Radient Pharmaceuticals- Bullish or Bullcrap? Print E-mail
By M.E.Garza   
Friday, 04 February 2011 12:43
In case you missed it, yesterday after market hours Radient Pharmaceuticals (AMEX:RPC), reported that it has closed on $900,000 in bridge financing which will help with the costs of spinning out their China based pharmaceutical company and deconsolidated subsidiary Jade Pharmaceuticals (JPI).

Those trading the stock were excitedly anticipating the good news which had been slightly delayed. Officials at the company had been actively seeking for the best way to create their spin-offs- in this case aiming to not have shareholders or the company take on the expenses of getting Jade into its own publicly traded vehicle as quickly as possible. The result is that Radient’s shareholders now stand to gain significant additional equity without spending money or getting their shares diluted during that process.

Within Radient’s current share structure, the pharmaceutical business operations of Jade should be reflecting a $.30 to $.40 valuation on their own, but the company has struggled to get investors to understand that. Now that the table is set to spin that company off into its own trading vehicle, Radient’s management is hoping that the transaction will more clearly reflect value on their balance sheet and bring $30 to $40 million in equity to RPC’s investors.

The second, and arguably more exciting spin-off involves Radient’s subsidiary , NuVax.  The talk on Wall Street is that details regarding that cancer immunotherapy play spin-off should be out shortly. News has been delayed on that front for the same reason. Radient is making sure that the parent company and their shareholders are not diluted or stuck with the bill for taking shares public. It is anticipated that spin-off will bring another $30+ million in equity to Radient as well.

If you're wondering why shares aren't reacting more positively this morning, then you probably haven't heard that a stock market tabloid known for leading bear raids publicly slammed Radient’s FDA approved early cancer detection technology and their management calling them “less than accurate” and “delusional,” respectively- but certainly not respectfully.

The author of the hit piece, who most recently predicted that the FDA would not approve Clinical Data’s (Nasdaq:CLDA) new antidepressant vilazodone or AVANIR Pharmaceuticals (Nasdaq:AVNR)  NUEDEXTA as a first line therapy the treatment of pseudobulbar affect (PBA), says Radient’s management has refused to speak to him. They would not be the first. Many biotech companies have learned not to take calls from the tabloid, since they are known for misrepresenting the facts- at best.

One company, Generex Biotechnology Corporation (Nasdaq:GNBT) has filed a $250 million lawsuit about two articles in which the same author expressed doubt about the company's oral insulin spray Oral-lyn for Type 1 diabetes.  The publication boldly stated that their investigation into Generex work revealed that the company was "using science and the quest to develop an alternative insulin delivery method not to actually help diabetics but as a ruse to perpetuate a 15 year-long stock promotion scheme." (See: http://www.fiercebiotech.com/press-releases/generex-biotechnology-corporation-gnbt-launches-250-000-000-lawsuit-against-thestreet)

Generex has said the articles went well beyond the expression of disparaging opinion or fair comment and that the tabloid had abused their public forum by spreading categorical falsehoods about Generex “when a modicum of due diligence would have revealed the truth, an injury then compounded by unfounded and libelous allegation and innuendo.”

In Radient’s case, several publications- including this one- have had little difficulty reaching the management team for questions and quotes.  When we asked if they had purposely avoided calls from the tabloid, one person familiar with the situation told us that the company had told several reporters that they would be more willing to answer questions “right after we are done making several key upcoming announcements. Those announcements will directly help answer some of their questions.” The source says a number of those positive announcements have still not yet been disclosed and could not, legally, elaborate further.

Could it be that the upcoming Mayo Clinic validation study results are part of that equation?  Our sources tell us that they are and that the company remains optimistic about the study, whose official results have not yet been unveiled to anyone at Radient. There is proof of that optimism given the recently announced presentations scheduled by the company at virtually every major upcoming cancer and oncology conference.

Despite the tabloid’s skepticism, Government officials in India recently completed their own round of due diligence involving Radient’s early detection platform. The test is believed to identify as many as 9 different cancers- but has only been officially approved for lung and colorectal cancer detection thus far in North America. India joins a growing list of countries which want to use Radient’s technology as a general cancer screening tool as part of various planned public initiatives. The company has announced and re-iterated publicly; as well as privately to officials the American Stock Exchange; that they expect over $10 million in revenues on top of previous projections this year.

In October, Radient announced validation study results of a blood test for early detection of lung cancer and along with Provista Life Sciences (and as we understand it- a soon to be disclosed subsidiary of a publicly traded diagnostics company) plans to broadly introduce this Lung Cancer test to market. The clinical study completed the requisite analyses and data evaluation needed to validate the test and found that it successfully detects lung cancer with a high degree of accuracy. According to both Provista and Radient, the data generated in this final study proved consistent with previous findings and produced positive clinical performance marks of 87% sensitivity; 95% specificity; and an ROC Accuracy of 0.97. By industry standards the study proved very successful.

As in the case with Generex, the tabloid insists that “Radient has been investing a lot of money into investor and media relations, which helps explain the mini stock-price bubble.” As with most everything else in the report, nothing could be further from the truth.

In fact, the owner of the company responsible for creating Radient’s sales and informational videos for the company offered to charge the company far less money than they charge other clients because Radient didn’t have the money to pay for their services.  Radient, as you recall, just completed an ambitious debt-to-equity swap and only last week received $7,500,000 in gross proceeds from several private institutional investors who believe in the company.

In addition to everything else, we believe Radient’s management team is being very serious about the recent notification they received from the American Stock Exchange. The company has reportedly engaged the top law firm in the business to deal with the issue head-on.  We don’t expect that issue to be resolved for some time to come, but we certainly think Radient will be trying everything in their power to right the ship and give investors real equity and positive reasons to invest.

For my own part, I continue to be long the stock, and no one here has ever received payments to promote it or any other company- as clearly stated in all of our disclosures and accountings to the SEC and other public officials and exchanges. That has never been our business model.  

Our strength as a news portal comes from digging down and bringing our readers the best facts we can find.  Most often, those facts come straight from the CEOs of these companies themselves.  After all, if they are lying, then ultimately won’t they be held accountable? History and the authorities say yes. Stock ambulance chasers who go after companies on behalf of shareholders say, “Hell yes!”

We thrive on finding great LONG ideas. Anyone seeking proof of how we’re doing on that end can see how we rank at Seeking Alpha. That portals un-manipulated and un-biased ranking system tracks the performance of bloggers and analysts across cyberspace without any influence of DVD sales or paid subscriptions.

We give the scandal sheets credit for questioning companies. Given how long they’ve been doing this, we just wish they had a better track record. Instead their readership is often left questioning their sources and motivations. A recent example of this is a pump of Inspire Pharmaceuticals, Inc. (NASDAQ:ISPH), whose shares went down by 58.72% after the company announced that its experimental cystic  fibrosis (CF) drug failed the second phase III clinical trial. While one of the higher-ups was on television encouraging investors to take positions in the company, the biotech bulldog remained painfully silent and didn’t warn investors to be cautious. What happened there?

It can’t help but make investors wonder why they try so hard to beat up all the wrong companies with such reckless abandon. I guess they're doing the best they can.



Disclosure: Long RPC



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