from inventory.

After reading stories on recalled devices

and publishing posts on FDA drug recalls, it

occurred to me that Microsoft Tags could be

the answer. Micro Tags are bar codes that are

designed to work with mobile devices. Once

software is downloaded on a smart phone,

it can be used as a scanner to get “valued”

information from bar codes. The process is

as easy as making a phone call.

Microsoft Tags are identifiers that con‑

tain rich information linked to the Internet.

Changes associated with Microsoft Tags can

be relayed to a wireless device immediately.

Information associated with a tag or bar code

could be updated at any time. Users can get

real‑time warnings and notices with a swipe

of a cell phone. Other bar codes exist, such

as the commonly‑used Quick Response (QR)

codes. The QR codes are used primarily for

marketing purposes. Microsoft Tags have

security features that are better suited for

identification of medical products. Microsoft

Tags can work through designated Internet

gateways. The gateways are encrypted and

cannot be hacked or tampered with. The

added security gives medical device and drug

companies assurance that their information

is correct and displayed as they have listed. In

addition, the Microsoft Tags can be reduced

to a much smaller size than QR codes. The

smaller bar code footprint and designated

gateway deter the use of copy‑cat bar codes

on counterfeit products.

The FDA could use bar code technology to

better monitor recalled products. The FDA

currently relies on announcements and press

releases to alert individuals. The procedure

is cumbersome when a recalled product

has a large range of identification numbers.

The Triad wipes and Tylenol bottles, for

example, have extensive identification lot

numbers. They are big and long. With bar

codes, product updates and alerts can be

synchronized with an FDA’s database almost

instantaneously. The new technology would

also allow the FDA to expand coverage of

pharmaceutical products, including expand‑

ing the current 14 medical device categories.

Microsoft Tags can be used to address

another problem plaguing the pharmaceuti‑

cal industry–fake and stolen drugs. Drug

piracy is rampant in the United States and

other parts of the world. Sometimes even

legitimate drugs are stolen and get sold back

to legitimate pharmacies. Eli Lilly had this

problem in 2010 with the big “Thomas Affair”

heist. To this day we don’t know where those

drugs went. They could have been resold

domestically or shipped out of the coun‑

try. Sometimes pharmacies can receive fake

drugs into inventory. Moreover, individuals

may buy such drugs over the Internet. Last

year counterfeit Alli products plagued the

market. The counterfeit product contained

sibutramin, which could cause bad reactions

when taken with other drugs. The counter‑

feit product was mainly sold on the Internet.

With Microsoft Tags, users can scan the over‑

the‑counter and a pharmacy could scan pre‑

scription drug bottle to check for authenticity.

Microsoft Tags also work with digital heat

maps to track the location of an item. A

scanned tag can be programmed to show an

IP address and the physical location with a

city and state. The tag can be set up for each

lot number. In the case of the stolen Eli Lilly

drugs, someone can identify the stolen product

simply by scanning it. He or she would know

immediately and could contact the authorities.

Further, Eli Lilly authorities would know the

exact location of the scanned item.

With this technology, users get immedi‑

ate information. Doctors can scan a package

before using a medical device in a surgery. In

the case of the Hem‑o‑lok, an unfortunate

death could have been avoided. Had bar scan‑

ning technology been used, such as Microsoft

Tags, surgeons would have known within 60

seconds that the clip was defective. Small

surgical centers, in particular, can benefit from

this as they have no way of checking devices

and products. Consumers also would have the

ability to check recall status of products at retail

stores. With a smart phone, consumers can

scan the label of a drug bottle before buying it.

Microsoft Tags have a number of other

uses. Tags work with personal health records

(PHR), such as HealthVault. Tags can be used

with e‑prescriptions to authenticate doctors

by pharmacists. Tags have a variety of uses

outside of health care. They are used by pub‑

lishing, retail, and consumer package compa‑

nies to obtain valued‑added information.

Microsoft received a U.S. patent for

inventing counterfeit‑ and tamper‑resistant

labels. The company continues to improve

on the already good security features of

Microsoft Tags. With some design work

and encrypted gateways set up for security,

we can have an improved recall system for

medical products. The new method would

be a vast improvement over the existing

system which relies on warnings and notices

sent through e‑mails, Web sites, and other

areas of communication.

Readers who

would like to

learn more about

these ideas should

visit the Medical

Quack. Or better

yet, if they have

downloaded Microsoft Tags, they can take

their cell phone, aim, and shoot. n

Barbara Duck is a heath care technology expert. She spent 20 years in the high technology logistics industry before becoming a writer and consultant in the health care field. She is the founder of Medical Quack, a blog devoted to improving health care services using technology. She has worked with health care and technology leaders, including Dr. Oz, Microsoft, Kaiser Permanente, Helicos, and Quest Diagnostics. She can be reached at [email protected].


lifeTech capitalunlocking the value of science for companies & Investors

ProFilED CoMPANiES

When I first met the LifeTech

Capital team at their biotech‑

nology conference in Boca

Raton, Fla. 18 months ago, I knew right

away that there was something special

about its approach to biotech research and

investment banking. As luck would have

it, I recently ran into them after seeing

the LifeTech Capital logo everywhere dur‑

ing the JP Morgan healthcare conference

in San Francisco. And boy, was I right!

After finding a new home and growing

the team, they had recently closed eight

investment banking and two M&A transac‑

tions in just six months, including Bionovo

(NASDAQ:BNVI), NeoStem (AMEX:NBS),

Echo Therapeutics (OTCBB:ECTE), Marina

Biotech (NASDAQ:MRNA), Stem Cells Inc.

(NASDAQ:STEM) and IsoRay (AMEX:ISR).

I asked Stephen Dunn, president and

senior managing director of research at

LifeTech Capital about what made them

unique. “From a research perspective, we

love the small‑ and micro‑cap biotech and

medtech companies, and we publish our

research not only through the traditional

institutional channels such as Thomson‑

Reuters First Call, but also on our Web site

where it’s downloaded by a variety of inves‑

tors, scientists, business development execu‑

tives, and even competitors. I believe the

smaller companies have a better risk‑reward

profile for percentage gains to the investor.

The hard part is that it requires excep‑

tional scientific, medical, regulatory, reim‑

bursement, and competitive due diligence.

Fortunately, our expertise in these areas gives

LifeTech Capital an edge for investors and

gives confidence to company management

teams and boards that we have an in‑depth

understanding of their complex science and

business.” Seeing Dunn appear on stage and

speaking on three different expert panels

covering molecular diagnostics, infectious

diseases, and oncology during the JP Morgan

conference, I can personally attest that his

expertise and opinions are in demand by

both the industry and investors. He is one

of the few Wall Street analysts that appear in

both the financial and the scientific media.

I also spoke with Bob Keyser, CEO and

senior managing director of investment bank‑

ing and asked him what it was like working at

LifeTech Capital and the secret to its success.

“It’s exciting to be a part of a focused life sci‑

ences investment banking team and bringing

a level of expertise to the company’s executive

management team and board that isn’t found

at many of the larger banks covering multiple

industry sectors. As part of a smaller executive

team we develop relationships with our clients

on both the corporate side as well as the capi‑

tal markets side and provide the personal ser‑

vice that used to be a part of Wall Street. It is

very rewarding when you are able to match the

financial needs of a company with investors

who understand a financing strategy designed

to create growth and capital appreciation.”

On the secret to their success, he added,

“When we meet with a corporate client we

spend time working with the CEO and CFO

to make sure that the financial needs match

up with the business plan to create the financ‑

ing strategy. What we see many times is that

in the past, the company was involved in

‘reactive’ financings based on market condi‑

tions rather than being based on the capital

needs of the business plan. We try to educate

the executive management team, as well as

the board, on the various financing options

available to them to meet the needs of their

business plan. With our strong capital mar‑

ket relationships we are able to match the

investors with the corporate client to create

not just one, but multiple structures that are

designed to meet the needs of the company.”

Doug Armstrong, who holds a Ph.D. in

pharmacology from the Medical College of

Virginia and a BA degree in chemistry from

the University of Richmond, is the senior

managing director of corporate finance at

LifeTech Capital. His unique background as

a seasoned life science executive brings a fresh

perspective to Wall Street’s capital markets.

He served as CEO of Aastrom Biosciences

(NASDAQ:ASTM) and TyraTech (AIM:TYR)

and led them both through their initial public

offerings. Armstrong has personally run capital

raising programs for over $300 million, through

a variety of public, PIPE, and other structured

deals, including a specialty in strategic partner‑

ing transactions with capital investment.

Armstrong described his experience and

outlook, “I’ve spent over 20 years as CEO

or chairman of emerging growth life science

companies, and went through the roller coast‑

er ride of success and failure that develop‑n By ShElly krAFT

Stephen Dunn (third from left), president and senior managing director of research at LifeTech Capital, speaks to a panel of experts at the 2011 JP Morgan Biotech Showcase Conference, which was held in San Francisco on January 11-12.


ment stage companies must endure. During

this period, I raised quite a bit of funding

for my companies, with financings that went

from large IPOs to small strategic placements

just to ‘keep the doors open’. Having an effec‑

tive ongoing relationship with a knowledge‑

able investment banker was always beneficial

in my strategic planning; however, during the

past 15 years, I’ve seen the role of investment

banking in the small‑ and micro‑cap space

decline from being a strategic partner to the

company, to one of simply ‘flipping term

sheets’ with no or limited understanding of

the company or its real needs.”

So what attracted him to LifeTech Capital?

Armstrong answered, “I joined LifeTech

Capital to be a part of a team that returned

to the roots of investment banking. Our

approach is to be an effective and ongoing

strategic partner with the management team

and developing effective capital strategies

aligned with their operational strategy. I’ve

found that my experience as a former CEO

and chairman meshes well with the strong

capital markets skills of my partners, and

appears to elicit stronger communication

with the companies and the institutional

funds to better achieve this goal.” He went

on, “LifeTech Capital’s objective is to for‑

mulate the most effective communication

of the company’s value proposition to the

appropriate institutions. Effectively meet‑

ing this objective enables a better structured

investment that’s good for the company

and the investors. The institutional funds

are quite responsive to our approach which

differentiates LifeTech Capital from other

investment banks. Furthermore, we find that

investors are more inclined to move outside

of their normal box of investment structure

when they understand the real opportunity.”

A year ago, the LifeTech Capital team found

a new home as a division of New York‑based

Aurora Capital, which also has roots in micro‑

cap biotechnology companies. I spoke with

Jeff Margolis, CEO of Aurora Capital, about

LifeTech’s synergies. Margolis said, “LifeTech

Capital is a direct complement to the pre‑

existing strengths and activities of Aurora

Capital. Clearly, the institutional research has

been a major plus. The synergies were clear,

demonstrable, and actionable since LifeTech

also fills a large gap in the investment bank‑

ing services we would otherwise be offering

to life science companies and their investors.

The pre‑existing Aurora efforts were in mer‑

chant banking, while the LifeTech services

were more in traditional investment banking;

melding the two brings more to the table

for our clients. By providing a variety of the

historical Aurora Capital services, as those

clients mature, we continue to provide them

with the services that LifeTech Capital deliv‑

ers so well.” But the bottom line for Margolis

was simple, “In any organization, the people

are everything. It was an opportunity to work

directly and intimately with professionals that

we have known, respected, and liked for many

years. The LifeTech team’s ability to think and

act creatively is very impressive. The results

can only be great when you are working with

great people.”

Some more of those great people on

the LifeTech Capital team include William

Dawson, senior vice president of research.

Dawson holds degrees in biochemistry

and business management. Craig Pierson,

managing director of investment banking,

is a product of the Rochester Institute of

Technology for chemical engineering and

MIT for the executive pharmacology pro‑

gram. Sachin Kelkar, senior vice president

of investment banking, worked at Abbott

and Genentech and has an MBA from the

University of Chicago.

Stephen Dunn summed up LifeTech Capital,

“Our motto is ‘Unlocking the Value of Science,’

and we strive to achieve this throughout our

entire organization. From our published insti‑

tutional research reports to our investment

bankers and capital markets team, we put in

tremendous hours doing our homework in

the complex world where the life sciences and

Wall Street intersect. The goal of all this effort

is to make everybody a winner by providing

investment ideas and opportunities to Wall

Street and retail investors, raising capital for

companies to develop and commercialize their

medical discoveries, and helping the ultimate

winner, the millions of patients worldwide

who will benefit from these efforts.”

I have to say that the combined smarts,

energy, and enthusiasm of the LifeTech Capital

team is something I haven’t seen in a long

time and I strongly recommend that investors

interested in biotech put these guys on their

radar screen immediately. The company’s Web

site is at www.LifeTechCapital.com and the

management team can be reached at the

following e‑mail addresses: Stephen Dunn,

[email protected]; Bob Keyser, bob@

lifetechcapital.com; and Doug Armstrong,

[email protected]. n


Safe Harbor Statement: The statements in this advertorial or profile relating to future products, partnerships, technology, and positive direction are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some or all of the aspects anticipated by these forward looking statements may not, in fact, occur. Factors that could cause or contribute to such differences include but are not limited to contractual difficul‑ties, demand for the Issuer’s common stock, and the company’s ability to obtain future financing. Micro‑cap Review Magazine may have received payment to publish and print this advertorial or corporate pro‑file. Micro‑cap Review Magazine disclaimers apply and may be reviewed at www.microcapreview.com/disclaimer.php. Before investing in any security, you are strongly advised to review all public filings of the issuer of such security, which can be found at www.sec.gov, as well as warnings published by the SEC at www.sec.gov/investors and to consult with your professionals.

Stephen Dunn, president and senior managing director of research at LifeTech Capital, reviews documents at his desk.

GHS’ Recent Transactions

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Measuring our success by the only metric that counts:

Extraordinary Value For Our Clients

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www.ghsecurities.com

PIPE

A SNN INCORPORATED AND MICRO-CAP REVIEW MAGAZINE SURVEY On behalf of you, our subscribers and readers, additional information about companies in this issue will be forwarded to you by checking the box and submitting your request. Information will be forwarded to you by mail or email.q Advaxis q Bar Code Solutions for those Pharmeceutical and and Medical Device Recalls that Never Endq Biotech Medicsq BIOTECHNOLOGY: Investing in Improving The Human Conditionq Cambridge House Conferencesq Cambridge House NY Conferenceq CheckAlt Payment Solutionsq Corprominence IRq DealFlow Conferenceq The Deadliest Deficiency q EDG Groupq FSX Conferenceq Full Bore or Bust!q Global Hunter Securitiesq Global Outlook for M&A Activityq ILSI Bio Medq Internet IPO'sq Investor Consultantsq Japan Memorialq Landmark Printq LifeTech Capital - Unlocking the Value of Science for Companies & Investorsq Lights, Camera, Action for SNN VPRsq Medical Alternatives for the 21st Century!q Medical Tourism in South East Asiaq Medicine Masters of the Future q Micro-Cap not Micro-Crap by Ask Mr. Wallstreet

q Mines and Money Conference in Hong Kongq Must Read for Traders and Investorsq NIBA Conferenceq NY Hard Assets Conferenceq New Orleans Conferenceq Ombudsman: It Is Time for Spring Cleaningq On the Marketq Oncology Drug Research Enters New Eraq Oswald & Yapq 144 Opinionsq Planet Micro-Cap Inc.q Profit Plannersq Revolutionary Technology Combines Nature and Science - Resulting in a Botanical Drug Candidate Targeted at Type 2 Diabetesq Revolutions Medical q The Right Patents Can Create Black Swan Super Growth Opportunitiesq SNN-VPR (Video Press Release)q Searching for Micro-Cap Biotech Fundq Small Biotech With A Big Drug Platform Profileq Stellar Biotechnologies Q&A profile (centerfold)q TSXq U.S. Jobs Depend on Funding Micro-Cap Companiesq Vintage Filings q Wall Street Chickenq Washington Healthcare Updateq Wound Management Technologies Profileq XBRL - What You Need to Know Now!

