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CREATIVE MEDICAL TECHNOLOGY HOLDINGS, INC. 10-K Analysis & Summary – 3/14/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

Creative Medical Technology Hol

Filing date:

03/14/2025

TLDR:

ELI5:

This company is trying to develop new medicines, but they’re losing money and need to raise more. They’re making progress in testing their drugs, but there’s still a lot of risk involved.

Accession #:

0001477932-25-001736

Published on

Analyst Summary

  • Creative Medical Technology Holdings, Inc. reported minimal revenue of $11,000 in 2024, with significant operating and net losses of $5.74 million and $5.49 million, respectively.
  • Research and Development expenses increased by 22% to $2.4 million, reflecting a focus on clinical trial advancement.
  • Cash and investments decreased by 41% to $5.94 million, highlighting the need for future financing.
  • Management expresses optimism regarding clinical trial progress, particularly with AlloStemSpine® (CELZ-201 ADAPT), but acknowledges the need for additional capital.
  • The company continued to repurchase shares despite its losses and need for cash, which may be viewed negatively by some investors.

Opportunities and Risks

  • Risk: Uncertainty surrounding FDA approval for ImmCelz™ and other therapies.
  • Risk: Intense competition from larger pharmaceutical and biotechnology companies.
  • Risk: Risk of negative or inconclusive results from clinical trials.
  • Risk: Inability to secure additional funding on acceptable terms.
  • Risk: Challenges in protecting proprietary rights and potential infringement lawsuits.
  • Risk: Potential disruptions to clinical trials, supply chains, and the overall economy due to COVID-19 and geopolitical risks.
  • Opportunity: Positive preliminary data from AlloStemSpine® (CELZ-201 ADAPT) and other trials.
  • Opportunity: Potential benefits from Orphan Drug Designation for Brittle Type 1 Diabetes.
  • Opportunity: Versatility of ImmCelz™ and AlloStem™ platforms for multiple indications.
  • Opportunity: Potential for AI to accelerate drug discovery and optimize therapeutic interventions.
  • Opportunity: Potential for collaborations to accelerate development and commercialization.

Potential Implications

Company Performance

  • Continued operating losses may impact the company’s ability to fund ongoing research and development.
  • Reliance on future capital raises introduces uncertainty regarding the company’s long-term financial stability.
  • Positive clinical trial outcomes could lead to increased investor confidence and potential revenue generation.
  • Successful commercialization of therapies could significantly improve the company’s financial performance.

Stock Price

  • Negative clinical trial results or failure to secure additional funding could negatively impact the stock price.
  • Positive clinical trial data and FDA approvals could lead to a significant increase in the stock price.
  • The company’s high Price-to-Sales ratio suggests the stock may be overvalued relative to its sales.

SEC Filing Report: Creative Medical Technology Holdings, Inc. (CELZ) – 10-K for FY2024

Executive Summary

This report analyzes Creative Medical Technology Holdings, Inc.’s (CELZ) 10-K filing for the fiscal year ended December 31, 2024. CELZ is a commercial-stage biotechnology company focused on regenerative medicine. Key findings include continued operating losses, reliance on future capital raises, and progress in clinical trials, particularly with AlloStemSpine® (CELZ-201 ADAPT). While the company has achieved several milestones, including FDA clearances and positive preliminary clinical data, significant risks remain, including regulatory hurdles, competition, and the need for substantial additional funding. The overall assessment is a cautious Hold, pending further progress in clinical trials and revenue generation. Investors should closely monitor cash burn, clinical trial outcomes, and the company’s ability to secure future financing.

Company Overview

Creative Medical Technology Holdings, Inc. is a biotechnology company developing novel biological therapeutics in immunotherapy, endocrinology, urology, neurology, and orthopedics. Their key platforms include ImmCelz™ (CELZ-100), AlloStem™ (CELZ-201-DDT), and StemSpine®. The company is currently focused on clinical trials for Type 1 Diabetes (CELZ-201 CREATE-1) and chronic lower back pain (AlloStemSpine® CELZ-201 ADAPT). Recent developments include FDA authorization for expanded access therapy for Type 1 Diabetes and promising initial data from the CELZ-201 ADAPT clinical trial.

