BOSTON ( TheStreet) -- Star Scientific ( CIGX) and claims about a cure for Alzheimer's disease lead off this week's Biotech Stock Mailbag.

Via Twitter, @superduty03 asks, "Why no comment on $CIGX and their compound RCP-006 that has the potential to treat Alzheimer's?"

Star Scientific hasn't revealed much about RCP-006 and published research is scarce. "Compound" is an appropriate way to describe RCP-006 because it is not a drug. Star refers to RCP-006 as a "nutritional supplement." RCP-006, also known as anatabine, is a naturally occurring compound isolated from nicotine.

Best I can tell, most of the excitement around anatabine comes from a Seeking Alpha column written by James Altucher in which he claims that anatabine is a cure for Alzheimer's. Altucher is a smart guy so I think he was being a bit cheeky; he knows full well there is no scientific evidence yet to back up a claim that anatabine cures Alzheimer's. His column, despite the enticing headline, doesn't offer any proof, either. Instead, Altucher says a recent Star Scientific press release announcing the start of a small human trial of anatabine is actually a coded message to investors: Anatabine is an Alzheimer's cure! Altucher is long Star Scientific.

Full disclosure: Altucher and I are former colleagues at TheStreet. During his tenure at TheStreet, we agreed on some biotech stocks, and disagreed on others. Were he still working here, we'd be disagreeing about Star Scientific. Anything is possible, so sure, anatabine might one day be a cure for Alzheimer's, but it's very premature to make such a claim since this nutritional supplement (not even a drug) has not yet been tested in humans, let alone humans with Alzheimer's.

Nicotine is known to increase alertness and concentration in smokers by activating certain receptors or "volume knobs" in the brain that turn up levels of key neuro-transmitters. Anatabine, as a compound found in nicotine, may play a role in this neuro-stimulatory process.

Whether or not a drug that activates neuronal nicotinic receptors, also known as nicotinic acetylcholinase receptors, can have a beneficial effect on diseases like Alzheimer's, depression, Parkinson's, inflammation and others is not known, but research is ongoing. Any investor truly interested in this area of drug research should take a look at Targacept ( TRGT), which is developing a very promising late-stage drug against depression in partnership with AstraZeneca ( AZN). Targacept's pipeline also includes an Alzheimer's drug.

I'd be much more cautious and skeptical about Star Scientific because anatabine and other natural-occuring substances in nicotine, while known to interact with these "volume knobs" in the brain, are probably not selective enough to have a significant therapeutic benefit without side effects. What's needed, more likely, are drugs specifically designed to target and stimulate only those receptors in the brain that can produce a therapeutic benefit while avoiding the receptors that can cause significant side effects.

It's highly unlikely that any nutraceutical or nutritional supplement, including anatabine, is going to be selective enough to cure a disease like Alzheimer's. I know some people swear by the efficacy of nutraceuticals but I'm not one of them. I prefer a bit more scientific rigor with my medical claims.

J.D. Bear asks, "KV Pharmaceuticals (KV-A) recently received approval for Makena, a.k.a. progesterone, for prevention of preterm birth. Progesterone was first approved by the FDA in 1957. It has been used for birth control, promotion of pregnancy, hormone replacement therapy, menstrual disorders, and prevention of preterm birth. It is readily available from compounding pharmacies at low cost.

"Now that KV has got an approval they want $30,000 for a course of treatment that previously cost a couple hundred dollars. They have reportedly sent out cease and desist letters to the compounding pharmacies threatening some kind of FDA enforcement action. My question: What is there to enforce? As I understand the law, KV has exclusive rights to label and advertise their product as treatment for preventing preterm birth. Aside from that labeling right, is there any reason to believe the FDA will stop compounding pharmacies from supplying generic progesterone, as prescribed by physicians, for such reasons they see fit?"

