Newsletter

March 7, 2006

Volume VII, Issue 21

Home Page : www.otcjournal.com
Email Questions or Comments To: editor@otcjournal.com

To OTC Journal Members:

Callisto Pharmacueticals (AMEX: KAL); Sets Sites on Potential Colon Cancer Therapy

Callisto in on the verge of developing a myriad of cancer therapies, any or all of whom could put this stock at considerably higher levels. Consider there are only about 40 million shares issued and outstanding. At the $1.60 level, where the stock has been grinding, the entire value of the company is only $64 million.

You would be hard pressed to find a publicly traded company, with a promising cancer therapy in Stage III clincal trials, trading below a $200 million market capitalization. KAL has the financial resources in the bank right now to get both Atiprimod and Annamycin to the Stage III levels.

A couple of comparisons include VION ($141 million) and BIVN ($314 million). Both companies are working on cancer therapies and in or nearing Stage III clinical trials.

They don't need to successfully introduce their products into the market for shareholders to enjoy substantial returns. The market knows their therapies will become very valuable to big pharma as they come with a year to 18 months of an FDA Approval. The big pharmacueticals companies need to keep their pipelines stuffed with the next generation of revenue producing therapies to replace the ones that go generic. They shop for smaller companies as they close in on potential revenue generating therapies.

As we get further down the road, KAL becomes either a very attractive acquisition candidate or a good candidate for a marketing partnership. Either one would place the stock at considerably higher levels.

I thought last week's announcement concerning Atiprimod as a potential therapy for metastatic tumors would send the stock to a new high. The stock made a valiant effort, but simply traded back down to the current $1.60 range. A symptom of the current anemic market conditions.

Perhaps today's news will do the trick. Today, post close, KAL announced some new information about Guanilib- it's potential treatment for uorguangtin deficiency in the colon.

Uroguanylin is a naturally occuring hormone found in the colon. A lack of uroguanylin is associated with polyps, tumors, and GI intestinal disorders. KAL is developing Guanilib, a compound that mimics uroguanylin and can be taken orally.

Dr. Scott Plevy, Associate Professor of Medicine and Immunology and the Co-Director of the Inflammatory Bowel Disease Center at the University of Pittsburg Medical Center, Pittsburg, PA is a principle collaborator on Callisto’s Guanilib research program. Dr. Plevy's abstract on Guanilib (SP304) was accepted for poster presentation at the Digestive Disease Week Conference in May, 2006.

Dr. Plevy has done extensive animal testing on the compound. This abstract, a fancy science word which translated means research paper, is the first step towards the commercializtion of the product. This therapy can now be added to the growing list of potential home runs in KAL's treatment portfolio. The May conference will be the compound's "coming out" party.

As you can see from the chart, KAL is really trying hard to find its way to a new high. The stock did not have the energy to make it last week, but perhaps today's news will rally the troops.

Ultimately, with all the irons this company has in the fire, one is bound to get hot. I don't know if tomorrow is the day, or its sometime down the road. I would continue accumulating at about $1.60 with a stop loss in the $1.40 range. When the next streaky move comes, you can offload some or all. For now, the company is moving forward rapidly on many fronts. It should pay off for investors somewhere down the road.

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

Press Release Source: Callisto Pharmaceuticals, Inc.

Animal Data on Callisto's Drug Candidate Guanilib to be Presented at Key Scientific Conference on Digestive Diseases

Tuesday March 7, 4:01 pm ET

Guanilib Found to Reduce Key Causative inflammatory Mediators in an Animal Model of Ulcerative Colitis

NEW YORK--(BUSINESS WIRE)--March 7, 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, announced today that an abstract on Guanilib (SP304), Callisto's drug candidate for gastrointestinal inflammation, was accepted for poster presentation at the Digestive Disease Week Conference in May 2006.

The abstract on Guanilib, which involves a collaboration with a team of scientists at the University of Pittsburgh School of Medicine, headed by Dr. Scott Plevy, a well-known research and clinical gastroenterologist, and scientists at Callisto, will be presented at the annual meeting of the Digestive Disease Week (DDW), a leading scientific conference covering diseases of the digestive tract. The meeting will be held at the Los Angeles Convention Center in Los Angeles, California, May 20-25, 2006.

The Callisto drug candidate Guanilib, also known by its laboratory name SP304, is an orally deliverable compound designed to mimic a naturally-occurring hormone called uroguanylin, which is normally produced in the body's intestinal tract. Deficiency of this hormone is predicted to be one of the primary reasons for the formation of polyps that can lead to colon cancer, as well as debilitating and difficult-to-treat GI inflammatory disorders such as ulcerative colitis.

