GT Biopharma: A Pump-and-Dump Built on the Hopes of Dying Cancer Patients
A CEO with a 25+ Year History of Pump-and-Dumps & Obliterating Shareholder Value; Aggressive Paid Stock Promotion; Dozens of Failed Product Launches; Insider Dealing; Ties to Organized Crime.
Hi everyone,
Thanks for being a Funny Business subscriber.
On July 13th, I published How America’s Most Inspirational Brand Sold Its Soul to the Devil, the story of the man behind Chicken Soup for the Soul.
On August 16th, I published PureCycle Technologies: The Nikola of Recycling, a piece about a recycling company with wild projections and technology claims. If you haven’t read it yet, you may want to check it out.
Today, I will tell you about another recent short idea of mine- GT Biopharma ($GTBP).
Before we get there, here’s a interesting update on PureCycle Technologies.
PureCycle CFO Michael Dee is also the Chairman of the Board for Velodyne Lidar, another SPAC that raised an outrageous amount of money, but has yet to produce any profits.
Velodyne Lidar isn’t doing too well.
The share price is currently down 75% from its 12-month highs.
The former CEO and largest shareholder of Velodyne recently wrote a damning letter to the board where he specifically called out Michael Dee as a destroyer of shareholder value.
Here are a few quotes from the letter (emphasis added) -
“I am calling on Chairman Michael Dee and director Hamid Zarringhalam to resign from the Board. I believe that both of these individuals have breached stockholders’ confidence and destroyed significant value in the company.
“Mr. Dee has spearheaded major business decisions that leave him responsible for the Company’s nearly 80% stock price decline…”
“In addition to Mr Dee’s lack of relevant skillsets to serve on the board, stockholders should be aware that he is currently deeply embroiled in litigation at PureCycle Technologies, Inc … Mr. Dee is facing serious accusation of misleading investors and fraud.”
I will continue to follow PureCycle closely. The first tier of the lock-up is coming in a couple of weeks. As a reminder, this is where insiders will be able to sell tens of millions of dollars in stock without showing any revenue, profit, or operational progress.
Stay tuned!
Now, on to GT Biopharma, my latest and greatest short idea.
Yes, I know this isn’t as exciting as the multi-billion dollar PureCycle report, but the story behind this $275mil biotech firm is wild, and I know you’re going to enjoy it.
Summary
GT Biopharma is the latest incarnation of a 50+ year-old company that has tried to launch horse supplements, anti-aging neutraceuticals, cannabinoid therapies, various cancer drugs, pain relief products and more. Most products never make it to market, but the ones that do are short-lived and result in massive losses.
The company has never produced a profit and the combined 20-year revenue is less than $900,000. It has an accumulated deficit of $600mil.
Over the last 20 years, the company has awarded nearly $150mil in stock-based compensation while spending just $14mil on R&D.1
CEO Tony Cataldo claims to be a successful “turn-around” executive, but has managed to destroy nearly every public company he has been a part of.
Ex-employees and investors have spoken out against Tony’s predatory behavior, and he has tried to silence them through lawsuits.
Many of Tony’s companies, including GT Biopharma, have paid large sums to shady stock promoters.
Tony has claimed he has seen flying saucers, was a member of the band Chicago, and that he is a successful movie producer. Oh, and allegedly he married a Danish supermodel on a cruise ship and lived on a $6mil property in Napa (which he loves to talk about in interviews).
Introduction
GT Biopharma has a corporate history dating back to the 60s. As far as I can see, it has had nothing but failures in its long history. Per its most recent quarterly report:
The Company has sustained operating losses since inception and expects such losses to continue over the foreseeable future.
55+ years is an impressively long time to sustain losses.
The various CEOs of the company have managed to reinvent it again and again, raising more and more capital to keep the business afloat.
In the late 90s, the company sold diagnostic assays and reagents. It was later involved in a potential treatment for inflammatory bowel disease, and then pivoted to neutraceuticals.
In 2012 alone, filings stated it was involved with functional beverages, personal care products, veterinary products, and “proprietary compounds” (whatever that means).
With all of these products, you might think they would do at least a few million in revenue, but that is not the case. Revenue in 2012 was $342,000, and dropped to zero by 2016, where it stands today.
The current accumulated deficit stands at $625mil+.
