Not sure how much will post, but here goes: Cel
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Posted On: 01/17/2017 8:39:58 PM
Not sure how much will post, but here goes:
Cellceutix: Financing Partners Arrested For Alleged Ponzi Scheme, Company Faces Risk Of Death Spiral Liquidity Crunch
Jan. 17, 2017 11:44 AM ET
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About: Cellceutix Corp. (CTIX), Includes: BIVI
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Summary
Key CTIX financing partners from Platinum Partners arrested for participation in alleged $1B+ “Ponzi scheme”.
Other Platinum Partners stocks have traded to approximately zero and face their own fraud allegations, or an apparent fraud within fraud. We refer to this as “ Fraudception”.
We believe CTIX’s own past apparent securities law violations leave the company vulnerable to additional inquiries related to Platinum Partners.
CTIX is out of cash approximately now and will face insolvency without an incredibly dilutive equity raise.
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.
It's been almost a year and a half since Mako Research fully and completely debunked every aspect of the Cellceutix (OTCQB:CTIX) story. CTIX shares at the time were trading near $2.50 and have fallen dramatically since then, currently languishing near a dollar on very low and decreasing volume. Since that time, nothing in our original report has been refuted. Astoundingly, however, CTIX continues to trade at an unsustainable market capitalization of $145 million for, as far as we can tell, essentially nothing. This report provides an update on the short case for CTIX, a financial analysis of the liquidity crunch CTIX faces now, and also includes highly relevant and concerning new information about CTIX's financing partners that recently came to light. Lastly, we revisit our valuation model for CTIX and show why the stock remains a compelling short even at the current "low" share price as CTIX faces an imminent liquidity crisis which we believe may finally result in the bankruptcy of CTIX, just like Leo Ehrlich's prior company StatSure Diagnostic Systems that went to ~$0.
Cellceutix "Death Spiral" Cash Crunch Underway and Updated Valuation: Downgrading Price Target to Zero
In our original report, we had this to say about CTIX's valuation:
I value shares of Cellceutix at $0.09 in a best-case scenario, which is 96% lower than the current price, and recommend that investors avoid this company entirely. It's clear to me that Cellceutix is very likely to end up as a complete wipeout for shareholders over time, and stands to continue declining significantly if we experience more near-term market volatility.
Our assessment of the value of CTIX was heavily dependent on the company's cash balance, its only meaningful asset to speak of, in our view. This cash balance has continued to decline to the point where near-term bankruptcy is now a real risk and CTIX has little hope of financing the expensive trials it touts without massive dilution, if the company can raise the necessary equity at all.
As a result, CTIX's only financing options available now is the Aspire Capital equity line, which puts the company into what is commonly known as a "death spiral" - in a worst-case outcome, this could result in CTIX insolvency and wipeout for equity holders. Even more importantly, by our estimates, given increasing delays in CTIX trial process and continued cash burn, the Aspire equity deal itself is also insufficient to keep CTIX from functional insolvency.
We will explain why the cash on hand appears insufficient, the multiple ways in which the Aspire Capital equity line can become instantly frozen, which would render CTIX insolvent virtually overnight, and how CTIX's reliance on this equity line of financing has put it in a "death spiral" position that could wipe out shareholders.
Based on CTIX's own SEC filings, we learned that the Aspire Capital equity line has limitations and could be frozen instantly if certain circumstances occur.
To start with, if CTIX is halted by the SEC or Principal Market, then the Aspire Capital agreement is frozen, which would mean certain bankruptcy:
" rading in the Common Stock shall not have been within the last 365 days suspended by the SEC or the Principal Market"
Given the public concerns about apparent SEC filing inaccuracies filed by CTIX, as well as its strong connection to Platinum Partners, we believe this is not a low probability event.
Furthermore, if CTIX stock trades below $0.25, there is a floor price and Aspire Capital is then also no longer obligated to be involved with CTIX or provide any funding.
"The Company and the Buyer shall not effect any sales under this Agreement on any Purchase Date where the Closing Sale Price is less than the Floor Price. "Floor Price" means $0.25 per share"
In this situation, CTIX will also likely suddenly go bankrupt. While $0.25 per share may seem low, it is important to note that I estimate the median market cap of Aspire's current public holdings at $17.7m as most Aspire capital companies are disasters. Further, as we will see below, the Aspire deal is likely to put significant pressure on CTIX shares. Should CTIX receive a $17.7m market cap, consistent with Aspire's other companies, with the current 125m shares outstanding, this would result in a valuation of $0.1416 per share, well below the $0.25 Floor Price at which this financing agreement is frozen.
Lastly, we estimate the Aspire agreement is woefully insufficient to fund CTIX even if executed.
First, we can see that as of the September, 2016/9/30 balance sheet CTIX reported, we estimate the company only has ~$3.5m of cash net of the related party note and suffers from negative working capital ($6.17m of total current assets, including the cash minus $8.77m total current liabilities).
Source: Google Finance
This balance sheet is a sick puppy and the cash left is perilously low, which leaves no margin for error at CTIX, particularly in light of the company's ongoing operating cash burn, which is currently running over $2.6m per quarter and which is expected to accelerate if CTIX actually tries to ever complete its forecasted trials.
Source: Google Finance
CTIX itself has acknowledged its cash is low, and in September 2016, it forecasted it will need at least $19m over the next 12 months. We think this is clearly incorrect and too low as we explain below.
To be conservative, we will start with the old net cash number of $3.5m. Then, if we go back to past years of CTIX before the currently expanded purisol and other later stage and more expensive trials, we can see CTIX was burning an average of $2.37m per quarter excluding any capex or cash spent on infrastructure. We will conservatively round this down in CTIX's favor to $2m per quarter since it was probably spending a little each quarter previously on random small animal studies and other similar work. This means over the next 12 months, CTIX is estimated to burn $8m just for operations.
To show why CTIX will likely run out of cash and become insolvent, we start with the ~$3.5m of net cash CTIX had left as of the last financial statement three months ago 2016/9/30 and my estimate that CTIX will continue to lose at least $2.0m per quarter for another year (or ~$8m of annual cash burn) just in operations to keep the lights on independent of its expensive trials announced. Then if we add the $15m more cash it estimates it will burn for near-term trials, that puts CTIX at estimated total cash burn of $23m (15 +
over the next 12 months. Its past net cash balance of $3.5m plus the $19m Aspire deal only amounts to $22.5m. This means that within the next 12 months, assuming cash burn does not ramp up (which we expect it will if CTIX hopes to actually do anything new) CTIX will become functionally insolvent as its net cash position weakens and the liabilities then have the senior claim on any equity value as cash burn continues. This scenario is likely to occur even if it uses 100% of the Aspire deal, which is a questionable and generous assumption itself.
Note that CTIX has no revenue to speak of so there is no other cash coming into the company unless CTIX can raise equity. The way I see it, anyway you cut it, significant dilution and cash burn is coming to CTIX in the immediate future.
Furthermore, with the stock so low the, only remaining financing option is a "death spiral" type financing with Aspire capital which could be frozen at any time if some very possible outcomes occur, and even if it exhausts 100% of the Aspire capital line that is still not sufficient.
If CTIX stock continues its steady march lower on declining volumes, though, this type of financing can spiral out of control into theoretically infinite dilution or suddenly become impossible to use, potentially putting CTIX in a position of sudden bankruptcy, as previous companies with this type of financing have experienced. Let me explain:
The Aspire deal that CTIX agreed to is termed in "dollars raised" while that money will need to be raised by "number of shares" sold. The problem here occurs that the lower CTIX stock goes the more shares need to be sold to raise the same amount of money - this is simple math: if the share price declines, then to reach the same number of dollars raised, CTIX will need to issue a larger number of shares. Given that CTIX stock has already collapsed 75% off the latest high and now trades near $1, this is not a trivial concern. If CTIX stock were to continue declining as it has been, at a certain point the number of shares required to be sold to meet the dollar target CTIX seeks to raise would begin to expand exponentially. At that certain price point, share sales no longer become feasible for raising a substantial amount of equity and the company becomes backed into a corner of insolvency and bankruptcy. This is where the term "death spiral" comes from and it has happened to many other companies in the past.
This is the reason in my view that every one of Aspire Capital's current holdings I could find have been shareholder disasters and typically trade at tiny <$30m market caps, creating substantial shareholder losses.
Should CTIX not raise a tremendous amount of equity immediately, the company could face insolvency, similar to prior Platinum Partners efforts.
To value CTIX, we take this estimated net cash of ~$3.5m and divide by the company's fully diluted share count of 125.11m shares to reach a fair value estimate of $0.028 per share. Since this doesn't leave much for the bulls to play for, we simply round down to what we believe will be the inevitable trading price of CTIX and set a price target of $0.00.
The Platinum Partners Chronicles: Alleged Ponzi Scheme Financiers Arrested
In our original report, we detailed how CTIX was born through a financing agreement with the Nordlicht family. We outlined Cellceutix's deep and longstanding relationship with Nordlicht and his business partner Murray Huberfeld, both of whom have a dubious reputation for supporting extremely low-quality penny stocks that wipe out shareholders. Nearly a year after our original report, the hedge fund these two operated, Platinum Partners, went into receivership after it was alleged the firm is actually nothing more than a $1B+ Ponzi scheme, according to allegations from the United States government. Nordlicht and Huberfeld were both recently arrested and charged with fraud, facing hefty prison sentences if convicted. Pundits have begun to refer to Platinum as the greatest financial scandal since Bernie Madoff.
CTIX Financing Partners Mark Nordlicht (Left) and Murray Huberfeld (Right)
Source: Google Images
The implosion of Platinum Partners was well covered in the news but strangely was not mentioned at all by CTIX from what we can tell. I recommend you read the following links to form your own opinion of these key CTIX founding partners:
Platinum Partners execs charged in $1B mini-Madoff fraud - USA Today
U.S. charges Platinum Partners execs with $1 billion fraud - Reuters
Several New York hedge funders have been arrested and charged with $1 billion fraud - Business Insider
US charges hedge fund founder, others with $1 billion fraud - CNBC
These articles and others provide a shocking glimpse into the alleged house of cards that was Platinum Partners before its sudden demise. We won't rehash all the details here but suffice to say they would make an excellent script for the next James Bond movie, and that if that movie is made, we hope to see a Sean Connery cameo appearance. In Bond-esque fashion, recently revealed details include Platinum founders' plans to flee the country, as well as hilarious quotes from internal fund documents that hint at the founders' state of mind as Platinum faced a rapidly worsening liquidity situation and the alleged Ponzi scheme began to quickly unwind. One internal document detailed written correspondence between Platinum executives where they claimed, "It's Hail Mary time". Sadly, the pass was incomplete.
The market has missed the deep ties between the Platinum Founders and Cellceutix
Those wanting a refresher on this content can refer to our original report here which explains how crucial Platinum Partners, Huberfeld and Nordlicht are to CTIX.