1. Would you invest in a professionally managed Micro-Cap Fund? q Yes q No q I need to know more about it

3. What can a CEO do to incrrease your trust in him/her? q Buy back stock in their own company q Issue a dividend when cash is available and not needed for growth q Reduce company expenses including lowering his/her salary q Raise more money for the company q Oversee the exercise of exisiting warrants

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2. What country’s Micro-Cap companies are you most interested in? q US q Canada q China q Israel q Brazil q Other_________________________

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6. Should a CEO of a micro-cap company promote the the company using social networks? q Yes q No

Please take the time to answer some simple survey questions so that we may provide the most comprehensive information, stories of interest, investment ideas, and industry analysis in future issues of Micro-Cap Review. We thank you in advance for your participation.

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Check off areas of interest


ProFilED CoMPANiES

advaxis Incorporated

recruit to protect them from therapeutic

immune attack.

Previous immunologic cancer treatments

were able to strongly activate the immune

system but were rendered ineffective by

endogenous sources of immune inhibition

within the tumors themselves. Advaxis has

demonstrated that its Listeria vaccines can

reduce the number of regulatory T cells and

Myeloid Derived Suppressor Cells (MDSC).

This renders tumors susceptible to immune

attack. The ability to reduce the effect of

immunosuppressive cells within tumors

is currently under clinical investigation by

other companies and is believed to be a

significant mechanism of achieving a thera‑

peutic response.

Unlike other vaccines, Listeria vaccines

stimulate every immune pathway simul‑

taneously and in an integrated manner. It

has long been recognized that cytotoxic T

lymphocytes (CTL) are the elements of the

Advaxis vaccines, developed under license

from the University of Pennsylvania, secrete

a protein sequence containing a tumor‑

specific antigen that elicit a robust, compre‑

hensive immune response. This proprietary

and patented vaccine technology is capable

of stimulating the body’s immune system to

process and recognize the selected antigen

as if it were foreign; generating an immune

response to attack the cancer tumor. This

is a broadly enabling platform technology

that can be applied to the treatment of many

types of cancers, infectious diseases and

auto‑immune disorders.

markeT OPPOrTuNITIes FOr

advaxIs

Advaxis is targeting the multi‑billion dollar

cancer market with its unique therapeutic

cancer vaccines. With a total market size of

$47.7 billion, cancer is one of the largest and

fastest growing markets in the pharmaceuti‑

cal industry. The market will continue to

grow in the future. Total oncology sales are

estimated to be $65.2 billion in 2014.

LISTERIA vaccINe

TechNOlOGy

Advaxis vaccines fight cancer by stimulating

the production of cytotoxic T cells. These

vaccines can increase the synthesis of antigen

presenting cells (APCs), as well as the num‑

ber of available activated immune cells that

underlie a cancer‑ killing response. Advaxis‑

bioengineered Listeria’s payload includes an

antigen fused to an Advaxis patented pro‑

tein (LLO), the immunotherapeutic con‑

struct can stimulate the synthesis, release

and expression of various chemicals which

stimulate a therapeutic immune response.

They can also reduce the number and func‑

tion of immunosuppressive cells that tumors

Figure 1: Advaxis’ Development Pipeline

Product Indication Stage

ADXS11-001 Cervical Intraepithelial Neoplasia (CIN)

Phase II Dosing commenced in May 2010 for the company sponsored, blind-ed, placebo-controlled, randomized, 120 patients, U.S. study.

Cervical CancerPhase II Company sponsored study initiated in November 2010 in India. Study involved 110 patients with advanced cervical cancer.

Cervical Cancer Phase II The Gynecologic Oncology Group of the National Cancer Institute has agreed to conduct a study which is expected to begin in the second quarter of 2011.

Head and Neck CancerPhase II The Cancer Research UK (CRUK) is funding a study of up to 45 patients at three UK facilities that is expected to commence in the second quarter of 2011.

ADXS31-142 Prostate Cancer Phase I Company sponsored (timing to be determined).

ADXS31-164 Breast and Brain Cancer Phase I Company sponsored (timing to be determined).

ADXS31-164 Canine Osteosarcoma Phase 1 Company sponsored (timing to be determined).

Source: Advaxis filings/Web site and Zacks Investment Research

Advaxis (OTC: ADXS) is an immunotherapy company focused on the research, develop‑

ment and commercialization of therapeutic Listeria‑based cancer vaccines.


immune system that kill and clear cancer

cells. The amplified CTL response to Listeria

vaccines is one of the strongest stimulators

of CTL yet developed, but just as important

is the ability Advaxis construct have to cre‑

ate a local tumor environment in which

these cells can be effective. This efficacy

likely results in part from the fusion of LLO

to the secreted tumor antigen. Many stud‑

ies have shown that LLO is a very strong

source of immune stimulation independent

of Listeria. By fusing a molecule with strong

adjuvant properties to a tumor antigen, and

then having it synthesized and secreted by

live bacteria directly, an unusually powerful

and complete immune response is generated.

Advaxis has focused its efforts on devel‑

oping cancer immunotherapeutics target‑

ing cervical cancer, its predecessor condi‑

tion, cervical intraepithelial neoplasia (CIN)

commonly known as cervical dysplasia, head

and neck cancer, breast cancer and prostate

cancer, among others. Figure 1 provides a list

of lead products that the company is cur‑

rently developing.

Recently, Advaxis has shown that Listeria‑

LLO (Lm‑LLO) vaccines can cause epitope

spreading. This means that these vaccines

can stimulate the immune system to respond

to more antigens than the one they are

designed to attack and broadens the immune

attack and results in a more therapeutic

response. Similarly, Listeria induces strong

immune memory that occurs very rapidly.

This memory provides long‑term immune

protection against disease. Advaxis’ live,

attenuated Listeria vaccines do not stimulate

antibody formation. Other types of cancer

vaccines, such as those that use viruses,

develop antibody responses which inacti‑

vate them and prevent them from being

used repetitively in a vaccine regimen. These

types of vaccines are inactivated by antibody

responses before they can effectively deliver

their immune payload which prevents them

from stimulating a therapeutic response.

Advaxis’ vaccines can be used effectively in

a multidose vaccine regimen, given they are

not inactivated by antibody responses.

Perhaps the most distinctive feature of

Listeria‑based vaccines is their ability to alter

the tumor microenvironment. It is now

known that stimulating the immune system

is not sufficient by itself to treat cancer.

Tumors have the ability to turn off activated

immune cells once they get into the tumor

tissue. Tumors create within themselves this

immune privileged space, which Listeria vac‑

cines can reverse. Listeria vaccines achieve

this by increasing the amount of cytotox‑

ic T cells and simultaneously decreasing

the amount of regulatory T cells, myeloid‑

derived suppressor cells within the tumor

cells (see Figure 2). This enables the strongly

activated immune system that Listeria stim‑

ulates to be effective within tumors, some‑

thing other technologies cannot do. n

Figure 2: Increasing the “Kill Ratio” Inside the Tumor

Vaccine Killer T Cells (%) Regulatory T Cells (%) Killer Ratio

Listeria E7 9.4 11.8 1.0 : 1.3

(-LLO)

ADXS11-001 36.8 1.7 22.7 : 1.0

(+LLO)

Source: Advaxis company presentation

Advaxis has focused its efforts on developing cancer immunotherapeutics targeting cervical cancer, its prede-cessor condition, cervical intraepithelial neoplasia (CIN) commonly known as cervical dysplasia, head and neck cancer, breast cancer and prostate cancer, among others.

Disclaimer: This corporate profile is based upon infor-mation provided by the issuer or company representa-tive. The information is not intended to be, and shall not constitute, an offer to sell or solicitation of any offer to buy any securities. It is intended for information purposes only, and to increase awareness of the com-pany profiled.

Safe Harbor Statement: The statements in this advertorial or profile relating to future products, partnerships, technology, and positive direction are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some or all of the aspects anticipated by these forward looking statements may not, in fact, occur. Factors that could cause or contribute to such dif‑ferences include but are not limited to contractual difficulties, demand for the Issuer’s common stock, and the company’s ability to obtain future financing. Micro‑cap Review Magazine may have received pay‑ment to publish and print this advertorial or corpo‑rate profile. Micro‑cap Review Magazine disclaimers apply and may be reviewed at www.microcapreview.com/disclaimer.php. Before investing in any security, you are strongly advised to review all public filings of the issuer of such security, which can be found at www.sec.gov, as well as warnings published by the SEC at www.sec.gov/investors and to consult with your professionals.


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ProFilED CoMPANiES

stellar biotechnologies, Inc.3. Why does it affect the human immune

system like it does, and what are the current

uses of KLH ?

Our scientists can make these points

clearer, and our corporate profile on the

company’s Web page explains it better. But

here goes: essentially KLH is a huge, non‑

human molecule with important sugar‑like

“decoration” on its surface. It acts like a big

red flag to our immune systems, shouting “I

don’t belong here! Attack me and anything

is attached to me!” The real key is that KLH

then passes out of the body with no harmful

side‑effects; there is little to no known toxic‑

ity in the quantities used.

Currently KLH is used as a vaccine car‑

rier protein that directs the immune system

to attack specific targets like cancer cells.

KLH is also used to challenge the immune

system to test the immune response. Based

on research to date, our scientists believe

that another potential $1 billion/year market

exists for KLH for which it is not currently

used. Moreover, in the future we believe

another multi‑billion dollar market may

exist for KLH as an enabler of a novel devel‑

opment platform for medical treatments.

4. Will Stellar market a diagnostic test kit?

Yes, we’ve issued a press‑release about how

our preclinical immunotoxicity test kit will be

market‑ready this year. We are hard at work on

bringing a human primary immune response

diagnostic forward. That is a product that we

believe does not currently exist in any other

form, nor is it produced by any other company.

5. Stellar has a tiny market capitalization.

In light of that, can you discuss the compa-

ny’s financial profile–its capital structure,

revenues, margins, and profitability?

Stellar has raised $8.5 million to date and

has 40 million common shares outstand‑

ing. The company has outstanding war‑

rants from previous financings that can add

another $11 million in potential funding.

Shelly Kraft recently sat down with

Darrell Brookstein, the executive vice‑

president of corporate development

and finance of Stellar Biotechnologies. They

talked about Stellar’s innovative work in

cancer and therapeutic vaccines. Excerpts of

the interview follow.

1. It’s clear from the corporate pro-

file on the company’s Web page, Stellar

Biotechnologies (www.StellarBiotech.com/

investors/presentation) is in both the phar-

maceutical and biotechnology industries.

Can you tell us more about those markets

and how do you make money?

Thanks for having us, Shelly. You’re cor‑

rect. Stellar has feet in both the biotech and

pharma worlds. We work with an important

immune stimulant and carrier protein that’s

currently used in cancer and other therapeu‑

tic vaccines. The vaccines are in the regulatory

approval process or being used in research for

lupus, Alzheimer’s, rheumatoid arthritis, and

other diseases. It’s important to realize that

these are not vaccines that prevent disease.

They are disease treatments or therapeutics

that slow progression or prevent recurrence.

We’ve been selling to large pharmaceutical

companies and small biotechnology com‑

panies that develop vaccines. We also have

a standardized preclinical immunotoxicity

diagnostic test that we’ve developed ourselves.

The product does not require FDA approval,

and we expect to begin selling the product

this year. We project over time that this could

generate over $50 million a year in revenue

for us. We “discovered” that product oppor‑

tunity on our way to developing a diagnostic

test for clinical (human) immune status.

2. I know “KLH” is your product name

but it’s also your stock symbol on the TSX

Venture Exchange (or SBOTF in the U.S.

market). What is KLH?

KLH is shorthand for keyhole limpet

hemocyanin. The biological product has been

used for decades and is well understood. It

comes from the blue blood (or hemocyanin)

of a rare mollusk called the California giant

keyhole limpet. The mollusk can only be

found in the coastal waters from Monterrey,

California to northern Baja, Mexico. The

population of this rare species is shrink‑

ing. The hemocyanin is blue because it’s

copper‑based; our blood is red because it’s

iron‑based. KLH is a huge, powerful immu‑

nogenic molecule that can be processed from

the hemocyanin. The Wikipedia page for

“keyhole limpet hemocyanin” has most of

the important details. Our Web site, www.

StellarBiotech.com, tells more. We believe

that we are the only company with a sustain‑

able and renewable supply of KLH and can

commit to long‑term contracts. That’s largely

because we received over $6 million of non‑

dilutive research funding from the National

Institute for Health and National Science

Foundation from 2000 to 2009.

GMP grade (“good manufacturing prac‑

tice”) KLH is the pharmaceutical grade for

human use. Stellar develops products in that

grade, where the KLH sells for from $5,000 to

$200,000 per gram, depending on the purity,

quantity, format, and formulation. One could

say it’s akin to diamonds, but we’re dealing

with a much more valuable product.

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We are well‑capitalized to meet our current

goals until the latter half of 2012 without

having to use those additional funds. We

have set the stage to grow aggressively after

2012. Unlike many “early‑stage” biotechnol‑

ogy companies, our California subsidiary

has been in business for a decade and has

had revenues for about four or five years

already. I expect the subsidiary to generate

earnings, as opposed to revenues, sometime

in 2013/2014 on a run‑rate basis.

6. Does Stellar’s KLH need FDA approval?

Our preclinical diagnostic kit does not

require FDA approval. Our Stellar KLH/

Subunit product already has an FDA filing

to support use as a key ingredient for thera‑

peutic vaccines. We are rapidly moving our

Stellar KLH/IMG product through the work

necessary to gain key FDA approvals.

7. What is the current size of the KLH

market, present and future growth?

We estimate current total KLH use at

around 2 kilograms/year, a small percentage

of which is GMP‑grade. Obviously, since a

single, approved cancer vaccine could use 5

kilograms/year of GMP‑grade KLH or more,

we believe the market could be explosively

higher over the next 2‑5 years. In light of the

shrinking natural resource, Stellar expects

that our aquaculture capabilities will posi‑

tion the company as the only reliable source

of sustainable KLH supplies.

8. How do you differentiate yourself from

your competitors?

We know of only two competitors in GMP‑

grade KLH. One is a Fortune 2000 company

that uses our Stellar KLH/ASP product as

its starting material. The other is a small

European nutraceutical company that has

a freeze‑dried subunit KLH. We have not

seen that either of these companies has the

intellectual property or the licenses to do

aquaculture or non‑lethal extraction of the

hemolymph, both absolute necessities to have

a dependable supply of KLH, much less to

grow supplies to meet increases in demand.

9. Please tell me about the management

team.

We have all the required elements of a

strong management team: executives and

leaders in protein chemistry, aquaculture,

marine biology, marketing and business

development in vaccines, medical diagnos‑

tics and novel therapeutics, immunology,

and molecular biology. I believe that we

also do a very good job in investor relations.

Details of our management team and the

company’s Scientific Advisory Board mem‑

bers can be found at http://www.stellarbio‑

technologies.com/corporate/management/.

10. I read on your Web site that Stellar

actively seeks innovations in other com-

panies and academic research centers that

will enhance the company’s capabilities

and augment its therapeutic and diagnostic

offerings. Can you expand?

Yes. When we see promising intellectual

property (IP) held at a university or within

a company that will help us grow the KLH

market, we may pursue an “in‑licensing”

agreement. Under this arrangement, we have

use of their patent for a specific research

or application. This is the reverse of “out‑

licensing” where Stellar would allow other

companies to use part of our KLH‑based

technologies for a specific purpose, such as a

drug to treat a specific disease.