You're correct. FDA doesn't have the legal right to regulate compounding pharmacies, according to the latest court decision in a long-running legal battle between the two sides. That means compounding pharmacies, if they so choose, can still make and sell the progesterone product 17P for doctors who want to prescribe it for the prevention of pre-term birth.

Alere ( ALR), one of the countries largest providers of 17P and related services, recently sent a letter to doctors informing them that the company will continue to offer the drug.

"Alere is committed to continue offering our current 17P Administration Service without interruption, which we pioneered in 2003 after the use of this compound was endorsed for specific patient indications by national medical societies such as the American College of Obstetricians and Gynecologists (ACOG)," the Alere letter to doctors states.

KV is the exclusive manufacturer of FDA-approved 17P, which it intends to sell under the Makena brand name, but compounding pharmacies and companies like Alere can still manufacture and sell less-expensive 17P if they so choose.

KV has every legal right to launch Makena at $1,500 per dose even when the same drug, manufactured by compounding pharmacies and used for years, is priced at $10 to $20 per dose. The strategy hasn't exactly made KV many friends -- politicians, doctors groups and insurance companies have all criticized the company publicly for its super-sized pricing policy. At the same time, however, some large insurance companies have said they will cover the extra cost of Makena, and KV has pledged to help low-income patients pay for the drug. KV is apparently willing to swallow the bad press if that means walking away with outsized Makena revenue.

The Makena controversy has turned KV into a very volatile stock. KV traded for $3-$4 before the FDA approved Makena. One month later, KV shares hit $13. The criticism of KV regarding its Makena pricing plan in recent weeks has also taken a toll, with KV shares now trading around $9-$10.

If it sounds like I have no idea what happens next with KV and its stock, you're right.

David B. revisits an old friend:

"What's up Adam? Let's see we're now three months past your prediction of Cell Therapeutics (CTIC) being bankrupt. Oh look at that, 'Cell Therapeutics Strikes Cancer Deal with Chroma.' What happened, Adam? Remember all those Jim Bianco-bashing comments? Remember it's not your fault. You can't help it. It's all about your past!"

I don't recall a column from three months ago in which I predicted bankruptcy for Cell Therapeutics. I have tried to pound home the message repeatedly that Cell Therapeutics is chronically short of cash and investors face massive dilution as the company continues to sell large amounts of stock in order to fund operations.

That fact remains undeniably true. Cell Therapeutics had more than 800 million shares outstanding at the end of 2010, a figure that's moving briskly towards a whopping 1 billion shares outstanding with the January financings and many more to come. Cell Therapeutics still doesn't have enough cash on hand to maintain basic company operations, fund the new clinical trial of pixantrone, pay off debt due later this year and now pay 75% of development costs for the new experimental drug licensed from Chroma Therapeutics.

Cell Therapeutics paid $5 million upfront to license tosedostat from Chroma. That's small change for a cancer drug entering phase III studies. Cell Therapeutics CEO Bianco may be a wheeler-dealer but he didn't steal away a highly coveted asset. Tosedostat is more likely a bargain-bin remainder. A more typical cancer drug licensing deal look like the $50 million Human Genome Science ( HGSI) paid upfront Wednesday for rights to a phase I/II drug from FivePrime Therapeutics.

The lead indication for tosedostat is in elderly patients with acute myeloid leukemia (AML). A single-arm phase I/II study of 51 patients demonstrated an overall response rate 27%, including a complete response rate of 14%. The median duration of response was a bit longer than three months. Toxicity concerns reported in the study included reduced platelet counts and increases in liver enzymes. The results from this study were published in the Journal of Clinical Oncology in October 2010.

With all the caveats and warnings about side-by-side comparisons of two different drugs, Cyclacel Pharmaceuticals' ( CYCC) sapacitabine demonstrated a 35% response rate (including a 25% complete response rate) and a one-year survival rate of 30% in a phase II study enrolling similar elderly AML patients. Cyclacel has already started a phase III study of sapacitabine in elderly AML.