The abstract presentation at the DDW meeting, entitled: "SP304, An Analog of Uroguanylin, Ameliorates Inflammation in a Model of Experimental Colitis" authored by Refaat Hegazi, Fengling Li, Gabriel Calilao, Antonia Sepuveda, Kunwar Shailubhai and Scott E. Plevy, will describe results suggesting that oral administration of Guanilib ameliorates inflammation in a mouse model of experimental colitis, presumably via downregulation of the key cytokines, such as tumor necrosis factor, that are known to be involved in the causes of IBD. For more information on the conference, visit http://www.ddw.org.

Dr. Scott Plevy, Associate Professor of Medicine and Immunology and the Co-Director of the Inflammatory Bowel Disease Center at the University of Pittsburg Medical Center, Pittsburg, PA, is a principle collaborator on Callisto's Guanilib research program.

"We are very encouraged by the Guanilib data from Dr. Plevy's laboratory, and pleased to have this new research presented to leading research professionals in the field," said Callisto CEO Dr. Gary S. Jacob. "Dr. Plevy and his group were the first to demonstrate that Guanilib inhibits gastrointestinal inflammation in an animal model of colitis, and now are providing insight into just how Guanilib exerts its antiinflammatory activity. Their research supports our commitment to pursue development of Guanilib as a completely new approach to the treatment of gastrointestinal disease."

One of the major physiological functions of uroguanylin is in the regulation of the continual renewal process, which is to eliminate mutated or damaged cells and replenish them with healthy new cells. "This delicate balance of elimination and renewal of the cells of the colon lining is crucial to the prevention of cancer and other GI inflammatory disorders. Guanilib is first-in-class of a new category of compounds called guanylate cyclase receptor agonists (GCRA) with the potential to provide a new way to treat gastrointestinal diseases, while exhibiting minimal side effects or toxicity," said Dr. Kunwar Shailubhai, Senior Vice President, Discovery Research for Callisto, who is one of the co-authors of the abstract and also one of the inventors of the GCRA technology.

A patent allowance covering therapeutic applications of this compound in GI inflammatory diseases has recently been granted by the U.S. Patent and Trademark Office. "This patent allowance is a scientific and strategic milestone for Callisto," added Dr. Jacob.

More than 500,000 Americans are afflicted with ulcerative colitis, a type of inflammatory bowel disease (IBD) that causes chronic inflammation of the digestive tract. Along with Crohn's disease, the other major form of IBD, ulcerative colitis can be painful and debilitating, and can lead to other serious and life-threatening complications. There is currently no medical cure for ulcerative colitis.

Colon cancer, also called colorectal cancer, is the second leading cause of cancer death among men and women in the United States and Canada, and is the third most diagnosed cancer, excluding skin cancer. The American Cancer Society estimates that there will be 146,940 new cases of colorectal cancer diagnosed in the U.S. in 2004 -- roughly one new case every 4 minutes. Although colon cancer can be treated through surgery, chemotherapy and radiation, currently there are no drugs specifically designed for its prevention and treatment.

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

So far this week there are no new BLOG entries. Comments for long suffering shareholders of Family Room below. The stock has been revived. The BLOG is primarily used as a mechanism to comment on trading activity in stocks we follow. We are currently in a nearly comatose market environment, so volatility is absent, and therefore BLOG posting are scarce.

To use the BLOG, simply go to the home page at www.otcjournal.com - the BLOG will scroll down automatically on the right side of your screen. You can look there by company. The most current journal entries appear in the middle of your screen in chronological order. Check back frequently for updates particularly when stocks are moving to overbought or oversold levels or in volatile markets. Your questions and postings do not automatically appear, so don't bother posting the same question multiple times. I personally go through to moderate and respond to every reasonable question.

16 Blocks Puts Charge Into Family Room (OTC BB: FMLY)

FMLY has surfaced in the past few trading days and is coming off the carpet with a vengence. This is the kind of volume we needed when the stock was $.10 to keep it healthy. Apparently, the market is very excited about the positive early reviews on 16 Blocks with Bruce Willis, to be released into theaters this month.

Last summer FMLY registered 47 million shares to cover convertible debt. The shares I&O went up by about 19 million into February, suggesting there were 28 million left to be sold.

Since last week, the stock has traded 130 million shares. It is probably safe to assume that the financiers have sold all the stock they could sell, and probably paid off about $1/2 million of the remaining $1.234 million in convertible debt, leaving about $700k.

If FMLY makes producer profits and uses the money to pay off the remaining debt, the dilution could be over. If they are going to continue to pay in stock, they will probably have to file another registration statement, and they may be running out of authorized stock.

Either way, the supply could be completely dried up at this point, and the stock might actually do well from here. I currently own no shares, but might punt and pick up a million or so at about the $.02 level- if it ever gets back there.

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