The executive team is a revolving door. There have been at least 9 CEO transitions and 5 CFO transitions since the early 2000s, as well as over a dozen board member resignations.
While the company has had many shady executives over the years, none stand out as much as the current CEO, Tony Cataldo.
Most of this piece will focus on Cataldo’s history in an attempt to build the case that he is a predatory pump-and-dump artist, not a cancer savior.
The History of Tony Cataldo - Genius Biotech Rockstar or Predatory Pump-and-Dumper?
Tony Cataldo is quite a character, even if we only look at his personal life.
He claims to have seen a flying saucer. He was even a director at a UFO investigation outfit called MUFON briefly, but is no longer on the board. I emailed MUFON to ask why but they wouldn’t say.
Ex-employees say that Tony claimed to be a former member of the band Chicago. I haven’t been able to verify this.
He married a Danish supermodel on a cruise ship.
He claims to be a successful movie producer, but many of the films he is involved with are directed by his son, Cory Cataldo. Spoiler Alert, they are absolutely terrible. I wouldn’t consider any of them “successful.”
His professional history is even more interesting, and far more sinister. Here’s a snapshot of some of the companies Tony Cataldo has been CEO of.
1990 - 1995 (Management Technologies)
In the early 1990s, Cataldo was involved with a public company called Management Technologies, Inc. While I don’t have access to a lot of details on this company, we know it ran out of cash during Tony’s tenure and that he left as part of a “restructuring.” Shortly after, it imploded and was delisted.
1996 (Asia Media Communications)
In 1996, a Russian vodka company called Kremlyovskaya Group attempted to merge with a publicly-traded shell, Asia Media Communications. Cataldo was to be the CEO and CFO of this new company, AMC. Unfortunately, the deal fell through. Allegedly, it was all a scheme by the mob to launder massive amounts of money.
London-based journalist Michael Gillard reported on this after the fact.
Most of the AMC shares were to go to a maze of offshore companies in various tax havens … investigators believe their secret aim was a “pump-and-dump” scam whereby the AMC share price would have been grossly inflated, enabling the offshore companies to unload equity and cash.
Riccardo Fanchini, known as the “CEO of Organized Crime in Europe,” was one of the architects of the deal, and would have served on the executive team alongside Cataldo if the deal went through. Fanchini was arrested in 2007 in Belgium for unrelated schemes. Cataldo managed to distance himself from the whole deal.
1999 - 2002 (1st Miracle Entertainment, AKA FMG)
1st Miracle had been embroiled in controversy prior Cataldo’s arrival, including lawsuits among partners and an auditor’s claim that over $1mil had been “misappropriated” and subsequently written off.
Cataldo joined and talked a big game, saying the firm would produce 5 films that year. Here’s what happened instead:
Cataldo purchased an anti-theft company owned by 1st Miracle’s Chairman, Peter Benz (a blatant insider transaction that added no value to 1st Miracle’s business, as far as I can see).
Cataldo fired his own auditor, Berg LLP, after Berg sent a letter to the SEC saying that Cataldo was issuing unregistered shares without proper documentation or disclosures.
Lied to his partners about having $150mil in financing lined up for movies. Allegedly, they had a public shouting match and all three walked out on him.
The company was late to file SEC paperwork and was ultimately delisted. It never produced any movies or revenue (as far as I can see).
2001 - 2004 (Calypte Biomedical)
Calypte Biomedical sold a urine-based HIV test. In 2003, it claimed to have a $4mil letter of intent with World Vision Africa. World Vision claimed this “letter” was forged and that is had no agreement with Calypte. There were similar accusations related to the Ministry of Health for Botswana and an organization called Safe Blood for Africa, according to journalists at Our-Street.
Apparently, a firm called Global Business Services helped Cataldo land the deal with Safe Blood for Africa. GBS employed both Michael Handelman, who would go on to work with Cataldo at other pump and dumps, as well as Rick Langley, who would later plead guilty to charges related to wire fraud.
When auditor KPMG asked Cataldo to conduct a more satisfactory internal investigation into the issues around questionable sales, Cataldo simply dismissed them and hired a new auditor.
Calypte was also listed as one of the “death spiral” companies in a massive lawsuit where several financiers were accused of manipulating stock prices.
Calypte was sued for faulty test kits in 2004. Here’s an excerpt from the plaintiff.
