Welcome to the fourth edition of the Stirling Connection, brought to you at great personal expense in an attempt to maintain better lines of communication between the company and both current and prospective shareholders.

I feel like I can really say that about this edition because during its preparation I experienced a severe case of "CECBAS". What's "CECBAS" - well that's when you have a Computer Error Caused By Absolute Stupidity. During the preparation of the fourth edition I malfunctioned and forgot to save the working copy resulting in the need to recreate the edition in its entirety. (I keep telling myself it was probably better than the first attempt, but don't you just hate that?)

Anyway since the last edition, Stirling has in my opinion made considerable progress and ticked off a couple of major milestones. We have signed our first distribution agreement, formed our first joint venture, raised some capital and we are now nearly through the animal phase of our latest technical study. We have also been busy organising further trials but you will have to wait for the next edition to hear about those!

To all those people who responded to "Have Your Say" thank you. We managed to increase our response rate by over 500% and I am looking for a similar increase in this edition's poll.

One important thing I did want to mention was that we have now established a process where interested parties can listen to a more detailed description of company events and announcements through interviews that will be aired through Boardroomradio. These interviews will be announced prior to airing and will be available live on the Boardroomradio website or through our own website after the interview.

Interviews will primarily be triggered by ASX announcements although there will be quarterly updates available on predetermined days. If you want to know when these are occurring you will either have to regularly visit our website (there are far worse punishments!) or make sure you are on our Newsletter mailing list for advice when these interviews will occur. The first interview had 208 listeners tune-in and the second interview related to Pulmovet had 162 listeners.

So as I usually say enjoy this edition of the newsletter thrill seekers - the next edition depends on you!

Did you know the average person consumes 11.7 kg of food per week and that each person makes on average 221 shopping trips a year? Did you also know that the biggest hidden cost of food arises from rearing livestock and that beef and veal have the largest impact on the environment?

Meat has become an important part of the western diet. Despite attempts by various lobby groups, it would seem that scientific data keeps coming back to the fact that we need "all the good bits" in meat for a healthy existence.

Last edition we asked three questions of readers that highlighted some important aspects about the meat we buy and as promised here are the results. Fifteen people responded (hey! At least it's a start we had an increase of 500% from last time!).

In the first question we asked when buying meat, how important was meat colour? The majority of the respondents (80%) said meat colour was important. Equal numbers (40%) chose pink coloured meat (in the belief it was fresher) or the opposite, dark coloured meat (in the belief it was more aged and therefore more tender).

This question was prompted by some recent controversy in the US over the use of "modified atmosphere packaging" (MAP)¹. You are probably all aware that like sliced apples, the colour of red meat can change rapidly. The meat starts out purplish in colour, but immediately after slicing and exposure to air, it turns red. Continued exposure to air can turn it brown and even greyish - all the while remaining perfectly safe to eat. But consumers tend to prefer beef that appears red in colour, so a whole industry developed which replaces the air in meat packaging with various combinations of gases that retard the discoloration process.

Now some people I am sure would be horrified to know that their lovely pink cut of meat might be swimming in carbon monoxide. This gas replacement does nothing to add extra shelf time to the meat or prevent bacterial spoilage, it simply creates a stable environment for the colour of the meat. One more thing, this is not a new practice, it has been occurring for more than 20 years and has been approved by the US Food & Drug Administration since 1984.

The second question asked where most people buy their meat from. 60% said that they buy their meat either from a supermarket (40%) or a butcher (20%). Nobody was game to admit they buy their meat from a speciality store and 30% bought meat on convenience as their primary choice factor. Most supermarket shoppers (86%) purchase their meat at a supermarket, 5% at the butcher and less than 1% at natural/organic stores².

What is interesting is that butcher's meat can be 5-20% less fat than supermarkets (within any given cut of meat) because they buy "select" and "choice" cuts rather than prime. "Select" has 5-20% less fat than "choice" and 40% less than "prime" (Just wait till R-salbutamol gets on the market we'll show 'em what lean cuisine is all about!).

The third question we asked was what the primary concern was when buying meat. Slightly more people said that product appearance and presentation was the most important factor (43%) compared to 36% that bought on the basis of pack size, 14% on the basis of price and only 7% (or one lonely soul) admitted that nutrition was the primary factor (I'd like to thank my Mum for generating the topic for the next newsletter!).

Have we really got to the stage where price and nutrition do not matter but pack size and appearance are everything?

A recent survey of over 1750 shoppers by the American Meat Institute and Food Marketing Institute indicated that more than 80 percent of shoppers are concerned about the nutritional content of their food. The top factors when selecting meat in descending order of importance were price, product appearance, nutrition and pack size and convenience ³.

