Newsletter

February 28, 2006

Volume VII, Issue 19

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To OTC Journal Members:

Callisto Pharmaceuticals (AMEX: KAL): New Highs Should Be Imminent

KAL shared some news with investors today post close. The news is extremely robust, and I believe could take the stock to new post OTC Journal coverage highs. We will see tomorrow and over the course of the next few days.

Fundamentally, the news casts a whole new light on one of their cancer drugs currently in clinical trials. Technically, since the stock has been trading at support with volume drying up over the last two months, a buy side volume surge should take the stock up quite easily. Simply put, everyone who was going to sell has done so already. In part, this is why I believe we have a chance at a new high. The stock would have to eclipse the $1.80 mark for this to be achieved.

Ideally, if you liked the idea you should have been accumulating the stock while it was quiet and no one wanted it. However, if it doesn't gap too badly, there might still be an opportunity to jump in. $1.60 would be the maximum in my view. I will probably suggest taking a partial profit if and when the stock gets to $2. After all, we started around the $1.20 area. However, a much longer term target still remains at $5 (2 years plus).

Today's news centers around Atiprimod, which has been in development for treating Multiple Myeloma. As it turns out, there has been a study going on since March of 2005 at the M. D. Anderson Cancer Center in Texas. The study suggests Atiprimod has the potential to treat carcinoid tumors.

Carcinoid tumors are often found in the GI tract, the respiratory tract, and the liver. Currently, there is no effective therapy for advanced carcinoid tumors. Therefore, we are talking about a drug for late stage cancer patients that has the potential to evoke a clear response where nothing else works.

Why could this news be so important to the biotech investing community in the stock market? Biotech investors understand the potential for accelerated FDA Approvals. A new cancer fighting drug that demonstrates it has the potential to extend life for patients where no other therapies are available could be put on an accelerated approval status.

Atiprimod now has the potential to get KAL its first regulatory approval much faster that previously expected. From here, KAL will go into an expanded clinical trial which will probably run through 2006. If the data is favorable, the next step would be a pivotal trial which would lead to a possible FDA Approval. The data will determine the direction and timetable.

This new development suggests Atiprimod could be a potential therapy for patients with advanced metastatic carcinoid tumors. Currently, there is no approved drug therapy for these forms of cancer. Hence, I suspect the stock could trade very well off this news.

The chart is quite compelling at the current time. As you can see, KAL surged in January to a new post OTC Journal coverage high of $1.80. The stock then pulled back as spent an entire month simply consolidating at about $1.50.

Note the low volume levels over the past month in the blue circle. When volume dries up for an extended period of time at a key support level, surging buy side volume tends to take stocks to higher levels rather quickly.

I would like to see a pattern of the highs getting higher and the lows getting higher. The lows have been getting higher. Now the highs need to get higher. A trade above $1.80 would be just what the doctor ordered.

Those of you who have been patient with KAL over the last month should be rewarded with today's news. Hopefully, Wall Street will embrace this development and send KAL up the charts over the next few days.

Here is the complete text of today's news for your review:

Press Release Source: Callisto Pharmaceuticals, Inc.

Atiprimod Clinical Trial in Advanced Cancer Patients Uncovers Clear Response against Carcinoid Tumors

Tuesday February 28, 4:01 pm ET

Company Plans New Clinical Trial, New Results May Accelerate Atiprimod's Path to Approval

NEW YORK--(BUSINESS WIRE)--Feb. 28, 2006--Callisto Pharmaceuticals, Inc. (AMEX:KAL - News; FWB:CA4), a developer of new drug treatments in the fight against cancer and other major health threats, today announced plans to launch an additional indication for clinical development of its drug candidate Atiprimod based on encouraging clinical results that showed a clear response in a patient with advanced carcinoid cancer plus additional encouraging clinical data on other carcinoid patients.

The encouraging data provides an additional development path for Atiprimod that has the potential to give Callisto its first approved drug considerably earlier than the Company previously expected.

Based on these new clinical data, the Company announced its commitment to initiate a new Phase I/II clinical trial of Atiprimod in carcinoid cancer patients with advanced tumors that it plans to open at several new sites in the next few months.

Callisto believes there exists an "unmet medical need" for new treatments for advanced and metastatic carcinoid tumors because there are no FDA approved drugs for these types of tumors.

Carcinoid tumors, or carcinoids, originate in hormone-producing cells of the gastrointestinal (GI) tract, the respiratory tract, the hepatobiliary (liver) system and the reproductive glands. The most common site of origin is the GI tract, with tumors often developing in the rectum, and other sections of the small intestine.

