Seeking Alpha

VFC's Stock House's  Instablog

VFC's Stock House
Send Message
VFC is just a guy with an opinion. VFC's Stock House brings new ideas to the table and opens discussions for a broad spectrum of investors, with a strong focus on - but not limited to - the biotech, pharmaceutical and healthcare sectors. VFC's Stock House provides research, informational and... More
My company:
VFC's Stock House
My blog:
VFC's Stock House
View VFC's Stock House's Instablogs on:
  • CELH: Might Be Time To Watch-List This One Again
    Shares of Celsius Holdings have been deflated to the twenty to thirty cent level for the better part of 2011, and volume has grown minuscule as the year has progressed.  Only three days in June has CELH experienced more trading volume than 10,000, and on June 8th, a whopping 100 shares traded hands. 

    On June 13th, it even looked as if CELH wouldn't trade a single share, until someone came in late in the day and kept the stock from racking up a halo.

    With the lack of interest in this company right now, the question is if Celsius is trucking along unnoticed and under the radar, or if the failure to approach the sales expectations of 2010 has weighed like a lead brick on the CELH share price and given it no chance of recovery. 

    Having opened 2011 right back on the OTCBB, after trading on the Nasdaq in 2010, and given the major price depreciation of the past year, it's easy to see why this stock's days as a one-time high-flyer are long forgotten.

    Many will also be hesitant to jump in on a company that has just about done everything except stop paying the electric bill to save as much cash as possible after a year of shoveling millions into a marketing campaign that was supposed to ignite the brand.

    Celsius has even gone the route of not being a fully reporting company any longer, to save a few bucks, but investors should still expect to receive timely quarterly reports.

    Given all that has transpired in the past, what about the future?

    In some aspects, we can consider 2011 a fresh start.

    Revenue for the first quarter of the new year came in at $2.2 million, far below where the company had predicted revenue would be when guidance was issued a year earlier, but the number was right in line with the first quarter of the previous year, which was $2.3 million.

    Last year, however, sales numbers drastically declined after peaking at $4.1 million in the second quarter, and settled at just half a million in the fourth quarter when it was revealed that a bulk of the product was marked "return to sender." 

    A snapshot of the past two years of sales numbers looks like this:

    Q1 2011 - $2.2 million
    Q4 2010 ~ $500,000
    Q3 2010 - $1.8 million
    Q2 2010 -  $4.1
    Q1 2010 - $2.3
    Q4 2009 - $2.4
    Q3 2009 - $1.3
    Q2 2009 - $1.2
    Q1 2009 ~ $1.0

    During the same time period, Celsius racked up nearly $30 million in losses, including an investment in Mario Lopez as a celebrity spokesman who ended up selling more reruns of 'Saved by the Bell" than he did cans of Celsius.

    It's safe to say that it's a new era for Celsius Holdings now.

    The positive that comes from the major momentum loss of 2010 is that Celsius has become entrenched in the places where it does sell - it's "niche," so to say.  The $2.2 million in Q1 sales were mostly the result of growth in that "niche" and the company can use that as a new starting point, rather than concentrating effort and resources in trying to put the product everywhere. 

    Now it's a matter of putting it everywhere that it sells.

    The risk is that investors won't be willing to take a look at CELH after the catastrophe of the past year.  That may also lump into the risk - and knowledge - that the company will need to raise money at some point soon.

    On the other hand, the market cap of the company is barely twice that of what was brought in last quarter.

    Combine that with a general lack of interest in the stock and it looks like the high risk could be backed by the potential for high rewards - if the "niche" that took in $2.2 million last quarter can grow.

    A couple of years ago CELH (then known as CSUH) was trading for a couple of pennies per share, then launched to over sixty cents on pure speculation.  However, because the numbers just weren't there yet, and because they never materialized as expected, shares came crashing back down to earth.

    Back then, when CSUH was two cents, the company needed cash as it does now, but Carl DeSantis came in and saved the day.  Will the big man bail Celsius out of a corner again?  That's yet to be seen, but he's already pretty heavily invested, if you take into consideration his affiliated companies.

    Meanwhile, another trading day has gone by where the CELH ticker pulse looks like it needs a little dose of Apricus' Vitaros, with only 250 shares having traded until after two o'clock.

    While that doesn't say much for the interest in CELH as a buy, it could be telling that if some volume came gushing in, then shares could move to the upside pretty quickly.

    Volume, however, would only be the result of some good news.

    CELH comes with some pretty hefty risk, but it's also looking like there could be some potential rewards here as well; it was just a year ago when the company banked sales numbers that were equal to the current market cap. 

    Celsius cannot yet be labeled as having risen from the ashes, but it's definitely one to keep a close eye on.  Even luke-warm news supported by some volume could spike this one back to close to the dollar mark, in my opinion.

    Even on no news, it touched sixty cents earlier in the year.

    Might be time to watch list this one again.

    Disclosure:  Long CELH, APRI.