We have recent examples of both. We’re

examining two situations to in‑license IP

or co‑venture with companies to develop

a clinical pathway for FDA approval. Both

approaches may help Stellar to become a

leader in designing research and develop‑

ment platforms for vaccines or drugs. We

also have ongoing discussions with major

companies that want to use our KLH exper‑

tise to help them solve problems. Our scien‑

tists could help save such companies billions

of dollars in drug development costs, some‑

thing very timely in this era of soaring costs.

11. How involved in product develop-

ment are noted scientists on your Board

and Scientific Advisory team, such as

Scientific American Top 50 researcher,

Daniel Morse, Ph.D. from UCSB; Professor

Emeritus Malcolm Gefter from MIT; and

Andrew Saxon, M.D., the discover of AIDS

from UCLA?

They are quite involved. Sometimes it’s an

interesting direction based on long experi‑

ence. For example, Dr. Saxon is very involved

with the immune response community

worldwide. He is helping our team develop

the immune response diagnostics to meet

requirements of key opinion leaders in the

field. Sometimes an inspired re‑examination

of recent research may show the potential

use of KLH in a novel way. For example, Dr.

Gefter from MIT recently proposed that we

take a closer look at a small private company

with an interesting drug platform that he

believes will be enhanced with KLH.

12. What important alliances and part-

nerships does the company have?

We disclosed previously the compa‑

ny’s important involvement with Bayer

Innovation and Neovacs. We only recently

began looking at joint relationships and

long‑term supply and co‑development

agreements with vaccine and novel thera‑

peutic developers, pharmaceutical compa‑

nies, and diagnostic companies. We recently

hired our first vice‑president of business

development and marketing. This execu‑

tive has generated over $250 million in past

deals, and we expect him to lead immedi‑

ately with our strongest areas of growth.

In closing, Darrell, how can readers con‑

tinue following your progress?

I would welcome them to sign up to receive

updates and press releases by e‑mail at the

company’s Web site at www.StellarBiotech.

com. Thank you, Shelly. n

Darrell Brookstein is the executive vice‑president of corporate development and finance and a director of Stellar Biotechnologies. He started working with Stellar in 2008. From 2001 to 2009, Mr. Brookstein was the managing director of the Nanotech Company, LLC. Prior to Nanotech, he founded sev‑eral financial firms that invested in securities, futures, natural resources, and technology companies. He has worked closely with many leaders in these fields, including Forbes 400 and National Academy of Sciences members. Mr. Brookstein has written about corporate development and investment in mining and technology companies. He has authored books and published newsletters, including The Prospector and Nanotech Fortunes. He received his B.A. degree from Duke University.


F E AT U r E D A rT i C l E

Life Sciences Drive Global M&A Deals

The reason for this is simple. Global phar‑

maceutical companies are driving much of

this activity. Big pharmaceutical companies

have a voracious appetite for new products.

They have no choice. Management is under

constant pressure to keep a stock valuation

that is based on high earnings growth. Many

companies can’t sustain this earnings growth

because they simply do not have enough new

products in the pipeline. This issue is even

more evident when dealing with a company

that has a therapeutic drug.

Therapeutics offers the greatest upside to

life science companies. Companies that sell

effective therapeutic compounds to treat a

disease, for example, stand to make billions

of dollars. The issue for most companies

is the time required to develop and bring a

drug to market. The development timeline

of a therapeutic compound, from discovery

to commercialization, may take up to ten

years. Often the compounds do not make

it through the FDA’s clinical trial process.

When this happens, a company is forced to

bypass the lucrative U.S. market and forfeit

potentially huge profits. Public companies

in particular need to justify valuations based

upon current and future earnings expecta‑

tions.

To illustrate the need to consolidate, let’s

look at an example. As of the writing of

this article, a certain global pharmaceutical

company, which we will refer to as Lifeco,

had a market capitalization of approximately

$110 billion. Lifeco has a five‑year earnings

per share growth estimate of 14 percent.

Earnings must grow at that rate for the next

five years to justify the current market value,

not to mention growth beyond the five‑year

period. Assuming earnings will grow only

at U.S. GDP levels after the fifth year, Lifeco

must grow earnings at this reduced level for

15 more years to justify its current market

value.

To meet a nominal 10 percent earnings

growth expectation, a company must intro‑

duce three to four new products that will

produce a minimum of $500 million in sales

every year. Given that the 10 largest glob‑

al pharmaceutical companies collectively

launch only 23 such products a year, a signif‑

icant gap exists between the actual earnings

potential and the imbedded market value

of these companies. To meet these growth

expectations, global pharmaceutical compa‑

nies must replenish their pipeline with new

products and compounds so that their stock

prices do not take a beating.

As a result, the outlook for global M&A in

the life sciences remains strong. n

Seth Yakatan is a co‑founder and partner of Katan Associates. Katan Associates provides corporate strat‑egy and finance advisory services to companies in the life science industry. Mr. Yakatan has over 20 years of experience in corporate finance. Before founding Katan, he worked at several venture capital firms. He is a recognized expert in the valuation of life science companies and is a regular speaker at many industry events. Mr. Yakatan holds a MBA degree in finance from the University of California, Irvine and a B.A. degree from the University of Denver. He can be reached at [email protected].

n By SETh yAkATAN, Partner, katan associates

Companies in the life science industry seem to be in the thick of most mergers

and acquisitions. The deal sheets of magazines and newspapers are filled with

multi‑million dollar transactions involving some biotechnology, health care, or

pharmaceutical companies.

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wound management Technologies, Inc.

ProFilED CoMPANiES

Wound Management Technologies, Inc.

(PINK: WNDM) is an emerging com‑

mercial stage company with primary products

in the $5 billion worldwide advanced wound

care market. Wound Management’s primary

focus is the distribution of its unique, pat‑

ented collagen product, CellerateRX®, which

is FDA cleared and reimbursable under

Medicare Part B. It has proved to be both

clinically and cost effective with broad uses

over a wide spectrum of wounds.

Since April 2010, the sales team has been

implementing Wound Management’s go‑to‑

market strategy for CellerateRX in both the

U.S. and international markets. This strategy

includes distribution agreements with major

health care distributors, channel partners,

health care facilities, retail product special‑

ists, and international distributors. Wound

Management has other advanced biotech

products in development, including a pat‑

ented resorbable bone wax line that is in late

stages of development, as well as a subsidiary

focused on technology for secure healthcare

data collaboration and storage.

The company’s 2010 revenues increased

by over three times from the previous year’s

revenues. Wound Management is positioned

to become cash flow positive and profitable

in the next 12‑18 months with 2011 revenues

projected at $6 million, a direct result of the

50+ opportunities in the sales pipeline.

CellerateRX targets a multi‑billion dollar

domestic and international wound care mar‑

ket with over 60 percent profit margins. A

large part of the growth in the wound care

markets is from diabetic ulcers. The advanced

wound care market is over $5 billion world‑

wide now. Forecasts show that by 2025 just

the global diabetic market alone could have

in excess of 48 million patients that could be

a candidate for CellerateRX. It is estimated

that aging populations and the increase of the

number of patients diagnosed with diabetes

will fuel rapid growth of this market as up to

25 percent of patients with diabetes will devel‑

op a wound at some point in their lifetime.1

CellerateRX®’s patented, activated collagen

(approximately 1/100th the size of native

collagen) delivers the essential benefits of col‑

lagen to a wound immediately, where other

forms of native, intact collagen in commer‑

cially available products require time for the

body to prepare the collagen for use in the

wound healing process. In people with com‑

promised health or circulation, the difference

in wound healing can be significant. More

information about numerous evidence‑based

studies can be found at www.celleraterx.com.

Next in the biotech pipeline are products

from the Resorbable Orthopedic Products

subsidiary. The resorbable bone wax and bone

void fillers are being developed from a pat‑

ent that Wound Management Technologies

acquired in 2009. The products are in the $1.4

billion worldwide bio‑materials market. The

company plans to file 510k’s with the FDA and

ready the product for marketing in 2011.

Also in the product pipeline are secure

healthcare messaging and communications

products from the Secure eHealth subsid‑

iary. The CifraHC, a secure messaging and

encrypted transport mechanism, was includ‑

ed in the Interoperability Showcase at the 2011

HIMSS (Health Information Management

and Systems Society) Conference. The show‑

case is the nation’s premier forum to highlight

the Integrating the Healthcare Enterprise’s

(IHE) common framework for interoperabil‑

ity across local, regional and national IHE’s.

The cOmPaNy’s 18 mONTh

value GrOwTh mIlesTONes –

aNNOuNced IN JaNuary 2011

• Targeted to be cash flow positive and

profitable.

• U.S. market rollout will include direct to

consumer sales (TV and Internet), at least

three major U.S. healthcare systems, and sub‑

stantial sales to U.S. government agencies.

• At least two major international distribu‑

tors will be actively selling products.

• New resorbable bone wax products will

be approved and in the market.

• Move to NASDAQ or AMEX exchange.

Wound Management invites investors to

discover more about the company and its

products at www.wmgtech.com and www.

celleraterx.com. The information is updated

daily via a Web site mailing list, as well as

though social media channels on Twitter,

LinkedIn, Facebook, and YouTube.

Wound Management has entered a new

chapter in its history as the company moves

towards profitability and growing market

share. More and more people know about

Wound Management and about CellerateRX.

The distribution and marketing channels in

the United States and internationally contin‑

ue to expand because the products uniquely

fill a need in the growing advanced wound

care market. At the same time, the company

is also working on new product pipeline ini‑

tiatives to add enhanced value in the future.

Investors can expect to hear more news

about the company’s remarkable products in

the near future. n

Disclaimer: This corporate profile is based upon informa-tion provided by the issuer or company representative. The information is not intended to be, and shall not constitute, an offer to sell or solicitation of any offer to buy any securities. It is intended for information purposes only, and to increase aware-ness of the company profiled.

Safe Harbor Statement: The statements in the press release that relate to the company’s expectations with regard to the future impact on the company’s results from new products in development and any other statements not constituting historical facts are “forward-looking statements,” within the meaning of and subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Since this information may contain statements that involve risk and uncertainties and are subject to change at any time, the company’s actual results may differ materially from expected results. This docu-ment may contain forward-looking statements concerning the Company’s operations, current and future performance and financial condition. These items involve risks, contingencies and uncertainties such as product demand, market and cus-tomer acceptance, the effect of economic conditions, competi-tion, pricing, the ability to consummate and integrate acquisi-tions, and other risks, contingencies and uncertainties detailed in the Company’s SEC filings, which could cause the company’s actual operating results, performance or business plans or pros-pects to differ materially from those expressed in, or implied by these statements. The Company undertakes no obligation to revise any of these statements to reflect the future circumstances or the occurrence of unanticipated events.

WN DM.QB | WNDM.PK1 HME Business Management Solutions, October 1, 2010


F i N A N C E

Dr. JohN FAESSEl

neuronal growth within the fetal brain that

could lead to autism and other disorders

of presumed neurodevelopment origin, like

schizophrenia and cerebral palsy.* (http://

www.ncbi.nlm.nih.gov/pubmed/15546155)

More recent research from January‑

February 2011 at the Department of

Neurochemistry, New York State Institute

for Basic Research in Developmental

Disabilities, reported similarly, “Our find‑

ings suggest that inflammation and apopto‑

sis may play a significant role in the patho‑

genesis of autism...”

( h t t p : / / w w w . n c b i . n l m . n i h . g o v /

pubmed/20399529)

It has long been known that rubella/

measles is the principal non‑genetic cause

of autism, so the conclusions above do

make “connect the dots” sense. Star has

recently trademarked a product called

Anatabloc™ and the picture of the container

that I’ve viewed on the Internet indicates

that its “Anti‑Inflammatory Support Lowers

C‑Reactive Protein Dietary Supplement.”

(Again CRP is the critical marker.)

Medical research is now unwavering in

its assessment that low‑grade inflamma‑

tions, once they becomes chronic, do sig‑

nificant 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, diminish,

or block the process of inflammation.

The recently published graph below from

the Roskamp Web site shows the astonishing

effects of the naturally occurring compound

anatabine (RCP006) on the molecule that

typically causes inflammation during bacte‑

sTar scIeNTIFIc INc.

(NasdaQ: cIGx)

“The single phenomenon that holds the key

to sickness and health –

The holy grail of medicine”*

Today the study of inflammation is ascen‑

dant in medical research. Thousands of arti‑

cles now reference this “first” response of

the immune system, and the multitude of

pathologies and human woes it can cause.

Interrupting the negative cascade of the

body’s response to first insult has become

a busy frontier of research, with countless

multitudes of lives and dollars at stake.

I recall Professor Dardin in one of my

early pathology classes at Georgetown

University many years ago. He lectured to

medical and dental students on the topic

of inflammation, the biological response to

harmful stimuli. “Calor, dolor, rubor, and

tumor,” he quoted in Latin—heat, pain,

redness, and swelling being the four classic

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 low‑grade, chronic, unre‑

solved, and untreated inflammation spurred

by an immune system overload is now con‑

sidered a key cause in almost all chronic

degenerative and lifestyle diseases.

ENTER: Star Scientific Inc.

A proprietary Star Scientific compound is

now being tested on humans at the Roskamp

Institute, Johns Hopkins University School

of Medicine, and in a new research just

underway referred to as the “Flint” study,

where Star and the Roskamp Institute have

obtained institutional review board approval

for a multi‑site human clinical trial. This

testing involves the treatment of neurologi‑

cal conditions as well as conditions associ‑

ated with elevated blood levels of C‑reactive

protein (CRP). Star’s compound, anatabine,

is found in tobacco and in peppers, eggplant,

and green tomatoes. Could it be that from

tobacco, of all things, a new method of deal‑

ing with and treating low‑grade inflamma‑

tion might be realized, possibly eliminating

a whole world of woe?

On October 7, 2010, the eminent research

institution Roskamp Institute announced

that it will soon begin human clinical tri‑

als of anatabine for the treatment of

Alzheimer’s disease. Star Scientific has said,

“Extensive pre‑clinical research has been

conducted.” The compound was developed,

patented, and provided to Roskamp by a 100

percent‑owned subsidiary of Star Scientific.

Because of the astonishing success of

the Star Scientific compound in encourag‑

ing new neuronal cell growth and reduc‑

ing B‑amyloid at the cellular level, Johns

Hopkins University—a major research

institution—is phasing in new uses of the

compound in several other disease venues:

cancers, thyroid, arthritis, and other diseases.

Research at the Johns Hopkins suggests

that a low grade inflammation in preg‑

nant women can pass through the placenta

and blood‑brain‑barrier and cause aberrant

Commentary and Insights

On the Market


rial infection. The chart demonstrates the

dramatic effect of anatabine versus Lipitor,

well known to have advanced anti‑inflam‑

matory properties (about double the thera‑

peutic effect of aspirin).

The graph demonstrates vividly how

anatabine is over three (3) times more effec‑

tive than Lipitor in reducing inflammation.

Anatabine, a naturally occurring com‑

pound (RCP006), is here shown to affect

the release of interleukin 1‑beta (IL‑1ß),

an inflammatory molecule produced from

human blood cells after stimulation by a

bacterial molecule (LPS). The graph shows

the expected increase in IL‑1ß release after

this stimulation. However, in the presence of

anatabine there is a dose dependent decrease

in the release of IL‑1ß. Such results hold out

promise for the control of inflammation in

many human conditions. Research is ongo‑

ing at the Roskamp Institute to bring this

molecule into clinical studies to test its abil‑

ity to regulate inflammation.