Because of technology, consumers will take much more responsibility for their health and well-being, but do we as consumers really understand what it is we are buying? This is particularly relevant to understanding what's in the foods we eat and we should not be too quick to judge novel food additives that have an impact on either the production process or the quality of the food as long as it is safe. A better understanding of what we eat has now become a personal challenge and it is the moral obligation of scientists and regulators to meet this challenge and educate the public. The obsession with food continues and it grows through all media forms. The rise of conditions such as obesity will shift our understanding away from awareness to consequences.

You may wonder what has all this got to do with Stirling and R-salbutamol? By the time R-salbutamol gets to market it will have been rigorously assessed for efficacy, safety and impact on the environment. As a public, we sometimes do not have a good idea of what is in the food we eat. Surveys show that the majority of people are still concerned about issues other than price and nutritional content but marketing projections show that without changes to the meat industry (such as new production tools like beta agonists), price and food quality will definitely become the major issues of the future.

Next edition we will explore some common facts and fiction about meat and about product labels. Take our poll and get involved!

¹ American Meat Institute Fact sheet. "Carbon Monoxide in Meat Packaging: Facts and Fiction."  Click here to view pdf. 
²U.S Supermarkets See The Most Meat. USAagNet March 16 ,2006
³ Seeing the Meat Case Through Shoppers Eyes. Ann Bagel. http://web.aces.uiuc.edu/agcomdb/view.asp?ID=C23820 (March, 2006)

Have Your Say:  

Do you think you are pretty much up with the whole issue of food contents, nutritional value and labelling?

Take our poll by clicking on the "Have Your Say" button below and answering TRUE or FALSE in the form that will appear.  We will provide some answers in the next edition.

Question 1: I believe that chicken is better for me than red meat because it has less fat.

Question 2: I believe that meat labelled as hormone-free is better for my health.

Question 3: I believe that natural and organic foods are healthier for me.

Question 4: I have become more concerned about nutrition and now read the nutrition labels before buying products.

Question 5: I believe that if a label says a product is "natural" or "organic" it represents a product that has not been adulterated with chemicals such as growth agents or pesticides.

Question 6: I believe that fish is the most natural and the most nutritious of all the protein sources.

Question 7: I would be prepared to eat biotech-developed foods but only if I understood more about what it means.

Big Pharma, Big Appetites ...

A recent report by a European Reuter Analyst has highlighted the big appetite that big pharma has developed for making a meal out of small biotech companies! Industry analysts highlight the renewed interest in gobbling up biotechs through mergers and acquisitions as being at least in part due to the rapidly growing market for biotech drugs which is increasing at a rate three times faster than conventional drugs. Industry executives also state that the prices paid for late stage licensing deals are now some four to five-fold higher reflecting the increase in demand and reduced supply.

It is expected that while mergers and acquisitions will continue to increase, they will also continue to supplement late stage licensing deals. (Most small biotechs I know would be glad to be eaten either way. We are not fussy when money is involved and the price is right!)

How Much Is That Doggie In The Window?

A recent survey of Veterinary Pet Insurance policyholders (my.petinsurance.com) revealed that 70% would pay any amount of money to save their pet's life. Earlier surveys on the attitudes of pet owners also support this level of dedication. The American Animal Hospital Association in 2002 found that 17% of those surveyed would spend up to $5000 to save "Fido" or "Fifi's" life. The following year, 73% said they would go into debt to extend their pet's life.

So it would seem that that our furry friends have made quite an impact on our lives. The aggregated household expenditure on vet bills is now US$8.5 billion (good for Stirling's obesity platform!). Now while you're sitting back saying - "those yanks, more money than sense", think again. It could be coming to the country where you live. Australia ranks as one of the highest pet per household ratios in the world. On average 64% of all Australian households have a dog and 52% have both a dog and cat. So I guess the answer to the question is - quite expensive!

About Town

BIO 2006: As we reported in the last Edition, this year Stirling was part of the biggest ever contingent of West Australian companies to a BIO event, lead by the Premier, Alan Carpenter. We are still following up on expressions of interest for the event. The photo shows CEO Calvin London firing up a South American delegate on the finer points of R-salbutamol.

Small Cap Discovery Conference: Stirling made the trip to New York city in June to be part of the Wall Street Small Cap Discovery Conference. The presentations (of which there were two) were well received by the 50 or so New York investors that attended. A web cast of the presentation can be found on www.investorcalendar.com/CEPage.asp?ID=106054     

Boardroomradio.com: CEO Calvin London conducted an interview with Boardroomradio.com in July soon after the announcement concerning the establishment of the Joint venture with Pulmovet in Denmark. The interview elaborates on what the joint venture means to Stirling and how it came about. Interested parties can listen to the interview on http://www.brr.com.au/event/STI/1307/12471/wmp/7otro7edtv 

Stirling's ASX Releases in 50 Words or Less

July 18 Issue of Securities/Section 708A Notice
This announcement has one simple and very practical message - we raised A$1 million.