    Disclosure: I am long OTCPK:CELH, APRI.
    Tags: CELH, APRI
    Jun 16 7:56 AM | Link | Comment!
  • CytRx: Strong Pipeline And Non-Dilutive Financing Has Company Bubbling With Potential

    CytRx (NASDAQ:CYTR) Corporation, with a rapidly advancing pipeline and money in the bank, may be skimming below the radar for investors searching for an undervalued company that might be gearing up to make a big splash in the cancer treatment sector.

    Companies with products that are not yet beyond Phase II, which I like to refer to simply as 'Phase II companies', are considered by some to be highly risky investments since a lot can happen between Phase II trials and an FDA approval, but some of the best deals in the biotech/health care sector can be found by searching out a good 'Phase II' company trading for a reasonable price with a pipeline of potential.

    For instance, shares of Keryx Biopharmaceuticals (NASDAQ:KERX) were trading for roughly the same price as the CYTR stock is now when that company was also considered a 'Phase II company'. As we have seen with KERX, once the Phase II trial results started rolling in and Phase III were underway, shares appreciated significantly and now trades with a market cap of over three times that of CYTR.

    Given the potential of the CytRx pipeline, which contains two solid Phase II products, it's quite possible that CYTR shares will experience a similar pattern and could be trading for considerably higher prices as the time draws nearer to the release of Phase II results. Should those results turn out positive, and the products move on to Phase III, then an even more pronounced increase in price could be realized.

    Something else to like about this company's pipeline is the fact that it has a built-in insurance plan. In addition to its two lead products, Bafetinib and Tamibarotene, INNO-206 serves as a third product candidate that provides a cushion - or a 'Plan C' - should one or both of the more-advanced product candidates hit a road block or experience a setback in development.

    Having a third candidate in the pipeline is a luxury that many small, aspiring companies in this sector can enjoy. Even those small companies that can boast multiple product candidates often cannot fund trials for each one simultaneously, which is something that CytRx is successfully managing.

    Of the three product candidates, Bafetinib may hold the most market potential. This product is being investigated for effectiveness in treating multiple cancer indications, including advance prostate cancer, brain cancer and leukemia. According to statistics posted by the Center for Disease Control and Prevention (NASDAQ:CDC), prostate cancer is the number one cancer suffered by men. 217,730 new cases were reported in the US alone last year, according to data supplied by the National Cancer Institute, and any move into that market by CytRx is sure to become a lucrative undertaking while significantly boosting shareholder value.

    The second Phase II candidate, Tamibarotene, is being tested as a for treatment of non-small cell lung (NSCL) cancer and acute promyelocytic leukemia (NYSE:APL). CytRx would only need to make a small dent into the NSCL market to significant boost the company's bottom line, and APL is a $100 million market in itself.

    INNO-206, although still earlier in the stages of development, could also become a big player as an anti-tumor agent. Multiple studies are underway and the product has already demonstrated success in early animal and human clinical studies. This will be a product to keep a keen eye on as the others develop.

    One major concern that all potential investors have when investing in the biotech/health care sector is how a company will fund its clinical development. Dilution is the largest of concerns, as shareholder value becomes diluted along with the stock, but CytRx has undertaken a strategy of finding non-dilutive alternative to fund its developmental stage, and thus far it's been a successful strategy.

    CYTR issued a press release last month announcing the sale of the worldwide rights for its molecular chaperone assets to the privately-held Orphazyme ApS, based in Copenhagen, Denmark.

    For a small company such as CytRx, this was no insignificant deal.

    The total value of the transaction, should all milestones be met, could be worth up to $120 million, which today is roughly 20% more than the current market cap of CYTR.

    In addition to an up-front payment and the milestone potential, CytRx will receive royalties on all sales of products utilizing the molecular chaperone technology. Give it some time, and this deal could turn out to be a coup for the company.

    CEO Steven A. Kriegsman noted as such in a recent press release:

    “This could be a game-changing transaction for CytRx with an ultimate potential value that exceeds our current market capitalization.”

    He then went on to comment about the company's strategy of funding its oncology pipeline through investments that are non-dilutive to shareholders:

    “It illustrates our exceptional execution of a strategy to acquire assets and add value, in this case through multiple clinical and preclinical trials, then monetize them to support our focus on oncology.”

    The management team looks to be navigating this strategy with success and precision, as the company also raised $17 million in a sale of RXi Pharmaceuticals (OTC:RXII) stock. Additionally,

    CytRx received 163,000 shares of AdventRx Pharmaceuticals (ANX) in exchange for its 19.1% stake in SynthRx, according to the above-noted press release.

    Given the recent developments at CytRx, the solid pipeline and success in adding funds to the war chest in a non-dilutive manner, CYTR might not be trading below the radar for too much longer.

    Worth taking a look.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: The opinions and views expressed in this article do not constitute a buy or sell recommendation for any stocks mentioned within. Each potential investor should consult his or her own investment or financial services advisor before making any investment decisions. View full disclaimer at
    Jun 08 3:56 PM | Link | Comment!
Full index of posts »
Latest Followers


More »
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.