We highlight a few specific bullet points:
CTIX was born through a financing arrangement with the Nordlicht family and pursued a number of deals with Huberfeld. Without these deals with Nordlicht, Huberfeld and Platinum I think it is clear CTIX would not exist in its current form or at all. This makes these people key partners of CTIX which CTIX has relied on heavily in the past. Nordlicht and Huberfeld now face what appears to be overwhelming allegations that Platinum Partners was a Ponzi scheme, and that Platinum allegedly was involved with dubious companies engaged in their own fraud. Amazingly, this was not the first alleged Ponzi scheme involvement for Nordlicht. Remember that Huberfeld and Nordlicht (and both their wives) were named in the scathing lawsuit surrounding the $1.2B Scott Rothstein Ponzi Scheme, for which Scott Rothstein is serving A 50-year prison sentence. Murray Huberfield was arrested several months ago. In our original report, we detailed Huberfeld's so called "knack for finding shady deals" and discussed the investments he made in CTIX. Huberfeld was originally part of an alleged "conspiracy to commit securities fraud by filing false documents." We believe CTIX has filed SEC documents that, from what we can tell, contain blatantly false information, which would be illegal. Specifically, we remind readers that CTIX executives signed SEC documents containing false biographical information for insider Krishna Menon which claimed that Menon received his PhD from Harvard. At least one of Platinum's portfolio companies (so far) was itself accused of fraud and went bankrupt.
Platinum Partners: Fraudception?
Many readers will no doubt be familiar with the award-winning movie Inception directed by Christopher Nolan and staring Leonardo DiCaprio. The plot of the movie is about a team of "extractors" who preform corporate espionage through a shared dream world. As the movie progresses, the protagonists travel through the subconscious of their targets by entering a dream within a dream. This process is called Inception.
While all of the bullet points above are unquestionably relevant and concerning for investors holding or considering purchasing CTIX shares, it is this last point that we find particularly concerning - that some of Platinum's portfolio companies were allegedly committing fraud themselves, independent of Platinum being an alleged "Ponzi scheme". If this proves true, it would not surprise us: low-quality stocks tend to attract low quality financing partners.
Specifically, Platinum portfolio company, Black Elk Energy, was itself the subject of fraud allegations before declaring bankruptcy, and at least one Black Elk executive allegedly helped Platinum illegally take assets owed to bondholders:
"The founder of New York hedge fund Platinum Partners and seven executives and affiliates were charged on Monday with engaging in a $1 billion securities fraud scheme wherein they allegedly inflated the value of investments and duped bondholders of defunct offshore driller Black Elk. According to Brooklyn's federal prosecutor, Platinum founder Mark Nordlicht and his colleagues had lied to investors since 2012 about the health of Platinum's portfolio company Black Elk Energy Offshore Operations LLC. Prosecutors said that as the investment faltered, Platinum relied on insider loans and new sales to repay increasingly worried investors. And in 2014, ex-Black Elk CEO Jeffrey Shulse allegedly helped Platinum usurp assets owed to bondholders."
If the evidence proves that Black Elk itself was a fraudulent endeavor as distinct from the Ponzi scheme fraud alleged to have occurred at Platinum (and the Black Elk case seems pretty clear at least to us), it would open up a pandora's box among Platinum's portfolio companies and companies that previously engaged in financing deals with the Platinum founders.
We see many similarities between Black Elk, and other Platinum companies like CTIX including confusing related party transactions and financial vulnerability. To see how these typically end up and now for everyone's favorite part (we strive to give the people what they want), wipeout charts of companies that received the "benefit" of Platinum's dubious financing efforts:
Source: Capital IQ
At this point, we can only speculate at how this will play out but it's hard to imagine that this ends well for Cellceutix. We know that CTIX has engaged in a host of opaque and self-enriching related party transactions. And we know the company was born out of a financing deal with the founders of Platinum. But just how deep does the CTIX rabbit hole go? We support and welcome a full SEC investigation into these and other matters at Cellceutix, which we believe is more timely now than ever before as the full impact of the Platinum scandal is just beginning to play out.
How to Play
We understand that some investors are reluctant to short sell penny stocks because these stocks can be volatile and potentially subject to large price swings. This is not an unreasonable point of view. However, given the overwhelming amount of value destruction that has occurred in prior Platinum Partners efforts, as well as at prior Ehrlich and Menon stocks, we submit two ways to capitalize on a likely CTIX convergence to fair value.
Method 1: Short CTIX in small enough size that you are insulated from the volatility and then simply wait
This is our preferred method. CTIX has an astoundingly high market capitalization for what it is, which provides a margin of safety to long-term short sellers who are not concerned about daily price volatility. Those inclined to pursue a short sale in CTIX stock may wish to do so in very small size, perhaps 20 to 50 basis points of fund capital. In the event that CTIX stock appreciates significantly - say, to $2 a share, which would be nearly a $300 million market cap (!) - it would be easy to simply double the bet and size this up to a core short position. In fact, that might even be a preferable outcome over the long-term because the short would have a tremendous margin of safety at a $300 million valuation.
One thing many investors fail to understand about Mako Research is that we take relatively small short positions - this allows us the luxury of waiting indefinitely for a convergence to fair value. We never, ever have to cover. Small positions also allow us to aggressively add to any positions that temporarily go up. All of which is to say this: We're going to be here. If one of our shorts goes up, that's great - now it's an even better risk/reward and we should add to our position. This approach has proven very effective over time and we recommend other short sellers consider the merits of small position sizing, particularly those similar to us who have very long duration capital commitments from their investors and the patient dispositions to capitalize on irrationally priced stocks such as Cellceutix.
Method 2: Wait for the next Ehrlich and Menon "special" to incubate
Many market participants may be unaware that yet another Ehrlich and Menon stock trades on the pink sheets: Nanoantibiotics (OTCPK:BIVI). According to Reuters, the company is run by Elliot Ehrlich and Rajah Menon, who we believe are likely related to Leo Ehrlich and Krishna Menon of Cellceutix. Although clearly shorting a $0.30 stock is problematic, we recommend investors keep a close eye on BIVI and revisit it in the event the shares ever trade to a higher price level. Mako Research certainly plans to do so.
Disclosure: I am/we are short CTIX.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
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Comments (81)
Mako Research, Contributor
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Author’s reply »
Unknown to many of our loyal readers, Nordlicht launched a lawsuit against SeekingAlpha in connection with Mako's original article on Cellceutix. It is important to note that this case was rapidly dismissed from the courts, representing yet another example of unequivocal victory for short sellers providing their research and thoughts to the market for the public good. As a refresher for those without a strong background in securities law, The First Amendment of The United States Constitution, combined with the very rigorous fact-based content regularly presented by Mako Research, presents an unassailable legal defense against such frivolous lawsuits.We congratulate SeekingAlpha on their resounding victory in this case. Furthermore, we wish to highlight that it is becoming increasingly well understood in the courts through an ever expanding and extremely robust case law history that when it comes to freedom of speech, short sellers are entitled to the same rights as other Americans, which is to say that The United States Constitution is not to be trifled with.
17 Jan 2017, 11:57 AM Report Abuse Reply 4 Like
bufnyfan1
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"Unknown to many of our loyal readers.."
tell me--who are your "loyal readers"
are they as dishonest as you are? why are you risking jail time for this "drivel"???
17 Jan 2017, 12:27 PM Report Abuse Reply 9 Like
Mako Research, Contributor
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Author’s reply »
We predicted this kind of comment was inevitable from the CTIX shareholder base ("As a refresher for those without a strong background in securities law..."
Start there and sound out all of the words this time.
17 Jan 2017, 12:45 PM Report Abuse Reply 0 Like
KBEMN
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"combined with the very rigorous fact-based content regularly presented by Mako Research"You mean all the facts that some goofball attorney relied on to sue CTIX, for which he was laughed out of court for relying on such false nonsense, hidden under the guise of "opinion"?Those "facts"? Please.Every developmental stage biotech needs to raise money. No news there.Guilt by association is such a common "hit piece" tactic that I'm amazed anyone falls for it anymore.This opinion piece and repeated attempts to smear small, vulnerable companies developing drugs to help people with devastating disease is rather disgusting.
17 Jan 2017, 01:32 PM Report Abuse Reply 8 Like
KarinCA, Contributor
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The Rosen Law Firm filed suit against Cellceutix on behalf of shareholders Nicole O'Connell and Gary Zagami based on the hit piece you wrote about CTIX back in August 2015 and the suit was dismissed.Lawsuit filed 9.11.15:
http://bit.ly/2iy8RekDismissal of lawsuit filed 6.8.16:
http://bit.ly/2iDTWuvThe court has yet to rule on sanctions against Rosen for filing this case.
17 Jan 2017, 01:33 PM Report Abuse Reply 8 Like
bufnyfan1
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CTIX has just responded today (Jan 18):“Mako is a pawn in an organized criminal enterprise that profits tremendously from this type of fake news that Seeking Alpha relishes publishing because it drives web traffic"I would really really suggest you get out of town PAL because it looks like the SEC is going to get involved this time
17 Jan 2017, 03:39 PM Report Abuse Reply 2 Like
bufnyfan1
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This "Mako Research" clown is likely a flunkie of Adam Feurerstein--he takes great pleasure smearing companies making life saving drugs--MNKD, AVXL, NWBO to name a few. These neandrathals are the lowest form of life on the food chain
17 Jan 2017, 04:46 PM Report Abuse Reply 1 Like
bufnyfan1
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"We predicted this kind of comment was inevitable from the CTIX shareholder base"Now you can make predictions too....WOW!! You're a man of many talents!!! It's going to come in handy when you're standing before the SEC
17 Jan 2017, 05:34 PM Report Abuse Reply 1 Like
Bill Swiggart
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Scary headline, but Mako's rambling story just rehashes old information that seems only tangential to CTIX. Possibly it is timed to counteract the positive news of the company's having completed enrollment for its Brilacidin phase 2 trial.
17 Jan 2017, 12:02 PM Report Abuse Reply 15 Like
Mako Research, Contributor
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Author’s reply »
Nothing tangential about CTIX being out of cash and insolvent if they don't imminently dilute shareholders again.
17 Jan 2017, 12:18 PM Report Abuse Reply 0 Like
bufnyfan1
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why are you doing this again---this time CTIX will demand full prosecution this time for your attack (jail time etc)
17 Jan 2017, 12:25 PM Report Abuse Reply 6 Like
Bill Swiggart
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Agreed there is fear of CTIX's running out of cash, a common problem with small biotechs. Your story might have been stronger if you had focused on that one element of the risk associated with the company. The others are old news.
17 Jan 2017, 12:34 PM Report Abuse Reply 4 Like
bufnyfan1
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From the CTIX press release today (Jan 17):"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.”
There’s a reason that the courts have ruled that Seeking Alpha is not a credible news source,” commented Leo Ehrlich, Chief Executive Officer at Cellceutix. “We will continue to gather information on Mako and his co-conspirators.”So tell us PAL--what does "gather information on Mako and his co-conspirators" mean??? Perhaps legal action? Perhaps SEC investigation? Perhaps "Jail time"
17 Jan 2017, 03:51 PM Report Abuse Reply 0 Like
grooveshark
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Wow. Your last article said that their offices were empty. Everyone who has actually gone to the office has found out that isn't true. Then you got the Rosen law firm to actually go to court with your drivel. That got summarily dismissed. Now you're back?Remember when you said Ocata was worthless? It got purchased for almost $400 million. Very interesting that short attacks commence as soon as your articles are published. You do realize that the SEC filing you cite regarding CTIX was amended in 2011. It's public record. But if it's all you got, why not stick with it. It is very cute that you would use the 1st Amendment to shield yourself while attempting to tar CTIX with guilt by association in absence of any actual evidence.
17 Jan 2017, 12:11 PM Report Abuse Reply 18 Like
bufnyfan1
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why is this "Mako Research" allowed to do this again--the fact they won't explain the numerous lies in their last "article' tells you they are lying again--why can't the SEC formally look into this??
17 Jan 2017, 12:32 PM Report Abuse Reply 4 Like
grooveshark
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Because it is cloaked in the diaper of "opinion." Not fact.
