Let me start by wishing you all a very successful 2007 and hope that you all had the opportunity over the holiday season for some rest and relaxation.  A very warm welcome to all the regular readers of the Stirling Connection and to those of you who may be reading our newsletter for the first time.

The Stirling Connection has been created to keep stakeholders and shareholders in the company informed on company developments.  Our aim for 2007 is to produce six further editions of Stirling Connection, one every two months.  As we move through the year we intend to introduce some variety to the newsletter, varying in part some of the content and some of the regular features (I could tell you about these, but if I don't then you will have to keep coming back to read it!).

2006 was a "cracker jack" year for the company and as detailed in our feature article we made significant progress on all aspects of our business.  I am confident that 2007 will be even better.  The start of the year has already seen some improvement in share price.  In December, the share price doubled and is currently the highest it has been for six months.  Stirling has several trials under way.  We look forward to presenting the main findings as they become available and providing further confirmation of what a great opportunity R-salbutamol provides across the three technology platforms currently being conducted by the company.

I hope that you enjoy this edition.  If you have any comments to make or you would like to see some changes or specific issues addressed, let me know by emailing info@stirlingproducts.net.

We live in an uncertain world and should never take anything for granted.  I can always remember my parents saying how time goes faster as you get older.  I never understood this, but I'm afraid to say it does.  The last year was no exception; things moved very quickly.  Several key events either had, or are still having, a profound effect on the market place(s) for Stirling's products.  Some of the more notable ones are:

• Bird flu continued to wreak havoc throughout most of the South East Asian countries and the rest of the world started to prepare and take steps to avoid similar catastrophes in their region.  The public perception is reflected in the reduction of poultry consumed in some markets.
• BSE (Mad Cow Disease) continued to have an effect on global beef markets and the additional securities being adopted by leading importers of beef and meat products continues.  Countries became embroiled in political debates over trade sanctions and the "attention to detail required" in assuring meat products are safe and fit for human consumption.
• Levels of understanding by consumers increased during the year.  While a large sector of this was due to lobbying by anti-meat groups, the consumer is now becoming far more savvy in their choice of food they wish to consume.  Suppliers are taking a firm stance on the feeding of livestock animals with antibiotics for growth promotion in response to consumer demands.  Farmers that have been resisting change are now finding it a necessity to change production systems.
• The companion animal health market continues to grow and expand rapidly.  As people are becoming more aware of what they are consuming, as pet owners we are becoming just as vigilant in what we feed our animals.  No longer is it acceptable to feed "Fido" or "Ruffles" a cheap and nasty product; it's a case of nothing but the best.  More people are owning pets and they are becoming increasingly important  family members with very expensive tastes.  Manufacturers are all too ready to respond as niche products enter the market.
• Aquaculture is becoming the fastest growing form of protein supply as consumers are bombarded with calls for more Omega-3's and "eat more fish".  (Personally, I don't have a problem with more fish, but I am definitely one of those people who will quite happily eat fish as long as it does not taste like fish!).
• Biotechnology is upon us, as is evident from the surge of interest in producing new fuel sources from cereal crops.  This has, and will continue to have, a dramatic effect on the feed prices for livestock producers.  Already the price of corn in the United States is the highest since 1996 and according to the United States Department of Agriculture predictions, will continue to rise. While some would say "feed the cows grass" the global dilemma is that we are running out of land so we can't.
• Agriculture is facing a new enemy that is also starting to take effect with the production of gases into the environment which is considered by many to be the biggest contributor to global warming.

So how does all this help Stirling you ask?

Over the last year we have completed all the proof of concept studies that uniformly demonstrate across the four major meat producing animals - pigs, chickens, cattle and sheep - that R-salbutamol not only improves production efficiencies but also adds value to the meat by changing the ratio of lean meat to fat (better for the growing concerns about obesity, general improvement in well-being and healthy eating).  We have also initiated this month, trials in fish to see the extent to which these effects can influence production and benefit the quality of meat from fish in preparation for the new wave of interest in fish consumption.

Stirling also moved ahead in its other two technology platforms - obesity in companion animals and the treatment of heaves in horses.  One of Stirling's mandates is to be part of the growing market of companion animal products.  Fat dogs and cats are now a fact of life and their treatment has been largely ignored, except by the use of tailored pet foods.  The horse market is, in my opinion, grossly undervalued and whether it be for performance horses or pets, the treatment of respiratory diseases in these animals, particularly in the northern hemisphere, is in need of specific medications.

