One of these days, Lipid Sciences ( LIPD) hopes to provide new treatments for everything from clogged arteries to HIV.

For now, the Pleasanton, Calif., company has no commercial products and just 17 employees. But the tiny biotech outfit clearly aims high: Lipid's Web site suggests the company's breakthrough technology could wind up treating hepatitis, influenza, SARS and the West Nile virus, among other things.

Some other facts about Lipid are noteworthy as well. The vice chairman and chief scientific director, H. Bryan Brewer, spent decades at the National Institutes of Health. The CEO once ran a company that is now owned by General Electric ( GE). And Lipid's most promising development resembles a new cholesterol treatment that, some feel, could become the next major blockbuster for Pfizer ( PFE).

Of course, there is a flip side. Brewer came under fire at the NIH for perceived conflicts of interest -- including his ties to Lipid Sciences -- before he walked out of the agency's door. CEO S. Lewis Meyer saw his own popularity plummet in some quarters after he arranged to sell Imatron to GE. And Lipid Sciences seems unable to accept the fact that it has yet to find a suitor of its own.

More than two years have passed since Lipid Sciences announced that it was exploring "strategic alternatives," after Pfizer paid $1.3 billion for a competitor. Nevertheless, Lipid Sciences -- with a market value of just $65 million -- continues to repeat that announcement in every quarterly update.

"We felt on a go-forward basis, we would disclose it," a company rep told the Mergers & Acquisitions Report earlier this month. "Suffice it to say, we're still receiving inquiries. If that had changed, we would so state."

For now, Lipid Sciences is pursuing its ambitious dreams on its own. Earlier this year, the company received conditional approval to launch a human trial that will test the safety of its proprietary plaque-removing device. The device, like Pfizer's potential blockbuster drug, aims to capitalize on the benefits of HDL -- the so-called good cholesterol -- in order to turn back the "cardiovascular clock."

Lipid's ups and downs

If successful, the concept would represent a major breakthrough in the world of medicine. It would also bring sweet victory to a small biotech that, so far, has been waiting on the sidelines for its first chance to play.

Shares of Lipid Sciences fell 2 cents to $2.37 on Wednesday, approaching the low end of their 52-week range.

Early Setbacks

Lipid Sciences emerged in its current form following a reverse merger with NZ, a Phoenix-based real estate concern, in late 2001.

The company launched -- and quickly halted -- a human trial of its original lipid-removing device the following year. It voluntarily ended the Australian-based study in the fall of 2002 after one of 10 healthy participants suffered an adverse reaction.

Over the next six weeks, Lipid Sciences ran off its CEO and welcomed Brewer -- then a branch leader at the NIH -- to its board. Then, in early 2003, the company formally shelved its expensive cholesterol trial and began focusing on viral research in an effort to cut costs.

"This restructuring action will allow us to move aggressively with the development of our viral platform -- with the first clinical indication being HIV -- while we also continue to advance our cardiovascular platform," then-Chairman Richard Babbitt announced that January. "We will now join together to begin the exhilarating process of focusing our efforts to assure our future."

Four months later, however, Lipid Sciences faced possible delisting because its share price had fallen below the $1 minimum on Nasdaq. But with a new CEO in place, the company was poised for a fresh burst of life.

Taking Heart

Meyer spent eight years running Imatron, a San Francisco-based maker of ultra-fast -- and ultra-expensive -- medical scanners before assuming the top post at Lipid Sciences in 2003.

While at Imatron, Meyer caught media attention for selling company stock after a big run-up in the shares. The San Francisco Chronicle pointed out in 1996 that Meyer had sold more than 400,000 shares of Imatron stock following a favorable report in a journal published by the American Heart Association. At the time the stock was near a record high of roughly $7 a share.

But later, the AHA issued a statement that left many people debating the real value of Imatron's scanners. In the end, the Chronicle reported, the AHA stopped short of recommending the scans for routine screenings because the agency had no idea what to do with the test results once it got them.

For years, controversies over Imatron scanners continued -- with the stock often reflecting that powerful tug of war. In mid-1999, the Food and Drug Administration finally slapped Imatron with a warning letter for improperly marketing its scanner. But the stock enjoyed another surge later that year -- with Meyer selling yet again -- after the FDA made new marketing allowances for the company's flagship product.