"The exciting results from the Phase I/IIa trial of Atiprimod in advanced cancer patients have transformed our Atiprimod development program," said Dr. Gary S. Jacob, CEO of Callisto. "The study uncovered a patient population with carcinoid tumors that could potentially benefit from our drug, and our intention is to move aggressively forward with further clinical evaluation of Atiprimod in a larger population of carcinoid patients."

In particular, Atiprimod may provide new hope for patients with advanced carcinoid tumors of the liver and GI tract. Common sites of carcinoid metastases include liver, lungs, bone and lymph nodes. Carcinoid tumors that metastasize to the liver have a poor prognosis. Traditionally, chemotherapy relieves symptoms in less than 30% of cases of metastatic carcinoid tumors, usually for less than 1 year.

"Atiprimod is a drug that we know from tissue distribution studies accumulates at highest concentrations in liver and the gastrointestinal tract," noted Dr. Donald Picker, Executive VP of Research & Development. "Because of this response, we are now focusing on a range of other liver cancers and other metastatic diseases in addition to carcinoids. We are very excited to initiate a formal separate carcinoid clinical trial for this serious disease, where there are no currently approved drugs for these liver metastatic patients."

The earlier Atiprimod trial in advanced cancer patients at the University of Texas M. D. Anderson Cancer Center entitled: "An Open Label Study of the Safety and Efficacy of Atiprimod Treatment for Patients with Advanced Cancer" which was begun in March, 2005, originally was designed to assess Atiprimod's activity in solid tumors and hematologic malignancies.

About Callisto Pharmaceuticals, Inc.

Callisto is a biopharmaceutical company focused on the development of new drugs to treat various forms of cancer and other serious afflictions. Callisto's drug candidates in development currently include anti-cancer agents in clinical development, in addition to drugs for a range of other significant health care market segments, including biodefense. One of the Company's lead drug candidates, L-Annamycin, is being developed as a treatment for forms of relapsed leukemia, a currently incurable blood cancer. Callisto initiated a clinical trial of L-Annamycin in adult relapsed acute lymphocytic leukemia patients in 4Q 2005. L-Annamycin, a new compound from the anthracycline family of proven anti-cancer drugs, has a novel therapeutic profile, including activity against resistant diseases and significantly reduced cardiotoxicity, or damage to the heart, compared to currently available drug alternatives. Another anti-cancer drug, Atiprimod, is in development to treat relapsed multiple myeloma, a blood cancer. Atiprimod has entered Phase I/IIa human clinical trials in relapsed multiple myeloma patients. Callisto also has drugs in preclinical development for gastro-intestinal inflammation, and a program focused on the development of a drug to protect against Staphylococcus and Streptococcus biowarfare agents. Callisto has exclusive worldwide licenses from AnorMED Inc. and M.D. Anderson Cancer Center to develop, manufacture, use and sell Atiprimod and L-Annamycin, respectively. For investor-specific information about Callisto, including recent news and stock price data, please visit http://www.trilogy-capital.com/tcp/callisto/. For an Investor Fact Sheet about Callisto, please visit http://www.trilogy-capital.com/tcp/callisto/factsheet.html. To view an informational presentation of the Company's development pipeline of drug candidates, visit http://www.trilogy-capital.com/tcp/callisto/powerpoint.html. Callisto is also listed on the Frankfurt Stock Exchange under the ticker symbol CA4. For additional information, visit www.callistopharma.com.

Forward-Looking Statements

Certain statements made in this press release are forward-looking. Such statements are indicated by words such as "expect," "should," "anticipate" and similar words indicating uncertainty in facts and figures. Although Callisto believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations reflected in such forward-looking statements will prove to be correct. As discussed in the Callisto Pharmaceuticals Annual Report on Form 10-K/A for the year ended December 31, 2004, and other periodic reports, as filed with the Securities and Exchange Commission, actual results could differ materially from those projected in the forward-looking statements as a result of the following factors, among others: uncertainties associated with product development, the risk that products that appeared promising in early clinical trials do not demonstrate efficacy in larger-scale clinical trials, the risk that Callisto will not obtain approval to market its products, the risks associated with dependence upon key personnel and the need for additional financing.

Contact:

Callisto Pharmaceuticals, Inc.
Dan D'Agostino, 212-297-0010 ext. 227
dagostino@callistopharma.com
or
Trilogy Capital Partners, Inc.
(Financial Communications)
Paul Karon, 800-592-6067
paul@trilogy-capital.com

Source: Callisto Pharmaceuticals, Inc.

Comments in the BLOG

There is a new BLOG posting today on DXCM, which I believed moved into the perfect range for accumulation earlier today. I added to my position as a result of today's weakness. Check the BLOG for comments.

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