17 Jan 2017, 02:42 PM Report Abuse Reply 3 Like
User 353686
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Well James Devries (aka Mako Research), another fraudulent hit piece while you've taken a short position. What happened to your previous claims of a "shell company" and a picture of an "empty" office and phony telephone number. Your previous article was COMPLETELY debunked.
17 Jan 2017, 12:17 PM Report Abuse Reply 10 Like
Mako Research, Contributor
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Author’s reply »
Call me Jim. And stick around, you might learn something.
17 Jan 2017, 12:32 PM Report Abuse Reply 0 Like
grooveshark
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Are we going to learn the difference between zero and $379 million? I'm all ears!
17 Jan 2017, 02:43 PM Report Abuse Reply 1 Like
bufnyfan1
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And tell me what might I "learn" from your drivel?? How to lie and make money doing so? You obviously didn't learn from your last attack on the company---based on CTIX's response today--I think this time you are in big big trouble
17 Jan 2017, 03:42 PM Report Abuse Reply 0 Like
isteveo
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If Mako Research stands by their research, why don't they disclose who's actually writing this article?
17 Jan 2017, 12:23 PM Report Abuse Reply 7 Like
Dinesh Sarda
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stock is down 15%..So I guess Article is good..
17 Jan 2017, 12:25 PM Report Abuse Reply 0 Like
avidlyreading
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The Rosen class action lawsuit which was based entirely on your prior hit piece on CTIX was dismissed WITH prejudice. The judge is now considering sanctions against Rosen. The SEC has been contacted to investigate Rosen and you. Every single point you made in that first hit piece was entirely false and thoroughly refuted on the record, in court, so your very first paragraph here starts with a lie, "Since that time, nothing in our original report has been refuted." The rest is all lies, as well. Platinum is not financing CTIX. The company and the Ashcroft law firm (yes, that Ashcroft) which represents them against Rosen has been contacted about this latest stunt of yours. Good luck with that.
17 Jan 2017, 12:26 PM Report Abuse Reply 9 Like
Mako Research, Contributor
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Author’s reply »
The SEC has been contacted to investigate CTIX. I have no affiliation with Rosen.
17 Jan 2017, 12:33 PM Report Abuse Reply 0 Like
grooveshark
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Did they tell you to quit wasting their time about a filing that was amended in 2011?
17 Jan 2017, 12:53 PM Report Abuse Reply 2 Like
avidlyreading
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The Rosen lawsuit was verbatim based on your first hit piece and was entirely refuted in court. Rosen's filings even named "Mako Research" as their source, although in their last filing, they slipped and called you "Pumpstopper." Interesting, isn't it, that you claim to have no affiliation with Rosen, yet Pumpstopper is another hit piece writer with a very similar style to yours, which fell silent just prior to Mako Research starting. Because of the dismissal of the lawsuit with prejudice, how can you then say, "Since that time, nothing in our original report has been refuted"? EVERYTHING in it was refuted, the judge is now considering sanctions against the law firm that based its entire case on the falsehoods in that article. Even IF you have no affiliation with Rosen, answer the question.
17 Jan 2017, 01:10 PM Report Abuse Reply 7 Like
baron4664
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You are not too smart.
I hope that all concerned shareholders take the time to read this message and read through the below links and file a complaint with this article attached. A complaint was filed with the NYAG office seeking an investigation into the Short and Distort fraudulent activity wrt to Cellceutix and Mako Research. A file for the investigation has been created. With the dismissal of the Rosen suit it is now more appropriate for investors to send complaints to the NYAG Investor Protection Bureau (IPB). A file has been created titled "Short and Distort"
Ref. No. 16/000012
Matter ID: 1267995. From the IPB website.
"The Investor Protection Bureau is charged with enforcing the New York State securities law, commonly known as the Martin Act. The Martin Act gives the Attorney General broad law-enforcement powers to conduct investigations of suspected fraud in the offer, sale, or purchase of securities. Where appropriate, the Attorney General may commence civil and criminal prosecutions under the Martin Act to protect investors." "The Attorney General's Bureau of Investment Protection does not generally handle complaints on behalf of individual investors, nor does it enforce the rules and regulations
governing the trading of securities unless such violations rise to the level of fraud. Your complaint may however be one in a series of similar complaints that indicates the need to investigate. The office maintains a database of complaints and investigates patterns of fraud
impacting many investors. It has the authority to commence civil or criminal actions on behalf of
the public." So it is essential that complaints be submitted to the bureau. Complaints should reference the Ref. No. And Matter ID listed above. Complaints can be mailed to: Investor Protection Bureau
120 Broadway, 23rd Floor
New York, NY 10271
Phone (212)416-8222
Fax. (212)417-8816 Complaints can also be made online at
http://on.ny.gov/2iDOx6NAfter complaining to the IPB it would be good to send a complaint directly to the Attorney General Addressed to Eric T. Schneiderman for good effect. The website of the IPB is: http://on.ny.gov/2iy0I9T For an excellent write-up of the Martin Act and why the NYAG is the most powerful regulator of wall street read the following paper. http://bit.ly/2iDANJ8
17 Jan 2017, 01:14 PM Report Abuse Reply 8 Like
Mako Research, Contributor
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Author’s reply »
Nothing in our original report has been refuted. True story.
17 Jan 2017, 01:16 PM Report Abuse Reply 0 Like
WallStPirate
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Even the vacant offices?
17 Jan 2017, 01:27 PM Report Abuse Reply 4 Like
avidlyreading
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Wrong. It was all refuted. Read the court filings. The judge agreed. That's why the case was dismissed with prejudice and she's currently considering sanctions against Rosen. BTW - you say you are not affiliated with Rosen. What about Mr. Kim, the lawyer at the Rosen law firm who actually filed the suit based entirely on your article? He was one of your very, very few followers when your original hit piece came out. He wrote up and filed the original notice, and got a plaintiff to sign on (who then thought better of it and withdrew) to the class action (which only ever had one plaintiff, a plaintiff the Rosen firm has used before in a different class action) all within 2 hours of your original hit piece hitting SA. As others have commented, it would have taken longer to type the whole thing up.CTIX investors and potential patients of their life saving pipeline of 3 drugs, all at least either entering, in Phase 2 trials or completed them, will be following your downfall closely - with popcorn.
17 Jan 2017, 01:54 PM Report Abuse Reply 8 Like
bufnyfan1
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"The SEC has been contacted to investigate CTIX"
No I think you got that wrong---the SEC is going to be investigating you PAL--how could they not---you produced a "pack of lies" with your first attack article and instead of "disappearing in the night" you crawl out of your hole again and do the same disgusting thing again--unfortunately this time its going to catch up to you
17 Jan 2017, 04:49 PM Report Abuse Reply 0 Like
bufnyfan1
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"true story"--you must be smoking some very potent stuff if you believe that---maybe you're delusional--there are plenty of drugs that can help you with that
17 Jan 2017, 04:51 PM Report Abuse Reply 0 Like
sox0407
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"In stark contrast, Mako Research was (and still is) anonymous. Mako Research’s first
story was its August 6, 2015, posting about Defendants. Mako Research, a self-described short seller, was thus a complete unknown, without any track record of credibility. Moreover, as explained below, numerous red flags by independent sources immediately questioned the truth and motivations of the posting sufficient to make it per se unreasonable for an objective lawyer to rely upon it. Under these circumstances, as a matter of law, the posting is not a sufficiently reliable source upon which to file a securities class action lawsuit".http://bit.ly/2iDB12KCellceutix Announces Dismissal of Class Action Lawsuit Filed by Rosen Law Firmhttp://bit.ly/2ixPORj
17 Jan 2017, 12:28 PM Report Abuse Reply 10 Like
Do Diligence, Contributor
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indeed. the Fed Court slammed shut Rosen's Mako-inspired slanderous case against the company, with Sanctions likely coming down next. hopefully Sullivan and his Legal Eagle team will dig deeper into short-and-distort tactics.http://bit.ly/1T90oEBa more balanced read:http://seekingalpha.co...
17 Jan 2017, 12:34 PM Report Abuse Reply 8 Like
GrowthGeek
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This article is definitely a hit piece and shows considerable bias much like the last article by Mako on CTIX. However, CTIX does face significant financial concerns at this point so that aspect of the article has validity.
What slays me about SA editors is that they would NEVER allow an article this one sided on the bullish side of things for any microcap company.
17 Jan 2017, 12:34 PM Report Abuse Reply 7 Like
matthew.karr
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Mako is like the Trump of SeekingAlpha. He takes advantage of the uninformed, fearful population with long-winded, circumferential drivel so he can make money on his short position. Not once did you even mention one of the trials. Absolutely pathetic. Yes, cash is fairly low, but it is fairly obvious that CTIX is planning on selling Prurisol after what will likely be a successful Ph2b in Q2. Cash proceeds will then fund ph3 brilacidin in ABSSSI, which is a costly trial but a near lock to be a success. CTIX strategic plan has been very clear since they brought Bertolino on board, and while there is risk in micro-caps, I think you are very wrong in this instance.
17 Jan 2017, 12:34 PM Report Abuse Reply 6 Like
Mako Research, Contributor
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Author’s reply »
My research is tremendous. We have the best people. Really, the best. You should see our people.
17 Jan 2017, 12:37 PM Report Abuse Reply 5 Like
matthew.karr
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And a trolling rebuttal with no substance whatsoever. What are your thoughts on the likelihood of Prurisol ph2 coming in Q2 in a sicker population than their original trial (which showed solid efficacy)? Don't you think an oral drug for psoriasis with comparable efficacy to Otezla might be able to be partnered with big pharma? Or are you more focused on some trivial detail about how the CEO's wife's cousin was convicted of tax evasion and how that proves the company is actually only worth $.03?
17 Jan 2017, 12:45 PM Report Abuse Reply 5 Like
GrowthGeek
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Well, Matthew you missed the sarcasm in his Trumpesque answer. It did make me chuckle. I could almost see the red hamster on top of the shark head.
17 Jan 2017, 12:47 PM Report Abuse Reply 1 Like
Do Diligence, Contributor
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so is Mike Sullivans, likely to Trump yours:"Sullivan said he enjoyed a close relationship with the Securities and Exchange Commission as U.S. attorney, and he plans to draw the agency’s attention to issue, in hopes of identifying the author of the blog.Mako Research has also posted blog posts recently attacking a Marlborough-based biotech working on treatments for some types of blindness, called Ocata Therapeutics (Nasdaq: OCAT). CEO Paul Wotton declined to comment on the blog posts last week, which made many claims similar to those made against Cellceutix."http://bit.ly/1FN8BOB
17 Jan 2017, 01:13 PM Report Abuse Reply 1 Like
Rb01234
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No comparison to Trump
17 Jan 2017, 01:15 PM Report Abuse Reply 1 Like
Rob Dunn
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Really? How many shares did you guys short ahead of the hit-job? You went into dark 5 months after CTIX defended itself last-time, only to reappear as the scum you guys are....
17 Jan 2017, 01:24 PM Report Abuse Reply 1 Like
Mako Research, Contributor
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Author’s reply »
I've been short the whole time. I will never cover, because when CTIX goes to zero, I won't have to pay the taxes, the shares will just be cancelled.
17 Jan 2017, 01:46 PM Report Abuse Reply 0 Like
grooveshark
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Are you sure you didn't just carry forward your massive loss on Ocata? That ought to get you out of paying taxes for decades. Big league.
17 Jan 2017, 01:57 PM Report Abuse Reply 4 Like
Rob Dunn
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Back to 1.10 and climbing!!! Last time you drove it down 60 percent, this time it may close green...
