Shares of Radient Pharmaceuticals break out; set to head even higher Print E-mail
By M.E.Garza   
Tuesday, 21 December 2010 02:46
Best penny stock picksShares of Radient Pharmaceuticals (AMEX: RPC ) are breaking out and set to go higher. Even after the stock closed  at $0.58 up 56.55% following our subscriber-only trade alert on Monday, we believe the stock should continue to see significant appreciation in advance of several forward looking news events and developments.

For starters, RPC is listed on the NYSE Amex and officials are seeking aproval for a significant debt-to-equity exchange which was approved by company shareholders on December 3rd at its Annual Meeting of Shareholders.

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While the board and shareholders voted in favor of the execution of a financial stabilization plan that should take company from tens of millions of dollars in debt to close to $30 million in equity, the stock actually sunk lower in the days following the news. Not only did the markets need time to digest the details of the ambitious exchange terms, but as it appears, some funds started naked-shorting the stock. This is a practice which is not uncommon on Wall Street and has become the focus of lawsuits and investigations. [see: "Not Just for Sirius Investors.." at]

Motivated by several factors, the shorters also anticipated that approval of the debt-to-equity exchange might be delayed (or perhaps not approved) by regulators at the NYSE Amex. As we understand it, the company not only submited all of the approved proposals and related issuances to the NYSE Amex for their approval but word of that approval could come sometime after the holidays.

In addition, the company is expecting positive news from the Mayo Clinic in regards to a clinical study for the validation of RPC’s US FDA‐approved Onko‐Sure in vitro diagnostic (IVD) cancer test for diagnosing lung cancer. RPC's low-cost test, which has already been validated for the detection of several types of cancerous tumors, enables physicians and their patients to effectively monitor and/or detect solid tumor cancers much earlier than other tests by measuring the accumulation of specific breakdown products in the blood called Fibrin and Fibrinogen Degradation Products.

The impact of a validation for the test as an early screening device for lung cancer could be a significantly positive development not only to the company's financial outlook but also to the vast populations who are at-risk for developing lung cancer. Results from that validation are also rumored to be "only a couple of weeks away."

The American Cancer Society estimates that Lung cancer is responsible for the most cancer deaths in both men and women throughout the world. Lung cancer was not common prior to the 1930s but increased dramatically over the following decades as tobacco smoking increased. In many developing countries, the incidence of lung cancer has started to fall following public education about the dangers of cigarette smoking and effective smoking cessation programs, but it remains the most common form of cancer in men worldwide and the fifth most common form of cancer in women.

Several government sponsored medical agencies in these developing countries have started to reach out to Radient Pharmaceuticals and their sales partners in order to place orders for their low-cost cancer tests. We have, in recent weeks, begun to see an increase in these types of orders from foreign entities as disclosed in public documents and company announcements.

In addition, the company has started exploring options and looked into expanding their production capabilities in order to meet the growing demand. Order fulfilment figures, even without growth in manufacturing capacities, could provide RPC tens of millions of dollars in new revenues next year.  BioMedReports has reached out to the management of Radient Pharmaceuticals for an update on these developments and  a full report will follow as soon as we can prepare it for publication. We fully expect that increased foreign sales of the Onko‐Sure cancer test will continue and more announcements about foreign orders may be coming in the weeks ahead.

From a technical analysis standpoint, we see that the stock has traded between $0.20 and $2.59 this year and we feel that shares should appreciate significantly from these levels. In fact, given the vast short interest in the stock our estimates for price appreciation may turn out to be conservative. Figures which refelect short interest in the stock- not including the previously mentioned naked shorts- account for almost 5% of the entire float. [see: Short Interest Volume in RPC at].

In short, a perfect storm of short squeezing, similar to the one we saw last April when the stock rose from around $0.30 to over $2.00 could be ready to play out here.

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Disclosure: Long RPC

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