Chroma started but never completed another phase II study of tosedostat in elderly AML designed to better define an optimal dose for elderly AML patients, according to ClinicalTrial.gov. Cell Therapeutics said data from this study would be presented at this year's American Society of Clinical Oncology annual meeting. Those data are supposed to clear the way for the start of a pivotal phase III study in the fourth quarter. That seems like an overly optimistic schedule. Cell Therapeutics has a dismal track record when it comes to meeting its own drug development timelines.

Tosedostat is oral and can be dosed once daily. That's a potential advantage but not much to get excited about unless the drug can significantly improve on the efficacy data published to date (and do so without causing a lot of toxicity.) Elderly AML patients are a fragile bunch and previous efforts at developing a drug in this indication has proven to be extremely difficult.

The biggest impediment standing in the way of tosedostat is Cell Therapeutics, which has proven itself to be completely incompetent when it comes to the clinical and regulatory know-how necessary to bring a cancer drug to market. Pixantrone's development path has been a disaster, so why should tosedostat be any better?

Last Thursday, Spectrum Pharmaceuticals ( SPPI) reported fourth-quarter earnings of 8 cents a share on revenue of $34 million. Top- and bottom-line results were better than expected and helped boost Spectrum's stock price from $6.90 to a bit more than $8 a share.

After Spectrum's earning report, I tweeted, "I'm still underwhelmed by Zevalin sales performance. $8M in Q4, the sequential growth should be better."

This prompted a response from @nexparadigm: "So why the enthusiasm? First non pro-SPPI comment I've seen."

Let me explain my tweet further. Spectrum's fourth-quarter results were strong, no doubt, but the numbers were boosted by a one-time surge in sales of its cancer drug Fusilev to $23 million. For comparison's sake, Fusilev sales for the preceding three months of 2010 totaled $9 million.

Fusilev sales took off in the fourth quarter because doctors are using it as a temporary replacement for the generic colon cancer drug leucovorin, which has been hit with intermittent supply shortages. Fusilev and leucovorin are related drugs.

Spectrum is waiting for an April 29 decision from FDA to expand Fusilev's label to include a colon cancer indication. If FDA approves, Spectrum can market Fusilev in colon cancer. The success of that new marketing push, however, likely depends on the available leucovorin supply. As long as cheap leucovorin is scarce, Fusilev should do well, but if generic drug makers replenish leucovorin stockpiles, perhaps as early as this spring, Spectrum may find the colon cancer market tougher to penetrate.

The uncertainty regarding Fusilev is why investors and analysts pay more attention to Spectrum's lymphoma drug Zevalin. Fourth-quarter and 2010 Zevalin sales totaled $8 million and $29 million, respectively. Zevalin's year-over-year sales growth of 81% is good but it could have been better, especially since management had previously expressed confidence that Zevalin sales would double in 2010. The drug came close but didn't quite make it.

On a sequential basis, Zevalin sales in the fourth quarter grew by just 4%, down from 12% sequential growth recorded in the third quarter.

Zevalin is Spectrum's most important commercial product. The company has done a good job but not a great job marketing Zevalin, considering the effort and money poured into the drug. I'd like to see more sales, sooner.

I'm tough on Spectrum because I was an early supporter of the company's efforts to re-launch Zevalin going way back to early 2009 when the stock traded for less than $2. Spectrum's stock price is recovering nicely, but at $8-9 a share, it's still only back to where it was in September 2009 when FDA expanded Zevalin's label to include use in front-line lymphoma patients.

Depomed ( DEPO) and Abbott Labs ( ABT) did what the NFL and its players could not: Reach a mediated settlement regarding marketing rights to Gralise, a new formulation of the generic drug gabapentin approved in January to treat shingles-related pain.

In an agreement announced Wednesday night, Abbott returned Gralise commercial rights to Depomed and will pay the small drug maker $40 million. Depomed, in turn, plans a commercial launch of Gralise in the U.S. in the fourth quarter, targeting specialty pain doctors. The company will also try to find a new marketing partner to sell Gralise to primary care physicians.

