micro-cap review magazine fall 2011
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Micro-Cap MagazineTRANSCRIPT
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
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.
4 Micro-Cap Review Magazine www.microcapreview.com
PROFIT PLANNERS MANAGEMENT, INC.Accountants & Business Advisors
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C O N T E N T S
WWW.MICROCAPREVIEW.COM
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
6 Micro-Cap Review Magazine www.microcapreview.com
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
www.microcapreview.com Micro-Cap Review Magazine 7
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
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www.microcapreview.com Micro-Cap Review Magazine 9
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
F E AT U r E D A r T i C l E
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).
10 Micro-Cap Review Magazine www.microcapreview.com
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
12 Micro-Cap Review Magazine www.microcapreview.com
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.
www.microcapreview.com Micro-Cap Review Magazine 13
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.
14 Micro-Cap Review Magazine www.microcapreview.com
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)
Market cap ‑ $58.8 billion
3 month avg. trading volume – 2.8 million
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
3 month avg. trading volume – 5.8 million
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)
Market cap ‑ $1.1 billion
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
3 month avg. trading volume – 407 thousand
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)
Market cap ‑ $225 Million
3 month avg. trading volume – 104 thousand
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)
Market cap ‑ $25 Million
3 month avg. trading volume – 90 thousand
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.
www.microcapreview.com Micro-Cap Review Magazine 15
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.
F E AT U r E D A r T i C l E
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
www.microcapreview.com Micro-Cap Review Magazine 17
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.
18 Micro-Cap Review Magazine www.microcapreview.com
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
www.microcapreview.com Micro-Cap Review Magazine 19
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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www.microcapreview.com Micro-Cap Review Magazine 21
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.
22 Micro-Cap Review Magazine www.microcapreview.com
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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24 Micro-Cap Review Magazine www.microcapreview.com
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
F E AT U r E D A r T i C l E
Oncology Drug Research Enters New Era Discovery/Development
www.microcapreview.com Micro-Cap Review Magazine 25
(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.
www.microcapreview.com Micro-Cap Review Magazine 27
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.
28 Micro-Cap Review Magazine www.microcapreview.com
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.
www.microcapreview.com Micro-Cap Review Magazine 29
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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N e w s T h a t T r a d e s
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
www.microcapreview.com Micro-Cap Review Magazine 31
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
32 Micro-Cap Review Magazine www.microcapreview.com
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.
www.microcapreview.com Micro-Cap Review Magazine 33
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
F E AT U r E D A r T i C l E
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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www.microcapreview.com Micro-Cap Review Magazine 35
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].
36 Micro-Cap Review Magazine www.microcapreview.com
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.
www.microcapreview.com Micro-Cap Review Magazine 37
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,
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 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
$23,500,000
Follow-On
February 2011
Co-Manager
$300,000,000
Senior Notes Due 2019
March 2011
Co-Manager
$450,000,000
Senior Notes
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Co-Manager
$50,000,000
Senior Notes
February 2011
Co-Agent
$11,019,523
March 2011
Financial Advisor
$50,000,000
PIPE
February 2011
Co-Agent
$56,676,023
Follow-On
December 2010
Co-Manager
February 2011
Financial Advisor
$78,275,000
February 2011
Co-Manager
$115,000,000
Units
March 2011
Lead Bookrunner
$20,000,000
Preferred Stock
March 2011
Lead Bookrunner
$126,500,000
March 2011
Co-Manager
Follow-On
Measuring our success by the only metric that counts:
Extraordinary Value For Our Clients
Registered Direct
$7,540,000
December 2010
Restructuring
$159,462,000
Follow-On
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$142,312,500
March 2011
Co-Manager
Follow-on
$154,100,000
Follow-On
January 2011
Co-Manager
Career opportunities: [email protected]
$14,910,090
PIPE
December 2010
Sole US Placement Agent
$14,910,090
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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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11. What did you do wrong in your 2010 investing strategy that you will correct in 2011? q I held my winners too long q I sold my winners too soon q I held my losers too long q I didn’t buy more shares when I knew I should have q I need to do more research q I should have read Micro-Cap Review from cover to cover
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www.microcapreview.com Micro-Cap Review Magazine 41
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.
www.microcapreview.com Micro-Cap Review Magazine 43
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.
