jfm1330 wrote: Theratechnologies regains favor with investors
Shunned for months, Montreal biopharmaceutical Theratechnologies is starting the month of September with a bang on the stock market.
The company's stock has appreciated sharply every day this week. The stock's value more than doubled in a few days.
It is the publication at the beginning of the week of an overview of the results which will be presented at the end of the month which is at the origin of the surge.
There was a “panic in the market” this summer, says the chief financial officer of Theratechnologies, Philippe Dubuc, in a telephone interview.
He explains that investors could wonder whether sales would continue to underperform after the disappointing financial performance presented in mid-July.
Management had indicated in July that revenues in March, April and May were negatively impacted by a build-up of larger inventory needed by specialty pharmacies at the end of 2022 in anticipation of higher demand .
Philippe Dubuc estimates the negative impact of this situation, deemed “exceptional”, to be around 3 million on the revenue of 17.5 million collected during the spring quarter.
“Unjustified” withdrawal
Doubt may have seized investors who remembered that Theratechnologies had made a commitment at the beginning of the year to generate a positive operating profit before the end of the financial year.
Already in significant decline since December, the stock took another nosedive in July before rebounding spectacularly this week.
The stock market decline observed this summer was “totally unjustified”, according to Philippe Dubuc, because, he says, the problem which affected income in the spring was exceptional.
With the company having completed the third quarter of its fiscal year at the end of August, management has decided to release some interim financial highlights this week, including the cash position.
Managers therefore clarified on Tuesday that the company could count on the equivalent of 23 million in cash to start September.
Management also indicated that the company likely managed to generate positive adjusted operating profit during the months of June, July and August.
Official financial performance for the quarter is expected by the end of the month.
The clarifications provided this week by management have “reassured the market a lot,” says Philippe Dubuc.
Catch-up
Theratechnologies stock, however, still has a way to go before returning to its mid-July level. The stock was worth $5 at the beginning of July taking into account the recent reverse stock split.
This consolidation was carried out with the sole aim of increasing the share price so that the company complies with the requirements of the NASDAQ – where the stock is also listed – and thus maintain listing on this American stock exchange.
The announcement of the share consolidation in July is another element that may have contributed to the pressure observed on the stock this summer.
In the eyes of certain investors, the announcement of a share consolidation can be part of a spiral of negative events that lead to a fall in a stock price.
Theratechnologies executives did not buy shares of the company this week because they could not do so due to regulations. “We are often in blackout [period of prohibition to conclude transactions], and this is the case at the moment between the end of the quarter and the release of results at the end of September,” says Philippe Dubuc.
Theratechnologies essentially collects revenue from two products sold in the United States. One targets the human immunodeficiency virus (HIV) and the other treats a condition associated with it. “We continue to think that these two products can continue to grow,” says Philippe Dubuc.
The company is also trying to develop a product in oncology. The project was put on hold last December, a decision that was poorly received by investors. The project is now being relaunched after a repositioning and Philippe D