Commercially we have made progress too.  In concert with our partners in South Africa we hope to capitalise on early market entry and gain our first sales of R-salbutamol.  Stirling has also formed two invaluable partnerships - one with the leader in animal health, Merial and one through our joint venture Pulmovet APS, with the Danish company Equine Healthcare.

So time does march on, but when you look back we have progressed the business significantly.  The new year will bring new challenges and new rewards.  If truly time does go faster as you get older, Stirling must continue to march forward at a faster rate.  It will continue to progress each of its technology fronts in order to become a successful international animal health company.

BIO 2007 - The world's largest Biotechnology conference is being held this year in Boston in the United States from May 6 - 9.  Stirling will be exhibiting at this conference as part of the Australian Pavilion.

ABIC 2007 - The Agricultural Biotechnology International Conference is being held in Calgary, Canada, September 23 - 26.  Stirling will also be exhibiting at this conference.

Stirling's Press Releases in 50 Words or Less

Stirling produced on average 2 press releases/month last year. Due to the large volume of releases from August to December last year, some have been grouped together where they relate to the same or similar topics.

INAD Numbers:
Stirling filed and received Investigational New Drug Application numbers for chickens (November 3), companion dogs (August 31), heaves in horses (September 13) and sheep (October 17).  The INAD number represents the starting point for regulatory submissions to the FDA.

R-salbutamol in Sheep:
Studies to be conducted in Merino lambs (August 28) demonstrated that R-salbutamol had a significant effect on the production efficiencies of lambs and improved the carcass attributes with no significant R-salbutamol residues in the tissue (December 6). Feed efficiency (rate of weight gain for amount of food eaten) was significantly improved.

R-salbutamol in Cattle:
Studies to be conducted in beef cattle (August 7) demonstrated that R-salbutamol had a significant effect on the production efficiencies of cattle and improved the carcass attributes (January 4, 2007).  Feed efficiency (rate of weight gain for amount of food eaten) was improved by 10%.

New Trials:
Stirling announced the commencement of 4 new trials.  The first (September 7) was a dose confirmation study in pigs to confirm the initial finding of 4ppm as the most appropriate commercial dose.  The second (October 4) was the first trial for obesity in dogs, the third (November 9) the first trial of R-salbutamol in horses and the final trial (January 9, 2007) is measuring the production gains in farmed fish (Barramundi).

Patent Approvals:
Stirling announced (October 10) the first patent approval for its indication for the treatment of heaves and (November 28) the European patent approval for growth agents.

Update on South Africa and Swine Trials (October 19):
Stirling announced that the regulatory filing for South African registration under Act 36 (Feedstock Remedies Act) had been completed and filed.  Approval of this file will allow the company and its partner Afgri to conduct trials in RSA.

Material Transfer Agreement with Global Animal Health Leader Merial (December 12):
This announcement concerned the agreement which had been reached with the leading animal health company, Merial, to conduct research into novel applications of R-salbutamol for use as a growth promoter in cattle and sheep.  Successful trials could potentially lead to a global licensing agreement.

Agreement for New Manufacturing Process (December 19):
Stirling announced signing of a contract manufacturing agreement with a European manufacturer for novel processes of manufacture of R-salbutamol.  Further to a previous announcement (April 5) Stirling was also assigned an additional patent application covering the manufacturing process for the supply of raw material.

In the News

You're Not Hungry, Just Low Food Security ........

We have made commentary in previous editions about the classification of "organic" and "natural" (see the last two issues).  A recent American report has now sparked political debate over the use of the term "hungry".  The term "hungry" is being removed from government vocabulary because it is not a scientifically accurate term. The authors of the report indicate that because there is no scientific measure for "hungry", people in this position should be described as having "low food security".  "Low food security" will now be used to define those individuals with a "potential consequence of food insecurity, that because of prolonged, involuntary lack of food, results in discomfort, illness, weakness, or pain that goes beyond the usual uneasy sensation".  This would describe the 12% of Americans - 35 million people - that are hungry, sorry "food insecure" or have "low food security".

So, true to their promises, it would appear that the American government has, by changing the definition, reclassified 11% of American households that were originally described as "being hungry".  They are now described as "food insecure but without hunger".  If you have multiple indications of disrupted eating patterns and reduced food intake, you are classified as "very low food security".  (Couldn't that describe a multitude of people on a diet?).

