Anonymous Short Trader Attacks Cellceutix Again

Anonymous Short Trader Attacks Cellceutix Again January 19, 2017
By Mark Terry, BioSpace.com Breaking News Staff

On January 17, a short seller writing under the pseudonym Mako Research on Seeking Alpha, took a shot at Cellceutix under the title, “Cellceutix: Financing Partners Arrested For Alleged Ponzi Scheme, Company Faces Risk Of Death Spiral Liquidity Crunch.” Cellceutix strongly denied the claim and released a statement calling Mako a “non-credible criminal author.”

Cellceutix, based in Beverly, Mass., was founded in 2007. It focuses on developing therapies in dermatology, oncology, anti-inflammation and antibiotics.

This is not the first time Mako has gone after Cellceutix. On August 6, 2015, Mako wrote a piece on Seeking Alpha, a whopping 12,000 words long, attacking the worth of the drugs the company was developing, but also accusing it of being “nothing more than a shell corporation.” At that time, Cellceutix denied the charges and invited members of the media to visit the company and see for themselves. Don Seiffert, writing for the Boston Business Journal, took them up on the offer. And in his account, it seems that the company is legitimate, does do research, and has had drugs in clinical trials.

Mako clearly states that it shorts Cellceutix stock. Seeking Alpha, an investor website, has a policy on its website that it allows some of its contributing authors to use pseudonyms, but the publisher itself requires the authors’ full names. They must also reveal any stock positions they write about.

The Mako Research bio, such as it is, on the Seeking Alpha website, describes itself as “Professional investor and overall good guy,” followed by a lengthy disclaimer. The most recent post blasts Cellceutix, citing that “Key CTIX financing partners from Platinum Partners arrested for participation in alleged $1B+ ‘Ponzi scheme’” and concluding, “We revise our fair value estimate for CTIX to $0.00 and downgrade the stock to Strong Sell from Sell based on near-term bankruptcy and the ‘death spiral’ liquidity crunch underway.”

Cellceutix responded with a strongly worded statement, saying, “As with Mako’s prior article on Cellceutix, the non-credible criminal author makes countless unfounded, wild allegations about the Company. The purpose of the iniquitous writings of Mako is to scare shareholders and drive CTIX stock lower for the profit of the author and all organizations collaborating in the illegal and manipulative market activity often called, ‘short and distort.’”

It also cites a court case between Cellceutix and Mako. It’s apparently not the only lawsuit. A shareholder of Cellceutix sued the company in New York federal court after the 2015 article, as well a case filed by Mark Nordlicht, the founder of Platinum Partners, who sued Seeking Alpha for defamation. Both of those cases were dismissed in 2016.

At this time, the U.S. Securities and Exchange Commission (SEC) declined a request for a statement about the company by the Boston Business Journal.

Otherwise, on January 17, 2017, Cellceutix announced it had completed the second cohort of a Phase II open label Proof-of-Concept clinical trial to evaluate Brilacidin for mild-to-moderate ulcerative proctitis/ulcerative proctosigmoiditis, two types of inflammatory bowel disease.

“To date, the trial has exceeded our expectations on all fronts” said Arthur Bertolino, Cellceutix’ president and chief medical officer, in a statement. “The study needs to be successfully completed with the final data fully analyzed, but at this point we attribute the early favorable results to Brilacidin’s robust anti-inflammatory therapeutic profile. Given Brilacidin’s unique mechanism of action, the body is able to get back to doing what it’s usually already good at—fighting illness and infection.”

Cellceutix is currently trading for $1.13.

Insider Financial also took a crack at the story today, noting that after the 2015 story and resulting court cases, “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.”

And this time, Mako is essentially regurgitating the same “facts,” only throwing in new allegations regarding Platinum Partners. Insider Financial notes that the company is developing three primary assets, has moved into several Phase II trials and a Phase III trial is pending. “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.”

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