Seeing Into the Future…And Boy Is It Pretty

You know the age old question, “If you had a super power what would it be?” Well, most investors would say to be able to predict the future and instantly become billionaires. Now although that would be one heck of a dream, it’s just that, a dream. Or is it?

What if I told you one CEO is duplicating a business model and strategy that he put together a couple years ago with another company that is paying off in a big way. And I mean BIG. This CEO’s strategy turned a tiny company with a less than $2Mil market cap into a true industry competitor now sporting a $365Mil market cap.

What company was that might you ask? Lion Biotechnologies (LBIO). Who was the CEO that put all the pieces in place? Tony Cataldo. And what company is he leading now? Oxis International (OXIS).

If history in any way repeats itself, early investors of OXIS could be in for quite a ride as Mr. Cataldo’s early framework and foundation for LBIO is taking that company to the moon. LBIO stock has recently broken out from $7 to $14 as the company’s LN-144 treatment offers similar benefits/drawbacks to autologous Chimeric Antigen Receptor (CARs) with strong data already generated in solid tumors, immunotherapy combination data in the pipe, and at a bargain price per share compared to industry leading competitors Juno Therapeutics (JUNO) at $52 and Kite Pharma (KITE) at $64. Not to mention JUNO’s $4.5Bil and KITE’s nearly $2.7Bil market caps versus LBIO’s much lower $365Mil.

Mr. Cataldo set out to create and take advantage of the arbitrage between LBIO and industry juggernauts JUNO and KITE. His thesis was that it’s a lot easier to take a company from $2 to $20 a share than it is to take a company from $50 to $500 a share. He doesn’t try to reinvent the wheel, simply improve it.

Mr. Cataldo set up LBIO by bringing in industry leading scientists who already held proven and valuable data on certain drug compounds. LBIO also relies on a Cooperative Research & Development Agreement (CRADA) with the National Institute of Health (NIH) (specifically Dr. Rosenberg’s lab) from whence the technology, clinical data, and manufacturing has been generated to-date. Coincidentally, this is an exact replica of the CRADA partnership that KITE relies on with NIH (also specifically Dr. Rosenberg’s lab) from whence all of KITE’s CAR-T progress has been generated to-date. Do you see where I’m going with this?

Cataldo comes into smaller companies, brings in people, assets, and data, and begins to duplicate the industry leaders in hopes of providing more value and less risk for investors. This is exactly what he is doing with OXIS right now.

In the past couple months, Cataldo has brought on Dr. Xie, the world’s foremost expert cannabinoid scientist and Dr. Mulé who is an employee of the FDA. And guess what Dr. Mulé is most known for. His research and clinical contributions to cancer immunotherapy, particularly in solid tumors. These are the exact same type of moves that Cataldo made when laying the foundation for LBIO. But in addition, he has also brought on Dr. Lisa A. Haile, Ph.D. who currently serves as Co-Chair for the Global Life Sciences Sector at DLA Piper, one of the country’s top law firms. Dr. Haile has special technical expertise in molecular biology and immunology. She has particular experience with patentability, non-infringement and validity opinions, licensing strategies, and most importantly FDA counseling.

The point I am trying to make is that the early opportunity developing in OXIS is beginning to look a lot like what we saw in LBIO when it was trading for mere pennies a share. But instead of going after industry juggernauts JUNO and KITE like Cataldo did with LBIO, he has his sights set on cannabinoid biotech giants GW Pharma (GWPH) and Insys Therapeutics (INSY) both with market caps hovering around $2Bil.

With OXIS, Cataldo believes he can create a much higher value proposition for investors when compared to the two industry giants. He was even quoted in an interview saying that he believes some of Dr. Xie’s drug data to be of higher quality and provide better results than GWPH’s and INSY’s. He also said he has aggressive plans of up-listing to a major exchange this year and expects very high interest from banks when it comes time for a significant capital raise to further their research in preparation for FDA trials. And who could argue with that? He only took his last biotech company from a market cap of less than $2Mil to now $365Mil. I’m willing to bet that every investment firm that raised Cataldo money for LBIO is foaming at the mouth to throw money at this guy again. And I’m willing to bet even more that the investment firms that passed on Cataldo with LBIO and did not invest, will be the first ones knocking his door down when it comes time to raise capital.

So, although you can’t predict the winning lottery numbers or which college basketball team will win the NCAA March Madness Tournament, you are getting a glimpse of what the future may hold for early OXIS investors as the LBIO story unfolds before our eyes. In just the past month, we have seen LBIO up-list to the NASDAQ and skyrocket from less than $7 a share to $14. And former CEO Tony Cataldo looks to be using the exact same strategy and putting all the same pieces together with his new biotech company, OXIS. See, I told you the future was pretty.

 

 

 

 

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