17 Jan 2017, 02:04 PM Report Abuse Reply 3 Like
bufnyfan1
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Same research that said "CTIX had no research going on and their address was just a bunch of empty offices"
"You should see our people"---Unfortunately I don't go and visit prisons very often
17 Jan 2017, 03:45 PM Report Abuse Reply 2 Like
Jim in SoCal
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"We have the best people. Really, the best. You should see our people." Hey, great idea! Let's see their photos.
17 Jan 2017, 04:07 PM Report Abuse Reply 3 Like
bufnyfan1
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"I won't have to pay the taxes..."
is that because when you go to prison you don't have to pay taxes?? I think you're wrong because working making license plates/and running the prison commissary earns you some taxable income
17 Jan 2017, 04:43 PM Report Abuse Reply 0 Like
bufnyfan1
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this is actually wonderful--you made the same ridiculous accusations about Ocata-they subsequently got bought out---that means your garbage will result in a similar fate for CTIX---I already hold a substantial position--I'm going to add to it!!!!!
17 Jan 2017, 05:15 PM Report Abuse Reply 1 Like
YUU WU
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This guy (Mako or whoever he is) will land in jail one day for fraud and deceptive practices.
17 Jan 2017, 12:37 PM Report Abuse Reply 10 Like
YUU WU
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Its a perfect time to add few more shares of CTIX.
17 Jan 2017, 01:23 PM Report Abuse Reply 4 Like
Rb01234
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Another hit piece on ctix... i think Kevetrin has great potential and will stay long here
17 Jan 2017, 01:11 PM Report Abuse Reply 0 Like
OverSouled
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Just look at the titles of this guy's SA articles - they all contain phrases like "Pump-and-Dump scheme", "Rush for the Exits", "House of Cards", etc. I'd call him the National Enquirer of SA, Mathew.Karr, though Trump is not a bad analogy for a manipulative short-seller who gets traction out of playing on people's fears and tells stories that are based on half-truths. Maybe Mako should run for President.Yes, solvency and dilution are always issues for small biotechs. This is no great discovery of a short-selling Shark. CTIX has had some setbacks and strategy changes, also par for the course in this business. You don't invest in such companies blindly, but you do so knowing there are risks. One of them being hit pieces by short sellers.
17 Jan 2017, 01:15 PM Report Abuse Reply 3 Like
Mako Research, Contributor
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Author’s reply »
The stock is down more than 75% since 2015, that's not a "setback" that's long time retail shareholders having a deeply religious experience that led them to ultimately agree with the irrefutable facts presented by yours truly.
17 Jan 2017, 02:01 PM Report Abuse Reply 0 Like
bufnyfan1
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Just keep "digging a hole" for yourself deeper and deeper PAL-its going to be huge pleasure to see you prosecuted this time
17 Jan 2017, 03:47 PM Report Abuse Reply 1 Like
OverSouled
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"Irrefutable facts" in the sense that the "facts" in Grimm's fairy tales are irrefutable.
17 Jan 2017, 04:01 PM Report Abuse Reply 1 Like
Rob Dunn
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Mako, What, one big payday wasn't enough to publish lies!!! We'll see how many law firms follow up on this hit-job? Rosen is pending settlement to CTIX for piling on your last attempt to ruin CTIX. Do you guys reside in-the-US? Because, Ashcroft is coming after you this time!!!!
17 Jan 2017, 01:21 PM Report Abuse Reply 5 Like
Vfwidmann
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Jim D, Your first article was a pack of lies. It had its effect. You made a ton of $ on your short. Unfortunately, this article is the same. Your Ponzi connection is dubious if not outright false. Is it your hope to bring this company to a financial disruption and make a killing again? The SEC is inept, and you know it. CTIX has drugs that can save lives. You are void of humanity. I hope there is a hell. SA, you are complicit.
17 Jan 2017, 01:24 PM Report Abuse Reply 13 Like
gcharvey
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Still more BS... A buying opportunity.
17 Jan 2017, 01:32 PM Report Abuse Reply 4 Like
careful investor 1
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I'm surprised SA let you post another article.
17 Jan 2017, 01:39 PM Report Abuse Reply 2 Like
Kerdom
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Buying more!
17 Jan 2017, 01:40 PM Report Abuse Reply 1 Like
Ray Still
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If you believe in what ctix is doing then go long and forget about gossip it looks good to me
17 Jan 2017, 01:41 PM Report Abuse Reply 3 Like
Stevie2times
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CTIX was nvr involved w' Platinum Partners!!!! This is not even good enough to be called a 'Hit Piece'. SA is now liable
17 Jan 2017, 01:50 PM Report Abuse Reply 2 Like
spoodio
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Mako is stating that everything he wrote in his initial piece was true, the courts unequivocally proved otherwise...BTW, great news today on the Brilacidin OP trials progress.
17 Jan 2017, 02:05 PM Report Abuse Reply 4 Like
villashaka
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This is a classic ad hominem attack- you are equating an investor group and its actions with the corporation CTIX- I actually think you might have gone too far legally. As per your assumptions of stock going to zero because of no income- any company that is in development stage fits that prognosis ,but if you read last cc there are serious partnership discussions which could alleviate this in one news brief. A litany of < ifs>. If auntie had balls she would be my uncle.
17 Jan 2017, 02:11 PM Report Abuse Reply 5 Like
Rob Dunn
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Today's news has 3 positives....1. We all knew another hit-piece could come, well it did and had some effect on the PPS, but not as bad at the first Mako. That's the last hurrah for them...2. Volume is huge and will help with both dilution and awareness...3. This brings positive attention to CTIX in new investors. Once they see the positives in-the-company and the dismissal from the last Mako attack the word spreads.
17 Jan 2017, 02:48 PM Report Abuse Reply 1 Like
thementany
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This is great:
"Mako is a pawn in an organized criminal enterprise that profits tremendously from this type of fake news that Seeking Alpha relishes publishing because it drives web traffic. There’s a reason that the courts have ruled that Seeking Alpha is not a credible news source,” commented Leo Ehrlich, Chief Executive Officer at Cellceutix. “We will continue to gather information on Mako and his co-conspirators.”
17 Jan 2017, 02:54 PM Report Abuse Reply 2 Like
System Trader
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CTIX is not going to be satisfied with a civil action. This is gonna be entertaining. For us. For Mako maybe not so much.
17 Jan 2017, 04:03 PM Report Abuse Reply 2 Like
fstampaholic
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Not going to work this time. Mako is a liar and thief. We're not going to panic sell. You need to move on. It's just a matter of time before this stock goes up.
17 Jan 2017, 03:06 PM Report Abuse Reply 3 Like
travis werling
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Wow, I cannot believe the company put that out as a press release. How could anyone take the company seriously after that?
17 Jan 2017, 03:15 PM Report Abuse Reply 0 Like
Rob Dunn
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What's wrong with the CEO defending the company versus fraud? We all know the info was 100 percent false judging by Mako's past-practices. Your the 1 percent minority here... Mako was proven a fraud in court..
17 Jan 2017, 03:23 PM Report Abuse Reply 2 Like
thementany
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Do people actually sell on "news" like this, or is it all just smoke and mirrors? I can't imagine, after seeing what happened to Rosen et al, via the last Mako article, that anyone would take a single thing he says seriously. Honestly, the thing I feel most after this hit piece, is relief.
THESE are the lengths that people have to go through to discredit the company. It's not an attack on the science. Never is. That won't stand up against scrutiny, as we've seen.
No. Instead, its these fantastical trips down non-existent rabbit holes, flinging as much mud as possible the whole way down.
It absolutely reeks of desperation.
I love it. I'm more confident now than I've EVER been. Thank you, Mako.
17 Jan 2017, 03:19 PM Report Abuse Reply 2 Like
Rob Dunn
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I agree, what Mako took away from CTIX 18 months ago will work in reverse this time...
17 Jan 2017, 03:30 PM Report Abuse Reply 1 Like
huskers123
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Let's sue Mako.
17 Jan 2017, 03:28 PM Report Abuse Reply 1 Like
WallStPirate
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They do not day the drugs do not work, just that they may need money, well what little bio doesn't??
17 Jan 2017, 03:29 PM Report Abuse Reply 0 Like
WallStPirate
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So with all this crap everyone seems to have missed the real news. Todays PR,
"Cellceutix Completes Enrollment in Second of Three Planned Cohorts in Phase 2 Clinical Trial of Brilacidin for Inflammatory Bowel Disease" GlobeNewswire•January 17, 2017Great news.https://yhoo.it/2iEo48W
17 Jan 2017, 03:49 PM Report Abuse Reply 2 Like
WallStPirate
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Someone is trying hard to get this down.. Push it push it, come on Mako push it,.http://bit.ly/2iyysns
17 Jan 2017, 03:51 PM Report Abuse Reply 1 Like
OverSouled
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I have to say I am impressed by the creativity that goes into creating a disaster novel out of only positive news. Can't imagine how long it took him to come up with this. Possible Reverse Pulitzer Prize candidate. But watch for headlines like, "Shark bites own tail", "Stock up, shark dives", "Toothless terror" and "Mako Makeover: Shark fin soup back on menu".
17 Jan 2017, 04:16 PM Report Abuse Reply 1 Like
DWD Investing, Contributor
Comments (13886) |+ Follow |Send Message
Jim, you also wrote the same thing about a stem cell (OCAT) company back in 2015, with a title of "zero" net worth. About a month later, the company sold itself for over 350M.EVIDENCE:Sep. 23, 2015 (MAKO 'RESEARCH')
"Ocata: Dilution Imminent, SEC Investigation Potentially Underway, Office Appears Empty, Price Target $0.00"
http://seekingalpha.co...Nov. 10, 2015
Astellas Pharma buys Ocata Therapeutics for $8.50 per share in cash: "Astellas Pharma (OTCPK:ALPMF)(OTCPK:AL... acquires Ocata Therapeutics (NASDAQ:OCAT) for $8.50 per share in cash or ~$379M." http://seekingalpha.co...
17 Jan 2017, 05:09 PM Report Abuse Reply 6 Like
DWD Investing, Contributor
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Just so people know, I took myself off the follow list for this article and so will not be responding or following it.
17 Jan 2017, 05:48 PM Report Abuse Reply 0 Like
STJ
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The Truth Emerges: Court Documents Discredit Article Disparaging Cellceutixhttp://seekingalpha.co...
17 Jan 2017, 06:14 PM Rep
Cellceutix: Financing Partners Arrested For Alleged Ponzi Scheme, Company Faces Risk Of Death Spiral Liquidity Crunch
Jan. 17, 2017 11:44 AM ET
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81 comments
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About: Cellceutix Corp. (CTIX), Includes: BIVI
Mako Research
Mako Research
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Summary
Key CTIX financing partners from Platinum Partners arrested for participation in alleged $1B+ “Ponzi scheme”.
Other Platinum Partners stocks have traded to approximately zero and face their own fraud allegations, or an apparent fraud within fraud. We refer to this as “ Fraudception”.
We believe CTIX’s own past apparent securities law violations leave the company vulnerable to additional inquiries related to Platinum Partners.
CTIX is out of cash approximately now and will face insolvency without an incredibly dilutive equity raise.
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.
