Robbins Arroyo LLP: Cellceutix Corporation (CTIX) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a securities fraud class action complaint was filed in the U.S. District Court for the Southern District of New York. The complaint alleges that officers and directors of Cellceutix Corporation (OTC: CTIX) violated the Securities Exchange Act of 1934 between May 10, 2013 and August 6, 2015, by making materially false and misleading statements about Cellceutix’s business and financial performance. Cellceutix, a clinical stage biopharmaceutical company, engages in discovering and developing small molecule therapies to treat diseases, such as cancer, antibiotics, and inflammatory disease. Its drugs Kevetrin and Brilacidin are currently undergoing clinical studies to treat cancer and bacterial infections, respectively.
Cellceutix Misrepresents the Effectiveness of its Drugs
According to the complaint, Cellceutix officials failed to disclose that Brilacidin is not effective, and that Kevetrin does not activate the p-53 gene, a tumor suppressor. Further, the company did not disclose that its president, Krishna Menon, did not earn his PhD in Pharmacology from Harvard University. On May 10, 2013, Future Woman published a profile article on Menon, who confirmed earning his PhD in Pharmacology from Harvard University. Then, on September 9, 2013, the company announced the purchase of Brilacidin from PolyMedix, Inc. pursuant to an asset purchase agreement, and touted the efficacy of Brilacidin in combating acute bacterial skin and skin structure infections. On January 20, 2015, the company issued a press release emphasizing Kevetrin’s ability to activate the p-53 gene.
However, on August 6, 2015, SeekingAlpha.com published a report on Cellceutix, asserting that it is a shell corporation, its science is demonstrably unviable, it is run by a management team with a history of shareholder value destruction, and its fair value is 96-99% lower than the current price. The article confirmed that Menon did not receive his PhD from Harvard. Additionally, it asserted that Brilacidin was not effective against any of the eight bacteria strains targeted in the Phase II clinical trial, will not be approved, and is without value. Finally, the article stated that Kevetrin does not stop cancer stem cells because it inhibits the release of MDMX and MDM2 proteins, which are the natural inhibitors of the p-53 gene. On this news, Cellceutix stock fell $0.73 per share, or approximately 30%, to close at $1.71 per share on August 6, 2015.
Cellceutix Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.