One angle of determining the value and likely success of a nano-cap company is to assess its executive management’s history of success. Particularly one might look at their achievements in solid small-cap, mid-cap and blue-chip companies. The reasoning here is basic but profound as an analogy from academia shows: assuming the character and ethics of administrators and teachers were approximately equal, would you be more apt to pay tuition for your child to attend a K-8th grade school that was staffed by individuals with a high school education and perhaps some college or a school that boasted of an array of competent persons with BAs, MAs and PhDs from notable colleges and universities? Surely most would select the later.
So when one is able to find executives from successful Fortune 500 companies entering, building, and leading a nano-cap company, we could perhaps refer to these companies as baby blue chips, as over rank penny stocks. Indeed some of these baby blue chip companies can manifest in microcosm the same types of qualitative action that we see played out in the macrocosm of Fortune 500 companies. If management can be directly associated with major achievements at much larger cap companies, it seems to immediately lend great credibility and security to the nano-cap enterprise that they are now developing. We tend to think that an established, successful blue chip executive would not take a comparatively small salary in exchange for substantial stock in a company valued at pennies, unless that executive believed in what the company was doing and the likelihood of its success in the marketplace. Therefore, at least in part, we invest in the stock because of the smart person, smart money theory.
One such OTC.BB company that elegantly fits into the parameters of this discussion is Cellceutix (OTC:BB: CTIX, Stock Forum),a 91.8 million share company, trading in the 80-cent range with a novel and most promising new cancer (oncological) therapeutic platform.
On July 13th, Cellceutix issued a press release announcing amazing results. Cellceutix Announces Kevetrin(tm) Animal Model Testing Success Against Multi-Drug Resistant Lung Cancer Cell Lines
Kevetrin showed very significant tumor shrinkage against drug resistant strains of non small cell lung cancers in pre-clinical trials. This is no small feat as the definition of drug resistant means that no current drugs are working. Drug resistance in cancer cells is caused by genetic changes in rapidly dividing and mutating tumor cells allowing them to resist drugs that were initially effective. A drug this effective could generate billions of dollars in revenues as lung cancer is the single largest cause of cancer death in the United States, accounting for more than 130,000 deaths each year. The toxicology results were also just released and showed no significant toxicity in the mice and rats tests with the compound.
Yesterday the Company announced that it contracted with Girindis America to manufacture Kevetrin for the remaining animal trials needed to file for an investigational new drug exemption. Success against drug resistant cancers is an amazing development and the Company is readying itself for Phase I trials in 2010.
Cellceutix was founded in June 2007 by George Evans, the former General Counsel of Pfizer’s (NYSE: PFE , Stock Forum) pharma division, which is approximately 96% of Pfizer’s total company. He was at Pfizer for 26 years and was instrumental in much of Pfizer’s phenomenal growth during that time through acquisition and strategic decisions that made Pfizer a great company.
Mr. Evans founded his own pharma, Cellceutix, together with Dr. Krishna Menon. Dr. Menon is a winner of the “Presidents Recognition Award”, the most prestigious award given to an Eli Lilly (NYSE: LLY, Stock Forum) employee. Dr. Menon received this award for the work he did in co-developing Gemzar and Alimta, drugs that eventually became blockbuster multi-billion dollar sellers.
Mr. Evans as CEO decided he would recruit similar people as those who made Pfizer great. Cellceutix is using other very senior talent, some of whom recently retired from Pfizer.
On August 25th, Cellceutix announced its latest acquisition: a novel, blood-pressure reducing compound known as KM 732. Preliminary animal studies have shown very promising results with reductions in systolic and diastolic blood pressure with no appreciable toxicity.
Being market sensitive myself, as most Stockhouse readers are, if interested in buying I would only do so with limit orders due to the fact that there is such a wide spread between the bid and the ask of the stock price. This will change as more investors discover that Cellceutix is a Baby Blue Chip with multi-billion dollar blockbuster drug potential. For patient shareholder of Cellceutix, I would think that the recent wave of acquisitions by big pharmaceuticals bodes very well.
This article has been written by Allan C. Jackson III. The author lives in Manhattan Mr. Jackson does not own shares of Cellceutix, at this time, nor has he in the past. He is a graduate of Dartmouth College and a former investment banker with J.P. Morgan. Mr. Jackson currently works for J. Lazarow & Co., a private equity firm headquartered in New York. He owns no shares of Cellceutix as of the time when this article was penned.