The mediated settlement ends a mini-contretemps between DepoMed and Abbott that began January 18 when Abbott announced that it would not sell Gralise despite a marketing agreement in place with Depomed. Abbott has never explained why it didn't want to sell Gralise, which is a more convenient, once-daily, formulation of gabapentin that is also better tolerated by patients.

After the Depomed news broke Wednesday night, I sparked a debate on Twitter by asking whether getting back full rights to Gralise and launching the drug (at least initially) on its own was good for Depomed. Here are some of the more thoughtful tweets I got in return:

@TroKalayjian: "actually it is good news, DEPO can now partner who has a vested interest in pain/neurology, simple as that."

Seperately, he added: "ABT has no neurology or pain sales force & its not in their therapeutic focus. Gabapentin is not new, docs know it=not risky."

@LifeSciencesMkt: "$DEPO If $ABT didn't want it what makes most traders believe that other big pharma co's will step in -- besides being long and emotional"

Also: "$DEPO $ABT -- I tend to believe that $ABT viewed the expense of commercializing Gralise vs total sales potential as not worth the effort"

I tweeted: "$DEPO -- regardless of why $ABT bolted, Gralise now another risky drug launch, like all other new drug launches. usually not good for stocks"

@stevebozeman: "no insurance is going to overpay for Gralise when you can take a couple of capsules of generic gabapentin"

@Ratchiman: "$DEPO Gralise returned is an excellent outcome...160MM cash with lots of catalysts THIS year-Serada P3 trials, new Gralise Partners, Glu Glumetza franchise continues to generate cash"

@sharkbiotech: "to me the $DEPO story is just as much Serada as Gralise if not more. The stock could double if the phase 3 is positive."

@natesadeghi: "$DEPO Have been doing this long enough to know bad news. Twitterverse challenge: Name a counter example."

The market's initial reaction to the Depomed news was positive, with the stock up 5% to $9.10 a share in mid-day Thursday trading. Ever since this episode with Abbott started in January, Depomed shre have traded as low as $5 and as high as $10.

Another follow-up on Apricus Biosciences ( APRI)

@DrewDog12380 tweeted to make sure I saw an Apricus announcement this week regarding the formation of a clinical advisory board to plan the clinical development of Femprox as a treatment for female sexual arousal disorder, also known as female sexual dysfunction.

Femprox is a topical formulation of alprostadil, the same active ingredient contained in Apricus' erectile dysfunction cream Vitaros. Alprostadil works by relaxing blood vessels and enhancing blood flow. When applied to the penis, men can achieve erections. The idea behind Femprox is similar -- increase blood flow to the vagina, thereby increasing vaginal lubrication and sexual arousal.

Apricus owns full rights to Femprox and future plans include meetings with FDA to reach agreement on the design of a phase III clinical program, the company says.

The use of topical alprostadil to treat female sexual arousal disorder (FASD) has been tried unsuccessfully before. Vivus ( VVUS) halted the development of a topical alprostadil known as Alista in 2007 after the failure of a randomized, controlled phase IIb study of 320 women. In that study, treatment with Alista over six months produced a doubling over baseline of satisfying sexual events, however the difference between Alista and placebo was not statistically significant.

Different approaches to treating FASD have also failed. Pfizer ( PFE) couldn't get sildenafil (the active ingredient in Viagra) to work in women. Sildenafil and alprostadil have similar mechanisms of action so the former's failure, along with Vivus' strikeout, is a real concern for Apricus as it moves ahead with Femprox. Procter & Gamble ( PG) and Boehringer Ingelheim also struck out separately with FDA, leaving BioSante Pharmaceuticals ( BPAX) as the only company with an FASD drug candidate that's still alive.

--Written by Adam Feuerstein in Boston.

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