Less than two years later, shortly after the Sept. 11, 2001, terrorist attacks, the wild ride finally came to an end. Meyer inked a deal to sell Imatron to GE for less than $2 a share, creating some vocal enemies in the process.

Today, Meyer portrays Imatron's sale price -- totaling $215 million -- as a fair one given the economic climate at the time. But the Daily Deal discovered some angry message board postings from shareholders after the transaction was first announced.

"Management will get rich," one Yahoo! poster wrote, according to the Daily Deal. "GE will gladly pay for the litigation because they stole the company. Lawyers will get rich. (And) stockholders will get a box of light bulbs."

In late 2001, Imatron agreed to settle the shareholder complaints by making additional disclosures and paying attorneys' fees. Meyer then ended his career at Imatron and, 16 months later, came aboard as the new leader of Lipid Sciences.

Ties in the Closet

In November of 2003, just a few months after Meyer assumed his current post, the Journal of the American Medical Association published a report supporting the concept behind Lipid Sciences' artery-clearing device. The company's stock jumped more than 40% the very next day.

By the end of that year, Pfizer had come along with its $1.3 billion offer for another company -- known as Esperion -- that was focused on a similar treatment. Lipid Sciences responded by putting itself up for sale.

Meanwhile, the company's stock continued to climb. The following month, Brewer touted HDL therapy -- like that being pursued by Lipid Sciences -- in an editorial published by the New England Journal of Medicine. But Lipid Sciences was nevertheless poised for a fall as the company remained on the auction block.

Then, as 2004 drew near a close, Brewer found his ties to drug companies -- including Lipid Sciences -- exposed in a groundbreaking investigation by the Los Angeles Times. Brewer and two other NIH researchers, with industry connections of their own, resigned from the agency a few months later.

"From 2001 to 2003, Brewer accepted about $114,000 in consulting fees from four companies making or developing cholesterol medicines," the Los Angeles Times noted, when reporting on Brewer's departure from the government agency in March 2005. "As part of his federal role, Brewer helped draft national guidelines urging more aggressive use of drugs to lower cholesterol."

Moreover, the Times added, Brewer specifically "extolled the safety and effectiveness" of Crestor -- a cholesterol-lowering drug that ultimately landed on the "Worst Pills" list published by consumer-watchdog organization Public Citizen.

The Times reported that Brewer planned to assume a position with a research institute in Washington. But just two months later, in May of 2005, Brewer surfaced as the vice chairman and chief scientific director of Lipid Sciences instead.

Meyer sees nothing wrong with Brewer's past actions. Indeed, he feels lucky to have Brewer working as a full-time consultant -- with a salary exceeding his own -- as part of the company's "virtual science department."

Positive Spin

Brewer assumed his current post at Lipid Sciences a month after the company hired a new investor relations firm to help boost public awareness of its story.

"We have selected Wolfe Axelrod Weinberger Associates to assist us in communicating our exciting message to the investment community," Meyer announced last April. "We look forward to working closely with Wolfe Axelrod Weinberger to achieve our objective of increasing stockholder value through an aggressive investor outreach program."

Four months later, the company's 79-year-old chairman died. Meyer and Brewer have, together, assumed the chairman's role.

They managed to kick off 2006 with a bang. On Jan. 31, the company announced that it had moved a step closer to launching human trials of its new plaque-lowering device -- which is far different than the one that failed in Australia -- here in the U.S.

Looking ahead, Meyer believes the company's device could hit the market by the end of 2008. With 1.8 million patients showing up at hospitals with clogged arteries every year -- and another 13 million survivors who still have too much plaque -- Meyer easily sees a $1 billion-plus treatment opportunity.

"And don't forget about the 5.5 million Americans wandering around who've had strokes," Meyer adds. "Conventional wisdom is that 88% of strokes are caused by plaque. ... This device treats arterial plaque systematically all over your body."

Please note that due to factors including low market capitalization and/or insufficient public float, we consider Lipid Sciences to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.