written by reader Stellar Biotechnologies – The real deal or just more tulip bulbs?

By theblindsquirrel, August 21, 2013

DISCLAIMER: I am long shares of SBOTF and may add to the position at any time.
”Even blind squirrels find an acorn every now and then”
OK, I know .. there is already plenty of discussion re Stellar Biotechnologies (SBOTF) on the site. Since Travis posted the tease from Nick Hodge in early July, the stock is up a hair over 100% (my Special Situation account sends many thanks for that one!). The reason I’m opening this thread is because the majority of comments from those of us interested or already invested in SBOTF are being posted under another wonderful – yet mostly unrelated – thread by Doc Gumshoe that talks about Alzheimers and possible causes/treatments/cures. Great stuff, but not fully germane to the topic of SBOTF. So, tho seperate the two discussions, I thought I’d try this so we can focus on each of the topics independantly.
That said, here’s some commentary about SBOTF that I have gleaned from the original tease, tracking the price action since July, reading member comments on this site, and studying anything and everything I can find about the Company and it’s product, Giant Keyhole Limpet Hemogobulin, a/k/a KLH.
First, a little peeve I’ve developed; the actual name of this animal that is the central focus of the business. I’ve noticed a trend of sorts by readers to refer to the Limpet as a ”snail”, ”escargot”, or something along those lines. While some may be using this as a light-hearted way of referring to the animal, it is not any of those. Please, use the proper name – as silly as it might sound. New readers could easily dismiss the entire idea and be misled otherwise. No disrespect meant to any who have done this, but I think it’s important we stay on track.
Now, some factoids for you.
If you haven’t done your due dilligence yet, the place to start is right here on this page. In the upper right you’ll see a box that says ”Teaser Tracking.” Click on that. The page that comes up is a list of the teases which Travis has posted over the past many months. Second from the top is the one re SBOTF. Some good tidbits of info right there. But what you want to do is look all the way over to the right and click on the link to the original tease posting. Open that and you’ll get the full story that Travis wrote when he first uncovered this tease (produced by Nick Hodge) and is a solid foundation of info about the company. Read it – two or three times to get an understanding of what SBOTF is all about.
Next, if you can find it, try and get a post that has the original video that Hodge did to tease the company with. In it, he (Hodge) interviews a couple of the company’s top executives and takes the cameras outside the room totalk with another employee about the ”farming” process that SBOTF has spent years and millions developing and patenting. You’ll get a pretty good visual inspection of the plant itself, the ”grow tanks”, and the Limpet. Good stuff. By the end you’ll have a fair overview of the company and what it does. FYI, the video tease runs about 40 minutes. It’s the first 25 minutes or so that will interest you. The remainder is what all teases consist of, overblown and repetitive pleas to get you to subscribe to the newsletter service that the promoter has to offer. Save yourself time and money by skipping that stuff.
A few takeaways from the video and additional research:
SBOTF has been around since the late 1990’s, working on how to extract the blood from the Limpet without killing them (they have done that and gotten patents on the process) and how to raise them in captivity in order to ensure a continuious supply of the animals to work with. This ”farming” process has, for the most part, been perfected and SBOTF can now raise them from fertilization of sperm and egg to maturity. They have a lifespan of some 30 years, and coupled with the patent-protected process they developed for extracting the blood without killing the Limpet, the company can now say with assurance that they can provide the Big Pharma with all the KLH they need to conduct clinical trials and produce the drugs they develop once FDA approval is granted. And – this is a big ”and” – they are the ONLY company in existence that can do this at the present time. The many patents they hold may ensure that to be the case for years to come.
Did I mention that KLH cannot be synthesized? So far nobody has been able to do that, so the supply of KLH from SBOTF seems to remain the only game in town.
Stellar Bio has yet to turn a profit. Sales and not much to write home about. That is mainly due to the small supply available and that SBOTF has focused on R&D in the past moreso than actual KLH production. That’s my best guess – I can’t verify that but seems to be the case. It is changing, however. The R&D is still in full swing, but the ability to produce and sell KLH is starting to ramp up as witnessed by increasing sales volume. It’ll take time but those increasing sales are coming.
In the wild (ocean floor), the Giant Keyhole Limpet has never been found ANYWHERE in the world other than in the small colony (estimated to be about 100,000 animals) which is just offshore from the Stellar Bio plant in Ventura County, CA. The enviromental community has been getting more and more concerned about the harvesting of the Limpets from this colony since there apparently aren’t any more around. Whisper talk about possible extinction have begun to surface, although no official governmental action regarding a ”protected specise” has yet been issued. This is why the farming of the animals has been crucial and why Stellar has such a leg up on any possible competition. If the Tree Huggers get hold of that idea, the ability to harvest the colony could – and probably would – be severely impacted.
Recent price and volume action has been fast and furious. As more and more people are becoming aware of the company by means of Hodges’ tease and thing such as this discussion, volume has had days that were near three times the average six months ago (175K shares average vs. some days now running around 500K). And most of this is upside volume indicating increasing demand for shares of a small float. This of course leads to highr prices as we are witnessing as I write.
For now, the gravy train is tearing down the track. The question is, when will demand for shares be curtailed as investor thirst for a bite of Limpet pie become satisfied? When will Nick Hodge back off this promotion, letting the press subside and therefore lessening investor awareness (the stock is not covered by any analyst, anywhere, that I can find, nor is it held by any mutual fund or investment management company). If and when this interest backs off, what effect will that have on the stock price? Trees don’t grow to the sky … or do they?
I can’t answer those questions. Just like you, I can only hold ’um and not fold ’um – yet. That day may come, and that is why I suggest anyone long the stock keep a DAILY eye on it. I’m making no prediction whatsoever about where the price will go over the next several weeks or months. In the interest of full disclosure, I have already taken some money off the table just to partially protect the quick profits I made since purchase. I sold about 30% of my initial position when that part became valued around 50% of my original investment. What remains is valued today right at the same $ amount I first put in. The amouunt I pulled out gives me full protection of some 50% of my original investment. Would I be better off today if I hadn’t done that? Yes. I would, because the price continues to rise. Will I be better of for having made thaat sale if the price stumbles and falls in the near future? Again, yes, I will – if the price falls. Some wise man once said ”you can’t go broke if you take profits” and I believe in that. Me, I don’t care for the idea of going broke, so I’m perfectly happy with this concept. No regrets about putting actual money in the bank, so to speak.
Comments? Concerns? Insights? Let the fun began!
Sincerely,
Your Resident Blind Squirrel
Jim Skelton