44 Micro-Cap Review Magazine www.microcapreview.com
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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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www.microcapreview.com Micro-Cap Review Magazine 47
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.
48 Micro-Cap Review Magazine www.microcapreview.com
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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50 Micro-Cap Review Magazine www.microcapreview.com
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
www.microcapreview.com Micro-Cap Review Magazine 51
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
52 Micro-Cap Review Magazine www.microcapreview.com
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)
MARCH 19–21, 2012AMSTERDAM, THE NETHERLANDS
OCTOBER 31–NOVEMBER 2, 2011DUESSELDORF, GERMANY
MAY 11–12, 2011BEIJING, CHINA
MAY 16–17, 2011TURIN, ITALY
SEPTEMBER 7–9, 2011BOSTON, MA, USA
JANUARY 9–11, 2012SAN FRANCISCO, CA, USA
Join the most productive partnering platform in the life science industry
BIOPHARM AMERICA™ BIO-EUROPE
BIO-EUROPE SPRING®BIOTECH SHOWCASE™
CHINABIO®
PARTNERING FORUMEUROMEDTECH™
Producer
In collaboration with
Co-producersProducer
Supported by
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Supported by
www.ebdgroup.com Partnerships start here.
San
Fran
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© S
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BES11 093 Kombi 8_75x11_25.indd 1 24.02.11 19:33
54 Micro-Cap Review Magazine www.microcapreview.com
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:
www.microcapreview.com Micro-Cap Review Magazine 55
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
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alcohol poisoning in children can be lethal.
Have you ever wanted to invest in
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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‑
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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)
56 Micro-Cap Review Magazine www.microcapreview.com
Medical Alternatives for the 21
st Century!
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www.microcapreview.com Micro-Cap Review Magazine 57
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
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.
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.
58 Micro-Cap Review Magazine www.microcapreview.com
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!
www.microcapreview.com Micro-Cap Review Magazine 59
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
www.microcapreview.com Micro-Cap Review Magazine 61
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.
62 Micro-Cap Review Magazine www.microcapreview.com
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.
64 Micro-Cap Review Magazine www.microcapreview.com
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.
www.microcapreview.com Micro-Cap Review Magazine 65
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]
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Investment Opportunities & Money
www.microcapreview.com Micro-Cap Review Magazine 67
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
68 Micro-Cap Review Magazine www.microcapreview.com
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‑
www.microcapreview.com Micro-Cap Review Magazine 69
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
70 Micro-Cap Review Magazine www.microcapreview.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.
www.microcapreview.com Micro-Cap Review Magazine 71
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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www.microcapreview.com Micro-Cap Review Magazine 73
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.
74 Micro-Cap Review Magazine www.microcapreview.com
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
OSWALD & YAPAward Winning Business LawyersContact Lynne Bolduc16148 Sand Canyon AvenueIrvine, CA 92618Telephone: (949) 788-8900Fax: (949) 788-8980E-mail: [email protected]
www.microcapreview.com Micro-Cap Review Magazine 77
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.
78 Micro-Cap Review Magazine www.microcapreview.com
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.
www.microcapreview.com Micro-Cap Review Magazine 79
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
www.microcapreview.com Micro-Cap Review Magazine 81
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
82 Micro-Cap Review Magazine www.microcapreview.com
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
OTC: FXITA PUBLIC COMPANY
Forex International TradingOne Grand Central Place, Suite 5310
60 East 42nd St., New York, NY 10165
888.333.8075
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Forex International Trading Group of Companies
OTC: FXIT
We have trading platforms for Beginning Traders to Advanced Traders and “Black Box” Operators
Forex International Trading Group of Companies
Beam FX Beam FuturesTriple 8 Limited
UFXBankUFXMarkets
Forex Int.’l Trading MS Limited
OTC: FXIT