Was waiting for it to settle and reverse on the OTC before making a speculative buy. Got in at 18 cents. Didn't expect this to fall 65% on delisting. If they sell Discover ready (DR), this stock can avert BK and maintain a price of about $1/share on the legacy business alone, with low margins but staying cash flow positive and with half the current debt. The market is banking on BK to wipe out the debt (and common shares) and then grow by double digits with DR. If the former, we are looking at a 5 bagger. If the latter, we are first looking at another 70% fall and then a 30 bagger if shares remain listed on the OTC. Mr. Dolan is a big shareholder and so I expect him to try to avoid BK but US laws are favorable for deadbeats and so he could take the latter route to hold onto DR and eliminate the debt at the same time. Either way, I will be trading it and not depend on a home run. Too many moving parts...
or 4 x daily average (discounting last week) in the first hour. Obviously, there is something in the works beyond the positive Seeking Alpha articles. Interest is growing daily in this perennially hated stock. The much hated CEO is now gone. The man behind the science (Dr.Lanza) is staying put to see this until the end. After some profit taking, it is re-testing 52 week highs today. Potential catalysts include:
1) Technical break through once it crosses a dime.
2)Top line results from Phase 1 to be published in NEJS.
3)New permanent financing or a partnership
4) Breakthrough designation by FDA for limited applications?
5) CE Mark in Europe due to orphan status for SMD?
6)Phase 2 to start in 2H14
7)RS and uplisting to NASDAQ. If the market cap is over $1B by then, the RS will be 1:30 (the low end of the spectrum) and the OS will be down to 100M shares or so, trading at about $12/share on the Nasdaq. If (3) or (4) happens, they will probably revise the RS down to 1:10 or lower as they will probably not want to debut over $30 per share on a national exchange.
I only have a little over million shares but will gladly cost average up as the catalysts above come to fruition, not on speculation. This way the gains will stick to form new bases on the way up...
$47.5M rise in market cap for $350K in product revenue for 4Q13! Totally bonkers but those who held this long deserve the break they got. I hope they make use of this opportunity unlike the last time from 43 cents back to a dime. Congrats once again.
I think that meets all shareholder wishes. The brains stay while the hype is pushed out. Win-win! Very good detective work by someone who hinted at this from the Dec SEC filing where Rabin was not Chair of board any longer. All SEC probes are resolved now since the last one remaining was Rabin related. Great start to the year with Gary's departure. Myles can stay as interim CEO till Ph II is started as far as I am concerned. No hurry in getting a new CEO. If we can get Ph II started in 3Q, get new financing in place and do the uplist by 4Q, we should get to 28 cents (pre-split) by Christmas. If the last lawsuit is settled with much less dilution (100-200M shares) or thrown out, that will be another catalyst. I shall start averaging up as milestones are met. All the best!
I don't think that is relevant but yes I sold the rest of my position if that makes you feel any better! I'll buy back only when there is $1M/quarter in sales. If it does not come within the next 2 quarters, then we can just call this all hype and move on...
Glad that the most highly rated poster on this board agrees with me though it goes against her long term sentiment. I have nothing against Dr. Chan or the company. DC is a highly educated individual and the company is trying to fill a gaping hole in medical treatments today. But let me say it, DC was pumping in the SHL. $350K in 3 months is peanuts for potentially the only effective SEPSIS treatment today. It's interesting to see him do what other penny stock CEOs do to talk up their stock - he is usually very conservative - but if the results aren't there to back up the talk, most discriminating shareholders will balk...
birddog, You are right. It's been a while since I looked at their agreement. So, scratch my statement on LPC financing running out quicker. But I stand by my opinion that this rise is not sustainable - like it has been the case for the past 3 years - without a change in fundamentals. It has been all talk so far in terms of seeing any meaningful sales...
There are no guarantees in the stock market but when you have a 50% gain in 2 days over news that has not changed the fundamentals, I'll take it every time...
ping, Looks like even you are getting thumbs down for speaking the truth! The SHL does not deserve this kind of response - revenues are still ony $850K for 2013. The smart ones will take advantage of this temporary boom and cash out. LPC will be buying a boat load of shares at 10 cents and flipping to make hay while the sun shines. Which also means, they will run out LPC financing much quicker if these prices last...
Actually, I added the grant income as sales. Taking strictly just the operational revenue, trailing P/S is 38 today! I understand your point about companies in the hyper-growth phase commanding unrealistically high valuations. CTSO qualified as a highly promising, hypergrowth company when CE mark was granted in Mar 2011 or almost 3 years ago. The stock shot up to 43 cents! Then they said they needed a marketing/sales team in place. That happened in summer of 2012 or 1.5 years ago. So, here we are, 3 years later, with $850K in revenue after a very fair amount of time was given by the market to realize that potential.
There are several reasons why it is trading below the pre-CE mark level of 17 cents. One is what I explained above. Second, LPC financing is toxic as it dilutes and puts a cap on any rise, due to the short term nature of LPC's business strategy. Third, DC promised to get another source of financing by end of last year - nothing on that front. Fourth, no partnership from big boys who should know the prospects of this technology by now - why? So, till we see one of these catalysts, the price is going to wallow down here. Their current financing will run out in a few months - there is uncertainty on what happens after that as well. This company should be compared to other companies that are way below pre-FDA approval prices due to underwhelming market adoption of their products. If you know me, I don't bash for the sake of bashing. The facts are quite easy to see. That being said, I would love to see this company be successful and for me to share in that success. I just dont see it yet....
