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 ‘catching’ something they needed, and Stellar is the only company that is raising these Limets (multi-generationally).
All in all, I thought it was a very honest and positive conference, which only goes to show how strange this thing we call a market really is.
Keep the faith folks and good luck to all.

Jim Skelton, The Blind Squirrel
Guest
Jim Skelton, The Blind Squirrel
December 11, 2013 11:37 pm

Hello fellow Limpet-Lovers! The Blind Squirrel back again to add my 2 cents worth – if indeed what I have to say is actually worth 2 cents – on todays conference call.
I wanted to sit back awhile and noodle over what I heard, what it might mean ,re-check my notes, then think it over before jumping back into the fray. For what it’s worth, here goes.
First I want to get a pet peeve of mine out of the way. That pet is jargonism vs. what I call plainspeak. Jargonism has taken over almost all aspects of our lives today. It is the free and unfettered use of technical and industry-specific terms when someone with a vast store of knowledge is speaking to others about their area of expertise. Or maybe they are just spouting off trying as best they can to impress someone else – you never can really tell which it is.
The investment community has gone the way of the technology folks, interspersing their conversations with terms like “strategetic imperatives” and “tactical deployment of imbedded advantages” and so on. Listen to the talking heads at Fox Business, CNBC, etc. You know what I mean. And all that jargon, for the majority of us, does little to clarify what is being presented. Instead it just makes the presenter sound sophisticated and intimidates folks from asking simple and direct questions for fear of bring viewed as simple minded. People like me for instance. And then there is the use of all the acronyms as substitute for a complete sentence. Makes my head spin. If I had wanted to live in a land where people spoke in that verbal currency I would have stayed in the Army – the Mother of all acronym-speak.
The best example in todays presentation was when some analyst asked Mr. Oakes if he could provide some “granularity” about something or the other. Say whaat? “Granularity”? That’s a new one to me. When he said that the image I got in my head was that he was asking about something like sandpaper, or salt. You know – granules. The term riccocheted around in my noggin for a trillionith of a nanosecond, was passed from neuron to neuron, each asking the other what the heck it meant, until finally hitting the eject chute neuron that, seeing that there were no answers, spit it out of my head so I could move on. Somebody ant to educate me and define “granularity” as it relates to subjects such as was under discussion?
I like plainspeak, as you may have noticed from my writings. I don’t feel the need to use words and terms that I know a lot of people won’t really understand. It’s not that I can’t – it’s that I have no ego-driven need to do so. I prefer to converse in a genuine, understandable manner so that all involved can get a sense of what is being explained and come away with a better understanding of the subject. I know that some level of high-minded and technical jargon is required. But can’t some of it be pared back to words that have meaning to folks without Phd’s in Bio or Techno whatever?
Anyway, I would have gotten more out of it if it had been presented in a manner a little less reminesicent of a masters-level college course in lingustics. Some once told me that, when making a presentation on any topic, always first think of who your audience is and prepare remarks in a manner that will carry maximum meaning to them. Not to a bunch of preening academics. Unless of course you are speaking to an audience of preening academics, in which case my mentors advise was to run as fast and as far from the auditorium as I could.
Now on to a few things that were addressed. Or in some cases were not addressed at all.
I don’t need to waste any more of your time than required, so first I’m going to assume you have read the previous two posts by David and Robert. They make great summary points that do not need repeating. So I’ll try not to. but I’d like to dig a little deeper into a couple of those points and ask some questions of my own
I was glad to hear the explanation of whether or not KLH can be synthesized. Turns out that, on a technical basis, it can. But on a practical basis, it can’t. Not economically feasible, unreliable, not traceable, impure. In other words, anything that might get cooked up in somebodies basement isn’t going to be of any useable quality. And it will cost far too much to make, so there is no profit to be had. That concern which has been floating around for a couple of years is now put to rest. KLH is sourced from the blood of living GKL’s, not test tubes. End of story.
Now, as to getting hold of the Limpets living in the little colony in the wild for the purpose of extracting blood and making KLH. Robert touched on that. The “news” I heard was that the State of CA has recently been on a mission in the coastal fisheries arena, restricting the ability of fishermen, individual or especially commercial, from going into large, specified areas of the ocean and fishing for anything that lives there. That would include GKL’s. So, another question is at least partially answered; can just anyone go in and scoop up a few thousand Limpets and take them off for processing? Perhaps not – that part of the inquiry wasn’t specifically answered. Has California put restrictions on the little stretch of coastline where the Limpets breed and live, or is that still open for fishing? There was one comment that seemed to indicate that whatever State regulatory authority is in charge of these kind of things has finally began to look at the situation in terms of the Limpet population and whether or not it is so small that regulation and protection is something to consider. Oakes didn’t state specifically that this was true, that the issue of the GKH’s in particular was under study, but he somewhat implied it either was or could become so.
