The Street Sweeper's Sonya Colberg published a scathing short thesis on Bio-Path Holdings Inc BPTH, a clinical-stage biotechnology company that focuses on developing drugs to fight cancer.
Colberg's main criticism of the company is the fact that it "spent six years fruitlessly trying to make a buck selling ugly pants, clashing shirts and other golf paraphernalia" before it made the "unlikely transformation" via a reverse merger into a gene therapy company. As such, the inexperienced management team may be good at running a golf company, its CEO Peter Nielson "lacks real biotech or healthcare leadership experience."
Bio-Path's top product candidate which targets acute myeloid leukemia is "only" in a Phase II study while its second candidate, a drug which targets chronic myelogenous leukemia is approaching a Phase II study.
"So the candidates must get through the long process of one to two more phases of study before seeking Food and Drug Administration approval to market the therapy," Colberg noted. "These potential products are in the very early stages, so any possible sales are distant dreams."
Colberg further pointed out that Nielsen's official biography proves Nielsen's biotech experience is "so light" and his only credit is his "friendship" with key individuals at the University of Texas MD Anderson Cancer Center.
Meanwhile, Nielson's executive experience also includes a stint as the chief financial officer of an oil field services company named Omni Energy Services which "fell into financial disarray."
Bio-Path's co-founder Douglas Morris "also lacks prior biotech experience," Colberg added. On the other hand, the company's Chief Operating Officer Ulrich Mueller and Director Dr. Amy P. Sing do have biotech experience. By comparison, a strong biotech company such as Juno Therapeutics Inc JUNO boasts eight out of nine executives with prior experience in the sector.
Colberg moved on to Bio-Path's "unfortunate" support from Rodman & Renshaw – an advisory firm that "pushed aggressively for people to invest in Chinese companies" from 2010 to 2013. While Colberg stated that she is not implying any wrong-doing on Rodman & Renshaw's part in connection with BioPath, it is nevertheless important for investors to decide if the firm's support "represents another layer of risk."
Finally, Colberg pointed out that big banks are "showing little interest" in Bio-Path with 5 institutions recently selling their stake in the company. In addition, notable healthcare investor Sabby Management recently completely sold its entire stake.
"BioPath's pathway from golfing to gene therapy is definitely unusual," Colberg concluded. "Indeed, a market cap of $250 million is outlandish for a stock this early in the process and this risky."
"We expect the stock will soon go screaming down to a very fair valuation of $1.50 per share."
Shares of Bio-Path were trading lower by more than 6 percent Tuesday afternoon.
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