Citius Pharmaceuticals (CTXR) posted a 24Q2 loss of $8.5 million or $0.05 per share, $0.02 below my estimate, mostly because of an unexpected $2.3 million gain on the sale of NOLs. R&D expense declined by about $1.1 million vs. the prior year and administrative expenses by $0.5 million, as the company focuses on the upcoming launch of LYMPHIR.
In February, Citius filed its BLA resubmission package for LYMPHIR with the FDA. The FDA has assigned a PDUFA goal date of August 13, 2024 to consider the resubmission. In anticipation of its approval, the company is preparing for the launch, which it expects will take place in October.
In May, Citius reported that the Phase 3 trial for Mino-Lok, an antibiotic lock solution for treating central line-associated catheter infections, met its primary endpoint of a statistically significant improvement in time to catheter failure vs. the control arm, and its secondary endpoints of overall treatment success (e.g. no catheter failures), clinical cure (e.g. no signs of infection and no additional therapies needed) and microbiological eradication. Mino-Lok has been designated as a potential Qualified Infectious Disease Product by the FDA and has been granted Fast Track status. It would be the only FDA approved treatment for central line catheter infections. Citius is now processing the Phase 3 trial data, but has not yet said when it will submit its application to the FDA.
In April, Citius sold 21.43 million shares of its common stock at a price of $0.70 per share and accompanying warrants ($0.75 exercise price) in a registered direct offering. Gross proceeds from the offering were $15 million, with the company realizing net proceeds of $13.8 million. With these proceeds, the company now projects that its available cash will be sufficient to fund its operations until December 2024.
Citius expects to complete the merger of its Citius Oncology (CO) subsidiary with TenX Keane Acquisition (NASDAQ: TENK), a SPAC, in July or August. If all remaining TENK shareholders approve and participate in the merger, Citius Oncology will have estimated cash of $58 million, including Citius’s contribution of $10 million, to fund the launch of LYMPHIR. Citius would then own 67.5 million shares of CO, equal to 91% of pro forma shares outstanding. It plans to spin off those shares eventually to CTXR shareholders.
Citius has been granted an extension until September 9 to regain compliance with NASDAQ’s minimum $1.00 per share threshold. In order to do so, the stock trade must trade above $1.00 for at least 10 consecutive business days. Although CEO Leonard Mazur is against it, a reverse stock split cannot be ruled out.
One as yet unanswered piece of the puzzle is how Citius will finance its remaining operations after the merger with TENX and launch of LYMPHIR. TENX’s cash will presumably be devoted to Citius Oncology and unavailable to Citius Pharmaceuticals. Yet, Citius Pharma must still fund the development of its other assets, including Mino-Lok and Halo-Lido. It could conceivably sell shares of Citius Oncology in a public offering to raise the necessary capital, but it seems more likely that it will seek to raise equity in another separate offering sometime before the end of the year.
Although Citius’s stock remains highly speculative, I am maintaining my 12-month price target of $1.50 and my performance rating of “1” (Buy).
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, 2024 (Report published on June 28, 2024.)
Stephen P. Percoco
Lark Research
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