Good thing our Limpets aren’t situated just off the coastline of my home state. Because if they were, I can promise you that a lot of people would have long ago pulled a croaker sack full of them from the ocean, toeed ‘um in a deep fat fryer, then removed and doused in Tabasco sauce. Like extra-huge oysters or soemthing. Those good ole coastal dwellin’ country boys and gals will eat most anything if you can deep fry it or cover it in sugar. So we can be thankful for that accident of location of the colony.
Whatever, these statements about the availability of Limpets to harvest and process clearly shows the strategic advantage Stellar has over all other companies that may be thinking of entering the business. It is part of a mighty wide “moat” of protection from competition that will be in place for many, many years to come.
Which leads into a question I posed several months ago and got no response to. I think most people who noticed it probably thought I was just off on another of my Quixoitic adventures, asking questions that were so far-fetched as to be silly. Whatever. It appears from what Oakes said today that the board was pondering this same issue and coming up with plans to quiet the concerns I raised. Not that they told me about it, of course. Imagine that – they don’t seem to want my input about anything they are doing :0). In much the same way my ex-wives treated me.
My concern back then was what would happen if and when a natural disaster might strike at the production plant – an earthquake, a Tsunami, etc. This is California, remember. Home of earthquakes and fires and people who think burning SUV’s in dealers lots will,solve the world energy problems. They might turn to burning the plant that houses the Limpets in the name of animal cruelty or something. You just never know with those wierdo’s. Hell, Kristie Alley might lead the charge! If the physical plant were damaged or destroyed, and along with it the entire population of the Limpets, where would we be then? Done and gone, I suspect. And sure enough, I wasn’t all that crazy in this thought. Oakes said the board had been considering exactly that potential situation and was in process of establishing additional facuilities away from the Port to preserve a community of land-based snails in the event the original plant was destroyed. Ah, sweet vindication. I may not be as nuts as a lot of people sometimes think.
Third, I was amazed at the lack of curiosity on the part of the analysts on the call about the mysterious “biotech investor” that had provided the $5 million in funding. We all know who that is – Charlie Yin. over in Taiwan. Why wasn’t he named, and what’s the big secret? And no mention of his warrants that will be coming up sometime in the next three years. Not a soul asked for clarification. Now, I can understand that maybe Mr. Yin asked for them not be up front by using his name right off the bat, but everyone concerned knows that if it was brought up it would have to be openly discussed. So why not? I’m not saying there is anything wrong with that – I’m asking why this very important piece of information as it relates to the financial situation at Stellar was so easily glossed over and left undiscussed? And linked to that was the absence of any mention of the appointment of Dr./Ms. Tessie Che to the board. Having someone with her credentials, expertise, and experience come on board would be a big deal at most companies and very worthy of mention. Yet not a whisper of it – and again, no analyst bringing it up. Maybe I’m missing something here. Any ideas?
And last, we all now have a better grasp of the time frames within which we have to adjust our thinking regarding some issues. We know the board is working hard to get SBOTF listed on an American exchange (please, God, let it be NASDAQ, not AMEX!), and that could happen by mid-2014 (no promises, though). We know that any signifigant revenues from the sale of KLH to big Pharmas cannot realistically be expectd for perhaps another 2 years, and that sales to sustain a successful new drug in production which use it in the formulation are as much as five years out. And as for a c. diff. vaccine of our own, who knows? Five years, seven years, ten years? Getting the science right and the various trials completed and approved could take ages. But we’re workin’ on it and have a big lead over any others as far as anyone can tell.
And as you know, all this good news and high expectation did nothing at all for the stock price. We closed around $1.70, down some $0.20 per share, or (-10.5%) on the day. Go figure. The general market was off, true, but Stellar marches mostly to it’s own drum. I said it before and will repeat for a final time – the “easy money” has been made already. Seeing day after day after day of 5% – 10%- 20% gains are, by and large, over. Now it’s time to start showing the investment community at large with the numbers produced what all this can do. Not just the hope and hype of the past year. Hard and fast results are now becoming the currency by which Stellar will be assesed and priced.. A really big pop in price will now depend more on a really big news release about sales, some actual earnings, or a breakthrough in drug approvals and development. I have no idea whatsoever what the price will be at year-end 2013 or 2014, or 20-you call it. I am convinced that the trend over time will be onwards and upwards barring some unforseeable and unpredictable event at the company. I’m happy to hold and wait out what Mr. Market throws at us stakeholders. I have a feeling we will all come out with big ole silly grins on our faces someday. Just not today.
Regards to the residents of Limpetland. May your Christmas stockings be stuffed with nothing but profits and promises of good times ahead!
Jim Skelton
You Resident Blind Squirrel
DISCLOSURE: I am long SBOTF and may add to or sell shares at any time. I’m going to hang my stocking over my fake fireplace now and wait for Christmas morning.