It's been almost a year and a half since Mako Research fully and completely debunked every aspect of the Cellceutix (OTCQB:CTIX) story. CTIX shares at the time were trading near $2.50 and have fallen dramatically since then, currently languishing near a dollar on very low and decreasing volume. Since that time, nothing in our original report has been refuted. Astoundingly, however, CTIX continues to trade at an unsustainable market capitalization of $145 million for, as far as we can tell, essentially nothing. This report provides an update on the short case for CTIX, a financial analysis of the liquidity crunch CTIX faces now, and also includes highly relevant and concerning new information about CTIX's financing partners that recently came to light. Lastly, we revisit our valuation model for CTIX and show why the stock remains a compelling short even at the current "low" share price as CTIX faces an imminent liquidity crisis which we believe may finally result in the bankruptcy of CTIX, just like Leo Ehrlich's prior company StatSure Diagnostic Systems that went to ~$0.
Cellceutix "Death Spiral" Cash Crunch Underway and Updated Valuation: Downgrading Price Target to Zero
In our original report, we had this to say about CTIX's valuation:
I value shares of Cellceutix at $0.09 in a best-case scenario, which is 96% lower than the current price, and recommend that investors avoid this company entirely. It's clear to me that Cellceutix is very likely to end up as a complete wipeout for shareholders over time, and stands to continue declining significantly if we experience more near-term market volatility.
Our assessment of the value of CTIX was heavily dependent on the company's cash balance, its only meaningful asset to speak of, in our view. This cash balance has continued to decline to the point where near-term bankruptcy is now a real risk and CTIX has little hope of financing the expensive trials it touts without massive dilution, if the company can raise the necessary equity at all.
As a result, CTIX's only financing options available now is the Aspire Capital equity line, which puts the company into what is commonly known as a "death spiral" - in a worst-case outcome, this could result in CTIX insolvency and wipeout for equity holders. Even more importantly, by our estimates, given increasing delays in CTIX trial process and continued cash burn, the Aspire equity deal itself is also insufficient to keep CTIX from functional insolvency.
We will explain why the cash on hand appears insufficient, the multiple ways in which the Aspire Capital equity line can become instantly frozen, which would render CTIX insolvent virtually overnight, and how CTIX's reliance on this equity line of financing has put it in a "death spiral" position that could wipe out shareholders.
Based on CTIX's own SEC filings, we learned that the Aspire Capital equity line has limitations and could be frozen instantly if certain circumstances occur.
To start with, if CTIX is halted by the SEC or Principal Market, then the Aspire Capital agreement is frozen, which would mean certain bankruptcy:
" rading in the Common Stock shall not have been within the last 365 days suspended by the SEC or the Principal Market"
Given the public concerns about apparent SEC filing inaccuracies filed by CTIX, as well as its strong connection to Platinum Partners, we believe this is not a low probability event.
Furthermore, if CTIX stock trades below $0.25, there is a floor price and Aspire Capital is then also no longer obligated to be involved with CTIX or provide any funding.
"The Company and the Buyer shall not effect any sales under this Agreement on any Purchase Date where the Closing Sale Price is less than the Floor Price. "Floor Price" means $0.25 per share"
In this situation, CTIX will also likely suddenly go bankrupt. While $0.25 per share may seem low, it is important to note that I estimate the median market cap of Aspire's current public holdings at $17.7m as most Aspire capital companies are disasters. Further, as we will see below, the Aspire deal is likely to put significant pressure on CTIX shares. Should CTIX receive a $17.7m market cap, consistent with Aspire's other companies, with the current 125m shares outstanding, this would result in a valuation of $0.1416 per share, well below the $0.25 Floor Price at which this financing agreement is frozen.
Lastly, we estimate the Aspire agreement is woefully insufficient to fund CTIX even if executed.
First, we can see that as of the September, 2016/9/30 balance sheet CTIX reported, we estimate the company only has ~$3.5m of cash net of the related party note and suffers from negative working capital ($6.17m of total current assets, including the cash minus $8.77m total current liabilities).
Source: Google Finance
This balance sheet is a sick puppy and the cash left is perilously low, which leaves no margin for error at CTIX, particularly in light of the company's ongoing operating cash burn, which is currently running over $2.6m per quarter and which is expected to accelerate if CTIX actually tries to ever complete its forecasted trials.
Source: Google Finance
CTIX itself has acknowledged its cash is low, and in September 2016, it forecasted it will need at least $19m over the next 12 months. We think this is clearly incorrect and too low as we explain below.
To be conservative, we will start with the old net cash number of $3.5m. Then, if we go back to past years of CTIX before the currently expanded purisol and other later stage and more expensive trials, we can see CTIX was burning an average of $2.37m per quarter excluding any capex or cash spent on infrastructure. We will conservatively round this down in CTIX's favor to $2m per quarter since it was probably spending a little each quarter previously on random small animal studies and other similar work. This means over the next 12 months, CTIX is estimated to burn $8m just for operations.
To show why CTIX will likely run out of cash and become insolvent, we start with the ~$3.5m of net cash CTIX had left as of the last financial statement three months ago 2016/9/30 and my estimate that CTIX will continue to lose at least $2.0m per quarter for another year (or ~$8m of annual cash burn) just in operations to keep the lights on independent of its expensive trials announced. Then if we add the $15m more cash it estimates it will burn for near-term trials, that puts CTIX at estimated total cash burn of $23m (15 +
over the next 12 months. Its past net cash balance of $3.5m plus the $19m Aspire deal only amounts to $22.5m. This means that within the next 12 months, assuming cash burn does not ramp up (which we expect it will if CTIX hopes to actually do anything new) CTIX will become functionally insolvent as its net cash position weakens and the liabilities then have the senior claim on any equity value as cash burn continues. This scenario is likely to occur even if it uses 100% of the Aspire deal, which is a questionable and generous assumption itself. Note that CTIX has no revenue to speak of so there is no other cash coming into the company unless CTIX can raise equity. The way I see it, anyway you cut it, significant dilution and cash burn is coming to CTIX in the immediate future.
Furthermore, with the stock so low the, only remaining financing option is a "death spiral" type financing with Aspire capital which could be frozen at any time if some very possible outcomes occur, and even if it exhausts 100% of the Aspire capital line that is still not sufficient.
If CTIX stock continues its steady march lower on declining volumes, though, this type of financing can spiral out of control into theoretically infinite dilution or suddenly become impossible to use, potentially putting CTIX in a position of sudden bankruptcy, as previous companies with this type of financing have experienced. Let me explain:
The Aspire deal that CTIX agreed to is termed in "dollars raised" while that money will need to be raised by "number of shares" sold. The problem here occurs that the lower CTIX stock goes the more shares need to be sold to raise the same amount of money - this is simple math: if the share price declines, then to reach the same number of dollars raised, CTIX will need to issue a larger number of shares. Given that CTIX stock has already collapsed 75% off the latest high and now trades near $1, this is not a trivial concern. If CTIX stock were to continue declining as it has been, at a certain point the number of shares required to be sold to meet the dollar target CTIX seeks to raise would begin to expand exponentially. At that certain price point, share sales no longer become feasible for raising a substantial amount of equity and the company becomes backed into a corner of insolvency and bankruptcy. This is where the term "death spiral" comes from and it has happened to many other companies in the past.
This is the reason in my view that every one of Aspire Capital's current holdings I could find have been shareholder disasters and typically trade at tiny <$30m market caps, creating substantial shareholder losses.
Should CTIX not raise a tremendous amount of equity immediately, the company could face insolvency, similar to prior Platinum Partners efforts.
To value CTIX, we take this estimated net cash of ~$3.5m and divide by the company's fully diluted share count of 125.11m shares to reach a fair value estimate of $0.028 per share. Since this doesn't leave much for the bulls to play for, we simply round down to what we believe will be the inevitable trading price of CTIX and set a price target of $0.00.
The Platinum Partners Chronicles: Alleged Ponzi Scheme Financiers Arrested
In our original report, we detailed how CTIX was born through a financing agreement with the Nordlicht family. We outlined Cellceutix's deep and longstanding relationship with Nordlicht and his business partner Murray Huberfeld, both of whom have a dubious reputation for supporting extremely low-quality penny stocks that wipe out shareholders. Nearly a year after our original report, the hedge fund these two operated, Platinum Partners, went into receivership after it was alleged the firm is actually nothing more than a $1B+ Ponzi scheme, according to allegations from the United States government. Nordlicht and Huberfeld were both recently arrested and charged with fraud, facing hefty prison sentences if convicted. Pundits have begun to refer to Platinum as the greatest financial scandal since Bernie Madoff.
CTIX Financing Partners Mark Nordlicht (Left) and Murray Huberfeld (Right)
Source: Google Images
The implosion of Platinum Partners was well covered in the news but strangely was not mentioned at all by CTIX from what we can tell. I recommend you read the following links to form your own opinion of these key CTIX founding partners:
Platinum Partners execs charged in $1B mini-Madoff fraud - USA Today
U.S. charges Platinum Partners execs with $1 billion fraud - Reuters
Several New York hedge funders have been arrested and charged with $1 billion fraud - Business Insider
US charges hedge fund founder, others with $1 billion fraud - CNBC
These articles and others provide a shocking glimpse into the alleged house of cards that was Platinum Partners before its sudden demise. We won't rehash all the details here but suffice to say they would make an excellent script for the next James Bond movie, and that if that movie is made, we hope to see a Sean Connery cameo appearance. In Bond-esque fashion, recently revealed details include Platinum founders' plans to flee the country, as well as hilarious quotes from internal fund documents that hint at the founders' state of mind as Platinum faced a rapidly worsening liquidity situation and the alleged Ponzi scheme began to quickly unwind. One internal document detailed written correspondence between Platinum executives where they claimed, "It's Hail Mary time". Sadly, the pass was incomplete.
The market has missed the deep ties between the Platinum Founders and Cellceutix
Those wanting a refresher on this content can refer to our original report here which explains how crucial Platinum Partners, Huberfeld and Nordlicht are to CTIX.
We highlight a few specific bullet points:
CTIX was born through a financing arrangement with the Nordlicht family and pursued a number of deals with Huberfeld. Without these deals with Nordlicht, Huberfeld and Platinum I think it is clear CTIX would not exist in its current form or at all. This makes these people key partners of CTIX which CTIX has relied on heavily in the past. Nordlicht and Huberfeld now face what appears to be overwhelming allegations that Platinum Partners was a Ponzi scheme, and that Platinum allegedly was involved with dubious companies engaged in their own fraud. Amazingly, this was not the first alleged Ponzi scheme involvement for Nordlicht. Remember that Huberfeld and Nordlicht (and both their wives) were named in the scathing lawsuit surrounding the $1.2B Scott Rothstein Ponzi Scheme, for which Scott Rothstein is serving A 50-year prison sentence. Murray Huberfield was arrested several months ago. In our original report, we detailed Huberfeld's so called "knack for finding shady deals" and discussed the investments he made in CTIX. Huberfeld was originally part of an alleged "conspiracy to commit securities fraud by filing false documents." We believe CTIX has filed SEC documents that, from what we can tell, contain blatantly false information, which would be illegal. Specifically, we remind readers that CTIX executives signed SEC documents containing false biographical information for insider Krishna Menon which claimed that Menon received his PhD from Harvard. At least one of Platinum's portfolio companies (so far) was itself accused of fraud and went bankrupt.
Platinum Partners: Fraudception?
Many readers will no doubt be familiar with the award-winning movie Inception directed by Christopher Nolan and staring Leonardo DiCaprio. The plot of the movie is about a team of "extractors" who preform corporate espionage through a shared dream world. As the movie progresses, the protagonists travel through the subconscious of their targets by entering a dream within a dream. This process is called Inception.
