Citius Pharmaceuticals (CTXR) 23Q2 Update Report

Citius Pharmaceuticals (CTXR) posted a 23Q2 loss of $0.07 per share, $0.02 more than I had anticipated, mostly because of higher R&D spending associated with the ongoing clinical trials of Mino-Lok and Halo-Lido and also due to pre-launch and market research costs associated with I/ONTAK.

The company ended the quarter with $29.1 million of cash and cash equivalents.  On May 8, Citius completed a registered direct offering of 12.5 million shares of its common stock and accompanying 5-year warrants for the purchase of an equivalent number of shares at a strike price of $1.20.  It received gross proceeds of $15 million before placement agent fees and other offering expenses.  With this issuance, the company now says it has sufficient cash to conduct its operations until May 2024.

On June 20, Citius reported positive results from its Phase 2b clinical trial of Halo-Lido, a proposed topical treatment for hemorrhoids.  The product now moves to a Phase 3 trial.  Citius is seeking a development partner to advance Halo-Lido through Phase 3 and presumably to assist in the product’s launch.

As of April 24, Mino-Lok, its proposed treatment for infected central venous catheters, had achieved 85 of the 92 required events for its Phase 3 trial, with additional patients still in treatment.  Citius is hopeful that the trial will be completed this year, paving the way for FDA approval perhaps in 24H2.

The company also has a July 28 PDUFA data for I/ONTAK, its proposed treatment for cutaneous T-cell lymphoma (CTCL).  I/ONTAK will be marketed under the brand name of LYMPHIR.  Assuming a product launch before year-end, LYMPHIR will begin generating revenues probably in 2024, but it is difficult to assess the trajectory of its revenues and profits.  Even so, it seems likely that the drug will be loss-making until at least 2025.

Thus, Citius’s product portfolio continues to advance toward commercialization.  Perhaps in recognition of this, its stock was recently admitted to the Russell 2000 and Russell 3000 stock indices.

Since my previous report on April 7, the stock rallied to a high of $1.71, but has since fallen back, perhaps because of the additional dilution from the registered direct stock and warrant offering.  While CTXR remains highly speculative, it continues to make progress on all fronts, which bolsters its ability to attract equity capital to advance its pipeline.  It also therefore has the potential to achieve a meaningfully higher equity valuation over time.  While the FDA’s approval of LYMPHIR may be a potential near-term upside catalyst for Citius’s stock price, I expect that the stock will continue to fluctuate, but with an upward trend over time, as long as the company continues to meet its developmental goals.  Accordingly, I am maintaining my near-term price target of $1.50, but raising my performance rating from “2” (Outperform) to (1) (Strong Buy), as the price target now represents a potential return of 25%.

This is a summary of my recent update report on Citius Pharmaceuticals, Inc. (CTXR). To obtain a copy of the full report, please reach out to me using the contact information provided below.

June 30, 2023

Stephen P. Percoco
Lark Research
839 Dewitt Street
Linden, New Jersey 07036
(908) 975-0250

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