The test kits used to determine "HIV positive" status in patients are deeply flawed - they were developed on the basis of faulty scientific methodology and assumptions and are without value in determining whether a person suffers from "HIV Aids"
Calypte burned $25mil during Cataldo’s last year there. Shortly after he left, the company sold its major assets to a biotech company due to a lack of cash. Later on, its securities registration was revoked and it appears largely defunct today.
2003 -2006 (BrandPartners Group)
BrandPartners Group saw massive losses during Cataldo’s tenure and ultimately defaulted on its creditors and shut its doors. As part of a restructuring, Tony entered into a settlement agreement with the company where he was paid $90,000 if he agreed to resign.
While I don’t have the details on what exactly happened with BrandPartners, this leads me to believe that the rest of the leadership wasn’t too thrilled with Cataldo’s performance.
2006 -2008 (VoIP, Inc)
Considering his past performance with public companies, it is no surprise that VoIP was also a disaster.
However, this one is especially egregious.
In 2008, the company was facing massive losses and had to eliminate most of its workforce and suspend the majority of its operations.
It was also sued by the SEC for “misleading investors about the financial health of the company” and for an unnamed executive selling $4.4 million worth of stock in an unrecorded transaction. I can only guess who this might be.
In 2009, just shortly after Cataldo moved on, it was delisted and forced into involuntary bankruptcy when it was sued by creditors. The attorneys handling the case said “we also believe insiders and lenders were not acting properly.”
An online forum of ex-VoIP folks has formed. Here’s what one ex-employee had to say.
Cataldo is a fraud who has never done anything for the companies he has served as an executive for, except drain them of precious operating capital… At VoIP Inc in Orlando, Cory (Cataldo’s son) had a 40k salary and a $750/month vehicle allowance. All the while Cory was in LA making his shitty movies.
An ex-investor had additional comments.
During Cataldo’s tenure as CEO of VoIP, the company hired a shady stock promoter, CEOcast, to touth the stock … CEOcast was paid ‘ten thousand dollars per month and 350,000 of stock for a 1 year promotional program. CEOcast is a paid stock shill service reportedly run by a convicted felon.
Lastly, Monique Constantino, the company’s treasurer, had this to say in a letter to the board.
How could a group of intelligent, experienced men such as yourselves allow a business enterprise to self-destruct and cause so much human suffering? ... You now have rooms full of paper, equipment and furniture … but no human resources, other than the two least experienced employees: Tony Cataldo and his son. It doesn’t sound very promising.
Cataldo has attempted to sue some of these folks, unsuccessfully.
2006 -2009 (Matech Corporation)
After escaping unscathed and enriched from the VoIP scheme, Cataldo moved on to Matech. One analyst summed up his arrival at Matech nicely.
Although the company had no significant business operations, was serially delinquent in filing with the SEC and had significant legal and financial liabilities, MTCH’s stock was nonetheless the subject of a significant promotional campaign just several months after Mr. Cataldo entered the picture.
The analyst went on to explain that $100,000 was paid to “HotOTC.com” to promote the Matech stock.
Here is a screenshot of the HotOTC.com website from 2010.
Interestingly enough, anonymous forum posters alleged that Matech was just another Cataldo self-enrichment scheme.
Tony Cataldo is a liar, a thug, and a horrible excuse for a human being … there are no projects. There are no great things just around the corner. It’s all a smokescreen to allow Cataldo enough time to squeeze more money from the company … DO NOT INVEST MONEY with Matech!
On May 5th, 2010, another anonymous poster wrote this about Matech -
I know the facts about this company … they closed the office but act like it’s still alive. Don’t believe any press releases… its all fluff to keep the stock trading. Tony killed this company (along with the other companies he worked for) with his stupid cohorts … Tony came and starved the company financially till all the employees quit. Tony is working with Sherman Mazur, Reid Breitman to pump and dump that stock.
These could just be disgruntled ex-employees seeking to disparage Cataldo’s name. However, I don’t think so. These folks know a lot about the operations of VoIP and Matech, and also predicted that Matech was a stock promotion that would soon collapse, just like Cataldo’s former company, VoIP.
That’s exactly what happened.
In late 2009, Matech stopped filing with the SEC and in 2010 filed for Chapter 7 bankruptcy.
Overall, Matech’s share price dropped by 99% during Cataldo’s tenure.
2011 -2013 (Iovance Biotherapeutics)
In interviews, Cataldo never mentions any of the companies I covered above, probably because most ended with failure and controversy.