On Februrary 9, 2011, Star Scientific

announced that the subject of its 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 sclero‑

sis, and Parkinson’s disease. Star said, “This

isomer can be administered in a composi‑

tion containing a therapeutically effective

dose of anatabine to treat chronic low‑level

inflammation.”

Star understands the impact of this

information on the scientific and medi‑

cal community and has revealed in the

press announcement that it is working with

McColl Partners LLC on “structuring a con-

trolled auction for bidding by pharmaceutical

companies for licensing and/or co-venturing

relationships.”

McColl Partners is an independent invest‑

ment bank co‑founded by Hugh McColl,

former chairman of Bank of America (BAC).

See link: http://www.starscientific.com/

news/rock‑creek‑pharmaceuticals‑discloses‑

filing‑of‑provisional‑patent‑application‑for‑

isolated‑anatabine‑isomer/

So, the sum of these studies of inflamma‑

tion adds several more powerful high‑pow‑

er arrows to the quiver of Star Scientific’s

armamentarium and its company‑making

strategy, now suddenly morphing Star into

a new category or sector, that of a dynamic

biotech with legions of possibilities. One

can only wonder who else is looking at these

developments, which offer such tantaliz‑

ing opportunities on mega‑issues of our

time: aging, Social Security, Medicare and

Medicaid, senior citizen housing, hospitals

as we’ve known them throughout the 20th

and early 21st centuries, and the costs of

drugs on almost the entire spectrum of dis‑

ease as we define disease. Big Pharma, I’m

certain, understands the totality of this data

and is marshaling its forces to participate

in the market play out of these inflamma‑

tion discoveries in some form; it is always

in search of significant new revenue sources.

Obviously licensing, co‑venturing, and buy‑

out possibilities abound here...

Let’s recall that the ancients found the

bark of the willow tree to have anti‑inflam‑

matory properties. We now know that

medicinal substance as aspirin. It may well

be that from tobacco, a source of anatabine,

a new treatment for all these afflictions could

be realized.

Now, if that’s not enough to get the hair

up on you back, add this anecdotal story:

it goes that a while back, Richard L. Sharp,

founder and a board member of Crocs Inc.

(NYSE, and former chairman of Circuit

City and Carmax) was part of a study at

Roskamp Institute. He had taken a leave

of absence from his post due to what was

Graph above: increase in IL-1ß release after LPS stimulation in whole human blood. A dose-depen-dent decrease in the IL-1ß response is shown with increasing levels of anatabine. Lipitor, which is thought to have some anti-inflammatory properties, is shown by comparison, but has no effect on IL-1ß levels at the doses in this assay. (RCP006 source: Rock Creek Pharmaceuticals)

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PARTNERING FORUMEUROMEDTECH™

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thought to be Alzheimer’s. (http://biz.yahoo.

com/e/101203/crox8‑k.html)

Rumors were out that Sharp was the ben‑

eficiary of some kind of miraculous healing

from this devastating illness after his visit to

Roskamp. I repeat that this account about

Mr. Sharp and his experience at Roskamp is

100 percent unsubstantiated, but the story

got around. It is certainly interesting in light

of what we know about the goings on at

the Roskamp Institute regarding its human

Alzheimer studies.

Now we hear that Mr. Sharp is a new

board member of Star Scientific (March 17,

2011).

(http://www.starscientific.com/news/c‑o‑

r‑r‑e‑c‑t‑i‑o‑n‑star‑scientific‑inc/)

Let it be said again: Star Scientific makes

the product the Roskamp Institute uses for

its Alzheimer studies.

And oh, I almost forgot: Mr. Sharp is a

member of the Johns Hopkins Medicine

Board of Advisors, so he must have been

aware of the Johns Hopkins involvement

with the testing of Star’s anatabine/RCP006

compound.

Orders of magnitude more than interest‑

ing, right?

I like to say about Star that the “connect

the dots” tendency of its narrative could

make (CIGX) a stock for the ages. Here is

a quick look at some of this matrix of dots.

Star’s mega lawsuit against tobacco giant

RJ Reynolds is supposedly the “largest pat‑

ent infringement lawsuit ever,” and is being

orchestrated by the powerful law firm Sidley

and Austin LLP—a major patent law impre‑

sario that has lost just a few of patent suits

over its long history. This story alone drove

the share price of Star Scientific to just below

$6 last year.

Star is now marketing CigRx™, an

over‑the‑counter (no doctor prescription

required) Tic‑Tac style, non‑nicotine nutra‑

ceutical made from natural ingredients that

temporarily reduces the urge to smoke. Just

picture the market. And you can purchase it

very simply online at 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 percent of

those who smoke try to quit each year. With

smoking issues so enormous worldwide,

wouldn’t some enterprising Big Tobacco

company become involved with either a

type of licensing agreement or even a buy‑

out? Rumors are “out there” about this.

There’s even more home run potential:

Star has applied to the FDA for approv‑

al 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, Star Scientific is the one and only

company that can do this. Imagine if it gets

FDA clearance on that one? “Big Tobacco”

will have to license the BDL technology

ASAP, I believe. It should be noted that on

March 11, 2011, Star’s patents were validated

by the United States Patent & Trademark

Office with no possibility of appeal. The

entire tobacco industry is now beholden

to Star Scientific. How beholden? Perhaps

to the tune of billions of dollars—but any

way you look at it, after the 10‑year lawsuit,

it is going to cost them a bunch. Another

big positive hit last month: Star Scientific

received official word from the U.S. Food &

Drug Administration (FDA) the net effect

being that “it” will allow Star’s modified

risk tobacco products to be advertised, mar‑

keted, and distributed. The ruling stated that

Star’s modified risk products are not “sub‑

ject to regulation under FDC Act Chapter

IX,” effectively approving Star’s request to

market and advertise its Ariva‑BDL™ and

Stonewall‑BDL™ “BDL” (Below Detectable

Levels) products.

( h t t p : / / p h x . c o r p o r a t e ‑ i r . n e t /

p h o e n i x . z h t m l ? c = 1 0 5 8 6 3 & p = i r o l ‑

newsArticle&ID=1542053&highlight=)

Boiled down to basics: Star can market

its tobacco products that have the cancer‑

causing, potentially lethal tobacco agent

removed. (http://www.starscientific.com/

news/star‑scientific‑receives‑notices‑from‑

fda‑ariva‑bdltm‑and‑stonewall‑bdltm‑not‑

subject‑to‑regulation‑under‑fdc‑act‑chap‑

ter‑ix/)

Institutional ownership continues to grow.

I believe that currently about 81 financial

institutions hold about 30 percent of Star

shares. Last November, insiders and five‑

percent holders bought an “additional” $14

million worth of shares plus warrants, in

addition, I believe, to a six‑month lock‑up.

On March 19, 2011, Jonnie Williams, the

CEO of Star Scientific, bought up 500,000

shares of the company’s stock for $1.97 per

share according to securities filings. Hedge

fund Tradewinds Investment Management,

a more that 16 percent shareholder of Star,

also picked up another 1,000,000 shares at

$1.84 per share on the same day, to now total

20.3 million shares.

* Noted author Dr. William Joel Meggs, an

inflammation specialist at the Brody School

of Medicine at East Carolina University,

makes the point that inflammation “may well

turn out to be the elusive holy grail of medi‑

cine, the single phenomenon that holds the

key to sickness and health.” Inflammation,

Dr. Meggs writes, is a common thread that

links heart disease, some forms of can‑

cer, diabetes, migraine headaches, irritable

bowel, and even periodontal disease.

I have purchased shares of Star Scientific

in the open market.

To watch the CigRx™ infomercial: www.

cigrx.com.

To view the new Star Scientific website:

http://www.starscientific.com,

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:

[email protected]. n


ProFilED CoMPANiES

medical alternatives for the 21st century!

jected to grow 4.1 percent annually to $575

million in 2013. Growth will reflect the

increasing applications in waterless prepara‑

tions.3 The global hand sanitizer market is

valued at $4 billion.

BioTech Medics is launching a major mar‑

keting campaign in 2011. The company is

developing three Web sites to sell and market

SHBAN.

BioTech Medics is negotiating a $15 mil‑

lion equity commitment from a major New

York hedge fund. The money will be used

to market SHBAN in the United States. The

marketing program will target television,

radio, the Internet, magazines, and select

retail outlets.

The company has also set up a Web site at

www.projectprotectthekids.com to inform

parents of the dangers of alcohol gel use

around small children. The Poison Control

Center has reported over 22,000 alcohol poi‑

soning inquiries over the past three years. A

four‑year old child ingesting a small quantity

of alcohol gel is equivalent to a child having

a shot of vodka. The gel can cause severe

alcohol poisoning. If left untreated, severe

alcohol poisoning in children can be lethal.

Have you ever wanted to invest in

a biotech company right when

it was about to explode into the

public arena? If so, then you should read

this article!

BioTech Medics, Inc. (PINK: BMCS) is

a 14‑year‑old Nevada public company that

will gain investors’ attention. The company

has completed over $10 million in research

and development, owns four U.S. patents1,

and is prepared to enter the market with a

clinically tested and thoroughly researched

antimicrobial product.

The product was developed by Dr. Edward

J. Cragoe, Jr., after his retirement from Merck

& Company’s (NYSE: MRK ). Dr. Cragoe

had been the top scientist for over 19 years

with Merck.

The product is SHBAN™ Alcohol Free

Hand Sanitizer. SHBAN is superior to most

other hand sanitizers for the following rea‑

sons.

1) SHBAN is long lasting – it provides up

to four hours of protection when used as

directed;

2) SHBAN has been clinically proven to kill

most germs, plus viruses like H1N1 (Swine),

Influenza A, H1N5 (Avian) Influenza A, and

HIV;

3) SHBAN is non‑flammable;

4) SHBAN is a green, environmentally‑

safe product made in the USA;

5) SHBAN is gentle on hands and will not

cause cracking or dryness;

6) SHBAN is colorless and will not stain

most clothing, flooring, and jewelry.

SHBAN’s active ingredient is FDA‑cleared

and is safe when used as directed. Unlike

some hand sanitizers, SHBAN does not con‑

tain ingredients which can cause cancer in

humans and animals.

Would you only wear deodorant for only

30 seconds? Of course not! But few people

know that alcohol gels last just 30 seconds

and the protection is gone!

A 2010 study conducted by the University

of Virginia for DIAL Alcohol Hand Sanitizer

showed that the alcohol hand sanitizer was

“ineffective” against cold and flu viruses.2

SHBAN is effective against most influenza

viruses.

Demand for hand sanitizers in the U.S.

health care and life science markets is pro‑

“When we’re talking about small, unprofitable, biotech companies, I rarely care about quarterly or even annual earnings. What I care about

is that the R&D programs stay on track and that the…” products ”…will make the company worth a whole lot more in the future than it is

today”. —Quote by Charly Travers, The Motley Fool

“Biotechnology is one of the most promising industries of the 21st century” —Joseph Nicholson, eHow

“As the 21st century begins, the pharmaceutical and biotechnology industry has entered an era of explosive growth in innovation, invest‑

ment and competition.” —Robert B. Handfield, B of A U Distinguished Professor)


Medical Alternatives for the 21

st Century!

Pain Management Centers High Powered Deep Penetrating Laser Pain Therapy

Newport Beach, CA; Santa Fe & Albuquerque, NM; Dallas, TX

________________________________________________ SSShhhbbbaaannnTM nTM nnnnTM nnnTM AAAlllcccooohhhooolll FFFrrreeeeee

HHHaaannnddd SSSaaannniiitttiiizzzeeerrr

SSSuuupppeeerrriiiooorrr LLLooonnnggg---lllaaassstttiiinnnggg PPPrrrooottteeeccctttiiiooonnn uuuppp tttooo 444 hhhooouuurrrsss

PPPiiinnnkkkssshhheeeeeetttsss SSSyyymmmbbbooolll::: BMCS

www.biotechmedics.com

Phone 972-274-5533


The company’s patents include 22 addi‑

tional antimicrobial products that can be

made from the SHBAN formula. Those

products include an eye drop to kill conjunc‑

tivitis. SHBAN can be made into a feminine

douche which can heal candida and kill the

HIV virus topically. SHBAN can be used

in a hemorrhoid crème to stop itching and

infection, and to heal the surrounding tissue.

The product can be made into a liquid anti‑

microbial spray for wounds and skin burns.

It can be used as a toenail and foot spray to

kill toenail fungus and athlete’s foot, as well

as a jock itch spray, just to mention a few

product uses.

BioTech Medics also operates pain treat‑

ment centers using medical lasers. The com‑

pany’s medical lasers are high‑powered, deep

penetrating devices that are used to reduce

or alleviate pain. BioTech Medics has four

laser pain centers in three states to treat

muscle, bone, nerve, and arthritic pain. The

centers use two types of medical lasers that

have been cleared by the U.S. Food and Drug

Administration.

BioTech’s proprietary protocols have a 90

percent success rate in reducing or elimi‑

nating pain. Over 94 ailments can be treat‑

ed with the BioTech lasers. Such ailments

include carpal tunnel syndrome, backaches,

whip lash, golfer’s and tennis elbows, sci‑

atica, migraines, hip pain, knee pain, fibro‑

myalgia, diabetic neuropathy, shingles, and

jaw pain.

BioTech Medics knows that residual

income is essential to building a sound com‑

pany. The company wants to emulate LCA‑

Vison Centers (NASDAQ: LCAV). LCA‑

Vision offers LASIK eye surgery to improve

vision. They have 89 centers throughout the

United States.

BioTech Medics plans on having 100 laser

pain centers nationwide to generate monthly

residual income. Pain management is reces‑

sion tolerant. Patients who are employed

need a quick, safe, and non‑drug means of

reducing or eliminating pain. Those who are

unemployed want to get well so that they can

continue with their job search. It is a win‑

win situation for the company and patients.

The company’s president Charles R.

Crane, M.D. has practiced medicine for over

35 years. He is a board‑certified physiatrist

(physical medicine) and a specialist in pain

management.

The company’s chairman and CEO, Keith

Houser, has over 32 years of corporate man‑

agement experience. He has an extensive

radio and television marketing background.

Houser pioneered niche television market‑

ing. He was one of the founding advisory

board members to Financial News Network

(FNN), now owned by CNBC.

BioTech Medics has a six‑minute video

on YouTube. The video features interviews

of Dr. Crane and several satisfied patients

who have been treated at the BioTech laser

pain centers. The link to the video can

be found at http://www.youtube.com/

watch?v=Zkr_0XxliQ8.

BioTech Medics possesses unique

strengths: cutting edge biotech products,

a globally expanding business, a business

model with residual income, a healthy bal‑

ance sheet with low debt, and plans for a

major marketing program. This company is

ready to explode and investors can be a part

of it today at bargain basement prices.

For more information about BioTech

Medics, please contact Keith Houser at 972‑

274‑5533 or visit the Web at www.biotech‑

medics.com. n


Safe Harbor Statement: The statements in this advertorial or profile relating to future products, partnerships, technology, and positive direction are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some or all of the aspects anticipated by these forward looking statements may not, in fact, occur. Factors that could cause or contribute to such dif‑ferences include but are not limited to contractual difficulties, demand for the Issuer’s common stock, and the company’s ability to obtain future financing. Micro‑cap Review Magazine may have received pay‑ment to publish and print this advertorial or corpo‑rate profile. Micro‑cap Review Magazine disclaimers apply and may be reviewed at www.microcapreview.com/disclaimer.php. Before investing in any security, you are strongly advised to review all public filings of the issuer of such security, which can be found at www.sec.gov, as well as warnings published by the SEC at www.sec.gov/investors and to consult with

your professionals.

