As we saw in Part I of this series, NorStar Group, Inc. (OTCB: NSTG) says it is set to revive its dormant gold mine claims. But, as we discovered, that is not the only item on the corporate agenda. The Company may be short on cash - with just $4,200 in the bank at last report - but it is long on ambitions. Details are another matter altogether.
Bio Tech Biz
NorStar’s most recent press releases may emphasize the Company’s gold mining designs, but, only a few months earlier, NorStar was unveiling plans for a far different venture. On September 5, 2002 the Company announced that it had entered into a new line of business by signing a letter of intent to acquire a “New York based research and development stage bio-pharmaceutical drug company” called Receptogen, Inc. The press release claimed that Receptogen planned to develop and test “proprietary products for the treatment of neurological and viral disorders” and was working to establish strategic alliances with researchers in the United States, Canada, China and Europe.NorStar did not provide any details of the proposed transaction or say how it planned to pay the costs associated with acquiring and operating the new business. Those financial considerations are critical since, according to public reports filed by NorStar and its auditors, there is substantial doubt about the Company’s ability to continue as an ongoing business unless it is able to resolve its financial problems.
The September 5th press release also failed to reveal whether Receptogen is an operating business, or if it has developed any of those “proprietary products.” According to NorStar, “preliminary work suggests that Receptogen’s proprietary products could be effective in the treatment of a number of chronic and/or life threatening viral and neurodegenerative disorders.” The Company did not indicate whether those proprietary products had been tested or the parameters of such tests.
On December 17, 2002, NorStar announced that it had completed its due diligence for the Receptogen acquisition and was now poised to move into the biotech field. The Company still offered no details of the deal, but waxed enthusiastic about Receptogen’s purported “lead product,” RPI-78. NorStar claimed that RPI-78 “has potent antiviral properties and…has been successful at inhibiting a wide range of significant viruses.” It also stated that the “Company” believes that RPI-78 will receive approval from the Food and Drug Administration for use in the treatment of rabies. The press release did not indicate whether the “Company” harboring that belief was NorStar or Receptogen.
Despite its enthusiasm for RPI-78, NorStar did not indicate whether Receptogen even had initiated the process for FDA approval. And, once again, NorStar did not indicate where Receptogen was located or where and when tests had been conducted. The press release also failed to identify the individuals who have been running Receptogen, the scientists who have been conducting its research, or a single person associated with the new acquisition.
In the absence of this information, investors lack meaningful information about Receptogen or the potential impact of an acquisition. Although the initial September 5th press release indicated that Receptogen was located in New York, we have been unable to find any address or telephone for Receptogen in New York City, New York State – or anywhere else for that matter.
One Drug Fits All
It was not surprising to find The StockBroker.com lauding the Receptogen transaction. Oddly, however, The Stockbroker.com offered its readers considerably more “facts” about Receptogen than were included in the vague NorStar press releases. In a recent report, TheStockBroker.com suggested that Receptogen was developing “proprietary therapeutic proteins” for the treatment of Rabies, HIV, Post-Polio Syndrome and Myasthenia gravis. TheStockBroker.com claimed that Receptogen has “two patents pending which covers (sic) proprietary applications for several of these ailments with two more in preparation.” Where are those patents pending? The StockBroker.com does not say, and we were unable to find any patents, or patent applications, filed by or on behalf of Receptogen with the U.S. Patent and Trademark Office.That reference to patent applications is only one of the unsupported claims contained in the report from The StockBroker.com. The promoter also stated that “five noted academic researchers at prestigious institutions” have been recruited to assess Receptogen’s products. It did not, however, provide either the names of those researchers or identify those prestigious institutions. And while TheStockBroker.com said that Receptogen had received permission to reference research data developed by a company called Biogenix, Inc., it did not indicate the relevance of that information to the products supposedly under development by Receptogen.
TheStockBroker.com offered some surprising revelations about RPI-78, stating, among other things, that the drug had completed preliminary toxicity studies in the United States and “has been successful in inhibiting a wide range of significant viruses.” It reiterated NorStar’s claim that the “Company believes that RPI-78 will first receive approval from the FDA for the treatment of Rabies.” But The StockBroker.com went even further in its predictions, claiming that RPI-78 had originally been developed to fight polio, “could emerge as a potential therapeutic agent” for AIDS related dementia, and might be related to a treatment for Myasthenia gravis.