While all of the bullet points above are unquestionably relevant and concerning for investors holding or considering purchasing CTIX shares, it is this last point that we find particularly concerning - that some of Platinum's portfolio companies were allegedly committing fraud themselves, independent of Platinum being an alleged "Ponzi scheme". If this proves true, it would not surprise us: low-quality stocks tend to attract low quality financing partners.
Specifically, Platinum portfolio company, Black Elk Energy, was itself the subject of fraud allegations before declaring bankruptcy, and at least one Black Elk executive allegedly helped Platinum illegally take assets owed to bondholders:
"The founder of New York hedge fund Platinum Partners and seven executives and affiliates were charged on Monday with engaging in a $1 billion securities fraud scheme wherein they allegedly inflated the value of investments and duped bondholders of defunct offshore driller Black Elk. According to Brooklyn's federal prosecutor, Platinum founder Mark Nordlicht and his colleagues had lied to investors since 2012 about the health of Platinum's portfolio company Black Elk Energy Offshore Operations LLC. Prosecutors said that as the investment faltered, Platinum relied on insider loans and new sales to repay increasingly worried investors. And in 2014, ex-Black Elk CEO Jeffrey Shulse allegedly helped Platinum usurp assets owed to bondholders."
If the evidence proves that Black Elk itself was a fraudulent endeavor as distinct from the Ponzi scheme fraud alleged to have occurred at Platinum (and the Black Elk case seems pretty clear at least to us), it would open up a pandora's box among Platinum's portfolio companies and companies that previously engaged in financing deals with the Platinum founders.
We see many similarities between Black Elk, and other Platinum companies like CTIX including confusing related party transactions and financial vulnerability. To see how these typically end up and now for everyone's favorite part (we strive to give the people what they want), wipeout charts of companies that received the "benefit" of Platinum's dubious financing efforts:
Source: Capital IQ
At this point, we can only speculate at how this will play out but it's hard to imagine that this ends well for Cellceutix. We know that CTIX has engaged in a host of opaque and self-enriching related party transactions. And we know the company was born out of a financing deal with the founders of Platinum. But just how deep does the CTIX rabbit hole go? We support and welcome a full SEC investigation into these and other matters at Cellceutix, which we believe is more timely now than ever before as the full impact of the Platinum scandal is just beginning to play out.
How to Play
We understand that some investors are reluctant to short sell penny stocks because these stocks can be volatile and potentially subject to large price swings. This is not an unreasonable point of view. However, given the overwhelming amount of value destruction that has occurred in prior Platinum Partners efforts, as well as at prior Ehrlich and Menon stocks, we submit two ways to capitalize on a likely CTIX convergence to fair value.
Method 1: Short CTIX in small enough size that you are insulated from the volatility and then simply wait
This is our preferred method. CTIX has an astoundingly high market capitalization for what it is, which provides a margin of safety to long-term short sellers who are not concerned about daily price volatility. Those inclined to pursue a short sale in CTIX stock may wish to do so in very small size, perhaps 20 to 50 basis points of fund capital. In the event that CTIX stock appreciates significantly - say, to $2 a share, which would be nearly a $300 million market cap (!) - it would be easy to simply double the bet and size this up to a core short position. In fact, that might even be a preferable outcome over the long-term because the short would have a tremendous margin of safety at a $300 million valuation.
One thing many investors fail to understand about Mako Research is that we take relatively small short positions - this allows us the luxury of waiting indefinitely for a convergence to fair value. We never, ever have to cover. Small positions also allow us to aggressively add to any positions that temporarily go up. All of which is to say this: We're going to be here. If one of our shorts goes up, that's great - now it's an even better risk/reward and we should add to our position. This approach has proven very effective over time and we recommend other short sellers consider the merits of small position sizing, particularly those similar to us who have very long duration capital commitments from their investors and the patient dispositions to capitalize on irrationally priced stocks such as Cellceutix.
Method 2: Wait for the next Ehrlich and Menon "special" to incubate
Many market participants may be unaware that yet another Ehrlich and Menon stock trades on the pink sheets: Nanoantibiotics (OTCPK:BIVI). According to Reuters, the company is run by Elliot Ehrlich and Rajah Menon, who we believe are likely related to Leo Ehrlich and Krishna Menon of Cellceutix. Although clearly shorting a $0.30 stock is problematic, we recommend investors keep a close eye on BIVI and revisit it in the event the shares ever trade to a higher price level. Mako Research certainly plans to do so.
Disclosure: I am/we are short CTIX.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
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Comments (81)
Mako Research, Contributor
Comments (344) |+ Follow |Send Message
Author’s reply »
Unknown to many of our loyal readers, Nordlicht launched a lawsuit against SeekingAlpha in connection with Mako's original article on Cellceutix. It is important to note that this case was rapidly dismissed from the courts, representing yet another example of unequivocal victory for short sellers providing their research and thoughts to the market for the public good. As a refresher for those without a strong background in securities law, The First Amendment of The United States Constitution, combined with the very rigorous fact-based content regularly presented by Mako Research, presents an unassailable legal defense against such frivolous lawsuits.We congratulate SeekingAlpha on their resounding victory in this case. Furthermore, we wish to highlight that it is becoming increasingly well understood in the courts through an ever expanding and extremely robust case law history that when it comes to freedom of speech, short sellers are entitled to the same rights as other Americans, which is to say that The United States Constitution is not to be trifled with.
17 Jan 2017, 11:57 AM Report Abuse Reply 4 Like
bufnyfan1
Comments (269) |+ Follow |Send Message
"Unknown to many of our loyal readers.."
tell me--who are your "loyal readers"
are they as dishonest as you are? why are you risking jail time for this "drivel"???
17 Jan 2017, 12:27 PM Report Abuse Reply 9 Like
Mako Research, Contributor
Comments (344) |+ Follow |Send Message
Author’s reply »
We predicted this kind of comment was inevitable from the CTIX shareholder base ("As a refresher for those without a strong background in securities law..."
Start there and sound out all of the words this time. 17 Jan 2017, 12:45 PM Report Abuse Reply 0 Like
KBEMN
Comments (105) |+ Follow |Send Message
"combined with the very rigorous fact-based content regularly presented by Mako Research"You mean all the facts that some goofball attorney relied on to sue CTIX, for which he was laughed out of court for relying on such false nonsense, hidden under the guise of "opinion"?Those "facts"? Please.Every developmental stage biotech needs to raise money. No news there.Guilt by association is such a common "hit piece" tactic that I'm amazed anyone falls for it anymore.This opinion piece and repeated attempts to smear small, vulnerable companies developing drugs to help people with devastating disease is rather disgusting.
17 Jan 2017, 01:32 PM Report Abuse Reply 8 Like
KarinCA, Contributor
Comments (662) |Following |Send Message
The Rosen Law Firm filed suit against Cellceutix on behalf of shareholders Nicole O'Connell and Gary Zagami based on the hit piece you wrote about CTIX back in August 2015 and the suit was dismissed.Lawsuit filed 9.11.15:
http://bit.ly/2iy8RekDismissal of lawsuit filed 6.8.16:
http://bit.ly/2iDTWuvThe court has yet to rule on sanctions against Rosen for filing this case.
17 Jan 2017, 01:33 PM Report Abuse Reply 8 Like
bufnyfan1
Comments (269) |+ Follow |Send Message
CTIX has just responded today (Jan 18):“Mako is a pawn in an organized criminal enterprise that profits tremendously from this type of fake news that Seeking Alpha relishes publishing because it drives web traffic"I would really really suggest you get out of town PAL because it looks like the SEC is going to get involved this time
17 Jan 2017, 03:39 PM Report Abuse Reply 2 Like
bufnyfan1
Comments (269) |+ Follow |Send Message
This "Mako Research" clown is likely a flunkie of Adam Feurerstein--he takes great pleasure smearing companies making life saving drugs--MNKD, AVXL, NWBO to name a few. These neandrathals are the lowest form of life on the food chain
17 Jan 2017, 04:46 PM Report Abuse Reply 1 Like
bufnyfan1
Comments (269) |+ Follow |Send Message
"We predicted this kind of comment was inevitable from the CTIX shareholder base"Now you can make predictions too....WOW!! You're a man of many talents!!! It's going to come in handy when you're standing before the SEC
17 Jan 2017, 05:34 PM Report Abuse Reply 1 Like
Bill Swiggart
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Scary headline, but Mako's rambling story just rehashes old information that seems only tangential to CTIX. Possibly it is timed to counteract the positive news of the company's having completed enrollment for its Brilacidin phase 2 trial.
17 Jan 2017, 12:02 PM Report Abuse Reply 15 Like
Mako Research, Contributor
Comments (344) |+ Follow |Send Message
Author’s reply »
Nothing tangential about CTIX being out of cash and insolvent if they don't imminently dilute shareholders again.
17 Jan 2017, 12:18 PM Report Abuse Reply 0 Like
bufnyfan1
Comments (269) |+ Follow |Send Message
why are you doing this again---this time CTIX will demand full prosecution this time for your attack (jail time etc)
17 Jan 2017, 12:25 PM Report Abuse Reply 6 Like
Bill Swiggart
Comments (193) |+ Follow |Send Message
Agreed there is fear of CTIX's running out of cash, a common problem with small biotechs. Your story might have been stronger if you had focused on that one element of the risk associated with the company. The others are old news.
17 Jan 2017, 12:34 PM Report Abuse Reply 4 Like
bufnyfan1
Comments (269) |+ Follow |Send Message
From the CTIX press release today (Jan 17):"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.”
There’s a reason that the courts have ruled that Seeking Alpha is not a credible news source,” commented Leo Ehrlich, Chief Executive Officer at Cellceutix. “We will continue to gather information on Mako and his co-conspirators.”So tell us PAL--what does "gather information on Mako and his co-conspirators" mean??? Perhaps legal action? Perhaps SEC investigation? Perhaps "Jail time"
17 Jan 2017, 03:51 PM Report Abuse Reply 0 Like
grooveshark
Comments (19) |+ Follow |Send Message
Wow. Your last article said that their offices were empty. Everyone who has actually gone to the office has found out that isn't true. Then you got the Rosen law firm to actually go to court with your drivel. That got summarily dismissed. Now you're back?Remember when you said Ocata was worthless? It got purchased for almost $400 million. Very interesting that short attacks commence as soon as your articles are published. You do realize that the SEC filing you cite regarding CTIX was amended in 2011. It's public record. But if it's all you got, why not stick with it. It is very cute that you would use the 1st Amendment to shield yourself while attempting to tar CTIX with guilt by association in absence of any actual evidence.
17 Jan 2017, 12:11 PM Report Abuse Reply 18 Like
bufnyfan1
Comments (269) |+ Follow |Send Message
why is this "Mako Research" allowed to do this again--the fact they won't explain the numerous lies in their last "article' tells you they are lying again--why can't the SEC formally look into this??
17 Jan 2017, 12:32 PM Report Abuse Reply 4 Like
grooveshark
Comments (19) |+ Follow |Send Message
Because it is cloaked in the diaper of "opinion." Not fact.
17 Jan 2017, 02:42 PM Report Abuse Reply 3 Like
User 353686
Comments (2) |+ Follow |Send Message
Well James Devries (aka Mako Research), another fraudulent hit piece while you've taken a short position. What happened to your previous claims of a "shell company" and a picture of an "empty" office and phony telephone number. Your previous article was COMPLETELY debunked.
17 Jan 2017, 12:17 PM Report Abuse Reply 10 Like
Mako Research, Contributor
Comments (344) |+ Follow |Send Message
Author’s reply »
Call me Jim. And stick around, you might learn something.
17 Jan 2017, 12:32 PM Report Abuse Reply 0 Like
grooveshark
Comments (19) |+ Follow |Send Message
Are we going to learn the difference between zero and $379 million? I'm all ears!