1. US Patents No: #5,514,808, #5,574,050, #5,679,711. #5,585,3912. http://www.virologyj.com/content/6/1/124 3. Source: © Freedonia Independent study 2009 # 2526

BioTech’s proprietary protocols have a 90 percent suc-cess rate in reducing or eliminating pain. Over 94 ail-ments can be treated with the BioTech lasers. Such ail-ments include carpal tunnel syndrome, backaches, whip lash, golfer’s and tennis elbows, sciatica, migraines, hip pain, knee pain, fibromyalgia, diabetic neuropathy, shingles, and jaw pain.


The deadline to implement eXten‑

sible Business Reporting Language

(or XBRL) is fast approaching. By

the second quarter of 2011, public companies

will have to file their financial reports with the

Securities and Exchange Commission (SEC)

using XBRL. In fact, the SEC requires virtually

all public companies to use XBRL with the

first periodic report ending after June 15, 2011.

The SEC has good reasons for pushing

XBRL adoption. The agency believes that

the new technology will make company

financial information more accessible and

useful to a wider audience. With XBRL, ana‑

lysts and shareholders can compare, retrieve,

backtrack, and bookmark all desired data.

Small‑cap companies have misconcep‑

tions about XBRL reporting requirements.

Several small‑cap CEOs and CFOs have

said, “XBRL does not pertain to me because

we are a recent reverse merger or because

we trade under $1.00 or because we are on

the OTCCB.” This is, in fact, not true! Once

again, almost all public companies will need

to file XBRL, beginning with their first peri‑

odic report that includes data for a period

ending after June 15, 2011.

Companies that implement XBRL should

recognize its many benefits. Simply put, XBRL

is a way of exchanging business and financial

information in a simplified manner. XBRL is

built on the idea that information should not

be laid out flatly on a document. Each indi‑

vidual line item reported should be tagged

using specific taxonomies and definitions.

When XBRL is used with software applica‑

tions, it makes extracting and exchanging

financial data faster and more efficient.

Despite XBRL’s advantages, many public

company executives remain unclear about

what is needed to prepare a document in

XBRL. The aim of this article is to provide

company executives, particularly those in the

small‑cap space, with key information about

XBRL implementation.

With June 15, 2011 fast approaching,

companies should begin the process now

to ensure a successful transition. Vintage

Filings can help show companies the way.

GeTTING sTarTed: besT

PracTIces FOr xbrl

Vintage Filings has completed numerous test

and live XBRL filings for large‑cap compa‑

nies and can guide first‑time, small‑cap fil‑

ers. Vintage Filings has established individual

plans‑of‑action. These plans take into account

the challenges with not only an initial filing,

but also consider how a company’s XBRL

processes will be organized over the long haul.

Furthermore, Vintage Filings offers small‑cap

companies a cost‑efficient solution that does

not compromise on quality of results.

The following are best practices used by

companies for successful filings.

PlaN ahead:

The first recommendation may appear fairly

benign. In actuality, it has the greatest impact

on the success – and stress level – of an XBRL

filing. Start early!

Companies should prepare by taking the

time to understand XBRL filing require‑

ments. It’s important to avoid rushing at the

end. Taking precautions will help keep costs

in line and make sure that the quality of the

XBRL filing is sound. Sudden and last min‑

ute changes create additional expense and

risk. These problems can be avoided with

good planning and processes.

5 TrIcks OF The Trade

In addition to avoiding the late‑quarter “XBRL

cram session,” Vintage Filings works with

companies to manage the following processes:

1. Prepare primary financial state-

ment and block tagged notes:

The ideal, textbook process for creating a

first SEC XBRL filing is to prepare early. One

quarter early is good, but two quarters early

is better. This helps to define processes, roles

and responsibilities, and timelines for suc‑

cessful concurrent filings. Here is why:

a. On-boarding: The on‑boarding process

is the first step to implement taxonomy and

business rules around financial statements.

This can take weeks, depending on the com‑

plexity of a company’s financials. Companies

will need time to establish an initial template

via tag/concept approval. It is possible to use

a previously filed Form 10‑Q, if it does not

change significantly from period to period,

or a Pro Forma, if it can be prepared early.

b. Dry Run Test: It is important to test

an XBRL filing to make sure that it has all

the proper tags/concepts and characteristics

for communicating one’s financials, passes

EDGAR Filer Manual (EFM) validation, ren‑

ders properly, and represents exactly what is

in the HTML filing.

2. Detailed examination:

Vintage Filings examines the structure and

presentation of the company’s financial dis‑

closures to get an accurate estimate of the

number of concepts that will need to be

F i N A N C E

XBRL – What You Need to Know NOW!


expressed in both Forms 10‑K and 10‑Q.

Currently Forms 10‑K and 10‑Q are the only

documents that need to be converted into

the XBRL format.

3. Focus on XBRL data creation:

Although rendering of the information is

important, according to the SEC, there is no

rendering requirement in the mandate – just

the filing. What is important is to get financial

information properly modeled. Vintage Filings

works with companies step‑by‑step to insure

the most accurate and direct XBRL model.

4. Review and research extensions:

Vintage Filings can help companies save con‑

siderable time in researching, reviewing, and

creating concepts from the US GAAP tax‑

onomy. This process is perhaps the most dif‑

ficult part of XBRL implementation. Vintage

Filings can facilitate the process, but compa‑

nies should be familiar with certain guidelines

published by the SEC staff in May 2009:

a. When choosing between two US‑GAAP

standard tags/concepts (narrow vs. broad),

narrow is preferred.

b. When choosing between an existing

standard and custom/extension tag/concept,

every effort should be made to use exist‑

ing US GAAP tags/concepts found in the

taxonomy.

c. Tags/concepts may cross industry clas‑

sifications.

5. Assembling the team:

Participants involved in the XBRL filing pro‑

cess will have different responsibilities. The

same parties that participate in the HTML

filing should also participate in the XBRL

filing.

1. External team (third party): an external

or third party team, such as Vintage Filings,

will alleviate a lot of the burdens associated

with XBRL.

2. Legal counsel: internal or external

3. Audit committee

4. Auditors: internal or external

5. Investor relations

6. Information technology (for in‑house only)

7. Special project team (if needed, usually

in‑house)

8. Consultants

A company should build core XBRL filing

skills early on, while it is still in the limited

liability stage. Being proactive has its ben‑

efits. Once the legal liability requirement

is enforced, a company should manage the

process and risk with its own team.

wOrkING wITh Pr NewswIre

aNd vINTaGe FIlINGs

XBRL truly is a paradigm shift in financial

reporting. PR Newswire and Vintage Filings

make certain that each XBRL filing is correct,

complete, consistent, and accurate.

valIdaTION:

XBRL financial filings have a lot of infor‑

mation. Vintage Filings makes sure that

the information is the same and correct in

both the HTML and XBRL formats. Vintage

Filings validates the following information:

• We check the overall quality of the EDGAR

document (correctness, completeness, consis‑

tency with prior filings, and accuracy).

• We guarantee compliance with the latest

XBRL standard and the SEC EDGAR Filer

Manual.

• We ensure the consistency of tags /

concepts and other characteristics period‑to‑

period and filing‑to‑filing.

• We help companies make the best use of

extension or US GAAP taxonomy concepts

relative to peers.

• We synchronize the XBRL filing ren‑

dering with the HTML EDGAR document

using the proprietary XBRL viewer and the

SEC viewer.

• We capture all comments and changes a

company makes to create an audit trail of the

entire process.

• We verify the calculations in HTML

statements and will notify companies of any

errors.

• We cross-check to ensure the categories

and sub‑categories foot properly.

• We confirm the same tags are used to

represent the same concepts across the bal‑

ance sheet, income statement, cash flow

statement, and shareholder’s equity state‑

ment to assure the “financial integrity” of the

XBRL filing in relation to the HTML filing.

TIme-savINGs:

Vintage Filings provides companies with

hands‑on experts. These experienced profes‑

sionals manage each step in the process to

expedite the XBRL filing.

• Company specific XBRL taxonomy and

business rules are created and saved as the

basis for future filings.

• XBRL proofs are available within three

to seven days.

• Ongoing edits: 24 ‑ 36 hours (8 hour

average turnaround).

• Taxonomy experts complete the ini‑

tial tagging/concept model creation and can

help companies save up to 80‑100 hours of

staff time on research and understanding of

taxonomies.

• XBRL specialists transfer knowledge

through Reviewer’s Guide documentation to

the company’s staff to ensure understanding

of the taxonomies, mapping process, and

SEC requirements.

• Companies do not have to purchase,

install, or learn special software.

cONcludING ThOuGhTs:

To those who don’t understand XBRL, it can

seem complex and confusing. At first the XBRL

process appears very different from the current

EDGAR filing process. It’s true that companies

may take more time initially to file financial

reports in XBRL. It will, however, become

easier over time. Companies should embrace

XBRL now. Although it is a SEC requirement,

XBRL will make the filing and reporting pro‑

cess easier and more efficient in the long term.

XBRL is a very good thing.

For more information about XBRL

reporting, please contact Vintage Filings at

212‑730‑4302 or [email protected]. n


h E A lT h & F i T N E S S

ratio between omega‑6 and omega‑3 fatty

acids (which are derived primarily from seed

oils, such as corn, safflower, and other veg‑

etable oils). The proliferation of vegetable

oil changed the ratio of omega‑6 to omega‑

3 from the one‑to‑one ratio to a 20 to 1

ratio, contributing to inappropriate inflam‑

mation, degeneration, and deterioration.

Plentiful omega‑6 fatty acids are consumed

out of proportion to the beneficial omega‑3s

found in fish oil. Fish oil supplementation

can restore the proper balance; enhance the

health of the heart, brain, eye, and skin; and

reduce inflammation.

The Federal Drug Administration stated

that fish oil is beneficial for maintaining a

healthy heart. This is achieved through mul‑

tiple mechanisms. Fish oil is anti‑platelet.

Like aspirin, fish oil reduces the stickiness

that leads to heart attacks and strokes. The

effects of fish oil on platelets are less com‑

plete and shorter in duration than aspirin,

contributing to the greater safety of fish oils.

Aspirin is no longer routinely recommended

for people without known coronary artery

disease. Fish oil also works to prevent heart

attacks by reducing inflammation, known

to be a significant mediator of coronary

disease. Lastly, fish oil works in the heart to

relax the blood vessels.

Fish oil’s ability to lower elevated triglyc‑

erides led Glaxo Smith Kline to market the

prescription fish oil, known as Lovaza, for

triglyceride reduction. Fish oil does not lower

cholesterol, and in fact, may modestly increase

low density lipoprotein (LDL). Fish oil alone

is not a treatment for elevated cholesterol. The

JELIS study demonstrated fish oil is additive to

the protective effects of statin drugs.

In addition to its contribution to heart

health, fish oil also contributes to brain

The Harvard School of Public Health

estimates that 72,000 to 96,000

avoidable deaths every year are

attributable to a deficiency of omega‑3 fatty

acids in people’s diet. Barry Sears, the creator

of The Zone Diet, called fish oil a medical

miracle. These assertions may sound like

hyperbole, but facts support them.

Omega‑3 fatty acids from fish oil have

been shown to reduce the incidence of

sudden death and slow the progression of

coronary artery disease. Fish oil accom‑

plishes this by decreasing arrhythmias, low‑

ering blood pressure, reducing triglycerides,

improving the function of cells lining the

arteries, and suppressing inflammation. The

anti‑inflammatory benefits may reduce the

incidence of several forms of cancer and

ameliorate inflammatory bowel disease and

rheumatoid arthritis. Fish oil may preserve

cognitive functions and help improve mood.

These benefits are achieved with no risk and

at a modest cost. Fish oil may not be the

greatest miracle of the 21st century as Sears

claimed, but it may offer the best value. Fish

oil offers some of the greatest health benefits

at the lowest cost.

Omega‑3 fatty acids cannot be manufac‑

tured by the human body. They must be

ingested. The three forms are eicosapen‑

taenoic acid (EPA), docosahexaenoic acid

(DHA), and alpha‑linolenic acid (ALA).

Eicosapentaenoic and docosahexaenoic are

both found in fish oil. Alpha‑linolenic acid

is derived from flax seed, nuts, and green

vegetables. The body can convert ALA into

the more potent EPAs and DHAs, but it does

so inefficiently and in only modest amounts.

Flax seed oil does not confer the same ben‑

efits of fish oil.

Insight into the benefits of fish oil origi‑

nally came from observations of people

who consumed large quantities of fish in

their diet. Eskimos and the native popula‑

tions of Greenland rarely develop coronary

artery disease. The statistical relationship

between fish consumption and depression

has been demonstrated in many countries.

The Scandinavian countries have lower prev‑

alence of depression. Evolutionary biologists

have reasoned that the seafood consumption

by peoples in the Great Rift Valley along

Southwest Asia and East Africa contributed

to the evolutionary development of the brain

of Homo sapiens, our direct ancestors.

These tantalizing observations of the ben‑

efits of omega‑3 fatty acids are supported

by modern scientific studies. Omega‑3s are

converted in fat cells to a variety of messen‑

ger molecules that control the inflammatory

response, platelet function, and the struc‑

ture and function of cell membranes. The

human body is a tightly engineered balanc‑

ing act between stimulation and inhibition.

Omega‑3 competes with omega‑6, another

essential fatty acid, for the production of

molecules that control physiologic func‑

tions. Traditionally there was a one‑to‑one

The Deadliest Deficiency

n By lAWrENCE MAy, M.D., F.A.C.P.


health. Andrew Stoll, a psychiatrist at

McClean Hospital and Harvard Medical

School, treated bipolar depression with high

dose fish oil. It is likely that fish oil supports

a positive outlook and reduces depressive

tendencies. It may improve cognitive func‑

tion. Inadequate levels of omega‑3s in the

brain can lead to irritability, hostility, and

even violence. A recent study using only

the DHA components failed to demonstrate

expected desirable effects. Eicosapentaenoic

acid is the necessary component of fish

oil that is synergistic with DHA to sup‑

port mood, memory, behavior, and cogni‑

tion. Some investigators have also reported

benefits to those patients with attention

deficit disorder (ADD), although this claim

remains controversial.

The omega‑3 fatty acids are the precursors

to anti‑inflammatory prostaglandins. These

have demonstrated benefits in the treatment

of inflammatory bowel disease, rheumatoid

arthritis, and systemic lupus erythematosus‑

all autoimmune triggered diseases of inflam‑

mation.

Fish oil reduces inflammation that con‑

tributes to pain and discomfort. The anti‑

inflammatory benefits ameliorate neurode‑

generative diseases, such as Parkinson’s dis‑

ease and multiple sclerosis, though random‑

ized prospective clinical studies have not yet

confirmed a benefit.

Docosahexaenoic acid is essential for

development of the brain and eye in the fetus

and infant. Supplementation with toxic‑free

processed fish oil is often recommended for

pregnant and breast feeding mothers. Fish

consumption is not encouraged because tox‑

ins in many species may harm the fetus and

developing child.

Epidemiologic evidence suggests a higher

intake of omega‑3 free essential acids reduc‑

es the risk of age‑related macular degenera‑

tion. It is also helpful in relieving dry eyes,

particularly after LASIK eye surgeries.

Fish oil supports beauty and is the ingre‑

dient in several costly internal beauty sup‑

plements such as Imedeen from Asia and

Phytophanere from France. Supplemental

fish oil can be used as an inexpensive beauty

treatment to improve the appearance of dry

skin, the luster of hair, and the health of the

nail beds. The EPA component helps protect

the skin from UVA sun damage. Preliminary

studies suggest that fish oil is effective in also

treating acne, eczema, and psoriasis.

