Refuting Star Scientific's Refutation

In my opinion, Star is peddling modern-day snake oil, but the company isn't stupid. Its marketing department and the stock promoters who tout Star cleverly link anatabine, a compound found in nicotine, to real medical research investigating the role of nicotinic receptors in the brain.

What Star and its promoters neglect to mention, however, is that medicinal chemists spend considerable time and brainpower creating drugs potent enough to activate nicotinic receptors. This is work done by actual drug companies -- Pfizer (PFE), Targacept (TRGT), Envivo Pharmaceuticals, Novartis (NVS). So far, the research has led to more failures and setbacks than medical breakthroughs.

The notion that Star Scientific has cracked the code with a nutritional supplement like anatabine is ludicrous. It also explains why Star talks more today about anatabine's alleged effect on inflammation and NF-KB inhibition. Piggybacking on a disappointing line of real medical research doesn't help generate anatabine sales at the local GNC store. Actually, nothing Star does helps the top line, judging by the $4.5 million in revenue and an operating loss of $19.8 million posted by the company through three quarters of 2012. Meantime, Star Scientific's market cap exceeds $300 million.

Talk about false and misleading...

-- Reported by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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