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Callisto Pharmaceuticals
(AMEX: KAL) Loads Capital War Chest For FDA Approvals |
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I haven't written any updated coverage
on KAL in some time, so I thought today's news concerning the recent
beefing up of the company's treasury would be a good opportunity to bring
everyone up to date.
A short review is in order. I first
covered KAL at about the $1.30 level on October 1. The stock
blipped up briefly, and then sank along with the rest of the small and
microcap world in the November/December time frame. The November 28th edition
at about $1.10 proved to be a wonderful opportunity as the stock finally
found its legs at that point, and eventually worked its way up to about
$1.80 for a brief moment in time.
The stock now resides in the $1.50
to $1.60 range, a profitable level for those who got in early, and a very
profitable level for those who chose to take advantage of the year end
weakness.
KAL has a strong portfolio
of potential new drugs, and they are adding to their technology assets
regularly. ANNAMYCIN, a very promising treatment for relapsed Leukemia
is the closest drug they have to commericalization. Phase III trials are
expected to begin this year. In a Phase I/IIa study on 20 patients in which
the dose of the drug was escalated, two of the twenty patients exhibited
complete remissions at higher doses, a clear indication of a positive drug
effect.
Not far behind Annamycin is
Atiprimod,
which is currently in two Phase I/IIa studies. Atiprimod is being
developed to treat relapsed Multiple Myeloma (MM). MM is an incurable cancer
that develops in bone marrow and causes lesions to form.
There are a host of other new drugs
and therapies the company is working on, and their portfolio is growing
rapidly. I was very intrigued by a news release earlier in January wherin
KAL
announced it had licensed the rights to an entirely new class of cancer
drugs named Degrasyn. This new drug expands the KAL portfolio
beyond cancers of the blood to tumors as well.
I don't believe Wall Street has picked
up on the signficance of the Degrasyn license. Dr. Moshe Talpaz,
a professor of Experimental Therapeutics at M. D. Anderson, is the co-inventor
of Degrasyn.
In the cancer field, Dr. Moshe
Talpaz has rock star status. Dr. Talpaz has been a key member
of the teams that invented two of the most successful and revenue generating
cancer drugs available today. Dr. Talpaz is credited with being
on the team that developed Gleevec, a cancer drug which was estimated
to generate $1.57 billion in sales in 2005. Talpaz was also credited
with being a co-inventor of Interferon, a drug estimated to deliver
$3
billion in sales worldwide in ‘06.
After the market closed today, KAL
announced it has refilled its capital war chest with a $5 million plus
financing. The company issued 4.3 million shares at $1.20, and 1 million
warrants with an exercise price of $1.60.
This is a reasonably favorable financing
for current shareholders. It is only a 23% discount to the current market.
Discounts for fixed price shares are generally much deeper. The biotech
fund managers must have liked what they saw, because they are definately
taking some signficant risk. The shares are not free trading at this time.
I don't expect excess supply to be
a big problem down the road. KAL averages about 250,000 shares in
daily volume. If every single share were for sale, it would take 16 trading
days. However, I suspect the fund managers are looking for more than a
$.35 profit.
Here's a different look at the stock
from my normal view. This chart tells me the stock is becoming more likely
every day to find it's way to the $2 mark. I worked the retracement
levels from the top down, instead of the bottom up.
KAL's all time high was $2
in January of '05. This weekly chart shows the all time low of $.90, which
it hit last June. In October the stock first pierced the 61.8% retracement
level measuring from the bottom up. It then came back down, but remained
in a uptrend.
It then shot back up in December
and repierced the 61.8% retracement level ($1.58), this time far more convincingly.
This was the third move through this critical level.
They say persistance breaks down
resistance. Three moves through the 61.8% level should eventually led to
a breakout. Perhaps on the 4th or 5th try.
At any rate, barring any horrendous
market related tragedies, I believe KAL is destined for the $2
level over the next few months. That will be the level I will suggest
it might be time to take some profits off the table. A year or two into
a Phase III clinical trial will be the time the stock could see the $5
price target forecasted by the Stanford Group research report.
Here is the complete text of today's
news from KAL:
| Press Release Source:
Callisto Pharmaceuticals, Inc.
Callisto Pharmaceuticals
Announces $5.14 Million Private Placement Financing of Common Stock and
Warrants
Tuesday February 7, 4:01
pm ET
Proceeds to Fund Acceleration of
Clinical Trials of Drug Candidates and Expansion of Key Strategic Initiatives
NEW YORK--(BUSINESS WIRE)--Feb.
7, 2006--Callisto Pharmaceuticals, Inc. (AMEX:KAL - News; FWB:CA4), a developer
of new drug treatments in the fight against cancer and other major health
threats, announced that it has completed a financing totaling approximately
$5.14 million through a private placement involving common stock and warrants.
The proceeds from the
financing will be used to continue to fund Callisto's strategic initiatives,
including substantial clinical development activities in 2006 plus additional
pre-clinical development activities. Callisto currently has two anticancer
drug candidates in clinical trials leading its drug development pipeline,
and two preclinical programs.