There are few side effects associated with

the consumption of fish oil. There is the

potential to cause bleeding because of the

anti‑platelet effects, but there are no pub‑

lished studies of clinical bleeding. Studies

have not confirmed the same impairment to

coagulation that is seen in people consuming

aspirin or warfarin (Coumadin). Patients

should not take fish oil supplements while

taking anti‑coagulant or anti‑platelet agents

unless recommended by a physician.

The only common adverse effects of fish

oil are unpleasant fishy odor, aftertaste,

and gastrointestinal discomfort. These side

effects usually occur with fish oil that is not

highly purified. The dietary supplement

industry is not regulated with the same stan‑

dards as the pharmaceutical industry, so the

consumer must carefully choose products to

avoid these side effects.

Fish oil should be judged by the level

of essential fatty acids. Most commodity

products contain only 30 percent essential

fatty acids, 18 percent EPA, and 12 per‑

cent DHA. Better preparations contain at

least 33 percent EPA and 22 percent DHA.

Pharmaceutical‑grade formulations can

approach the concentrations of EPA and

DHA found in the prescription product,

Lovaza.

It is important to look at the total EPA

and DHA content of a product, because all

fish oil capsules are not the same. Processors

use winterization to remove saturated fat,

and deodorization and molecular distilla‑

tion to produce a superior supplement. An

example is omega P‑3, named for its potency,

purity, and palatability. Natural antioxidants

are added to preserve the oil’s freshness. It

has the potency to approach the efficacy of

the prescription product. The higher purity

helps to reduce annoying gastrointestinal

side effects and allows more people to ben‑

efit from fish oil supplements.

Fish oil is the fourth most consumed

dietary supplement, after multivitamins,

calcium, and vitamin C. It deserves to be

“number one” because of its compelling

health benefits. The popular vitamin E

supplements are likely harmful and should

not be routinely consumed.

Eating fish is wise and the American Heart

Association recommends having two serv‑

ings per week. Fish with high mercury con‑

tent, such as halibut, king mackerel, shark,

swordfish, tile fish, barramundi, and some

white meat tuna, should be severely limited.

The safest fish are sardines, herring, and

anchovies. They are rich in omega P‑3. It

is impossible to consume enough fish to

gain the benefits attainable from a pure and

potent supplement.

Fish oil is the perfect complement to a

healthy diet for everybody. Supplementation

is strongly advised for people with high tri‑

glycerides, elevated blood pressure, or coro‑

nary artery disease. Fish oil is recommended

to reduce depression and improve mood,

and to improve cognitive functions. It is an

excellent complement to alleviate musculo‑

skeletal discomfort and may be helpful for

a variety of inflammatory and degenerative

processes. It can be a natural treatment for

dry eyes and skin and should be considered

along with vitamins for the prevention of

macular degeneration. The benefits of fish

oil are myriad with minimal side effects.

Pure, potent fish oil is the best investment

that anyone can make to promote a healthy

and long life. n

Dr. Lawrence May graduated Phi Beta Kappa from Harvard University and received his M.D. degree from Harvard Medical School. He is the medical director of Targeted Medical Pharma and is the former chairman of the medical advisory board of Herbalife. Dr. May is on the faculty of the UCLA School of Medicine and currently practices medicine near Los Angeles. He has been consistently recog‑nized by peers as being among the best doctors in the country, including being honored in the publication, Best Doctors in America.

To Our Friends in Japan,

From your friends at the Micro-Cap Review and Taiyo Pacific Partners

We want to extend our deepest condolences to the manywho have suffered so much as a result of the recenttragedy. We are confident that Japan will rebuild andrecover as it has in the past. You have been a wonderfulexample to the world of decency and civility in the face ofgreat misfortune. Our prayers are with you.


F E AT U r E A r T i C l E

Saving the World, One Orphan Drug at a Time W

e live in the 21st century and

globalization has left its mark

with a banking crisis. While this

one has not yet been entirely overcome, there

are signs that a new crisis is emerging–the

crisis of the pharmaceutical industry. Is it

through a lack of innovation that thousands

of employees in the pharmaceutical industry

are now without jobs? Or is the problem the

result of a flawed business model?

aN INdusTry IN TraNsITION

Pharmaceutical companies have traditionally

focused on widespread diseases that affect mil‑

lions of people to generate billions of dollars

in sales. The stock market has virtually dictat‑

ed what is now being stored in our medicine

cabinets. There are many civilization‑diseases,

but the battle for the golden egg is no longer

profitable enough. Almost every drug that is

no longer under a patent has been exposed

to generification. The profit margins are fall‑

ing and dozens of patents have expired or

are set to expire. New drugs take a long time

to be approved and development costs con‑

tinue to rise. Is this a new crisis in the making?

The problem is getting worse, but the model

still remains the same. Personalized medicine

appears to be a solution, but how should this

be financed if we calculate an annual cost

INNOvaTION IN The FasT laNe

A company based in Zurich, Switzerland could

have the right business model. Orphanbiotec

uses an innovative approach to develop drugs

for rare diseases. The company recently won

the 2011 Social Entrepreneuship Initiative

Award. Its model vies to create sustainability

and maintain a social impact. The goal is not

only adding to the bottom line, but also creat‑

ing a proven partnership of several stakehold‑

ers and ensuring that the profit and social

benefits are realized (*SROI). This goal keeps

the model riveting and viable in the long term.

“The fact is that this drug will be formulated

to remain affordable.”

“Each partner is rewarded for his coopera‑

tion, and for those people with a rare disease,

the greatest gift is therapy and improving

their quality of life.”

Orphanbiotec is a think‑tank and pioneer.

The company understands more than just the

development of new therapies and their devel‑

opment program differs from that of a typical

pharmaceutical company. Orphanbiotec is a

hybrid and hybrid models have been around

for a long time. Think of today’s innovative

automobiles. When you think about it, a

sailboat is also an old hybrid model. The boat

has the helm to set the course and the sail to

convert energy to forward motion. And so is

Orphanbiotec and its innovation.

The cOmmON GOal

A closer look reveals how Orphanbiotec’s novel

business model (fig. 1.1) will pay off. The com‑

pany relies on separate entities, the Foundation,

to set the mark and invite professional partners

to tackle a project together. Orphanbiotec n By Dr. FrANk groSSMANN

increase of more than six percent for health‑

care and HMOs and payers that are subject to

therapy and cost restrictions?

Now place research for rare diseases under

the same model and one can only hope to

say who will pay for people suffering under

this status. Will one in ten people be wait‑

ing in vain for urgently needed drugs and

therapies? But the question arises whether

this challenge for the traditional pharma

industry is to be created at all. Is there not a

need for alternative business models?

FIll GaPs aNd OccuPy NIches

Worldwide there are few institutions and even

fewer big pharmaceutical companies involved

in research to find diagnostics, drugs, and

therapies for rare diseases. For the biggest

players, this research has previously been of no

interest. With only 30 million people affected

by rare diseases in the European Union and 25

million people in the United States, often very

few patients are afflicted with 1 of the over

7,000 recognized rare diseases. The field of rare

diseases has opened up an opportunity for spe‑

cialized, smaller companies to enter this attrac‑

tive niche. Smaller companies tend to be very

innovative, lean, and flexible. They also require

less money and fewer resources to develop new

drugs. This leaves hope that those affected by

rare diseases are able to use these innovations

and new therapies in the future. The problem,

however, is that they are so expensive that

healthcare payers can no longer afford the

costs, thus proving these innovations to be

futile for those in need. A model that draws dif‑

ferent partners to the table and helps to reduce

costs sounds like a more logical solution.


AG was founded as the Foundation’s initial

development partner. When all the other part‑

ners are on board, the Foundation funds the

project start‑up costs, thereby minimizing the

risks for phase 1 development and proof of

concept research. The Foundation‘s funding

is obtained from various sources, including

patrons, sponsors, and donors.

“The boat has been launched and is pre‑

pared for its maiden voyage. The winds are

up and so continues further development–

clinical development. We are ready to drive

and finance.”

Each partner has specific tasks. The

Foundation acts as the kick‑off partner. The

company serves as the source of innovation,

development, and production. Once the boat

arrives in port again with “the cargo,” every‑

one will benefit. Orphanbiotec AG shares its

profits with its partners and the Foundation

receives a guaranteed annual social benefit

(*SROI) or donation. This social share of

the profit in turn initiates new development

projects and patient support. This is sustain‑

ability and Orphanbiotec invites innovative

partners to participate in the project. These

partners are considered essential members.

Orphanbiotec AG will now target venture

philanthropy to streamline and maintain low

development costs. Orphanbiotec’s investors

are innovators and visionary thinkers. They

recognize that long‑term, shared success is

more important than short‑term, unsustain‑

ably high returns. Short‑term profit has no

place here because this would result in expen‑

sive, out‑of‑reach medications.

INvOlvING sOcIeTy aNd

kNOwledGe exchaNGe

The Foundation has other functions. To

derive new solutions, it serves as a think

tank to network knowledge about rare dis‑

eases. Orphanbiotec calls this bridging, an

art borrowed from ancient civilizations used

to pass wisdom and knowledge from genera‑

tion to generation. The approach is to deliver

this knowledge on to future partners. This

ensures the success of the Foundation and

increases intellectual property development.

This knowledge is sourced for further proj‑

ects, which again leads to the development of

a new orphan drug.

The Foundation’s in‑house competence

center is considered the brain of the organi‑

zation. There sit the scientists and research

project participants, such as research

institutions and pharmaceutical partners.

Integration is the key. The Foundation relies

on and encourages patients and organiza‑

tions to share ideas and knowledge. As stake‑

holders they have a much better understand‑

ing of what works. The Foundation serves as

a platform to engage and motivate. An active

and informed patient is highly motivated

to improve his or her situation and reduce

costs. This later onset of social return on

investment has been far underestimated by

many and should not be overlooked.

This is the result of a visionary think‑

er, working to uplift the disadvantaged in

the medical community. The Foundation

brings superior minds, knowledge, and treat‑

ments together. It also answers the questions

as to what modern patient involvement and

engagement should look like. This creates a

platform to raise awareness of issues by bring‑

ing together those affected with rare diseases

with researchers, institutions, and associations.

Orphanbiotec brings together what

belongs together. The innovative model is

one of profit and sustainability and will pio‑

neer change in the new century.

“The drive is on for funding, so we can

start.“n

After studies in veterinarian medicine in Hanover, Germany, he worked and conducted research at the ETH (Swiss Federal Institute of Technology) in Zurich and received the title of Doctor of Veterinarian Medicine. After partnering in a young start‑up prac‑tice, he worked in the pharmaceutical industry in various capacities, including regulatory affairs, busi‑ness development, project management, science, and new drug development. In addition to dermatology, infections disease, nutrition and orphan drugs, he is a recognized expert in developing sustainable busines‑ses that deliver social impact.

He is the founder of a successful consulting company in pharmaceutical science. He has taught pharmaceutical science as an guest lecturer at the ETH in Zurich for more than five years. His unique skills and experience have enabled him to interact with patients and experts in science, business, and the medical community.

Three years ago he founded Orphanbiotec.This unique and internationally operating Social Hybrid Entity and Competence Center for Orphan Disease is supported by the Swiss CTI (Center of Innovation and Technology) Program, mem‑bers of the Swiss Government, the Swiss Biotech Association, Venturelab, Swissnex and the Swiss General Consulate in California. In January 2011 Orphanbiotec was awarded First Place at the Swiss Social Entrepreneurship Startup Awards for its innovative, sustainable, and social business model. Orphanbiotec will soon open its North American Research Foundation in San Francisco. The non‑profit Charitable Foundation will work with sponors and donors to support patient engagement and research programs for rare diseases.

PLANET MICRO-CAP INC.

For information: [email protected]

“LEARN TO EARN”

Campus Conferencesfor Financial Education

Investment Opportunities & Money

For information: [email protected]

Campus Conferencesfor Financial Education

Investment Opportunities & Money


V i E W P o i N T S

M I C R O - C A P F O R M A T I O N

U.S. Jobs Depend on Funding Micro-cap

CompaniesBack in 1993, Paulson Investment Company raised a little

over $11 million in an initial public offering for a small company, Cree Research.

broad reach means that they are less likely

to be affected by the types of financial “bub‑

bles” seen in recent years.

Something is out of whack when Wall

Street seems less interested in raising funds

for U.S. companies. Micro‑cap companies

have had a hard time getting Wall Street’s

attention, yet continue to provide jobs for

Americans. Congress should make tax provi‑

sions to allow smaller companies to deduct

losses to offset the cost of doing business.

Doing so will help these companies to grow.

Investors ought to look seriously at funding

these early stage ventures. Many companies

like Cree Research are waiting to be discov‑

ered. n

Chester “Chet” L. F. Paulson is the founder, president, and chairman of Paulson Capital Corp., a holding company for Paulson Investment Company, Inc. located in Portland, Oregon. Mr. Paulson has been actively involved in investment banking, financial consulting, and project funding for over 40 years. He is a current member of the Securities Traders Association and Southern California Investment Association. He previously served as a board mem‑ber for the National Investment Bankers Association.

The market capitalization for Cree after the

offering was about $40 million. Today, the

company boasts a market cap of $5.25 bil‑

lion and still trades on NASDAQ (“CREE”).

Why should investors care about micro‑

cap companies? There are two reasons: jobs

and capital gains. It has been shown over

time that smaller companies are the ones

that contribute to the country’s economy and

provide jobs for citizens (i.e., Americans),

present and future. Second, micro‑cap com‑

panies have the potential to become the

next Microsoft and IBM. Investors who own

promising young companies stand to prof‑

it immensely should the companies grow

and prosper. While no one can predict the

next Cree Research, an investment portfolio

should not discount U.S. micro‑cap compa‑

nies altogether. Their potential returns are

too great to ignore.

Micro‑cap companies can be found in

all industries today. Because of the ever‑

changing technologies that have taken place

over the past decades, the number of young

companies seeking capital is growing. Their n By ChET PAUlSoN


V i E W P o i N T S

Internet IPOs–The Time (and Need) Has Come!

What’s all the fuss about companies that offer unregistered securities to “sophisticated” investors? If someone can buy a scratch ticket, wager at a

track, pay the excise tax for liquor or cigarettes, or buy medical marijuana, why can’t a person’s money be as acceptable as the lucre of Goldman Sach’s clients?

vided this service are virtually gone or sub‑

stantially emasculated (a story for another

day). The economics of the business that

once allowed the $2 million to $20 million

offerings no longer exists. What has changed,

however, is that technology has become the

great enabler. Companies can now assuage

regulator’s concerns for disclosure. Issuers

(the companies that are seeking the financ‑

ing) can reduce the costs associated with a

journey that can come up short. With new

technology, these offerings can easily take

place, if today’s distribution channels could

be used. There is no need for brick and mor‑

tar facilities. There is no need for expensive

road shows, endless breakfasts, lunches and

dinners, super‑sized letter of intent fees. And

as important, underwriting capital, front

office costs, etc., etc.

What sayest thou, Ms. Mary Schapiro? n

Marshall S. Sterman has worked in corporate finance for over 50 years. He held executive positions at Sterman & Gowell (investment banking and securi‑ties brokerage), Croesus Capital (work out consult‑ing for institutional investors), M. S. Sterman & Associates (merchant banking), Pilgrim Financial Services (investment in distressed securities), and The BankHouse (merchant bank). Since 1986 Mr. Sterman has worked at the Mayflower Group, a Boston‑based merchant bank to originate, men‑tor, and finance start‑up and early stage ventures. Mr. Sterman received a B.A. degree from Brandeis University in 1953 and an M.B.A. degree from Harvard University in 1955. He served in the U.S.

Navy as a lieutenant from 1955‑1958.

Most “unwashed” people pay a larger per‑

centage of their income in taxes than those

who get invites to the glitzy Wall Street

casinos.