17 Jan 2017, 02:43 PM Report Abuse Reply 1 Like
bufnyfan1
Comments (269) |+ Follow |Send Message
And tell me what might I "learn" from your drivel?? How to lie and make money doing so? You obviously didn't learn from your last attack on the company---based on CTIX's response today--I think this time you are in big big trouble
17 Jan 2017, 03:42 PM Report Abuse Reply 0 Like
isteveo
Comments (1) |+ Follow |Send Message
If Mako Research stands by their research, why don't they disclose who's actually writing this article?
17 Jan 2017, 12:23 PM Report Abuse Reply 7 Like
Dinesh Sarda
Comments (104) |+ Follow |Send Message
stock is down 15%..So I guess Article is good..
17 Jan 2017, 12:25 PM Report Abuse Reply 0 Like
avidlyreading
Comments (64) |+ Follow |Send Message
The Rosen class action lawsuit which was based entirely on your prior hit piece on CTIX was dismissed WITH prejudice. The judge is now considering sanctions against Rosen. The SEC has been contacted to investigate Rosen and you. Every single point you made in that first hit piece was entirely false and thoroughly refuted on the record, in court, so your very first paragraph here starts with a lie, "Since that time, nothing in our original report has been refuted." The rest is all lies, as well. Platinum is not financing CTIX. The company and the Ashcroft law firm (yes, that Ashcroft) which represents them against Rosen has been contacted about this latest stunt of yours. Good luck with that.
17 Jan 2017, 12:26 PM Report Abuse Reply 9 Like
Mako Research, Contributor
Comments (344) |+ Follow |Send Message
Author’s reply »
The SEC has been contacted to investigate CTIX. I have no affiliation with Rosen.
17 Jan 2017, 12:33 PM Report Abuse Reply 0 Like
grooveshark
Comments (19) |+ Follow |Send Message
Did they tell you to quit wasting their time about a filing that was amended in 2011?
17 Jan 2017, 12:53 PM Report Abuse Reply 2 Like
avidlyreading
Comments (64) |+ Follow |Send Message
The Rosen lawsuit was verbatim based on your first hit piece and was entirely refuted in court. Rosen's filings even named "Mako Research" as their source, although in their last filing, they slipped and called you "Pumpstopper." Interesting, isn't it, that you claim to have no affiliation with Rosen, yet Pumpstopper is another hit piece writer with a very similar style to yours, which fell silent just prior to Mako Research starting. Because of the dismissal of the lawsuit with prejudice, how can you then say, "Since that time, nothing in our original report has been refuted"? EVERYTHING in it was refuted, the judge is now considering sanctions against the law firm that based its entire case on the falsehoods in that article. Even IF you have no affiliation with Rosen, answer the question.
17 Jan 2017, 01:10 PM Report Abuse Reply 7 Like
baron4664
Comments (9) |+ Follow |Send Message
You are not too smart.
I hope that all concerned shareholders take the time to read this message and read through the below links and file a complaint with this article attached. A complaint was filed with the NYAG office seeking an investigation into the Short and Distort fraudulent activity wrt to Cellceutix and Mako Research. A file for the investigation has been created. With the dismissal of the Rosen suit it is now more appropriate for investors to send complaints to the NYAG Investor Protection Bureau (IPB). A file has been created titled "Short and Distort"
Ref. No. 16/000012
Matter ID: 1267995. From the IPB website.
"The Investor Protection Bureau is charged with enforcing the New York State securities law, commonly known as the Martin Act. The Martin Act gives the Attorney General broad law-enforcement powers to conduct investigations of suspected fraud in the offer, sale, or purchase of securities. Where appropriate, the Attorney General may commence civil and criminal prosecutions under the Martin Act to protect investors." "The Attorney General's Bureau of Investment Protection does not generally handle complaints on behalf of individual investors, nor does it enforce the rules and regulations
governing the trading of securities unless such violations rise to the level of fraud. Your complaint may however be one in a series of similar complaints that indicates the need to investigate. The office maintains a database of complaints and investigates patterns of fraud
impacting many investors. It has the authority to commence civil or criminal actions on behalf of
the public." So it is essential that complaints be submitted to the bureau. Complaints should reference the Ref. No. And Matter ID listed above. Complaints can be mailed to: Investor Protection Bureau
120 Broadway, 23rd Floor
New York, NY 10271
Phone (212)416-8222
Fax. (212)417-8816 Complaints can also be made online at
http://on.ny.gov/2iDOx6NAfter complaining to the IPB it would be good to send a complaint directly to the Attorney General Addressed to Eric T. Schneiderman for good effect. The website of the IPB is: http://on.ny.gov/2iy0I9T For an excellent write-up of the Martin Act and why the NYAG is the most powerful regulator of wall street read the following paper. http://bit.ly/2iDANJ8
17 Jan 2017, 01:14 PM Report Abuse Reply 8 Like
Mako Research, Contributor
Comments (344) |+ Follow |Send Message
Author’s reply »
Nothing in our original report has been refuted. True story.
17 Jan 2017, 01:16 PM Report Abuse Reply 0 Like
WallStPirate
Comments (1465) |+ Follow |Send Message
Even the vacant offices?
17 Jan 2017, 01:27 PM Report Abuse Reply 4 Like
avidlyreading
Comments (64) |+ Follow |Send Message
Wrong. It was all refuted. Read the court filings. The judge agreed. That's why the case was dismissed with prejudice and she's currently considering sanctions against Rosen. BTW - you say you are not affiliated with Rosen. What about Mr. Kim, the lawyer at the Rosen law firm who actually filed the suit based entirely on your article? He was one of your very, very few followers when your original hit piece came out. He wrote up and filed the original notice, and got a plaintiff to sign on (who then thought better of it and withdrew) to the class action (which only ever had one plaintiff, a plaintiff the Rosen firm has used before in a different class action) all within 2 hours of your original hit piece hitting SA. As others have commented, it would have taken longer to type the whole thing up.CTIX investors and potential patients of their life saving pipeline of 3 drugs, all at least either entering, in Phase 2 trials or completed them, will be following your downfall closely - with popcorn.
17 Jan 2017, 01:54 PM Report Abuse Reply 8 Like
bufnyfan1
Comments (269) |+ Follow |Send Message
"The SEC has been contacted to investigate CTIX"
No I think you got that wrong---the SEC is going to be investigating you PAL--how could they not---you produced a "pack of lies" with your first attack article and instead of "disappearing in the night" you crawl out of your hole again and do the same disgusting thing again--unfortunately this time its going to catch up to you
17 Jan 2017, 04:49 PM Report Abuse Reply 0 Like
bufnyfan1
Comments (269) |+ Follow |Send Message
"true story"--you must be smoking some very potent stuff if you believe that---maybe you're delusional--there are plenty of drugs that can help you with that
17 Jan 2017, 04:51 PM Report Abuse Reply 0 Like
sox0407
Comments (17) |+ Follow |Send Message
"In stark contrast, Mako Research was (and still is) anonymous. Mako Research’s first
story was its August 6, 2015, posting about Defendants. Mako Research, a self-described short seller, was thus a complete unknown, without any track record of credibility. Moreover, as explained below, numerous red flags by independent sources immediately questioned the truth and motivations of the posting sufficient to make it per se unreasonable for an objective lawyer to rely upon it. Under these circumstances, as a matter of law, the posting is not a sufficiently reliable source upon which to file a securities class action lawsuit".http://bit.ly/2iDB12KCellceutix Announces Dismissal of Class Action Lawsuit Filed by Rosen Law Firmhttp://bit.ly/2ixPORj
17 Jan 2017, 12:28 PM Report Abuse Reply 10 Like
Do Diligence, Contributor
Comments (13) |Following |Send Message
indeed. the Fed Court slammed shut Rosen's Mako-inspired slanderous case against the company, with Sanctions likely coming down next. hopefully Sullivan and his Legal Eagle team will dig deeper into short-and-distort tactics.http://bit.ly/1T90oEBa more balanced read:http://seekingalpha.co...
17 Jan 2017, 12:34 PM Report Abuse Reply 8 Like
GrowthGeek
Comments (3477) |+ Follow |Send Message
This article is definitely a hit piece and shows considerable bias much like the last article by Mako on CTIX. However, CTIX does face significant financial concerns at this point so that aspect of the article has validity.
What slays me about SA editors is that they would NEVER allow an article this one sided on the bullish side of things for any microcap company.
17 Jan 2017, 12:34 PM Report Abuse Reply 7 Like
matthew.karr
Comments (201) |+ Follow |Send Message
Mako is like the Trump of SeekingAlpha. He takes advantage of the uninformed, fearful population with long-winded, circumferential drivel so he can make money on his short position. Not once did you even mention one of the trials. Absolutely pathetic. Yes, cash is fairly low, but it is fairly obvious that CTIX is planning on selling Prurisol after what will likely be a successful Ph2b in Q2. Cash proceeds will then fund ph3 brilacidin in ABSSSI, which is a costly trial but a near lock to be a success. CTIX strategic plan has been very clear since they brought Bertolino on board, and while there is risk in micro-caps, I think you are very wrong in this instance.
17 Jan 2017, 12:34 PM Report Abuse Reply 6 Like
Mako Research, Contributor
Comments (344) |+ Follow |Send Message
Author’s reply »
My research is tremendous. We have the best people. Really, the best. You should see our people.
17 Jan 2017, 12:37 PM Report Abuse Reply 5 Like
matthew.karr
Comments (201) |+ Follow |Send Message
And a trolling rebuttal with no substance whatsoever. What are your thoughts on the likelihood of Prurisol ph2 coming in Q2 in a sicker population than their original trial (which showed solid efficacy)? Don't you think an oral drug for psoriasis with comparable efficacy to Otezla might be able to be partnered with big pharma? Or are you more focused on some trivial detail about how the CEO's wife's cousin was convicted of tax evasion and how that proves the company is actually only worth $.03?
17 Jan 2017, 12:45 PM Report Abuse Reply 5 Like
GrowthGeek
Comments (3477) |+ Follow |Send Message
Well, Matthew you missed the sarcasm in his Trumpesque answer. It did make me chuckle. I could almost see the red hamster on top of the shark head.
17 Jan 2017, 12:47 PM Report Abuse Reply 1 Like
Do Diligence, Contributor
Comments (13) |Following |Send Message
so is Mike Sullivans, likely to Trump yours:"Sullivan said he enjoyed a close relationship with the Securities and Exchange Commission as U.S. attorney, and he plans to draw the agency’s attention to issue, in hopes of identifying the author of the blog.Mako Research has also posted blog posts recently attacking a Marlborough-based biotech working on treatments for some types of blindness, called Ocata Therapeutics (Nasdaq: OCAT). CEO Paul Wotton declined to comment on the blog posts last week, which made many claims similar to those made against Cellceutix."http://bit.ly/1FN8BOB
17 Jan 2017, 01:13 PM Report Abuse Reply 1 Like
Rb01234
Comments (22) |+ Follow |Send Message
No comparison to Trump
17 Jan 2017, 01:15 PM Report Abuse Reply 1 Like
Rob Dunn
Comments (53) |+ Follow |Send Message
Really? How many shares did you guys short ahead of the hit-job? You went into dark 5 months after CTIX defended itself last-time, only to reappear as the scum you guys are....
17 Jan 2017, 01:24 PM Report Abuse Reply 1 Like
Mako Research, Contributor
Comments (344) |+ Follow |Send Message
Author’s reply »
I've been short the whole time. I will never cover, because when CTIX goes to zero, I won't have to pay the taxes, the shares will just be cancelled.