In fact, he only talks about one company- Iovance Biotherapeutics, formerly called Lion Biotechnologies, which was formerly called Genesis Biopharma.
Does that sound familiar? That’s because it was the subject of the article I linked to earlier. Here is it again. I would encourage you to read that full article for more context.
Iovance is a shady company, and will likely be the subject of a future Funny Business newsletter.
It has no revenue, a long and controversial history of product delays and/or failures, executive turnover, and strategic pivots. As recently as August, 2021, it announced yet another delay for its main drug candidate. The CEO resigned immediately after this announcement.
It has been investigated for securities fraud, and has been the subject of a SEC cease-and-desist order related to illegal undisclosed stock promotion.
Somehow, the stock price has continued to go up in spite of all of this, and at one time the market cap was nearly $7B. This is the sole reason Tony loves to talk about his prior involvement with the company.
Here are a few examples of Tony claiming he started Iovance. As you watch, keep in mind that Lion Biotechnologies is the same thing as Iovance Biotherapeutics.
The first thing to note here is that a lot of these clips are from paid interviews with stock promoters like Midas Letter. Tony is an expert at paid stock promotion.
The second thing to notice is that he is directly claiming that he started Iovance and built it from zero to almost $7B in market cap. You can see this again in the company’s tweets:
Unfortunately, Cataldo is straight-up lying. Iovance Biotherapeutics was formed in March of 2010, but Cataldo didn’t come on board until nearly a year later in February of 2011.
During his short time as CEO, the stock price collapsed from $126 to less than $2, basically bankrupting the company.
Out of cash and out of options, the board decided to completely restructure its debt and to bring an an entirely new executive team.
In 2013 we determined that, in order to attract new investors it was necessary to restructure our prior debt and equity issuances and to hire new management. (10-K)
This included getting rid of Cataldo. He took a “leave of absence” on January 14, 2013. Interestingly enough, the CFO Michael Handelman also left, and he would go on to work with Cataldo at GT Biopharma. More on that later.
It was years after Tony “resigned” (I imagine it was more of a termination) that Iovance would recover under new leadership and reach the stock market highs that Tony loves to reference in his interviews.
If you look at the stock price during his tenure, we see a different story. Here is a chart of Iovance’s market cap from Tony’s start date to the day he “resigned.”
Tony’s Latest Scheme - GT Biopharma
Tony actually first got involved with GT Biopharma in 2009 when it was called Oxis International. This was right after Matech imploded, but before he moved on to Genesis Biopharma / Iovance.
With $300k to retain stock promoter Eric Dickson, Cataldo quickly pumped the Oxis stock from under $0.10 to over $0.60, only to have it implode shortly after that with a swift 90% decline.
Eric Dickson was a part owner of Capital Financial Media, which was later sued by the SEC for illegal stock promotion.
After “pumping and dumping” Oxis once, he jumped to Iovance for a couple of years, destroyed it, and then returned to Oxis/GT Biopharma for round two.
This time, he is doubling down and spending at least $1.8 million on stock promotion through a shady firm called Midam Ventures, which owns websites like www.pennystocks.com.
Here’s a screenshot from one of their articles on GT Biopharma.
GT Biopharma reached a valuation of ~$600mil earlier this year, which was no doubt due to this aggressive stock promotion. In addition to the ongoing Midam Ventures promotion, Cataldo is on a circuit of conferences and paid interview spots.
Even on his own website, Cataldo is hyper-promotional, publishing 130+ press releases in the last few years despite having shown little to no operation progress. He even jumped on the COVID-19 bandwagon, although we haven’t heard an update on this since the original press release.
He must be working hard on all of this promotion to earn his $750k salary ($500k base + 50% bonus).
Cataldo’s Sidekick, Michael Handleman
Since there are only three employees at the company, you would hope the others would provide more confidence for investors than Tony Cataldo.
Unfortunately, nothing could be further from the truth when it comes to CFO Michael Handelman.
Handelman’s past is as dodgy as Cataldo’s, having spent time at various companies where share prices collapsed amid controversy, including TechnoConcepts, which collapsed from $5.00/share to $0.001/share under his watch.
Handleman also worked with Cataldo at Iovance. He “resigned” as part of the restructuring as well.