July 13 Stirling Establishes Joint Venture Company
Pulmovet (the JV) provides Stirling with an experienced partner in equine heaves, a device for its drugs, a presence in Europe and a vehicle for the required registration trial work that does not dilute significant funds from Stirling. It is mutually beneficial and will maximise our future market presence.

June 7 Stirling Signs First Distribution Agreement for R-salbutamol
This Agreement provides us with a distribution partner in South Africa who will fund all in-country registration trials and registration in exchange for distribution rights. South Africa has a growing meat industry and apart from third party validation, the Agreement represents a significant milestone for the company.

May 25 STI Audio Broadcast
Stirling has now entered into a contractual agreement (see "from the CEO's desk") to provide a forum for more detailed updates on company events and milestones. This interview represents the initial introduction. To hear the interview go to: www.brr.com.au/event/STI/1307/11236/wmp/gvulr9x3e0 

May 22 Stirling Finalises A$1.3M Placement to Indus Capital Partners LLC. Apart from the obvious influx of working capital, this announcement represents a significant commitment from a well-respected overseas investor.

August - ABIC Conference:
Stirling will have an exhibition booth at the Agricultural Biotechnology International Conference "Unlocking The Potential of Agricultural Biotechnology" to be held in Melbourne from the 6 - 9 August. ABIC is a not-for-profit organisation that focuses on both innovation and commercialisation.

August - WA Investment Presentation:
Stirling has been invited to participate in the "Investment in the West Australian Biotechnology Industry" workshop, August 3. The event will bring together representatives of investors and industry and is being opened by the Hon Francis Logan MLA, Minister for Energy, Science and Innovation.

August - Meeting with the Danish Ambassador:
Following Stirling's announcement of its joint venture with Danish company Equine Health Care (see below), CEO Calvin London will meet with the Australian Ambassador designate to Denmark. The informal meeting will provide the Ambassador designate with a description of Pulmovet as an example of the potential that Australian biotechnology offers in fostering overseas relationships.

A Little Bit of Humour To Finish Off

How Humiliating

This one speaks for itself - it could be titled "Why dogs bite their owners" or "But I don't want to be Batman no matter how many doggie treats you give me!"

Dedicated Inspector Wanted for High Profile Biotech Job

You may not find this job on seek, but you definitely have to give it to this guy for enthusiasm. In the heart of one of the United States agricultural belts (actually it's Indiana, but don't tell anyone cause that is where we did our pig trial!) they take things very seriously. Mr Y (we have to protect his name for reasons that will become obvious) spends every day of working life as an egg inspector. Yes that is right!

He drives about 800 miles a week stopping only for a nature call and to look at randomly selected eggs. Mr Y proudly states his job is "to look at samples of 100 eggs from randomly selected grocery stores to see if they have cracks or air pockets", ( I guess my supermarket is more into shock testing judging by the numbers of broken eggs that I see). "I am often asked what is the difference between brown and white eggs", says My Y. "I tell them that the brown ones come from bigger hens that eat more and therefore have thicker shells." He says the most common question he is asked is "which came first the chicken or the egg?", which he admits has now lost all of its novelty!

The saddest part is that Mr Y will proudly show you his prize possession which is a chicken tie. "I was given this tie by a previous egg policeman whose life I saved when he was choking in a restaurant (hopefully not on an omelette!)". That's not the sad part, the sad part is I have spent hours in my travels around the globe looking for a chicken tie and that there is not just one Mr Y but there are three egg police employed in Indiana alone.

My Dog is in Iceland, My Luggage is in Africa and I am in Los Angeles

Radio Frequency Identification chips (RFI's) are becoming common practice among pet owners keen to keep track of their dog. However a problem is arising highlighted by the increased security measures at airports and for luggage control. Dogs with RFI's are apparently more susceptible to viruses, computer viruses that is. A University in Amsterdam (must be that free drug attitude) has now found that RFI's are big enough to get computer viruses. Researchers have raised fear that they could cause disruptions at places like airports and even be used for terrorist activities to deliberately interfere with navigation or divert packages to specified destinations. (I guess it won't be long before some smart entrepreneur comes up with the idea of radio-controlled pets. You control them with a console much like the RF toy cars on today and they do whatever you tell them to!)