17 Jan 2017, 01:46 PM Report Abuse Reply 0 Like
grooveshark
Comments (19) |+ Follow |Send Message
Are you sure you didn't just carry forward your massive loss on Ocata? That ought to get you out of paying taxes for decades. Big league.
17 Jan 2017, 01:57 PM Report Abuse Reply 4 Like
Rob Dunn
Comments (53) |+ Follow |Send Message
Back to 1.10 and climbing!!! Last time you drove it down 60 percent, this time it may close green...
17 Jan 2017, 02:04 PM Report Abuse Reply 3 Like
bufnyfan1
Comments (269) |+ Follow |Send Message
Same research that said "CTIX had no research going on and their address was just a bunch of empty offices"
"You should see our people"---Unfortunately I don't go and visit prisons very often
17 Jan 2017, 03:45 PM Report Abuse Reply 2 Like
Jim in SoCal
Comments (51) |+ Follow |Send Message
"We have the best people. Really, the best. You should see our people." Hey, great idea! Let's see their photos.
17 Jan 2017, 04:07 PM Report Abuse Reply 3 Like
bufnyfan1
Comments (269) |+ Follow |Send Message
"I won't have to pay the taxes..."
is that because when you go to prison you don't have to pay taxes?? I think you're wrong because working making license plates/and running the prison commissary earns you some taxable income
17 Jan 2017, 04:43 PM Report Abuse Reply 0 Like
bufnyfan1
Comments (269) |+ Follow |Send Message
this is actually wonderful--you made the same ridiculous accusations about Ocata-they subsequently got bought out---that means your garbage will result in a similar fate for CTIX---I already hold a substantial position--I'm going to add to it!!!!!
17 Jan 2017, 05:15 PM Report Abuse Reply 1 Like
YUU WU
Comments (
|+ Follow |Send Message This guy (Mako or whoever he is) will land in jail one day for fraud and deceptive practices.
17 Jan 2017, 12:37 PM Report Abuse Reply 10 Like
YUU WU
Comments (
|+ Follow |Send Message Its a perfect time to add few more shares of CTIX.
17 Jan 2017, 01:23 PM Report Abuse Reply 4 Like
Rb01234
Comments (22) |+ Follow |Send Message
Another hit piece on ctix... i think Kevetrin has great potential and will stay long here
17 Jan 2017, 01:11 PM Report Abuse Reply 0 Like
OverSouled
Comments (293) |+ Follow |Send Message
Just look at the titles of this guy's SA articles - they all contain phrases like "Pump-and-Dump scheme", "Rush for the Exits", "House of Cards", etc. I'd call him the National Enquirer of SA, Mathew.Karr, though Trump is not a bad analogy for a manipulative short-seller who gets traction out of playing on people's fears and tells stories that are based on half-truths. Maybe Mako should run for President.Yes, solvency and dilution are always issues for small biotechs. This is no great discovery of a short-selling Shark. CTIX has had some setbacks and strategy changes, also par for the course in this business. You don't invest in such companies blindly, but you do so knowing there are risks. One of them being hit pieces by short sellers.
17 Jan 2017, 01:15 PM Report Abuse Reply 3 Like
Mako Research, Contributor
Comments (344) |+ Follow |Send Message
Author’s reply »
The stock is down more than 75% since 2015, that's not a "setback" that's long time retail shareholders having a deeply religious experience that led them to ultimately agree with the irrefutable facts presented by yours truly.
17 Jan 2017, 02:01 PM Report Abuse Reply 0 Like
bufnyfan1
Comments (269) |+ Follow |Send Message
Just keep "digging a hole" for yourself deeper and deeper PAL-its going to be huge pleasure to see you prosecuted this time
17 Jan 2017, 03:47 PM Report Abuse Reply 1 Like
OverSouled
Comments (293) |+ Follow |Send Message
"Irrefutable facts" in the sense that the "facts" in Grimm's fairy tales are irrefutable.
17 Jan 2017, 04:01 PM Report Abuse Reply 1 Like
Rob Dunn
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Mako, What, one big payday wasn't enough to publish lies!!! We'll see how many law firms follow up on this hit-job? Rosen is pending settlement to CTIX for piling on your last attempt to ruin CTIX. Do you guys reside in-the-US? Because, Ashcroft is coming after you this time!!!!
17 Jan 2017, 01:21 PM Report Abuse Reply 5 Like
Vfwidmann
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Jim D, Your first article was a pack of lies. It had its effect. You made a ton of $ on your short. Unfortunately, this article is the same. Your Ponzi connection is dubious if not outright false. Is it your hope to bring this company to a financial disruption and make a killing again? The SEC is inept, and you know it. CTIX has drugs that can save lives. You are void of humanity. I hope there is a hell. SA, you are complicit.
17 Jan 2017, 01:24 PM Report Abuse Reply 13 Like
gcharvey
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Still more BS... A buying opportunity.
17 Jan 2017, 01:32 PM Report Abuse Reply 4 Like
careful investor 1
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I'm surprised SA let you post another article.
17 Jan 2017, 01:39 PM Report Abuse Reply 2 Like
Kerdom
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Buying more!
17 Jan 2017, 01:40 PM Report Abuse Reply 1 Like
Ray Still
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|+ Follow |Send Message If you believe in what ctix is doing then go long and forget about gossip it looks good to me
17 Jan 2017, 01:41 PM Report Abuse Reply 3 Like
Stevie2times
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CTIX was nvr involved w' Platinum Partners!!!! This is not even good enough to be called a 'Hit Piece'. SA is now liable
17 Jan 2017, 01:50 PM Report Abuse Reply 2 Like
spoodio
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Mako is stating that everything he wrote in his initial piece was true, the courts unequivocally proved otherwise...BTW, great news today on the Brilacidin OP trials progress.
17 Jan 2017, 02:05 PM Report Abuse Reply 4 Like
villashaka
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This is a classic ad hominem attack- you are equating an investor group and its actions with the corporation CTIX- I actually think you might have gone too far legally. As per your assumptions of stock going to zero because of no income- any company that is in development stage fits that prognosis ,but if you read last cc there are serious partnership discussions which could alleviate this in one news brief. A litany of < ifs>. If auntie had balls she would be my uncle.
17 Jan 2017, 02:11 PM Report Abuse Reply 5 Like
Rob Dunn
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Today's news has 3 positives....1. We all knew another hit-piece could come, well it did and had some effect on the PPS, but not as bad at the first Mako. That's the last hurrah for them...2. Volume is huge and will help with both dilution and awareness...3. This brings positive attention to CTIX in new investors. Once they see the positives in-the-company and the dismissal from the last Mako attack the word spreads.
17 Jan 2017, 02:48 PM Report Abuse Reply 1 Like
thementany
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This is great:
"Mako is a pawn in an organized criminal enterprise that profits tremendously from this type of fake news that Seeking Alpha relishes publishing because it drives web traffic. There’s a reason that the courts have ruled that Seeking Alpha is not a credible news source,” commented Leo Ehrlich, Chief Executive Officer at Cellceutix. “We will continue to gather information on Mako and his co-conspirators.”
17 Jan 2017, 02:54 PM Report Abuse Reply 2 Like
System Trader
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CTIX is not going to be satisfied with a civil action. This is gonna be entertaining. For us. For Mako maybe not so much.
17 Jan 2017, 04:03 PM Report Abuse Reply 2 Like
fstampaholic
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Not going to work this time. Mako is a liar and thief. We're not going to panic sell. You need to move on. It's just a matter of time before this stock goes up.
17 Jan 2017, 03:06 PM Report Abuse Reply 3 Like
travis werling
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Wow, I cannot believe the company put that out as a press release. How could anyone take the company seriously after that?
17 Jan 2017, 03:15 PM Report Abuse Reply 0 Like
Rob Dunn
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What's wrong with the CEO defending the company versus fraud? We all know the info was 100 percent false judging by Mako's past-practices. Your the 1 percent minority here... Mako was proven a fraud in court..
17 Jan 2017, 03:23 PM Report Abuse Reply 2 Like
thementany
Comments (36) |Following |Send Message
Do people actually sell on "news" like this, or is it all just smoke and mirrors? I can't imagine, after seeing what happened to Rosen et al, via the last Mako article, that anyone would take a single thing he says seriously. Honestly, the thing I feel most after this hit piece, is relief.
THESE are the lengths that people have to go through to discredit the company. It's not an attack on the science. Never is. That won't stand up against scrutiny, as we've seen.
No. Instead, its these fantastical trips down non-existent rabbit holes, flinging as much mud as possible the whole way down.
It absolutely reeks of desperation.
I love it. I'm more confident now than I've EVER been. Thank you, Mako.
17 Jan 2017, 03:19 PM Report Abuse Reply 2 Like
Rob Dunn
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I agree, what Mako took away from CTIX 18 months ago will work in reverse this time...
17 Jan 2017, 03:30 PM Report Abuse Reply 1 Like
huskers123
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Let's sue Mako.
17 Jan 2017, 03:28 PM Report Abuse Reply 1 Like
WallStPirate
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They do not day the drugs do not work, just that they may need money, well what little bio doesn't??
17 Jan 2017, 03:29 PM Report Abuse Reply 0 Like
WallStPirate
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So with all this crap everyone seems to have missed the real news. Todays PR,
"Cellceutix Completes Enrollment in Second of Three Planned Cohorts in Phase 2 Clinical Trial of Brilacidin for Inflammatory Bowel Disease" GlobeNewswire•January 17, 2017Great news.https://yhoo.it/2iEo48W
17 Jan 2017, 03:49 PM Report Abuse Reply 2 Like
WallStPirate
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Someone is trying hard to get this down.. Push it push it, come on Mako push it,.http://bit.ly/2iyysns
17 Jan 2017, 03:51 PM Report Abuse Reply 1 Like
OverSouled
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I have to say I am impressed by the creativity that goes into creating a disaster novel out of only positive news. Can't imagine how long it took him to come up with this. Possible Reverse Pulitzer Prize candidate. But watch for headlines like, "Shark bites own tail", "Stock up, shark dives", "Toothless terror" and "Mako Makeover: Shark fin soup back on menu".
17 Jan 2017, 04:16 PM Report Abuse Reply 1 Like
DWD Investing, Contributor
Comments (13886) |+ Follow |Send Message
Jim, you also wrote the same thing about a stem cell (OCAT) company back in 2015, with a title of "zero" net worth. About a month later, the company sold itself for over 350M.EVIDENCE:Sep. 23, 2015 (MAKO 'RESEARCH')
"Ocata: Dilution Imminent, SEC Investigation Potentially Underway, Office Appears Empty, Price Target $0.00"
http://seekingalpha.co...Nov. 10, 2015
Astellas Pharma buys Ocata Therapeutics for $8.50 per share in cash: "Astellas Pharma (OTCPK:ALPMF)(OTCPK:AL... acquires Ocata Therapeutics (NASDAQ:OCAT) for $8.50 per share in cash or ~$379M." http://seekingalpha.co...
17 Jan 2017, 05:09 PM Report Abuse Reply 6 Like
DWD Investing, Contributor
Comments (13886) |+ Follow |Send Message
Just so people know, I took myself off the follow list for this article and so will not be responding or following it.
17 Jan 2017, 05:48 PM Report Abuse Reply 0 Like
STJ
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The Truth Emerges: Court Documents Discredit Article Disparaging Cellceutixhttp://seekingalpha.co...
17 Jan 2017, 06:14 PM Rep
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