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

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Jim Skelton, The Blind Squirrel
Guest
Jim Skelton, The Blind Squirrel
December 11, 2013 9:26 am

ATTENTION ALL GUMSHOERS: YOUR RESIDENT BLIND SQUIRREL, JIM SKELTON, HERE WITH A MESSAGE THAT MAKES ME LOOK NOT ONLY BLIND BUT CARELESS AS WELL. I HAD NO INTENTION OF WRITING ANOTHER WORD ABOUT THE SITUATION WITH NUTRANOMICS (NNRX)AFTER MY POST ON DEC. 9 (#139) BUT I MUST IN ORDER TO CORRECT AN ERROR I MADE THERE. PLEASE READ.
On Monday morning I had been doing some research on a few Rare Earth companies and was using my favorite resource for good atricles and analysis on that topic. That resource is a website called “InvestorIntel”.
As I was doing this the sell off in NNRX hit like a tidal wave and totally distracted me as I am long NNRX. A half hour or so later, reeling form the shock of this debacle, I wrote that post. In it I said that the promoter of the stock which I had been getting daily e/m’s from was InvestorIntel. THAT IS INCORRECT. I contacted the owner of the site and made my sincere apologies that were graciously accepted. Talk about a heaping, steaming serving of egg-on-my-face for breakfast!
InvestorIntel is a reputable and informative site that focuses on just a few areas of the market: Rare Earths, Graphene/Graphite, Oil & Gas, Precious Metals, and a couple others. They do a fine job of presenting research articles on those topics that can be hard to find elsewhere. I recommend that site as a source of information to all.
The company I had been getting the puff pieces on NNRX from is called “Analysts Corner”. They re not a research organization of any kind, nor are they in any way objective. They are paid by the companies they promote (see the disclosure posting on their site for proof) to push and promote a stock. And “never is heard a discouraging word” is the mantra there. For example, yesterday I got the daily e/m that said in essence the decline of some 70% or so on Monday was actually A GOOD THING because it gives opportunity to buy more NNRX at lower prices. You believe that? Some cajones on those folks, whoever they may be.
Bottom line is this: InvestorIntel is in NO WAY connected to this ongoing Pump and Dump campaign with Nutranomics. The culprit here is Analysts Corner. Avoid ANYTHING they say or do like the plague – because in a way, that’s exactly what the product they spew is – a plague on the serious investment community.
My apologies to all. “Nuff said.
Now, I’m looking forward to the conference call at 11:00 AM with Stellar Biotech, a real company with real potential that needs no hype or puffery. I love my Limpets!
Sincerely,
Jim Skelton
The Blind Squirrel
DISCLOSURE: I am long NNRX and SBOTF. I may sell some or all of the position in NNRX at any time. I may add to my position in SBOTF at any time.

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David Brown
Guest
December 11, 2013 1:41 pm

The market appears to be punishing Stellar after today’s presentation. I guess that some were expecting “big news” like a deal in the works. I remain very bullish as the demand for KLH continues to grow, the many trials using KLH continue to show very good news and the C Diff trial news is quite encouraging. I was predicting a sustained $2 price by year’s end, but it really doesn’t matter. I’m in this for the long run and quite a run it will be. The price spikes will come in fits and spurts until true profitabilty and/or news of deals or partnerships.

Robert V
Irregular
December 11, 2013 2:08 pm
Reply to  David Brown

The presentation was nothing but positive. They have cash for about 30 months, all kinds of clinical trials utilizing their products, discussed lots of ways of maximizing their potential, discussed how they care about the shareholders…. near term catalysts, near future upgrade to nasdaq or amex, I’m thinking they’re caught up in the general downtrend of the market today, maybe one or 2 investors jumped ship expecting them to make a huge announcement, but as far as I can see, its all looking good. They even answered my question about them being a possible takeover target.
My original question sat there for a while:
What would be the companies feelings towards a buyout offer?
so I followed it up with:
I asked my original question about possible buyout offers due to the fact that there must be large pharmas with deep pockets that could view an early purchase of your company as the best way to ensure their KLH supply, while blocking their competition. Have any companys inquired and what would Stellars response possibly be?

The response was, if they were to get an amazing offer, they would bring it up for a stockholder vote, but deep down, since they’re involved with so many different companies in various stages of clinical trials, they would prefer to follow the trials thru to the end in an effort to give the companies using the product every chance of success while putting their minds at ease for the availability of KLH in case their trials succeeded.

Someone brought up the fact that another company could just catch the Limpet if one of the trials succeeded, but they eased that concern stating that not many companies would want to rely on ‘