Cellceutix Corp (OTCMKTS:CTIX) Is Setting Up For NewGen Antibiotic Gains

Massachusetts based Cellceutix Corp (OTCMKTS:CTIX) had a pretty tough second quarter, falling from April highs of $1.84 to current levels at circa $1.20. Across the period, however, no real company updates hit press, and it looks as though wider market sentiment played the major role in the decline. There's a good chance, therefore, that as sentiment shifts, Cellceutix could pick up some upside momentum. Add to this chance that the company is about to kick off a pivotal trial in its lead candidate, a new generation antibiotic called Brilacidin, and it seems well worth a look.Back in 2013, Cellceutix picked up the rights to Brilacidin in an asset sale on the back of a company called PolyMedix going bankrupt. At that point, it had just completed a phase 2a, and was heading into a pre-pivotal 2b. Cellceutix got its hands on Brilacidin for $5 million, which now looks like a bargain acquisition. Why? Because Merck picked up the rights to what is essentially the only comparable drug on the market – Cubicin – a couple of years later in an acquisition valued at $9.5 billion.Cellceutix has spent the last two years proving that Brilacidin is comparable to Cubicin, which it has done successfully by way of a phase 2b, and to boot, it's shown equivalence with a single dose, while Merck's candidate requires a 7-day treatment period.Manufacturing is underway for a pivotal that will form the basis of an NDA, assuming the company can replicate its phase 2 results in the upcoming phase 3, and it looks as though Cellceutix could be targeting a billion-dollar market (Cubicin generated $1.1B at its peak for Cubist, the company Merck acquired to gain the rights to the drug) before the close of the decade. All with a compound it got for just $5 million in a flash sale a few years ago.When Merck acquired Cubist, Cellceutix gained more than 30% overnight. When asked why, Leo Ehrlich, CEO of Cellceutix said:

Because now it looks like we were absolute geniuses for purchasing our antibiotic from bankruptcy court a year ago for $5 million.

It's looking very much like he might be right.So what's next? Well, the upcoming pivotal will likely serve as the major catalyst behind any big moves, and that's what we're focusing on near term. Cellceutix just submitted some pediatric data, which is the precursor to being able to dose children, and in doing so met a major milestone in the path to pivotal initiation. Its API (a sort of blueprint version of a drug from which manufacturers work to produce the batches required for a trial) is in hand and undergoing testing. Once it has shown to be equivalent to the version used in the phase II by way of head to head trials, the trial will begin. There's upside in its initiation, and even more as interim efficacy data starts to roll in.That's not all. The company has two other strong candidates in its pipeline. Kevetrin, an oncological target and Prurisol, a psoriasis indication that looks both safe and effective and should follow Brilacidin into a pivotal trial before the end of next year.It's not all rosy, however. The company had a little over $5.3 million in cash at last count (March 31) and runs at a burn of more than $3 million a quarter. Factor in the advancing of two candidates into pivotal trials near term, and even when we include a $1.7 million injection based on the the sale of 1.1 million shares of common stock to Aspire LLC, there's practically nothing in the bank before the year draws to a close. This means a capital raise, and this in turn probably means dilution. To date there haven’t been any overly toxic raises, and operational capital has generally derived from methods similar to the Aspire deal described above, but that doesn’t rule out the risk of something a little less savory going forward.We're basing the potential upside on two things. The first, how quickly and effectively Cellceutix can get its two leads into pivotals. The second, how it decides to fund these pivotals.The sooner this information hits press, the sooner our analysts will be able to make an accurate judgment call. Subscribe to our updates by entering your email below and make sure you get the information, and our interpretation of it, first.Disclosure: We have no position in CTIX and have not been compensated for this article.