On April 7, 2015, The Pump Stopper at Seeking Alpha released a bearish report claiming that Cellular Biomedicine (NASDAQ: CBMG) has achieved an unsustainable valuation with paid stock promotion. The company’s cell therapies are worthless and certain executives have questionable histories.
Cellular Biomedicine is a Chinese cell therapy stock which I stumbled upon when LifeTech Capital released an extremely bullish report with a target price of $32.50. I felt very strange, but I didn’t find any solid evidence against LifeTech Capital. Now it turned out to be a paid stock promotion.
In February 2015, Cellular Biomedicine acquired CAR-T therapies targeting CD19, CD20, CD30, and EGFR from the Chinese PLA General Hospital in a RMB12 million deal. It sounds too cheap to be true. Furthermore, the company’ R&D expense was much lower than G&A cost in the last two years (2014: $2.67 vs. $8.41 million; 2013: $1.89 vs. $9.31 million).
I saw why four CAR-T therapies only cost RMB12 million when the Phase I results of CAR-CD19 came out on March 25, 2015. The trial enrolled nine adult patients with R/R B-cell ALL, only two had a complete response. One of those patients eventually died of graft-versus-host disease. The results were dim when compared to Juno Therapeutics’ (NASDAQ: JUNO) complete response rate of 90% presented at the ASH2014 Annual Meeting.
Here’s still a biotech investment lesson: be careful of Chinese fraudsters in biotech clothing.