I guess one might say that there’s move‑

ment but no real action. Actually it’s an

excuse or illusion that’s being foisted on

those who are concerned about the good

‘ol U.S of A. The biggest problem facing the

country today is a shortage of jobs. Our lead‑

ers (the people we anointed) are a half step

n By MArShAll STErMAN

away from getting part of the answer cor‑

rect. And they don’t even have to change the

regulations, including Sarbanes‑Oxley. For

the life of me, I don’t understand how the

accounting world keeps holding us hostage

to its green‑mail surcharge.

Giving the likes of Facebook a free pass is

beyond my ken, but who really cares? With

gasoline at $4 a gallon, most people have

other worries. We should use the current

regulations and just update them for the 21st

century. Attitudes at FINRA and the SEC,

however, need to change. The regulators

need to have a more democratic and edu‑

cated appreciation of capitalism and the rule

of law. To be more genteel, these agencies

(the people who do the daily chores) need to

be enablers, not obstructionists. With respect

to this observation, we can ask practicing

SEC attorneys (especially those who start‑

ed their careers at our gate‑keepers) about

their aggravation. The mind‑boggling hoops

attorneys have to jump lead to outsized and

often wasted costs and time.

But more to the point. The answer is

elementary. We ought to bring back “best‑

efforts” underwriting for early stage, tech

companies and use the Web to reach poten‑

tial investors. We should talk about full dis‑

closure, access for everyone to management,

etc. Unfortunately, over the past 20 years or

so, the small broker‑dealers that once pro‑


TMX LS Microcap Mag AD 2011_Layout 1 11-03-24 5:19 PM Page 1

NEW YORK INSTITUTIONAL INVESTMENT FORUM WALDORF ASTORIA OCOTOBER 6 2011

Speaker line-up and agenda coming soon …

www.cambridgehouse.com


V i E W P o i N T S

Washington Healthcare Update

spending in fiscal 2012, as set forth in their

“Pledge to America.” Realistically this would

barely reduce the budget from $3.9 trillion to

$3.8 trillion if adopted.

Constitutionally, each year the House

must originate a budget, send it to the Senate

for approval, and hope that the President

signs it into law. For the last several years,

the federal government has been funded

by continuing resolution (CR), which indi‑

cates a serious impasse between Congress

and the President. Imagine if a business

were forced to run on 80 percent of the

previous year’s budget, receiving outlays in

one‑twelfth increments – that is the uneasy

state in which our federal agencies currently

operate. Because of budget issues, agencies

likely delayed procurements once again this

year, which hurt small businesses the most.

Thankfully, a complete government shut‑

down was averted by a mid‑April vote to

fund government programs for the remain‑

der of the fiscal year, minus $38 billion.

Therefore, frenetic procurement season is

expected in federal contracting between now

and September 30.

Further, companies should be mindful

of the escalating Obamacare showdown in

the House as budget season moves into full n By ElViS oXlEy

Although this legislation never made

it through the Senate or earned the

President’s signature, the new Republican

majority in the House quickly made good

on their campaign promise to cut the fed‑

eral budget.

“Americans need a better health care solu‑

tion than the law passed by Congress last

year,” stated freshman Congressman Steve

Stivers (R‑OH). The reaction underlines the

credo of the freshman class: correct the over‑

reach by Democrat leadership in both the

legislative and administrative branches over

the past two years.

So, how will all of this affect emerging

healthcare companies? Will the market see

stability in a divided Congress and there‑

fore promote more investment? Will budget

cutting measures spurred on by Tea Party

advocates create a significant drop in federal

procurements? Answers to these questions

and more ensue.

The Federal budGeT

Members of Congress affiliated with the

Tea Party recently attempted to compel new

House Speaker, John Boehner (R‑OH), and

his leadership team to cut $100 billion in

On January 5, 2011, sixty‑three freshmen members of the U.S. House

of Representatives were sworn into Congress. Exactly two weeks

later, the majority of them and their Republican colleagues voted to repeal

Obamacare, the controversial healthcare legislation.


swing in April. Although Congress approved

Obamacare in the last session, the House of

Representatives must initiate and approve

budgets for all federal agencies. There is

much talk of “beheading the Hydra” or

“starving the beast” within Republican lead‑

ership. Budget packages from House Speaker

Boehner and his lead budget man, Paul Ryan

(R‑WI), will likely leave out funding mecha‑

nisms for undesirable parts of the healthcare

bill. If they don’t fund it, the agencies can’t

do it, simple as that. Thus, a CR for FY’12 is

already in the works.

Federal PrOcuremeNTs

Given the political landscape, micro‑cap

healthcare companies may want to skip

the federal contracting marketplace. Before

doing so, companies should study the facts.

The budget for the Department of Veterans

Affairs (VA) was $6.1 billion in fiscal year

2010 and will likely remain at this level

regardless of the political environment.

Culling budget from our veterans is politi‑

cal suicide for Republican or Democrat. The

Department of Defense (DoD) added anoth‑

er $2.1 billion in TRICARE expenditures.

The Department of Health and Human

Services (HHS) dwarfs the VA by thirty‑fold

at $185.5 billion. Emerging healthcare com‑

panies can ill afford to ignore a market worth

over $200 billion.

So how do micro‑cap companies take

advantage of healthcare purchases by the

federal government? First, companies should

understand how the current budgetary envi‑

ronment affects decision‑making between

Capitol Hill and federal agencies. Most

Congressmen agree on the need to buy

goods and services that support the war

fighter – in particular those things that are

lighter, smaller, and more efficient. Cardiac

Analytics (www.cardiacanalytics.com) is a

good example. The company sells equipment

that detects coronary artery disease more

accurately and non‑invasively than current

technology. Cardiac Analytics’ equipment

is less expensive than those used for nucle‑

ar stress tests and catheterization. Cardiac

Analytics said that it can save the VA $1

billion in costs alone. RevMed (www.revolu‑

tionsmedical.com) is another good example.

RevMed sells vacuum retractable syringes,

which can help eliminate needle‑stick inju‑

ries and workers compensation costs across

all federally operated hospitals and clinics.

Second, companies should review their

corporate ownership structure and feder‑

al contracting law for small business. The

VA obligates 17 percent of its contracts

toward Service Disabled Veteran‑Owned

Small Businesses (SDVOSB’s) and an addi‑

tional 12 percent with Veteran Owned Small

Businesses (VOSB’s). A veteran who owns 51

percent or more of his/her micro‑cap com‑

pany is in luck! Alternatively a company may

want to find a channel partner like Buffalo

Supply (www.buffalosupply.com) that is

experienced in federal contracting and has

trusted relationships with senior contract‑

ing officials. Many other set‑aside categories

also exist to benefit the small business owner.

Agencies are compelled to reach their con‑

tracting goals with each group (http://www.

sba.gov/content/small‑business‑goaling).

Third, companies should recognize pro‑

grams within agencies that encourage and

reward innovation. Many have heard of the

Department of Energy’s “X PRIZE” that

inspired a litany of entrepreneurs to build

energy efficient cars several years ago. Now

the Tesla car company is traded on NASDAQ.

Similarly, Army Medical Command’s New

Product & Idea Web site (http://www.usam‑

raa.army.mil/pages/Products_Ideas/index.

cfm) is an excellent resource that encourages

micro‑cap companies to submit their prod‑

ucts for review by Army doctors. Companies

with the right products can quickly find

themselves with a well‑heeled client that

spans the globe. Similarly, the FDA’s

Center for Devices & Radiological Health

(CDRH) has issued a call for innovative

companies (http://www.fda.gov/AboutFDA/

CentersOffices/CDRH/CDRHInnovation/

default.htm) to demonstrate their unique

value. It may be just the opportunity a

company needs to expedite approval for its

novel medical device. According to the FDA’s

site, “CDRH is responsible for advancing

public health and facilitating innovation to

help bring novel technologies to market and

make the medical devices that are already on

the market safer and more effective.”

Fourth, companies need to be consistent

and patient. The average time to close a

federal contract is 18 months. Companies

with unique products, protected intellectual

property, experienced management teams,

demonstrated private sector sales, and a

well‑capitalized business plan will succeed

through tenacity and relationship build‑

ing. Companies that attempt government

contracting on a whim and do not have the

dedication will fail miserably.

Before doing business with the federal gov‑

ernment, companies should start by finding

out what agencies are buying. Valuable infor‑

mation is available on the Federal Business

Opportunities Web site, www.fbo.gov. Since

the federal government is a well‑capitalized

purchasing giant, there is a likelihood that

a company’s product or service is in need.

Good opportunity exists to do business with

the federal government, so companies should

take advantage of it now before the budget

shrinks by more tens of billions. n

Elvis Oxley is president of Oxley Consulting, LLC, a Washington, DC based firm that sources capital for emerging growth companies and teaches them the art of government contracting. www.oxley‑consult‑ing.com

Since the federal government is a well-capitalized pur-chasing giant, there is a likelihood that a company’s product or service is in need.

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V i E W P o i N T S

Review of Hong Kong Mines and Money Conference, Mar. 22-26

For more than two decades, I have attended many investment conferences in the natural resources industry. These confer‑

ences give me a chance to travel the world.The rest of the morning I saw speakers and

exhibit booths, splitting time between com‑

panies from Canada and those from other

parts of the world. Many Europeans attend‑

ed the conference. Lunch was served during

a three‑hour period in a large area with

seats and tables. The lunch break allowed

participants to relax with business people

or friends. We enjoyed the good food and

service. The setup was better than anything

that I had seen before.

After the third day, I was overwhelmed by

the amount of information and contacts that

I had made. Later that evening, I attended

a gala dinner. The event featured a quality

menu and entertainment with an Asian fla‑

vor. It was good to speak with people whom

I had met over the last few days in a relaxed

atmosphere.

On the fourth day, I attended a post‑

conference summit about Mongolia. There

was a lot to learn about Mongolia, an area of

the world of which I knew so little. Overall

Mines and Money conference in Hong Kong

was well‑run. I came home with an abun‑

dance of new investment information and

ideas.

The next Mines and Money show is in

Beijing in June 2011. I hope to be there after

having so wonderful an experience at the

Hong Kong show.

The schedule for all upcoming Mines and

Money conferences can be found at www.

MinesandMoney.com. n

I get to see different countries and meet

many new people from all walks of life. Over

the years I have made many life‑long friend‑

ships. Most importantly, the conferences

help me to become a better investor. I have

always felt that the best way to invest in a

company would be to meet management in

person. Further, the conferences allow me to

learn about what is happening in the natural

resources industry. In every conference (I go

to about six to eight conferences a year), I

learn something new. My expenses over the

years have been small when compared with

the financial rewards gained as an investor.

In the early years, I limited my travels to

conferences in the United States where I live

and Canada. I thought that I would find

most of the information near home. I was at

a conference in San Francisco when a smart

money manager recommended that I attend

a conference in Asia. He said that I should go

the Mines and Money conference in Hong

Kong. The conference was scheduled for the

week, March 22 to March 26, 2011.

Returning home from San Francisco,

I thought about the Hong Kong confer‑

n By lAUrA STEiN

ence. The trip there would take me halfway

around the world for four days. I asked

myself whether I would find information

there that I would not otherwise find in

North America. I also thought about the

extra time and costs required to travel the

long distance, not to mention the time away

from home. After discussing this with my

husband, I decided that taking the trip to

Hong Kong would be worthwhile.

I arrived in Hong Kong and was ready for

the Mines and Money conference. On day

one, I attended one of several pre‑conference

workshops. I gathered information, got to

speak with a few participants, and met one

of the conference organizers, Leo Stemp.

Leo came by to greet me when I picked up

my badge. He gave me a conference book.

I flipped through it and read some of the

information. It was easy to understand and

had good information about speakers, pan‑

els, and the companies that would be pre‑

senting at the conference.

The second and third days were simply

amazing and opened up a new world of

knowledge and investing. The conference hall

was spacious and had well‑spaced aisles where

guests could find plenty of coffee stations. The

conference doors opened at 8 a.m. Those who

got up early could get their morning drink

and breakfast without having to wait in long

lines. After breakfast everyone started heading

toward the conference hall to hear the first of

many speakers scheduled for the day.


V i E W P o i N T S

Full Bore or Bust!to those parents who understood that it’s

not about passing, it’s about learning. Too

many parents have pushed for easier courses,

less homework, and more accommodative

grading. Half‑assed curriculums and sub‑

par testing just isn’t the right recipe to fend

off the mounting global challenge. If that

wasn’t enough, I came across one weekend

a headline in the New York Daily News: ”The

Danger of College for All!”

I understand that not everyone is built for

college. I even accept the half‑assed argument

that the fear of college may cause someone

to drop out of high school. But, how can a

college degree be dangerous? Someone can

choose to be a bum with a college degree, but

he can’t be in charge of engineering at Boeing

without one. Biggie Smalls, one of my favor‑

ite rappers, said that he was “considered a fool

for dropping out of high school.” To become

a rapper like Biggie is like winning the Mega

Millions lottery. With those kinds of odds,

someone who drops out of school ought to

be considered a fool. But even more foolish

than this is the idea that going to college can

ruin a person’s life.

This is where we are as a nation. If we

were running the Boston Marathon, we

would be gasping for air at Heartbreak Hill.

It’s a serious test, a true test and the kind

of test where answers can’t be half‑assed or

erased.

She whom I love is hard to catch and con-

quer,

Hard, but O the glory of the winning were

she won! —George Meredith

We must take the hard road sooner, rather

than later. We must preserve glory already

attained and reach for glories to be had. We

owe it to our children and grandchildren. O

the glory of winning! It’s fading from our

lips and drying in our pores. nn By ChArlES PAyNE

Half-assed‑adjective Slang: VulgarInsufficient or haphazard; not fully planned or developedIncompetent; lacking sufficient ability or knowledge

—Dictionary.com

We are inching closer to becoming

a half‑assed country. The mod‑

ern household will soon read in

dimmer light. The government will outlaw

the use of incandescent bulbs, and people

will have to buy them on the black market.

We will wear dingier clothes. Front‑end

washers won’t work under current standards.

We’ll drive cars that leave us stranded in bad

weather. And, our toilets won’t flush right.

We’ll have to stick around the bathroom lon‑

ger. Will it be one flush or two this time?

We will walk into this new lifestyle dumb‑

founded and leave with lower expectations.

Excuses for failure have been around for

decades. When I was growing up, I was told

that I had to be twice as good. Now kids are

told they can be twice as bad, but get a waiver.

In the past nice guys finished last. Now they

don’t have to finish at all. They will be pro‑

vided for by the mean guys who bothered to

run the race and cared about winning. Years

of relentlessly demonizing success is taking its

toll on a nation. We aren’t crawling out the

abyss with the same aplomb as in the past.

Then there is policy. It took until the clock

was within minutes of midnight before we

decided to bomb the hell out of Libya to

back rebels sympathetic to al‑Qaeda. Our

energy policy, economic policy, health care

policy, and educational policy are all half‑

assed. Maybe in a perverse way some edu‑

cators have decided to split the difference.

We try to win but can’t stand the work. A

story in USA Today recently found that

educators had been fudging test results at a

Washington D.C. school.

Crosby S Noyes Education Campus was

a “shining star.” It was an example of how

public schools could be turned around.

Students at the school saw their “proficient”

or “advanced” test score in math climb to

58 percent from 10 percent over a two‑year

period beginning in 2006. The teachers at

the school won bonuses of $8,000 in 2008

and 2010. The principal received a $10,000

bonus for those years. I’m a huge fan of

bonuses for deserving teachers. But the cel‑

ebrating was premature. A USA Today inves‑

tigation found that for the past three years

Noyes’ classrooms had extraordinarily high

number of erasures on standardized tests.

