Replies to post #15760 on Rock Creek Pharmaceuticals Inc (fka RCPIQ)

[NukeJohn]

I don't see anything that concerns me in the paragraph you posted.

NukeJohn I read fryeballs post on yahoo the only part that concerns me is this paragraph. Is this any thing to worry about or just a discloser.

No one expects Star to ever get anything out of their Star Cured process (which is patented). But that may not be the case.

The Tobacco Patents may still have significant value

After Star settled with RJR and got $5 Million cash (and the $8 million Brown & Williamson loan balance forgiven), I had pretty much given up on any significant future revenues from Tobacco. But, I did notice statements in their 10-Q's and 10-K that they were still trying to license the tobacco patents. My thinking was that they might be able to get a little more from Philip Morris than they got from RJR (because Philip Morris has a bigger market share), but I did not think that tobacco licensing could ever contribute significant earnings. After reading the Q1 2013 10-Q and what the FDA is doing with tobacco, I changed my mind. I think that Star could still ultimately get a significant revenue contribution from Tobacco licensing.

First, here is a paragraph from page 15 of the Q1 2013 10-Q...

In December 2008, we filed a new United States patent application for a variant of our patented curing technology that results in the production of cured tobacco that contains virtually undetectable levels of carcinogenic TSNAs as measured by prevailing standards and in April 2012 the PTO issued a patent for this curing method. Also in 2012, we filed utility applications for an enriched form of tobacco, an alkaloid composition for e-cigarettes and for a new tobacco product that are currently pending before the PTO. We believe that through the StarCured ® process and our related technology we have the ability to reduce exposure to carcinogenic TSNAs, particularly the subgroups of nitrosamines commonly referred to as NNNs and NNKs, to very low levels (with carcinogenic NNNs and NNKs that measure 200 parts per billion and below) and that we have demonstrated that our process for curing tobacco using these processes can be scaled up to meet broad commercial needs in the United States and abroad. While we have discontinued the sale of tobacco products as of December 31, 2012, we continue to pursue means of collecting royalties for our curing technology through licensing arrangements and through monitoring of the curing practices of industry participants as applicable.
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The comments above sound good...but what is going to force Philip Morris, RJR, and Lorillard to ever get serious and sign a license? First, I should highlight that the settlement with RJR did not include the newer Below Detectable Limit Patents from Star because those patents were not part of the lawsuit.

Now, if you haven't kept up with the FDA, they developed a list of 93 Harmful or Potentially Harmful Constituents (HPHC's) in Tobacco (carcinogens and respiratory toxicants). They then reduced the list to only 20, but these 20 have to be reported by the tobacco companies for every brand of cigarette, snuff, smokeless tobacco, and chewing tobacco that they sell. Guess what is on the list for all of these types of products....NNN and NNK, two of the tobacco specific nitrosamines that the Star Cured process completely eliminates (below detectable levels). Look on page 7 of the link below.

http://www.fda.gov/downloads/TobaccoProducts/GuidanceComplianceRegulatoryInformation/UCM297828.pdf

The tobacco companies have already submitted their analysis of the HPSC's in each brand of tobacco product they sell. When the FDA gets their act together, the world will know what each brand has in the way of TSNAs (carcinogenic compounds such as NNN and NNK that Star's patented process can eliminate). I think this whole situation will come to the forefront again. Hopefully, Star does one of the following:

1. License everybody at reasonable rates for their BDL patents.
2. Get one of the bigger companies to sign an exclusive license where they get a premium for the rights to exclusivity.
3. Elect to sell these patents outright to the highest bidder.

Option 3 may be the simplest and easiest way to monetize those patents.

In early 2013, I had given up hope on any significant revenue coming from the tobacco patents, but depending on the FDA's position on TSNA's as HPHCs, combined with the competitive nature of the tobacco companies, leads me to believe that at some point all the big tobacco companies will still want Star's BDL patents (which don't expire until 2028).

JMHO,

NJ