Jeff, thanks for your thoughts. You provide a nice
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1. Accounting issues (reported on the recent S3) why should there be accounting issues when the company is run by a CPA? **(I believe you are referring to the internal control deficiencies reported by both the company and the auditors. However, these do not appear to be an “accounting issues” per se. Rather, they refer to the fact that Ehrlich is both the CEO and CFO, which does not allow for segregation of duties and oversight of financial reporting. In addition, there is no audit committee as part of an independent BOD currently, thus no board oversight by an independent “financial expert,” without which the “internal control” compliance issue was triggered. Seating of an independent board and audit committee can rectify this. Ehrlich said uplisting is a priority at R&R in Sept. and if he is serious, then I would expect to see at least beginning board appointments within the next 30-60 days)**.
2. "Going concern" label given to CTIX by auditors. If you read the S3 again, lots of bolded warnings and more warning than would seem typical. **(Most of these “risk factors” are boilerplate. The going concern warning is likely mandated by the auditors for a company without revenue that has less than a year’s cash on the books. I don’t know what the “typical” number of risk factors for biotech start-ups, but those listed are likely meant to cover the bases in terms of legal liability… hence necessary as boilerplate cautions.)**
3. More dilution with new Aspire deal for $20 million plus the "payoff" to Polymedix attorney. Potential for R/S heightened in the near term. **(Yes, there is dilution for the Polymedix assets and Burtch, the trustee. The issue of R/S was clearly addressed by Ehrlich in Sept. at R&R with a resounding “no R/S” will occur. So to say that a R/S is “heightened in the near term” sounds like you are no longer willing to take Ehrlich at his word. I would be shocked if Ehrlich did a 180 about a R/S just a couple months after saying “no” to that possibility, as it would damage both his credibility and allow shorts a new target.)**
4. Sidetrack of Prurisol POC trial and potential "black box" label. Polymedix assets questionable. **(As we now know, the POC for Prurisol was nixed in favor of an expanded 2/3 trial, and it will be important for investor confidence to expedite that expanded trial asap. The IND filing should come soon. The stated expectation for a “black box” designation is new info to me, and I would like to understand what this means in terms of known Prurisol “side effects.” The Brilicidan asset does not seem questionable on the face of it, since there is a great unmet need for new anti-biotics, and the numbers were good from B’s 2A clinical trial, but yes, it remains to be seen whether the entire group of PolyMedix assets are worth what Ctix paid for them. I found the recent presentation on B by Jorgenson to be quite good.)
5. Absolutely no institutional investors. No independent BOD. Uplisting won't happen anytime soon. Therefore, lack of appeal to more investors and institutions. **(I agree that these are significant negatives that have held down the SP in the near term, and am hoping for Board appointments as quickly as possible. Institutional support may not come until initial trial results are confirmed as positive, which is why the P delay and the K silence have been so difficult. I also agree that Westport Resources Management with their 3K shares “doesn’t count” as institutional support..lol)**
6. No significant update on p21 since April. No update on Kevetrin. Update probably not coming until Q2 2014. **(The lack of these results has been a source of major controversy, in terms of cohort progress, dosing, and lab results during this entire year, and all with confusion regarding who can disclose what results and when. The sooner we get updates on K in all relevant respects, the better. No update until Q2 would have some folks wielding pitchforks or camping outside of DF to catch “the nurse.”)**
7. Other better investment alternatives to put my money to work . . . just off the top of my head. Others should do there own DD. These are my opinions only. Again, Pete I will buy CTIX if/when things change, which could be at any moment. ** (Near term you have certainly been, and may continue to be right about other investments, and I think you are also right that things could change at any moment).
Thanks again. These are the kind of hard-nosed analyses that we need going forward.
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