Value Added Poultry (Not) ........

A recent report details the findings of a three-year study funded by the Center for Disease Control and Prevention looking at the use of antibiotics as a livestock growth promoter and the potential for antibiotic resistance.  The study looked at poultry exposure as a risk factor for antibiotic resistance in a particular strain of bacteria that is increasingly the cause of infections in hospitals and a particular antibiotic - virginiamycin - used to treat serious antibiotic infections. 

The results showed that virginiamycin use in poultry leads to transfer of antibiotic resistance to human gut bacteria through the food supply and provides additional evidence that use of antibiotic growth promoters in animals may have long-term consequences for human health.  The bacterium was isolated from newly hospitalised patients, healthy vegetarians, conventional retail poultry and antibiotic-free poultry.  The findings demonstrated that the bacteria from conventional poultry and from patients consuming poultry became resistant to the antibiotic more often than the same bacteria from vegetarians.  Some of the resistance was associated with the handling of raw poultry meat and frequent poultry consumption.

Please Send Me to the Dog House ........

I just love the flurry of articles that come out every month relating to the latest and greatest inventions for our furry friends (in case you hadn't noticed!).  Real Estate agents in that country where all good things happen, are now turning their attention to dog house real estate.  Compared to "human" housing where a real estate agent may get only 2.5% commission, they have now found that they can get 10% on selling dog houses.  These are not your average dog house though.  A designer dog house can be priced anywhere from $10,000 to $100,000.  For example, an American football player recently paid $25,000 for a two-storey dog house for his two Rottweilers and their slightly smaller fine-boned Maltese.  The dog apartment comes with air conditioning, micro velvet suede couches, tiled floors, arched windows and a flat screen TV which continuously loops canine classics like "Rin Tin Tin" (for the big boys I guess!) and Benji (for the Maltese).

Not to be outdone a Californian lady at twice the price built a white stucco Swiss chalet for her Burmese mountain dog, Ted.  She wanted Ted to pick out the paint colours to go with the Bose sound system, air conditioning and marble floors (even though dogs are colour blind!), so Ted sniffed one and not the others and that was that.  Unfortunately Ted passed away and Ted's replacement Klyde didn't like the paint colours and won't go near the place.  The owner now says she spends more time in the dog house than Klyde because it is air conditioned and her house is not.

Ice Breakers for the Warped Mind ........

• Two cannibals are eating a clown.  One turns to the other and says "does this taste funny to you?"
• Two fish swim into a concrete wall.  One turns to the other and says "Dam!"
• A woman has twins and puts them up for adoption.  One of them goes to a family in Egypt and is named "Ahmal".  The other goes to a family in Spain and is called "Juan".  Years later, Juan sends a picture of himself to his birth mother.  Upon receiving the picture she tells her husband that she wishes she also had a picture of Ahmal.  Her husband responds "They're twins, if you have seen Juan, you've seen Ahmal."
• Two cows are standing in a field together.  Daisy says to Dolly, "I was artificially inseminated this morning."  "I don't believe you," says Dolly.  "True," says Daisy, "No bull."

Who Says Cats Aren't Human ........

An Australian bank has apologised for issuing a credit card to a cat after its owner decided to test the bank's security system.  The Bank of Queensland issued the credit card to Messiah the cat as a secondary card on her account.  The bank has since cancelled the card saying "we apologise, this shouldn't have happened."  (The cat is now applying for a bank loan after reading the article on dog houses!).

Bless Their Little Cotton Socks ........

Below are six of the best children's science exam answers:

• How can you delay milk from getting sour?
  Keep it in the cow.
• What happens to your body as you age?
  When you get old so do your bowels and you get intercontinental.
• What does the word "benign" mean?
  Benign is what you will be after you be eight.
• What are steroids?
  Things for keeping carpet still on the stairs.
  (See, R-salbutamol is definitely not a steroid!)
• Explain one of the processes by which water can be made safe to drink.
  Flirtation makes water safe to drink because it removes large pollutants like grit, sand, dead sheep and canoeists.
• What is artificial insemination?
  When the farmer does it to the cow instead of the bull.

Bacon and Eggs ........

A day's work for the chicken
A lifetime commitment for the pig