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arch1
Member
March 30, 2014 1:52 pm

Jim; in this context granularity means detail . I think some make a habit of obfuscation so you cannot pin them down later?

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Robert V
Irregular
December 12, 2013 12:08 pm

Stellar Biotechnologies Announces Collaboration with Amaran Biotechnology, Inc.

PORT HUENEME, CA, (December 12, 2013) — Stellar Biotechnologies, Inc. (“Stellar” or “the Company”) (OTCQB: SBOTF) (TSX-V: KLH), announced today that it has entered into a collaboration agreement with Amaran Biotechnology, Inc., a privately-held Taiwan biopharmaceuticals manufacturer (“Amaran”) to develop and evaluate methods for the manufacture of OBI-822 active immunotherapy using Stellar’s GMP grade Keyhole Limpet Hemocyanin (“KLH”).

Amaran designs, develops, and manufactures active immunotherapies such as OBI-822, the lead immunotherapy product of OBI Pharma, Inc. The primary purpose of the alliance is to develop and evaluate methods for the manufacture of the OBI-822 active immunotherapy using Stellar’s GMP grade KLH.

OBI-822 is a new generation of active immunotherapy combining Globo-H, a carbohydrate antigen frequently expressed by cancer cells, together with KLH as the immune-stimulating carrier molecule. An active immunotherapy uses a patient’s own immune system to recognize and mount an attack against the targeted tumor cells. OBI-822 is currently being evaluated for the treatment of metastatic breast cancer in International Phase 2/3 clinical trials* in the United States, Taiwan, South Korea, India and Hong Kong. It is also being evaluated for the treatment of ovarian cancer in an investigator-initiated Phase 1/2 clinical trial in Taiwan.

* OBI-822 is in Phase III in Taiwan and Phase II in the U.S., South Korea, India and Hong Kong

“This is an important, multinational clinical project and Stellar is very pleased to collaborate with Amaran on the manufacture of Immunotherapies such as OBI-822” said Frank Oakes, President and CEO of Stellar Biotechnologies, Inc. “This is an excellent example of Stellar KLH™ technology serving as a platform for partnerships with long-term product development and commercial potential.”

Catherine Brisson, Ph.D., Chief Operating Officer for Stellar said, “KLH is a key active ingredient in immunotherapy drugs. Our goal is to ensure that partners such as Amaran have future supply of the highest-quality KLH to meet the specifications of each particular immunotherapy drug.”

“We are pleased to have Stellar Biotechnologies’ key technical advances in KLH applied to this important cancer active immunotherapy program,” said Tessie Che, General Manager and Chair of Amaran’s Board of Directors. “We look forward to working closely with the Stellar team on this development project.”

Under the terms of the agreement, Stellar will be responsible for the production and delivery of GMP grade KLH for evaluation as a carrier molecule in OBI-822 immunotherapy. Stellar will also be responsible for method development, product formulation, and process qualification for certain KLH reference standards. Amaran will be responsible for development objectives and product specifications.

The agreement pr