The pattern was that wrong answers had

been erased and changed to correct answers.

In 2010 fourth grade math students at

Noyes had an erasure rate of 11.0 versus a

district average of 1.7. The fifth grade read‑

ing class had an average erasure rate of 10.4

versus the district average of 1.3. The most

egregious differential came in 2009. Seventh

grade students at Noyes outwitted the dis‑

trict by a score of 12.7 to 0.8. Hey, they’re

trying because the old saying goes, “If you

ain’t cheating, you ain’t trying.”

In Georgia, a principal plead guilty to a

felony charge of falsifying test scores on a state

document. He was banned from schools for

two years. The real crime here was that we

had resorted again to another easy way out.

Some Noyes Education parents were skep‑

tical. The test scores didn’t seem to mea‑

sure up to their child’s true skills. Bravo

No Boring Lawyers

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V i E W P o i N T S

Finding the Medicinal Peace Good health is a gift beyond compare. Those who are blessed

with it are the richest of people, and those who do not have

good health seek to receive the blessing of healing with all of the

passion that they can find within themselves.

the illness and the survival.

In my tradition, the word for “miracle”

and the word for “test” is the same word.

This teaches that all medical conditions

are not punishments or judgments, but are

challenges that force us to find out what we

are made of. In the five times that my life

has been challenged, I have learned that my

survival and that the quality of my life fol‑

lowing that challenge are not in my hands,

but in the hands of those I surrender to for

care and comfort. I am currently living with

an illness that has lasted for six years. One

I know this to be true because I am not

blessed with good health. I have been close

to death five times‑‑and five times have

remained here.

I attribute the miracles of my survival

to good medical care, a loving family and

friends, and a loving God. Those of us who

survive critical medical episodes know the

power of that miracle firsthand. And those

of us who live with chronic medical issues

understand that miracle in an even deeper

way. I have been challenged by medical epi‑

sodes and have learned many lessons from

n rABBi STEPhEN roBBiNS, PSy.D.


of the symptoms of this illness is that I live in

constant, excruciating pain which even drugs

can’t handle.

I have been to many different physicians

and medical centers in an effort to find relief,

let alone a cure, and it is not to be found

there. The pain I endure is from a case of

shingles which destroyed the nerves in my

back from the center of my chest to my lower

hips, and have left the nerves in the whole

right side of my torso stripped of any capac‑

ity to manage nerve signal transmission,

and so I am in constant pain. This resulted

from the third episode of the collapse of my

lungs, as the result of a condition caused

by influenza in 1985. This last episode,

which occurred in 2005, also left me with an

autoimmune neuromuscular degenerative

disease like muscular dystrophy, as well as

the growth of a tumor and other conditions.

Needless to say, I’ve had many medical

doctors who have tried and have cared for

me with unquestionable skill, diligence and

concern. While extremely weak and in a

wheelchair, I went to India four years ago

for extensive treatment in herbal and nutri‑

tional medicine which saved my life. Upon

writing this article, I have just returned from

my second trip. Because of both the allo‑

pathic (Western medical) treatments and the

naturopathic (complementary medicine), I

continue to lead a somewhat active life and

manage my chronic conditions, and live

with the pain. It is the practice of medita‑

tion (Jewish based) and prayer that helps me

manage the pain levels that pharmaceuticals

cannot contain.

My story is not unique. There are mil‑

lions of people just like me who live with

critical and chronic health issues throughout

their lives. Just getting up in the morn‑

ing and getting dressed, let alone going to

work, is a miraculous accomplishment in

the face of the overwhelming demands of the

body. Maintaining relationships, functional

employment and participation in life is a

miracle of the mind and spirit. I speak here

for all of us who have such hope and confi‑

dence in the shattering of medical barriers

and boundaries so that new treatments and

medicines can be found and developed from

both the pharmaceutical and natural worlds,

so that our conditions can be managed and

alleviated. I await that moment when some

researcher or practitioner will find that way

to relieve my pain. It is because I know that

they are out there working that I have confi‑

dence that there will be found, in the future,

some remedy that is perfect just for me.

As this issue of Micro‑Cap is focusing on

biotech, so is it that I encourage those who

read this article to know that investment in

new areas of medical research are not only

good business but are also doing what we

call a “mitzvah”—a good deed established by

God for the well‑being of humanity. Those

who dedicate their lives to healing are to be

praised and supported; their work is sacred

and their purpose is honorable.

In my childhood, my father’s business

involved medical research and the develop‑

ment of medical equipment, so I am inti‑

mately aware of how such work can only

happen if there are investments in place to

support it. It is, from the point of view as

a patient, very difficult to be patient when

the process of developing new medicines

and treatments is so expensive and requires

so much money to bring them to the stage

of approval by government agencies. Since

I am trained in naturopathic practice and

healing, I understand how frustrating it

can be for any practitioner or researcher

to develop and market their discoveries. It

seems as if the treatment of disease is moti‑

vated and controlled only by money. When

it is so difficult to introduce new products,

those of us in need are required to wait…

and wait… and wait, until someone finds

the money and the approval to provide us

treatment.

I know that these questions are much

more complex than I seem to express them

here. I am aware of all of the dynamics,

complexities, politics and finance it takes to

deal with health care. It seems that the more

sophisticated we become, the more compli‑

cated we make things. It should be the other

way around—the more knowledgeable and

sophisticated we are, the simpler it should

be to care for those in need. Since this is

not so, then those of us who are concerned

about the research and development aspects

of new medicines and medical treatments

must continue to support those who have

dedicated their lives to this effort. I am

someone who has had a mostly positive

experience with our health care system, but

as a Rabbi, psychologist and healer, I know

so many for whom that has not been true. I

have, as an American, been raised to believe

in human rights. As a Rabbi, I know that

healing is given by God freely to humans

and through humans, without judgment;

the saint and the sinner alike are entitled to

the best treatments that can be found. So I

understand health care to be in the vernacu‑

lar of American ideals—a human right.

The pursuit of my life, liberty and happi‑

ness is consumed with issues of health care

and its delivery. When biotech first came

While extremely weak and in a wheelchair, I went to India four years ago for extensive treatment in herbal and nutritional medicine which saved my life. Upon writing this article, I have just returned from my second trip. Because of both the allopathic (Western medical) treatments and the naturopathic (complementary medi-cine), I continue to lead a somewhat active life and man-age my chronic conditions, and live with the pain.


into public consciousness, there was the

usual discussion among ethicists, politicians

and religious leaders as to the morality of

such pursuits. My tradition teaches that the

universe in which we live is not evil, corrupt,

an illusion or a place of constant pain. It is

simply unfinished. It is up to humans, in

partnership with each other and in following

the highest standards of ethics and spiritual

teachings, to work with the forces of exis‑

tence, God, or whatever else you may refer to

in order to bring existence closer and closer

towards completion. The most familiar

word around the world from Judaism is the

word “shalom” which most people translate

as “peace.” In fact, the word really means

“wholeness.” It refers to the completion of

some task—the repayment of a debt, the

repair of something broken—and the whole

goal of this world is shalom… wholeness

Bringing completion into the lives of indi‑

viduals means, above all, to bring them out

of their struggles and into a state of healthy

well‑being.

In this paradigm, all the knowledge that

we need to accomplish the goal of wholeness

is already waiting there to be uncovered.

Those who spend their lives studying and

searching into the natural world find that

this is so. Discovery of new medicines and

treatments is like the joy of turning over a

rock and finding a treasure. Since I spend

my life in the company of people who are

ill, treating them, and in the company of

doctors, practitioners and researchers from

all fields, I delight in the joy that lights up

their being when they reveal something

new that can bring relief and well‑being to

those who struggle with illness. Seeing the

look on the faces of people who are healed

of their condition, whether they are physi‑

cally or emotionally relieved, and to see

their families reunited in health, I witness

the most sacred and touching of moments.

Many people express their sympathy for

my suffering. I am grateful for their con‑

cern, but I have learned an important lesson

and that is that illness and suffering are not

the same thing. Illness and pain are physi‑

cal states; suffering is an emotional state.

Suffering is born when the person identifies

with their condition and sees themselves

as the illness, the pain or the condition in

which they live. In surrendering themselves

to their illness, they cease to be themselves.

They lose their identity. They live con‑

stantly in the boundaries of their illness

and its treatment; having nothing else to

focus on, everything they experience is felt

through the filters of being their illness.

They become isolated in their pain and suf‑

fer because of that isolation. I learned this

lesson once when I was in a particularly

massive attack of pain, and while crying out

and writhing in my discomfort, my son held

me in his arms and expressed how angry

he was at my suffering. At that moment,

I knew that while I was in agony of body, I

was not in agony of mind, and I said to him,

“As long as you hold me, I don’t suffer. I’m

just in pain.”

For me, this is the model of health care.

As long as the doctors and practitioners,

researchers and investors work together to

find remedies, medicines and treatments, I

will not fall into the despair of suffering. I

will remain in the confidence of knowing

that there are those who work to bring me

shalom, or wholeness. The strongest of all

medicines is love, and the greatest of all

treatments is caring. When we get sick, it

is never just the individual who has the ill‑

ness or condition. It happens to the whole

family. When I got sick, I learned this les‑

son and it kept me from falling into despair

and suffering. So many of us who become

ill that think that no one can understand

what we are going through, including our

family members, and some even fall into

the arrogance of entitlement because we are

sick. The illness does not entitle anything

as long as we separate ourselves from our

family and friends in the isolation and the

despair of illness. Surrender is the most

difficult thing for all humans to do, and

in this case, I do not mean surrender to

the illness but to surrender to the need for

love and care from those around us. When

we all work together, then suffering abates.

What is left is dealing with only the illness,

not its psychological components, which

are sometimes worse than the illness itself.

We who are ill very quickly learn to live

very different lives. Illness changes it all. I

now must look at every breath I take and

every move I make, the expenditure of

energy and moments of rest. There is a dif‑

ferent economy to my life. That economy

involves maintaining myself in a balance

in between the illness and the well‑being,

between the sick and the healthy. All my

acts affect my physical state and express my

emotional and spiritual state. In the six

years of my illness, I have almost forgot‑

ten what it’s like to be healthy, but I have

certainly learned what it’s like to be loved.

I have learned about fear and faith, despair

and confidence. I have learned that hope is

a wish built upon a dream that something

will happen that you believe won’t happen.

Hope is built upon a doubt. So instead,

I have trust—the trust that I am capable

of handling my condition, the trust in the

people who love me and care for me, and

the trust and confidence in my doctors

and practitioners, and trust in the Holy

One whom I serve in my illness by not sur‑

rendering to despair but living in that state

of confidence, that all things can be made

whole… including me. n

SGS-COC-004752


Many of our recent columns in this

publication have dealt with the

new and revised rules that FINRA

and the SEC are promulgating. Each of these

rules impacts various industry participants in

different ways. We are told that these rules are

necessary to protect investors and maintain

market integrity. Noble causes if nothing else!

If I may, I would like to digress from

our normal “heed the warning” atmosphere

that usually accompanies this column to a

broader discussion of the impact the rules

and regulations have on our industry in

particular and the broader commercial well‑

being of our democracy.

All of us who are registered participants

in the industry appreciate the fact that not

just anybody can hang out a shingle and be a

broker (legally). More importantly, we under‑

stand that there are barriers to entry. Once we

overcome the barrier, we are entitled to prac‑

tice our chosen business. However, it appears

that having overcome the barrier only entitles

us to increased scrutiny, limitations on activity,

and in some cases frivolous prosecution (some

may say persecution) and all in the name of

investor protection and market integrity.

However, the unintended consequence of

this vigorous regulatory enforcement regime

has been a marked decline in the ability of

our country to create capital, cause business

formations, increase employment and other‑

wise restore our economic well‑being. In my

conversations with both broker‑dealers and

issuers, it has become very apparent that risk

has been defined as a bad thing. Anything

that involves risk has to be avoided, and the

loss of capital must be prevented.

Most, if not all of you, who are reading

this column are risk takers. You are perhaps

an entrepreneur who believes you have a bet‑

ter widget or mouse trap. By default, you are

a risk taker and invest all of your capital in

a business venture that you believe is worthy

of the risk. Or perhaps you are an investor

who sees the possibility and wants to partici‑

pate in ideas of the future. Or you are a risk

taker who seeks out promising opportunities

to present to other investors. None of us

know for certain that an idea or investment

will work or much less make a profit for us;

but we are willing to take the risk.

My point is this. We can do all the due dili‑

gence, investigation, and review that is pos‑

sible, and there can still be no guarantee that

something will work. But one thing is cer‑

tain. Without risk, there can be no reward.

Without risk, there can be no growth. And

without risk, we cannot have a market.

I bring all of this rhetoric up for one

reason. Regulations that stifle capital forma‑

tion can only bring long‑term disaster for

short‑term headlines. Regulations that have

no actual benefit to our economic growth

must and should be reviewed, amended, or

repealed. Regulations that negate risk must

be repealed. Regulations that only create

opportunities for litigation must and should

be repealed. Regulations that increase

opportunities for capital formation should

be embraced and championed.

Do not misunderstand my remarks. These

remarks are my personal feelings and do not

represent anyone else’s opinion other than

my own. I am not espousing the virtues of

any political movement or organization. My

purpose is to invite you to participate in the

democratic process. Get involved in industry

organizations that advocate for our future

and our country’s economic well‑being.

Thank you for your patience. In the next

issue, we’ll discuss compliance issues. n

Chet Hebert is founder and president of The Compliance Department Inc., a compliance con‑sulting firm located in Centennial, Colorado. The firm assists broker‑dealers and investment advisors in the areas of firm formation, compliance, CRD service bureau, outsourced back‑office processing, and branch office audit services, including AML and Regulation S‑P compliance. For more information about the firm, please visit www.thecompliancede‑partment.com or call Chet at (303) 339‑9870.

By ChET hEBErTThe Compliance CornerlEgAl • TAX • ACCoUNTiNg


To look in the past can be painful to some people. Doing so will not help a person’s out‑

look. Managing time, money, and health is often overlooked by most people. To change

abruptly will never work in the long run.

We often accomplish things in small steps. Only then can we build a foundation

for the future. Few diet books, for example, help people achieve their goals. That is so

because people often try to change their lifestyle too quickly. The same can be said about

the financial well‑being of most of us. We have all relied upon advisors and have watched

talking heads. When we decide to steer ourselves onto the right path, however, we are

not ready for such precipitous change. How then do we expect to have positive results?

This question seems simple to answer, yet we often procrastinate or doubt that we can

do this by ourselves.

Initiating change in small steps will help us achieve success. We can start with the IRA.

It is easy to dismiss the simple concept. The IRA is supposedly a long‑term retirement

plan. How many have had their plan implode? Regulations help owners achieve success,

because they must put away money for a greater period of time. Managing the IRA is

similar to managing one’s health. When a symptom is ignored, more dire consequences

can occur. The same can be said for money and financial planning.

Stodgy politicians have a habit with gambling with people’s financial well‑being.

Some proposed changes currently before legislators may actually hinder people’s ability

to maintain their financial health. We need to have a panel of educated and responsible

people review these changes. We can dispense with the self‑serving political appointees

who know very little about gradual change. This is tantamount to having elected offi‑

cials diagnose a person’s ailment in their office and then prescribe medication that does

harm.

We should all take a physical and financial exam. Our well‑being will depend on

doing this. Our family will be glad that we did. n

OmbudsmanIt Is Time for Spring Cleaning

V i E W P o i N T S

It is time for

spring

cleaning. This

also means

getting a finan‑

cial checkup.

One’s financial

health is closely

related to one’s

physical well‑

being.

By JACk lESliE

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Micro-Cap Review Fall 2011

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