StreetSweeper Negative On Celator, Said Good Story Won't Last

Shares of Celator Pharmaceuticals Inc CPXX tumbled more than 3 percent on Monday after TheStreetSweeper's Sonya Colberg published a scathing report on the company.

According to Colberg, the clinical-stage bio-pharmaceutical company has "finished cherry-picking and left the ladder against the tree." Meanwhile, new stock promoters have "climbed up and begun tossing investors the pits."

Colberg continued that Celator is now focusing on a drug that targets a rare cancer called acute myeloid leukemia. In fact, the company has already failed at meeting a primary key endpoint in a phase II trial and that survival rates "were not statistically significant." However, researchers began to examine a special subgroup of patients with secondary acute myeloid leukemia which produced "better looking results" – hence the "cherry-picking" which helped the company proceed to a phase III trial.

Related Link: 3 Mega Biotechs Leerink Loves

Other Concerns

Colberg further suggested that Celator's press releases might be "more promotional than informational." In addition, four positive articles about Celator can be retrieved through Yahoo! Finance's library and were all written by the same author. Colberg does state it is unclear if these articles are indeed paid promotions, but "they probably are," as the publication charges between $10,000 and $50,000 for investor relations and related services.

Finally, Colberg pointed out that Celator's finances are "only getting worse and worse, faster and faster." At the same time, the company's top four executives are "hauling in" more than $2 million in compensation.

Bottom line, there is an "excellent chance" that the expected results from a phase III trial in March will "not be positive."