[ed. note: Dr. KSS writes about biotech stocks for the Irregulars. He has agreed to our trading restrictions, but he chooses his own topics and his words and thoughts are his own]

According to new SEC filings, Cellceutix President, co-founder and Chief Scientific Officer Krishna Menon has recently settled what should probably be regarded as a price-sensitive matter pertaining to Cellceutix (CTIX).

Like many Irregulars, I have a long position in CTIX, a company in Beverly, Massachusetts (on the north side of Boston), that began OTCBB trading in mid-2007. Menon, a veterinarian who also has a PhD, co-founded the company with Leo Ehrlich, who is CEO and CFO. The company’s present market capitalization is about $210 million. CTIX is somewhat lopsided in that it has only two officers, Menon and Ehrlich. Up until this week, It has only two directors (M&E), and still has only two large block shareowners (you’ve correctly guessed who). Ehrlich is an accountant with no formal biotechnology expertise. Menon has a credible drug development record, both at Eli Lilly (LLY) and under the late Emil Frei III, MD, a dazzling investigative oncologist.

CTIX has 108 million outstanding shares. Ehrlich owns 11.4 million of them, or 9.57 percent. Menon owns 31 million shares, or 26.1 percent, and those shares represent 73 percent of his personal financial holdings.

According to public records, Wayne Aruda, a master’s degree-holding organic chemist, co-invented Kevetrin, a lead compound for Cellceutix, with Menon, and Menon “inadvertently” left him off the compound’s patent application. Aruda helms a non-public company called Agrenetics in Wilmington, Massachusetts. Comparatively little data is available regarding Agrenetics. Aruda began litigating against Menon in 2007. I can find no evidence that any of this liability has previously been disclosed by Cellceutix in any regulatory filings or press releases. Which is odd: the conflict is contemporaneous with the emergence of Cellceutix. Aruda’s attorneys have likely pushed the matter of late as Kevetrin winds up phase 1 and increasingly appears to be a drug with a fighting chance, even though royalties are years away if they ever come about. Kevetrin, in phase 1, has completed eight dose level sorties, with sizable dose increments in between, and patients are said to have tolerated it well. This was expected based on mechanism of action and known pharmacological behavior in animals.

Kevetrin is thioureidobutyronitrile, a water-soluble organic small molecule. Kevetrin has the ability to activate a ...

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