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Cellceutix Corp (OTCMKTS:CTIX): Here's Our Take

Cellceutix Corp (OTCMKTS:CTIX): Here's Our Take
Written by
Chris Sandburg
Published on
January 19, 2017
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Short bias articles that claim to have uncovered a small cap scam always make for a great read. If there are pictures, even better. Back in August, a so-called research firm called Mako Research published this article claiming to have determined beyond doubt that development stage biotechnology company Cellceutix Corp (OTCMKTS:CTIX) is one such scam, and supported its theory with pictures of what appeared to be an unmanned front office desk.Subsequent to the release, the company sued Seeking Alpha for publishing the article, and in retaliation, Mako took Cellceutix to court. Both cases were dismissed extremely quickly, and a raft of post-release due diligence proved that most of the claims outlined in the article were spurious at best, or outright false at worst.This week, Mako has done it again.Same company, same allegations, using the (majority of the) same facts. The only new allegation is that a couple of members of the team behind some of Cellceutix's financing have been accused of running a Ponzi scheme – in other words, scam by association.How things will play out for Mako going forward remains to be seen. Cellceutix has come to press stating that Mako is a "pawn in a criminal enterprise" and that the allegations are completely baseless – just as they were last time. Cellceutix took a bit of a hit on the release, but nowhere near the 60% or so that the company lost on the back of the first release, and it seems that markets are generally in agreement with the company as opposed to the research firm.What is our take on this? Well, we're firmly in line with the opinions expressed by Cellceutix. We have covered this one before on a number of occasions, and outlined it as a stock to watch throughout 2017.The company is developing three primary assets – a cancer drug, an antibiotic, and a psoriasis treatment. In December, phase 2b data hit press from the psoriasis drug, and should underpin an advance into a pivotal trial early this year. Dosing just completed in the antibiotic asset for an ulcerative proctitis indication in a phase 2 trial, and a second phase 2 in chemoradiation-induced oral mucositis (OM) in head and neck cancer patients will kick off before the end of the second quarter this year.There is also a solid tumor phase 2 set to start near-term, and an antibiotic phase 3 based on the above-mentioned phase 2 data not far behind.Mako's article claims that each of these assets has been proven ineffective and worthless by a third-party independent medical professional. In allowing them to move through the development process, however, the FDA is directly refuting the claims of said (anonymous) medical professional.Yes, Cellceutix is going to need to raise cash near-term if it is going to fund the trials mentioned above. Chances are, therefore, shareholders are going to have to shoulder a certain degree of dilution on the back of this funding. Anyone with even a grain of familiarity with the space, however, will know that this is perfectly normal for biotechnology companies of this size (and bigger), and is far from justification for claiming this company is nothing more than a shell designed to funnel capital towards its owners.From an independent and objective perspective, we think the latest article may even serve to improve sentiment surrounding Cellceutix, and that Mako may find itself in some regulatory trouble going forward. The latter suggestion doesn't really matter, of course. Shareholders are in this one based on their own due diligence, and while they have every right to be aggrieved by these efforts to distort market sentiment, it is they that will draw benefit longer-term as the company pushes its promising assets through the development pathway and towards commercialization in the US.We will be updating our subscribers as soon as we know more. For the latest updates on CTIX, sign up below!Disclosure: We have no position in CTIX and have not been compensated for this article.

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