The financing, which
included institutional biotechnology investors, was completed on February
3, 2006. The private placement involved approximately 4.3 million shares
of Callisto's common stock and 1.07 million warrants at a per share price
of $1.20, for aggregate gross proceeds of just over $5.14 million. The
warrants are exercisable at $1.60 for a period of 18 months from closing.
"We are pleased with
the confidence and support this excellent group of investors has shown
in Callisto by its participation in this financing," said Callisto CEO
and CSO Dr. Gary S. Jacob. "Callisto intends to use the net proceeds from
the private placement to further the clinical trials of our two lead drug
candidates, L-Annamycin and Atiprimod, and to finance other drug development
activities."
In addition, Callisto
recently announced the licensing of Degrasyns, a new class of anticancer
drug candidates developed at The University of Texas M. D. Anderson Cancer
Center, one of the leading clinical and research institutions in the world
aimed solely at cancer. The novel anti-cancer activity of Degrasyns relates
to their ability to selectively degrade key proteins involved in tumor
cell proliferation and survival, and have the potential to treat not only
hematological cancers but solid tumor cancers, as well.
Callisto also recently
announced receipt of a Notice of Allowance from the U.S. Patent and Trademark
Office on a patent for a unique breakthrough drug candidate called Guanilib,
which is being developed as a treatment for serious inflammatory gastro-intestinal
diseases, including ulcerative colitis. Research also suggests that the
drug may also act as a preventative against the formation of polyps that
are a major risk factor in the development of colon cancer.
The securities issued
in the private placement have not been registered under the Securities
Act of 1933, as amended. Accordingly, these securities may not be offered
or sold in the United States, except pursuant to the effectiveness of a
registration statement or an applicable exemption from the registration
requirements of the Securities Act. Callisto has agreed to file a registration
statement covering resale of the securities by the private placement investors.
This press release shall not constitute an offer to sell or the solicitation
of an offer to buy the securities.
About Callisto Pharmaceuticals,
Inc.
Callisto is a biopharmaceutical
company focused on the development of new drugs to treat various forms
of cancer and other serious afflictions. Callisto's drug candidates in
development currently include anti-cancer agents in clinical development,
in addition to drugs for a range of other significant health care market
segments, including biodefense. One of the Company's lead drug candidates,
L-Annamycin, is being developed as a treatment for forms of relapsed leukemia,
a currently incurable blood cancer. Callisto initiated a clinical trial
of L-Annamycin in adult relapsed acute lymphocytic leukemia patients in
4Q 2005. L-Annamycin, a new compound from the anthracycline family of proven
anti-cancer drugs, has a novel therapeutic profile, including activity
against resistant diseases and significantly reduced cardiotoxicity, or
damage to the heart, compared to currently available drug alternatives.
Another anti-cancer drug, Atiprimod, is in development to treat relapsed
multiple myeloma, a blood cancer. Atiprimod has entered Phase I/IIa human
clinical trials in relapsed multiple myeloma patients. Callisto also has
drugs in preclinical development for gastro-intestinal inflammation, and
a program focused on the development of a drug to protect against Staphylococcus
and Streptococcus biowarfare agents. Callisto has exclusive worldwide licenses
from AnorMED Inc. and M.D. Anderson Cancer Center to develop, manufacture,
use and sell Atiprimod and L-Annamycin, respectively. For investor-specific
information about Callisto, including recent news and stock price data,
please visit http://www.trilogy-capital.com/tcp/callisto/. For an Investor
Fact Sheet about Callisto, please visit http://www.trilogy-capital.com/tcp/callisto/factsheet.html.
To view an informational presentation of the Company's development pipeline
of drug candidates, visit http://www.trilogy-capital.com/tcp/callisto/powerpoint.html.
Callisto is also listed on the Frankfurt Stock Exchange under the ticker
symbol CA4. For additional information, visit www.callistopharma.com.
Forward-Looking Statements
Certain statements made
in this press release are forward-looking. Such statements are indicated
by words such as "expect," "should," "anticipate" and similar words indicating
uncertainty in facts and figures. Although Callisto believes that the expectations
reflected in such forward-looking statements are reasonable, it can give
no assurance that such expectations reflected in such forward-looking statements
will prove to be correct. As discussed in the Callisto Pharmaceuticals
Annual Report on Form 10-K/A for the year ended December 31, 2004, and
other periodic reports, as filed with the Securities and Exchange Commission,
actual results could differ materially from those projected in the forward-looking
statements as a result of the following factors, among others: uncertainties
associated with product development, the risk that products that appeared
promising in early clinical trials do not demonstrate efficacy in larger-scale
clinical trials, the risk that Callisto will not obtain approval to market
its products, the risks associated with dependence upon key personnel and
the need for additional financing.
Contact:
Callisto Pharmaceuticals,
Inc.
Dan D'Agostino, 212-297-0010
ext. 227
dagostino@callistopharma.com
or
Investor Relations
Trilogy Capital Partners,
Inc.
Paul Karon, 800-592-6067
paul@trilogy-capital.com
Source: Callisto Pharmaceuticals,
Inc. |
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