Detailed Analysis

Financial Statement Analysis

Metric 2024 2023 Change Analysis
Gross Revenue $11,000 $9,000 22% Minimal revenue generation; heavily reliant on external funding.
Research and Development Expenses $2,400,777 $1,970,639 22% Increased investment in clinical trials and platform development.
Selling, General, and Administrative Expenses $3,239,232 $3,560,309 -9% Decrease due to cost-cutting measures, but still substantial.
Operating Loss $5,743,861 $5,620,132 2% Continued significant operating losses.
Net Loss $5,493,481 $5,286,574 4% Reflects ongoing losses despite slight revenue increase.
Cash and Investments $5,940,402 $9,987,058 -41% Significant cash burn; highlights the need for future financing.

Key Ratios:

* Cash Burn Rate: Approximately $5.3 million in cash used in operations for FY2024.
* Working Capital: Positive working capital of approximately $5.8 million as of December 31, 2024.

Trends:

* Increasing R&D expenses indicate a focus on clinical development.
* Decreasing cash balance raises concerns about long-term funding.

Management’s Discussion and Analysis (MD&A) Insights

* Positive Tone: Management expresses optimism regarding clinical trial progress and the potential of their platforms.
* Forward-Looking Statements: The MD&A contains numerous forward-looking statements, highlighting the inherent uncertainties in the biotechnology industry.
* Emphasis on Milestones: Focus on FDA clearances, clinical trial initiations, and positive preliminary data.
* Revenue Generation: Acknowledgment of minimal revenue from existing products and the need for increased revenue from future therapies.
* Capital Needs: Explicit statement regarding the need for additional capital to fund operations.

Red Flags and Uncommon Metrics

* Continued Losses: Consistent operating and net losses raise concerns about long-term sustainability.
* Reliance on External Funding: The company’s dependence on future capital raises is a significant risk factor.
* Minimal Revenue: The limited revenue generated from existing products (CaverStem®) suggests challenges in commercialization.
* Stock Repurchase Program: The company continued to repurchase shares despite its losses and need for cash. This may be viewed negatively by some investors.

Risk and Opportunity Assessment

Risks:

* Regulatory Approval: Uncertainty surrounding FDA approval for ImmCelz™ and other therapies.
* Competition: Intense competition from larger pharmaceutical and biotechnology companies.
* Clinical Trial Outcomes: Risk of negative or inconclusive results from clinical trials.
* Funding: Inability to secure additional funding on acceptable terms.
* Intellectual Property: Challenges in protecting proprietary rights and potential infringement lawsuits.
* COVID-19 and Geopolitical Risks: Potential disruptions to clinical trials, supply chains, and the overall economy.

Opportunities:

* Clinical Trial Progress: Positive preliminary data from AlloStemSpine® (CELZ-201 ADAPT) and other trials.
* Orphan Drug Designation: Potential benefits from Orphan Drug Designation for Brittle Type 1 Diabetes.
* Platform Technology: Versatility of ImmCelz™ and AlloStem™ platforms for multiple indications.
* AI Integration: Potential for AI to accelerate drug discovery and optimize therapeutic interventions.
* Partnerships: Potential for collaborations to accelerate development and commercialization.

Conclusion and Actionable Insights

Creative Medical Technology Holdings, Inc. is a high-risk, high-reward investment. The company has made progress in its clinical development programs, but faces significant challenges in securing regulatory approvals, generating revenue, and obtaining sufficient funding.

