Cellceutix fires back against short-seller accusations
- Small Beverly, MA-based biopharma Cellceutix Corp. has fired back against a scathing critique of the company posted by an anonymous investor on the investor site Seeking Alpha, accusing the author of making unfounded allegations.
- The short-seller, writing under the name Mako Research, published on Tuesday a lengthy post which alleges Cellceutix could soon face insolvency and links the company to a New York hedge fund whose founders were recently arrested on charges of investment fraud.
- Cellceutix, unsurprisingly, attacked Mako Research for publishing "fake news" and defaming Cellceutix n a deliberate attempt to drag down the value of the company's stock.
Cellceutix has fought off allegations from Mako Research before.
The short-seller published a similarly accusatory post on Seeking Alpha in August 2015, which spurred a class-action securities lawsuit that was brought against the company by the Rosen Law Firm.
In June 2016, a district court judge dismissed the lawsuit in its entirety and closed the case. Cellceutix pointed to that ruling as evidence discrediting Mako's new allegations.
According to Mako, Cellceutix is overly reliant on a single $30 million credit line with an Illinois-based limited liability company called Aspire Capital.
As of September 30, Cellceutix had $5.5 million in cash after burning through $2.6 million in the third quarter. A stock sale to Aspire Capital raised $1.9 million, which helped offset the cash burn. Cellceutix has a balance of $20 million on the credit line with Aspire, but Mako points to limitations in the agreement that would lead to suspension of funding.
That would matter greatly to Cellceutix, which has plans to spend $19 million over the next 12 months, including $15 million for ongoing clinical development.
Cellceutix has 3 lead compounds currently in clinical testing: Prurisol for psoriasis, Kevetrin for ovarian cancer, and Brilacidin for a type of skin infection.
Prurisol and Brilacidin are more advanced, including an ongoing Phase 2b study for Prurisol which the company estimates will cost between $6 and $7 million.
While the company is extremely bullish on Prurisol, the expected market is packed with many well-established competitors that would make potential commercialization challenging.
Cellceutix trades for just over $1 per share on OTC markets under the ticker CTIX.
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