After trading hours on Wednesday, Radient Pharmaceuticals (NYSE Amex: RPC) received a notice of de-listing for non-compliance from the American Stock Exchange. Company officials and advisors say that the snap-shot analysis which Exchange regulators used to issue the non-compliance notice is based on the company’s last quarterly filing, made during Q3 of 2010.
Since that time, however, the company has been undergoing a major financial restructuring make-over, complete with a stream of positive news items. Company officials say, the listing department at the Amex has not yet considered the Company’s latest financial data, including Radient’s ambitious debt-for-equity swap, improved sales projections and key plans to spin-off two subsidiary assets into their own publicly traded firms.
The company is in contact with Amex officials and they expect to resolve those issues during an in-person hearing which they have requested.
Details about the notification have provided a glimpse into some of the issues that the company has been working on behind the scenes and certain facts about their re-structuring have been confirmed.
While some analysts have been working from the assumption that the company would have to issue close to 180 million shares in order to survive, released figures indicate that the company is on track to complete their massive debt-to-equity swap with far less dilution than anticipated- nearly half a much.
As discussed in reports earlier this month, officials at the American Stock Exchange only approved the ambitious debt swap after careful review and assurances from company officials that Radient shares would continue to meet minimum listing requirements.
Company management seeks to present Exchange officials and investors data that the stock has been reinforced by their approvals and that Radient has emerged as a more secure company with no debt, additional revenue streams, and stronger equity positions.
Previous filings, public disclosures and news help shed light on Radient’s plans and it appears that several significant events will come into play for the stock which could continue to add significantly more equity value than is required for listing on the Exchange. In addition, those values are expected to drive share prices higher.
The company has previously announced that it will spin-off two of its non-core businesses into their own publicly traded vehicles while maintaining a strong ownership position in those businesses. Those two spin-offs are significant because they should provide shareholders with an estimated $60-$70 million in additional equity straightaway and perhaps more in the future.
Immediately on the horizon is the spin-off of wholly-owned subsidiary NuVax Therapeutics, which some feel has the potential to become a significant player in the immunotherapy space on its own merits. Radient has publicly said that it plans leverage their own experience in product development, regulatory approvals, and manufacturing to fully commercialize NuVax therapies as rapidly as possible, but given the compelling quality of clinical data and leadership- not to mention previous experience and resumes of the individuals who will invest and guide the NuVax vehicle- the company should attract attention and a higher valuation the moment it starts trading on its own.
Some patients who have been treated with the NuVax pancreatic cancer vaccine have during mid-stage clinical trials have seen the cancer stay away for 4 years and counting. Proving those types of results in late stage trials could be a significant, yet unprecedented achievement. In 2001, RPC acquired the proprietary cancer vaccine and, as evidenced by Tuesday’s (January 25th) press release, the company signed an exclusive license agreement for the use and commercialization of four additional innovative and patented immune-gene therapy tools and systems developed by the same scientist. [See related news release at: http://alturl.com/vmrae ]
Detecting the cancer early using their own diagnostics tests and then aiming to treat it with the ground-breaking technologies proposed by the newly formed NuVax Therapeutics subsidiary- which will also carry out human phase II clinical trials is a bullish proposition which may attract speculators looking to invest in first inline therapies for largely unmet medical needs. [See related news release at: http://alturl.com/towsp ]
Another imminent event that will bring more equity is the previously announced spin-off of Radient’s China-based subsidiary Jade Pharmaceuticals (JPI). In Mid-December, a company announced letter of intent set the table for a transaction that would combine the strengths of JPI and a privately-held pharmaceutical manufacturing company- Shanxi BaoTai Pharmaceutical Ltd. (BaoTai). The plan is to merge the two highly successful Chinese pharmaceutical companies, into a single formidable enterprise which should be spun-off into its own publicly traded vehicle. Investors note that Jade produced approximately $27 million in revenue last year and has projected $35 million in revenue with approximately $10 million of that expected as earnings this year. [See related news release at: http://alturl.com/teh2o]
Some finance experts on Wall Street put a $70+ million value on the activities that have nothing to do with Radient’s main operating business. Earlier statements by Douglas MacLellan, the CEO of Radient Pharmaceuticals, appears to bolster those estimates: “I want to make sure that everyone takes a close look at our December press releases on the spin off our Chinese subsidiary JPI and our CIT technology (NuVax). This is something that the media has not really focused a great deal of attention on so far, but we anticipate that these two key transactions could bring as much as $80 million in additional value to the RPC shareholders in 2011.”
Observers expect news of these spin-offs shortly, but a third event may prove to be just as significant to the future of Radient, especially as it relates to recent reports and rumors that the company has been attracting the attention of potential partners for their In Vitro Diagnostic (IVD) cancer tests.
BioMedReports has confirmed that several publicly traded companies are interested in helping to commercialize those early cancer detection technologies in the U.S. Previously disclosed news that Radient has signed an agreement to acquire the privately held Provista Diagnostics comes into play as a key component in that development. As such, Radient has been actively preparing to raise the capital and/or make the necessary transactions to complete that acquisition, but they have been careful not to make any moves that would further dilute or hurt shareholder value during such a transaction.
Provista Diagnostics is the exclusive U.S. provider of several breakthrough tests including a blood test to aid in the early detection of Alzheimer’s disease, the only FDA cleared smell test, an early detection of breast cancer, lung cancer as well as tests for the early detection of women’s reproductive cancers. The well planned and executed acquisition is expected shortly and would bolster Radient’s value in the open market. In fact, it would help Radient capture significantly more revenues and increase financial projections given that under previous agreements with Provista, Radient was only set to capture a small percentage of the profits being generated from sales of RPC Reagent/Antibodies used in Provista’s tests.
Prior to the drop caused by the de-listing notification, the stock had managed to continue trading at healthier levels despite absorbing most of the newly issued shares. Radient Pharmaceuticals’ fight to keep their AMEX listing could offer upside to traders and potential for higher prices to come in the days ahead. Positive news flow and announcements from the company will continue in the short term given the important pending catalysts. Coupled with more positive equity, new cash reserves and acquisitions, the undervalued stock could be in position to gain and maintain traction once the market digests the new balance sheets as well.
Disclosure: Long RPC
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