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April 15, 2011

Cellceutix (OTCQB: CTIX) Management Outlines Enormous Potential in Exclusive Interview

Cellceutix Corporation (OTCQB: CTIX), a preclinical cancer, anti-inflammatory and autism drug developer, recently sat down with BiotechStockTrader.com for an exclusive interview.

Can you provide new investors reading this article with a brief overview of Cellceutix and why they should be paying close attention to it?

Cellceutix offers investors one of the greatest potential risk/reward ratios from publicly listed companies– one would be hard-pressed to find a company that offers that kind of opportunity. Cellceutix currently has three leading compounds that the company is working with. The first compound is Kevetrin, for the treatment of cancer, which in animal tests showed that it worked on cancers that presently are untreatable with existing drugs. In the industry, these are called drug-resistant cancers. An FDA approved drug having this characteristic would have the potential to generate many billions of dollars in revenues. The second is a compound that we’ve developed to treat autism – not merely the symptoms of autism, but the underlying cause. Potential sales for an approved drug in this market could be $10 billion or more. And the third compound is to treat psoriasis; we believe the market potential for this would be approximately $1 billion. There are also five other compounds in the early stages of development.

Recently, Cellceutix announced a CDA with a major pharmaceutical company. Is this common for a company that is in pre-clinical trials? How did this come about?

It is very, very unusual for a large pharmaceutical company to sign a Confidential Disclosure Agreement, or CDA, with a company in preclinical drug development. As a matter of fact, it was two of our compounds with two different pharmas. Regarding our cancer compound, the way it came about was that the investment and scientific community started noticing our press releases regarding our ability to kill resistant cancers. This information was presented to one of the big pharmas. In discussions with the pharma, they decided that they wanted to move forward with additional information, and it resulted in a CDA. Again, this is highly, highly unusual.

What could something like this lead to?

The company’s goal is to get the compound into clinical trials, because the value of the compound goes up exponentially as you enter and go through the FDA process. Our intent is to talk, but to stay away from signing any deals before the Phase I trials. The big pharma that we recently signed a CDA with just wants to have the information now, so if there is an opportunity to pounce, it’s up to them to pounce. There’s a very big upside for a company like ours knowing that one big pharma is looking at us, because this always yields additional pharmas looking at you. These large pharmas pretty much know the compounds out there that have potential. If they feel that one has an advantage, the others want to own it as well, and that bodes well for our stockholders.

One of the major breakthroughs that sets Cellceutix apart from other biotech companies is Kevetrin’s ability to activate p53. Can you discuss what this is and why it is so significant?

p53 is known as the “Guardian Angel” gene. It’s the p53 in more than half of the cancers that is not regulating the cell properly. When Kevetrin comes in contact with the p53, it reactivates the p53 and it gets alerted to start doing its job, whether to fix the cell or to kill the cell. This has been one of the “Holy Grails” in cancer research. There have been numerous programs at the biggest pharmas working on this, and it’s hard for us to estimate how much has been spent on these programs, but we’d have to guess it has been in the hundreds of millions of dollars of research. There’s one whole class of drugs with which they attempted to do this, called Nutlins, but those were found to be defective in that they destroyed the DNA, so that wasn’t a viable option. So, it seems that Cellceutix, at this time, and with what we know, has the only activator of p53 as a cancer drug.

Now, I’ve been an investor for many, many years, and what we’re trying to do is mitigate the risks. The rewards we know – the upside is very enormous. We’ve done extensive animal testing. We’re now preparing our IND filing, which we are on target for May 2011 to file. And, we’re now speaking to one of the most respected major university hospitals to do our trials.

With regards to some of the other compounds, like KM-391, what sets those drugs apart from their respective competitors?

That’s another phenomenal project that we’re undertaking. The upside is potentially in the billions of dollars for an approved drug that deals with the core issues of autism and not just the symptoms of autism.

We haven’t spoken much about the autism drug over the past year, but that doesn’t mean that work hasn’t been continuing. We’ve focused on our cancer drug, Kevetrin, because it will likely be the first to enter clinical trials. But, now that that’s close to happening, we’ve shifted our focus back to autism and have actually signed a confidentiality agreement with one of the large multi-billion dollar pharmas.

Now, we need to synthesize the compound and complete our toxicology studies; we have been in contact with different vendors to begin that process. And again, it is highly unusual for a multi-billion dollar pharma to sign a CDA on a preclinical drug, which is further proof of our abilities.

You mentioned that KM-391 targets the core issues of autism. That seems like the same issue that the Alzheimer’s industry faced, in that for so long they were treating the symptoms and not the cause. Is this a similar situation with the autism market?