Indeed, the promoter insisted that Receptogen has “positive, preliminary results that indicate RPI-78 is applicable to the treatment of these diseases.” And, it added, Receptogen believes that its drugs have potential application in the treatment of Multiple Sclerosis, Arterial Lateral Sclerosis, Chronic Pain and Chronic Fatigue Syndrome. According to the report, the Company intends to pursue drugs that would qualify for expedited treatment that might lead to quicker FDA approval.
Despite these rather bold assertions, The StockBroker.com did not provide any information about those “preliminary toxicity studies,” say where they had been conducted, or indicate who had supervised the tests and analyzed the results. There is no indication that a drug application has been filed with the FDA, that “fast-track” classification is likely, or that the “Company’s” expectation of approval is reasonable.
The StockBroker.com makes RPI-78 sound like a multi-purpose miracle drug – which makes the lack of detail even more striking. Shouldn’t a drug that can combat HIV, Polio, Rabies and Myasthenia gravis have attracted considerable attention? Is it likely that a company with plans to fight those diseases, plus Multiple Sclerosis, ALS, Chronic Pain and Chronic Fatigue Syndrome, would remain undiscovered until NorStar came along? Doesn’t it seem as though Receptogen – at least as it has been described by NorStar and The StockBroker.com – would be an acquisition target for an established pharmaceutical company? Why would it want to join with NorStar, which has no roots in the pharmaceutical community, and whose other ventures have yet to bear fruit? And don’t forget, NorStar’s auditors fear that the Company may not survive as a going concern. What kind of a catch is this?
Like the NorStar press releases, the StockBroker.com report is notably silent when it comes to Receptogen’s owners and management team. The report does mention two individuals, a neurobiochemist named Paul F. Reid, PhD., and an immunologist named Laurence N. Raymond, PhD., but does not state whether either man has any relationship to Receptogen. Our search for the two men revealed that an individual identified as Paul F. Reid, PhD. has been associated with a Florida biotech company called Biotherapeutics, Inc. (f/k/a PhyloMed Corporation) that has been involved in the development of drugs to treat multiple sclerosis.
The Lights Went On In Georgia
Although NorStar has not revealed the provenance of Receptogen, we also discovered an intriguing connection between NorStar, Receptogen, and a promoter who has a history of forming shell companies and preparing them for reverse-mergers. A Nevada corporation called Receptogen was formed on June 2001 by Patricia Meding of 1001 Cambridge Square, Ste C, Alpharetta, Georgia. As readers of StockPatrol.com know, Ms. Meding, and her company, Capital Advisory Partners LLC., have been involved in the formation and management of a number of shell companies, including one or more businesses that became associated with a Canadian stock promoter named Teodosio Pangia, who has been charged with securities fraud by both U.S. and Canadian regulators. (See Zero Degrees of Separation, Part III - Were Those Irish Eyes Smiling, Or Is Georgia on Their Mind?; Zero Degrees of Separation - The Last Hurrah?, Part I; and Zero Degrees of Separation - The Last Hurrah?, Part II).This suggests that Receptogen may have started its corporate life a year and a half ago as a shell, with Meding or Capital Advisory Partners as one of the principal owners. If that is the case, how did the entity become involved in the biotech industry, obtain funding, and develop its miraculous cure-all treatments? In other words, what is the complete history of Receptogen?
How did Receptogen, with its purportedly promising drug research, hook up with NorStar in the first place? Could there have been more to the Meding connection? Consider this. At the time NorStar made its initial Form 10SB12G filing with the SEC in December 1999, one of its largest shareholders was Delta Capital, LLC. Delta Capital gave its address as 1001 Cambridge Square, Suite C, Alpharetta, Georgia – the same address occupied by Ms. Meding.
We found one other item of interest relating to Receptogen. Receptogen, the Nevada corporation, filed to do business in New York State in 2001. Although that filing does not indicate a New York address for the Company, it does identify its registered agent, Briskin & Associate, L.C., whose address is 1001 Cambridge Square, Alpharetta, Georgia, Suite D. How close are Suites C and D at 1001 Cambridge Square – literally and figuratively? As we have seen in the past, Briskin & Associates has been associated with companies related to Ms. Meding. So has the New York law firm of Bondy & Schloss, which also has acted as counsel for NorStar.
These intriguing associations might help to explain NorStar’s sudden leap toward biotech. In the past, the Company has devoted its attention – and its promotional efforts – to promises of a novel Internet business and a virtual reality system. As we will see in Part III, however, so far that plan seems to be more virtual than reality.
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