$850K in product revenue and $1.6M in grants justifies a maximum value of $24M (P/S = 10) or about a dime. So, there is a 30% premium built into the current price to account for future potential. LPC is still flipping their shares. I am still not sure when and what the inflection point will be. Reimbursement in key markets? All I can say right now is $850K in revenue is quite underwhelming (stating the obvious) for a potentially multi-BILLION dollar market that their flagship product is supposed to address. I shall keep waiting to see that quarter with $1M in product sales or 3 x current sales before getting back in significantly .
OK, some are bringing up the potential for catastrophic consequences if they lose any of these lawsuits. They have settled with the SEC already. The only outstanding lawsuit that I am aware of is the Aronson Gorton case. Best case it gets thrown out and ATC thinks it has merit to do so. Worst case, they will have to dilute by 450M shares to pay them off. I think it will be somewhere in the middle or about 200M shares. Doesn't affect their cash position and the dilution will be around 8%. Not 'catastrophic' by any means if the science works and all indications are it is.
So we talked about the potential dilution from the Aronson Gorton case. If they fully draw down the LPC financing, that's another 400M shares if the share price does not budge from 6 cents. So, total OS will be 3.4B shares in the worst case and about 3B in the best case. I am basing my 5 year projections with an OS of 4B (before RS) and so this is not news to me.
Lack of news
I am not sure why the sudden frustration over the lack of news. Over the past month, they appointed a capable VP for clinical development for Ph II and beyond. They have presented at a conference. They have resolved the SEC investigation from 2008. Lanza and Rabin are still with the company, past their Dec contract renewal date, or there would have been a 8K for a change of officers notification.
So, we wait for Ph 1 to come to a conclusion in the next month and hopefully followed by stellar results and a JV with a big pharma heading into Ph 2.
Like I mentioned earlier, if all the milestones that Gary stated is achieved in 2014 (Stellar Ph 1 results, start of Ph 2, new non-dilutive financing, uplisting), we should see 25-28 cents this year. In the next 5 years, if insurance companies are paying for treatment of Dry AMD and SMD, we should be around $5 under today's share structure and $30 ($120B) in 10 years. So, as you can see, the monster moves will be far into the future if you are willing to hold on. As for timing my buys, I was thinking to wait till the RS to get all in but I am thinking the price will be 4-5 times higher when that happens since Gary mentioned it will only happen for uplisting and so we need some other significant milestones completed before then. So even if there is a 25% pull back after the RS, it should still be trading at much higer prices than now. So, buying now makes more sense than later. Of course, this is all assuming a very successful outcome for the trials, safety not being an issue as we know today.
Though not intuitive, it takes the same effort for a $6 stock to run to $100 as it does for the same stock from 6 cents to a $1. Why? The float is reduced 100 times and hence the volatility goes up on good (or bad) news. The difference is then we have institutional investors jumping in on good news instead of penny flippers. The gains will stick much better as well. The stock just has to forward split 7 times on a 2:1 basis and you will get your original number of shares back and more (if that is important to you) and a much higher price due to the institutional support, analyst coverage etc. Or it can keep growing to $1000 like GOOG and PCLN. National listing is a must, but only after we have spectacular results to show and a partnership lined up.
Langer is not Lanza. Langer is a MIT prof who is a director at ACTC - another super brilliant scientist like Lanza. That's the other thing - ACTC has the brightest minds working for it and the best eye institutes in the world particpating in the trials.
I am a lot more conservative in my estimates. Assuming the worst case scenario from Aronson Gorton case (450M shres dilution) and another 400M from LPC financing (if they use it all up), that will be 3.4B shares in the OS. So, $1B is 29 cents. I don't think the world is totally unaware of the potential results from Phase 1. I would be surprised if the inflection point leads to more than a 500% increase in price, which is what 29 cents represents. $2 means a market cap of nearly $7B - too high for a company just entering Phase II.
5 directors got 3M in stock options at a strike price of 0.0617 on Jan 3, 2014 (expires in 10 years but exercisable immediately) and they bought 1.3M ordinary shares on Dec 31, 2013 as well. See SEC Form 4s for more details. The fact that they got only 3M options instead of 30M or 100M means that the internal expectation is for a significant increase in valuation for a paltry 3M options (or 0.1% of the OS) to make a difference to these officers. Conjecture at this point but a decent one if I might say :).
But LPC needs to be fired, a new non-dilutive financing deal in place, great Phase 1 topline results published and Phase 2 started before the RS and uplisting can happen. If all this happens this year, I can easily see a valuation of $1B or a 6 bagger from here by Christmas.
Unfortunately, if Dolan was planning to sell any of its units to avoid BK, it would not hire a CRO. I believe the path is BK and then re-emerge debt free with DiscoveryReady or a firesale of valuable assets and left with legacy, low-margin/growth but cash flow positive business. If you notice, the CEO does not mention anything about shareholder value in his brief comments.
I think Dr. Lanza leaving the company is a material event, but not a contract renewal. We all know he is the franchise quarterback for ACTC. The reason for the short, 3 month contract extension was answered adequately by Gary. Gary himself was on a 3 month extension. The board is aligning compensation closer to meeting company milestones now. Also, I would think Gary would pack his bags as well if Lanza is leaving and that is one big material event! So, from deductive reasoning, I would say this discussion is a non-issue since there was no 8K filing in Dec regarding this. Shareholders will be updated on the contract terms at the next meeting or conference call, if specifically asked.
Hi Tony, are you kidding about the compassionate use program in the UK and Japan? Did you acually see any news in their local media that may hint that this might be the case? I would imagine Gary would have already addressed this in the shareholder meeting if that was true. Just trying to separate fact from fiction.