Exactly. There is documented data as to specific characteristics within an autistic person’s brain which include increased brain plasticity and lowered serotonin levels. We were able to chemically reproduce these traits in animals used for our research, and then when treated with our compound, we were able to overcome these conditions and return those critical biologicals back to more normal levels. As is the goal of any drug in development, ongoing research will hopefully confirm the early data generated of reduced plasticity and creation a more even serotonin distribution in the various regions of the brain. If that were to work as it did in animals, this would be a huge medical advancement in the treatment for autism and would hopefully provide relief to autistic patients and their families.

In the end, the value of a stock is the present value of its future cash flows. So, can you give investors doing their due diligence an idea of your development timeline and any projections in terms of revenue potential?

Investors have not really understood Cellceutix and what we’re about. For example, if we were to analyze our cancer drug Kevetrin, we plan on filing the IND in May. Assuming no objections by the FDA, we should be able to begin human trials around August. Then, we’d be in a Phase I human trial, and we’re not just attacking any cancer, we’re attacking cancers that all other drugs have failed against.

Let me explain why this is important: A normal drug in Phase I trials goes into healthy volunteers and tests primarily for safety. In cancer drugs, it’s different. Cancer trial drugs are often given to Stage 4, terminally ill patients. These patients most often have cancers that are already resistant to existing therapies. So, these are the patients we’re going to be getting. Ironically, many of these patients are perfect candidates for our efficacy trial, since this is the market we’re also seeking to treat.

So, we’re hoping for efficacy to be seen in Phase I, which is a very unusual situation. If this happens, it is possible that the FDA will allow us to skip Phase II and go to Phase III trials. In the best case scenario, we could be on the market in two-and-a-half years and generating very significant revenue.

So, because you’re targeting untreated cancers and are seeing your target patients in Phase I trials, it’s possible that you’ll see efficacy in Phase I instead of waiting until Phase II or III trials? And as a result, you may be able to speed up your development timeline pretty significantly?

Exactly. It’s an unmet medical need and we’ll have priority review with the FDA and may be able to significantly speed up development.

And, if you take your current market capitalization at around $80 million, it could be seen as pretty undervalued given this potential. If you even took a very conservative sales level four years out and discounted it back to today, investors aren’t giving you very high odds of success, despite what your animal testing and trials suggest.

Precisely. The market capitalization on a risk/reward ratio leaves a tremendous upside, if the scenario were to occur. Just look at Dr. Menon’s track record, he was very instrumental in the development of two blockbuster drugs at Eli Lilly for which he won the President’s award in 1999. Present sales for the drugs are over 3 billion dollars. So, you’re dealing with a guy that’s proven, a drug that has shown really amazing results in animal trials, and the company is very well-positioned, with its CDAs as further votes of confidence.

What’s the timeline for the autism drug?

The timing of everything depends on funding. In order to do the toxicology studies and prepare the IND, the company needs to do a capital raise. Our philosophy has been avoiding diluting the company at these depressed valuations, so we’re waiting for Kevetrin to begin trials before doing the raise. Then, we’ll focus on getting the autism drug through preclinical work. Furthermore, the autism drug is also directed towards an unmet medical need and may be eligible for an FDA fast-track.

You just touched on funding. How has the company financed all of the pre-clinical research?

We have been internally funded. Dr. Menon and I have put forth the monies required to conduct all of the research to this point without drawing a single paycheck. We have done this to protect shareholder value and to reiterate our confidence in the potential of this company. We feel that we will be rewarded when the Cellceutix shareholders are rewarded and will continue to work diligently to make that happen.

At what stage would you consider partnering for either drug?

We’re just about in Phase I with Kevetrin and anytime a little thereafter or further along, depending on our financing and potential offers. But, right now, we feel like we’re in a really good spot. We’ve been in correspondence with top five pharmas and have two CDAs signed.

Aside from Kevetrin’s cancer focus, what other drugs are you developing and how do they compare in terms of potential?
We believe we have a very interesting drug for psoriasis that has essentially cured mice of psoriasis. You must understand that the longevity of a mouse is very different from a human, but we do know that our drug has a profound effect on mice. We do have plans to move towards human clinical trials and they will be announced shortly.

Your stock trades on very low volume. Why do you think that is the case?

I think that every CEO wishes to have the answer for that. There are about 45 million shares that are freely tradable, but I can only assume that the people holding those shares are committed to the long-term potential and are holding their shares tightly.

If you could tell investors reading this article one thing, what would it be?

They would be hard pressed to find a company that has the potential risk/reward of Cellceutix. We are about to enter into two of the biggest pharmaceutical markets in the world. Our compound for autism is in the planning stages of toxicity studies. Our cancer drug, Kevetrin which is novel in its composition, is also very, very unique in its mechanism of action and proven in animals. We’re very optimistic that we’ll enter clinical trials shortly and get the same results. As a company, we are confident based on the studies done to date and that view is shared and reinforced by our team of advisors and consultants who have been involved with some of the biggest drugs on the market today. We, the management, believe that the best is yet to come.

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