Overall Assessment: Hold

Recommendations:

* Monitor Cash Burn: Closely track the company’s cash burn rate and ability to secure future financing.
* Evaluate Clinical Trial Outcomes: Assess the results of ongoing clinical trials, particularly for AlloStemSpine® (CELZ-201 ADAPT) and Type 1 Diabetes (CELZ-201 CREATE-1).
* Assess Commercialization Strategy: Evaluate the company’s plans for commercializing its therapies and generating revenue.
* Consider Regulatory Risks: Understand the regulatory hurdles and potential delays in obtaining FDA approval.
* Monitor Competitive Landscape: Track the progress of competitors in the regenerative medicine field.

This analysis is based on the information available in the 10-K filing and should not be considered financial advice. Investors should conduct their own due diligence before making any investment decisions.

Financial Analysis of Creative Medical Technology Holdings, Inc. (CELZ)

1. Commentary

Creative Medical Technology Holdings, Inc. faces significant financial challenges. The company reported a net loss for both 2024 and 2023, with minimal revenue generation. While cash reserves remain substantial, they have decreased significantly from the previous year due to operating activities. The company is heavily reliant on raising capital to fund its operations and research and development activities. Continued losses and reliance on external funding raise concerns about the company’s long-term financial sustainability.

2. Financial Ratio and Metric Analysis

Profitability

Gross Profit Margin

  • Metric: $6,600 / $11,000 = 60% (2024); $5,400 / $9,000 = 60% (2023)
  • Trend: 0%
  • Industry: Biotech companies in early stages of development often have variable gross margins, heavily influenced by licensing agreements, grants, or early product sales. A 60% gross profit margin is good, but the low revenue makes it less significant.

Operating Profit Margin

  • Metric: ($5,743,861) / $11,000 = -52217% (2024); ($5,620,132) / $9,000 = -62446% (2023)
  • Trend: -16%
  • Industry: Immature biotech companies will have negative operating margins due to high R&D and administrative costs.

Net Profit Margin

  • Metric: ($5,493,481) / $11,000 = -49941% (2024); ($5,286,574) / $9,000 = -58739% (2023)
  • Trend: -15%
  • Industry: Immature biotech companies will have negative net profit margins due to high R&D and administrative costs.

Return on Assets (ROA)

  • Metric: ($5,493,481) / $6,669,143 = -82% (2024); ($5,286,574) / $10,715,190 = -49% (2023)
  • Trend: -67%
  • Industry: Negative ROA is typical for early-stage biotech companies investing heavily in R&D.

Return on Equity (ROE)

  • Metric: ($5,493,481) / $6,341,499 = -87% (2024); ($5,286,574) / $10,343,796 = -51% (2023)
  • Trend: -71%
  • Industry: Negative ROE is expected for companies with net losses and positive equity.

Earnings Per Share (EPS) – Basic and Diluted

  • Metric: ($3.71) (2024); ($3.76) (2023)
  • Trend: -1%
  • Industry: Negative EPS is common for biotech companies without approved products.

Liquidity

Current Ratio

  • Metric: $6,135,303 / $327,644 = 18.72 (2024); $10,270,898 / $371,394 = 27.65 (2023)
  • Trend: -32%
  • Industry: A high current ratio suggests strong liquidity, but it can also indicate inefficient use of assets. The decrease in the current ratio is due to the decrease in current assets.

Quick Ratio (Acid-Test Ratio)

  • Metric: ($6,135,303 – $2,194) / $327,644 = 18.71 (2024); ($10,270,898 – $6,594) / $371,394 = 27.64 (2023)
  • Trend: -32%
  • Industry: A high quick ratio suggests strong liquidity, but it can also indicate inefficient use of assets. The decrease in the quick ratio is due to the decrease in current assets.

Cash Ratio

  • Metric: $5,940,402 / $327,644 = 18.13 (2024); $3,466,867 / $371,394 = 9.33 (2023)
  • Trend: 94%
  • Industry: A high cash ratio indicates a very conservative approach to liquidity management.

Solvency/Leverage

Debt-to-Equity Ratio

  • Metric: $327,644 / $6,341,499 = 0.05 (2024); $371,394 / $10,343,796 = 0.04 (2023)
  • Trend: 25%
  • Industry: Low debt-to-equity ratio indicates low financial leverage.

