$CLRB -Due Diligence Nasdaq- Under the Radar, Pivotal Catalyst 1H 2015
Hi Sheff and everyone! Long time successful biotech investor, physician, and follower of Sheff. Thought for my first post I'd share my notes on what I consider an Under the Radar play. I play these somewhere between "lotto" and "regular." All information is from cellectar.com website, nasdaq.com, finviz.com, and earnings call transcripts from seekingalpha.com. As always, please do your due diligence, particularly with early, low float biotech stocks like this one. The had a recent 20-1 reverse split and uplisted to Nasdaq.
DISCLOSURE: Long CLRB
HISTORY: Reverse takeover of Novelos in 2011, after Novelos had all its products fail. They got rid of management and currently have Simon Pedder as CEO, who was the CEO of Chelsea Therapeutics.
SHARE PRICE: 11/21/14: 2.43
Note: Clear signs of bottoming on the chart following a crash after recent large dilution.
MARKET CAP: 18.35 million fully diluted (source- finviz.com)
CASH: $11.6 million after $12.5 million offering August 2014.
CASH BURN: Net loss of $0.5 million Q3 2014, and $5.5 million for first 9 months of 2014. Anticipated quarterly burn of $2.5-$3 million through 2015.
Note: Very strong cash position, will not need dilution again any time soon.
INSTITUTIONAL OWNERSHIP: (Nasdaq.com): 50.32%
Note: Includes small bets by UBS, Morgan Stanley, and Fidelity.
INSIDER BUYING (Nasdaq.com)- Open market buys, appeared to have been done during the offering. They also all received warrants exercisable at 4.68 per share.
8/20/14: John Neis, Director: 268,711 shares at 3.75
8/20/14: Simon Pedder, CEO: 13,300 shares at 3.75
8/20/14: Stephen Hill, Director: 5,300 shares at 3.75
SCIENCE/PRODUCTS:
-Founded by University of Wisconsin Associate Professor Jamey Weichert, Ph.D, who is the Chief Scientific Officer
-PLE (Phosophilipid ether analogs) are trapped in tumor cell membranes, including cancer stem cells as well as circulating cells
-Strong preclinical and early clinical work show these PLEs are found in many different types of cancer.
-Cellectar's point is to target these PLEs by attaching different molecules to their product that attaches to PLEs: for imaging (PET agent), treatment (attaching radioactive Iodine 131) and for assisting in defining surgical margins during surgery, like breast cancer lymph node localization as well as primary tumor margin excision.
WORK SO FAR THAT I'VE LOOKED AT:
-Imaging- proof of concept presented at ASCO 2014: 22 patients with lung, colon, prostate, breast, etc cancer showed (Imaging) agent with selective uptake in all cancer subtypes, retaining activity 6-21 days after. So, lasts longer than PET and so far it looks like it's more selective. Current PET works by tagging glucose. The problem is many cancer types do show high metabolic activity, but so does infection and inflammation (false positives). Also, you have to image current PET relatively quickly after injection.
-Therapeutic: So far, not as impressive. 12 patients in phase 1 presented recently at ASCO 2014, all with advanced solid tumors. 4 had stable disease, no complete or partial responses. All had selective accumuluation in known tumors by imaging. It's really hard to take any good or bad conclusions from this, since the stated objective was just to figure out dosing. The numbers are extremely small, there were all different types of tumors, all the patients had advanced solid tumors, and there were four different doses given.
-Cellectar's work was published in Science Translational Medicine June 11, 2014 as the cover story- a well known journal (impact factor for 2013-2014 of 14.414; impact factor measures relative importance of a journal by looking at the average number of citations of a journal's articles relative to its field, higher the better). They have some other publications too, including a recent one on colorectal cancer.
UPCOMING CATALYSTS:
-1H 2015:Pivotal phase 2 Glioblastoma trial for PET imaging agent results upcoming in 1H2015. The trial is running slower according to the CEO in the last conference call, but still expect results by 1H2015. The theory behind this trial is that current PET does not define margins very well for GBM and does not show sites of metastatic disease accurately in the brain, which itself has high metabolic activity (since current PET is based on glucose and metabolic activity).
-2015: On treatment side, they've switched to multiple myeloma, I suspect because the results of the phase I they presented at ASCO wasn't as promising as they'd hoped. Multiple myeloma looks like an attractive target- very radiosensitive, and spread out over the whole body so impossible to irradiate most tumor cells by conventional radiation means. Proof of concept trial due to start soon and report in 2015, recently received approval for IND from FDA for this.
2015: 1 in 4 of breast cancer surgeries do not achieve clear margins in the initial resection. They're studying a real time fluorescent tagging to their molecule to help surgeons see the margins and involved lymph nodes in real time. Due to file IND by end of this year and start trial of 20 patients next year.
CONCLUSION:
-I like it as in between a lotto and regular play on the long side. They have a strong cash position by a recent huge dilution and won't be raising any time soon. Insiders including the CEO and Directors bought on the open market as part of the offering at 3.75. Current share price is well below that and the chart shows clear signs of bottoming.
-Upcoming catalysts for 2015 are multiple and include a pivotal imaging trial for GBM. The current market cap is not pricing in much in the way of results for strong results. Although on the treatment side, the early, small results have not been impressive, the imaging side has always worked.
-Getting the treatment side basically for free, which is going to concentrate on multiple myeloma. It's not possible to treat MM with radiation effectively, as its spread out over the body, but it is known to be very radiosensitive and all the work so far shows Cellectar's agents at the least selectively target cancer. Haven't seen any human work yet on the fluorescent agent they're going to try for breast cancer surgery, but that's another catalyst coming up in 2015.
-Tiny float (smallest of any stock I've seen so far) as a result of the 20-1 reverse split recently to uplist to Nasdaq. Any type of news, catalyst, and this will move very very fast.
-Theoretically, I've seen book runners for offering in the past also initiate coverage via their analysts to help the stock price. Aegis Capital looks like they ran the offering. It may be too early for Aegis' tastes in Cellectar's development to start coverage, but if they do, the stock price will rocket due to the tiny float.