Allegedly, he was also the CFO of Global Business Services. If you remember, GBS was the company that helped Calypte Biomedical supposedly land a distribution deal with Safe Blood for Africa. GBS’s CEO was later charged with conspiracy to commit fraud for unrelated matters.
GT Biopharma’s Capital Partners Are Equally Concerning
GT Biopharma has used Roth Capital to raise financing.
Roth Capital has a notorious reputation on Wall Street. BrokerCheck shows Roth Capital has had 27 regulatory disclosures.
It has helped take companies such as Inpixon public, which is now down 99.99% from its high amid serious controversy.
It was even highlighted in a film called The China Hustle for its role in taking fraudulent Chinese companies public on US exchanges.
Roth Capital also partnered with PureCycle Technologies on their SPAC. I covered this a couple of weeks ago in my article PureCycle Technologies: The Nikola of Recycling.
Cataldo also utilizes a lesser known lender, Paul Kessler.
Kessler has been investing in Cataldo-run companies for years. Here’s a summary of some of the transactions which have flowed through Kesslers web of companies.
Issued convertible notes to Calypte, which were turned into stock.
Provided investor relations services to BrandPartners Group for a fee of $5,000 per month.
Provided financing to GT Biopharma. GT defaulted on these loans and had to pay with other types of assets (i.e. stock).
Kessler was on the board of Iovance at one point and had significant ownership.
Kessler’s father-in-law was appointed to the board of GT Biopharma while Kessler was a significant shareholder.
Why would Kessler provide financing to so many Cataldo-led companies if he knows that all of these companies fail?
The fact that his firm has an Investor Relations (read: stock promotion) division leads me to believe that he finances the companies, helps to pump their stock, earns discounted stock when Cataldo defaults on the loans, and then cashes in on his stock without having to report anything to the SEC since he is typically not an officer of the company. Perhaps he is paying Cataldo out on the back-end.
This is a highly speculative theory, but it would explain why Kessler gets into bed with Cataldo again and again, and how Cataldo has been able to amass so much wealth without a lot of reportable stock sales.
What About The Fundamentals?
I could get into the fundamentals of GT Biopharma, but that would be treating it like a real company, which I don’t believe it is. I think its a pump-and-dump scam.
If you aren’t convinced yet, consider that the company’s accumulated deficit in 2000 was ~$54 million dollars. 20 years later, it stands at $629 million dollars.
Where did all the money go?
You might be thinking, “maybe they’re sitting on a ton of cash.”
Today, GT has around ~$39mil in cash, which still leaves $500mil+ unaccounted for.
Only $14mil has gone to R&D. They only have three employees, so overhead can’t be too bad. They’ve spent less than $1mil on advertising over the last 20 years, cumulatively.
What if… what if they’re just funneling all of the money to themselves?
Cumulative stock-based compensation since 2000 stands at an insane $161 million. In the most recent quarter alone, $14mil+ was awarded to officers and directors of the company. There are only three officers of the company. Another $10mil+ was awarded to “consultants.”
Conclusion
GT Biopharma has been around since 1965 and has never posted a profit. It’s current CEO, Tony Cataldo, has never successfully led a public company. He has a track record of aggressive paid stock promotion and destroying shareholder value.
The company has pivoted dozens of times. None of their drugs ever make it through clinical trials. Their current lead candidate, GBT-3550, hasn’t even completed phase 1 trials. Most biotech companies are legitimate and full of smart, hard-working people, and still, only 3.5% of oncological drug candidates make it to approval.
Ask yourself, do you think Tony Cataldo is the man to cure cancer?
I predict the company will fail to launch its lead drug candidate, GTB-3550. I predict it will pivot to another product initiative, continue to invest in stock promotion, and find ways to sell stock without the proper disclosures. Eventually, I believe the firm will run out of cash and Cataldo will disappear, somehow richer than when he started, onto his next scheme.
I am short GT Biopharma ($GTBP)
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DISCLAIMER:
I sometimes write about publicly-traded companies. I am not a financial advisor and I hold no financial registrations. You should never use my research as due-diligence or investment advice. My research is for entertainment only. I am not responsible for investment losses. I do actively invest, and you should assume I may have long/short positions in the companies I write about. I am not responsible for your losses.
Financial claims are based on publicly available filings. There were some years where the company failed to file, but it appears that there were little to no operations during these years. I believe my numbers are accurate but I encourage readers to do their own research.