Debt-to-Assets Ratio

  • Metric: $327,644 / $6,669,143 = 0.05 (2024); $371,394 / $10,715,190 = 0.03 (2023)
  • Trend: 67%
  • Industry: Low debt-to-assets ratio suggests a small portion of assets are financed by debt.

Interest Coverage Ratio (Times Interest Earned)

  • Metric: ($5,743,861 + $250,380) / $0 = N/A (2024); ($5,620,132 + $333,558) / $0 = N/A (2023)
  • Trend: N/A
  • Industry: Since there is no interest expense, the interest coverage ratio is not applicable.

Activity/Efficiency

Inventory Turnover

  • Metric: $4,400 / (($2,194 + $6,594)/2) = 1.00 (2024); $3,600 / (($6,594 + $0)/2) = 1.09 (2023)
  • Trend: -8%
  • Industry: Very low inventory turnover suggests slow-moving inventory.

Days Sales Outstanding (DSO)

  • Metric: Not meaningful due to low revenue.
  • Trend: N/A
  • Industry: N/A

Days Payable Outstanding (DPO)

  • Metric: Not meaningful due to low cost of revenue.
  • Trend: N/A
  • Industry: N/A

Asset Turnover

  • Metric: $11,000 / $6,669,143 = 0.0016 (2024); $9,000 / $10,715,190 = 0.0008 (2023)
  • Trend: 100%
  • Industry: Very low asset turnover indicates inefficient asset utilization in generating revenue.

Valuation

Price-to-Earnings Ratio (P/E)

  • Metric: $3.27 / (-3.71) = N/A (2024); $3.27 / (-3.76) = N/A (2023)
  • Trend: N/A
  • Industry: Not applicable due to negative earnings.

Price-to-Book Ratio (P/B)

  • Metric: Market Cap / Book Value = (1,748,428 * $3.27) / $6,341,499 = 0.90 (2024); (1,431,126 * $3.27) / $10,343,796 = 0.45 (2023)
  • Trend: 100%
  • Industry: A P/B ratio less than 1 can indicate that a stock is undervalued, but it can also mean there are serious problems with the company.

Price-to-Sales Ratio (P/S)

  • Metric: (1,748,428 * $3.27) / $11,000 = 520.58 (2024); (1,431,126 * $3.27) / $9,000 = 519.33 (2023)
  • Trend: 0.2%
  • Industry: Extremely high P/S ratio suggests the stock is overvalued relative to its sales.

Enterprise Value to EBITDA (EV/EBITDA)

  • Metric: Market Cap + Total Debt – Cash / EBITDA = (1,748,428 * $3.27) + $327,644 – $5,940,402 / (-$5,493,481 + $110,452 + $250,380) = N/A (2024); (1,431,126 * $3.27) + $371,394 – $3,466,867 / (-$5,286,574 + $94,584 + $333,558) = N/A (2023)
  • Trend: N/A
  • Industry: Not meaningful due to negative EBITDA.

Growth Rates

Revenue Growth

  • Metric: ($11,000 – $9,000) / $9,000 = 22%
  • Industry: Any revenue growth is positive, but the absolute numbers are very small.

Net Income Growth

  • Metric: (($5,493,481) – ($5,286,574)) / $5,286,574 = 4%
  • Industry: A decrease in net loss is a positive sign, but the company is still far from profitability.

EPS Growth

  • Metric: ((-3.71) – (-3.76)) / -3.76 = -1%
  • Industry: A decrease in EPS loss is a positive sign, but the company is still far from profitability.

Other Relevant Metrics

The company highlights several key performance indicators related to its ImmCelz™ platform, including fewer donor cells required, higher purity, and reduced functional suppression of effector T cells. These metrics are important for assessing the potential of the technology, but they do not directly translate into financial performance. The company is also conducting clinical trials for its CELZ-201-DDT product, with preliminary data suggesting potential therapeutic benefits. The success of these trials will be critical for the company’s future revenue generation.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️