Celsion (CLSN) has made an impressive move so far, as I've been expecting since I wrote my first CLSN article 5 Reasons To Be Bullish On Celsion Now. That, along with my next article, are good starting points to get the quick skinny as to why so many people are fundamentally excited about CLSN. As I write this CLSN is up 46% in just three weeks since I began. In addition to those two articles, I have outlined other reasons I believed CLSN would rally and even why I thought it was a good idea to sell Amarin (AMRN) and instead buy CLSN (I still think it's a great idea). CLSN reached a new 52 week high today of $8.39 which also happens to be the 7 year high and is a hair away from the 8 year high. All investors who bought and held CLSN at any point during the last 7 years are now sitting at a profit, some at very huge life-changing profits. The knee-jerk reaction for many people at a profit is to sell. I sold none Tuesday. I'll explain.
Here are 5 reasons CLSN is going to go even higher.
(1) A director, Max Link, bought 14,000 shares on the open market at $7.60 per share on December 10 committing $106,400 in one shot, paying a 347% premium over the starting price of the year. This is in addition to all of the other insiders who have bought shares in the open market. Max Link didn't seem to think the run is done.
(2) At the start of 2012, the company had a large variety of outstanding warrants in various holders' hands that were all out of the money and therefore worthless. In light of the dramatic price rise, now all of the warrants are in the money and worth a total of $36,535,643.55 when exercised. This is a huge amount of financing already readily available and will come in from time to time as holders exercise since those same warrant holders went from holding essentially worthless warrants at year-end last year to warrants now worth $59,384,919.04. That is a lot of incentive to exercise some and, in turn, increase the company's cash coffers.
(3) Year-end coming and people are dropping their losers like AMRN and adding their winners. Why hold AMRN which has done nothing but deliver excuses to shareholders when one can sell AMRN and buy CLSN which STILL has a fraction of the market cap of AMRN despite both expecting to go to market with a drug of similar market size (and I'm being generous to AMRN when I say that).
(4) The higher the price goes for CLSN it becomes almost a self-fulfilling prophecy for any future financing. Raising money at $10.00 for example would be half the dilution as raising money at $5.00. CLSN is already well capitalized with a low and shrinking cash burn rate so it can afford to be patient and raise money at higher prices for less share dilution.
(5) The sheer value of the short position size is getting out of control, and their losses are mounting, now at $46 million worth of potential squeezes. Short ratio is at 2.9, and I doubt shorts are going to want to continue to hold when the biggest upcoming catalyst in the company's history is around one short month away, releasing of top line Phase III data.
Keep in mind, however, if the phase III data comes in surprisingly bad, the party will end, and the stock price will come crashing down. CLSN is not without risk. But it's a risk I'm willing to take for the a potentially very large reward.
Disclosure: I am long CLSN.