RE:RE:RE:RE:$5+ Stock trading at laughable 28 cents From someone who just took nearly a million dollar haircut on the whole Tribute/Aralez debacle, here are a few lessons I've learned from that:
1. Birds in the bush stay in the bush till they're not in the bush. (If that makes any sense). Yes, potential is great, but in the biotech sector these days post-bubble, the market is reluctant to value them until they are monetized - and this is doubly true for Venture companies always redlining their bank accounts and needing to raise cash. But this is why we invest in these companies, because the reward can often be worth the risk. There looks like there is promise here.
2. Insider ownership can be a positive, but it can also be a negative. Tribute had a similarily large insider ownership, so when it came to selling the company - a very bad idea that eventually destroyed most of Tribute shareholders equity - there were not enough retail investors to stop the deal from insider greed. But yes, it's also a positive as management is that much more motivated, but again, be cautious of quick and cheap company sales so employees can cash out and move on to something else. Again, Tribute execs only cared about themselves and completely effed the shareholders in the process.
3. I'm not sure I'd count on up front payments that large for those assets (I could be wrong), because when the company itself only has a market cap of 15M, why would you pay anywhere from 25-50% of the value of the entire company to acquire a license when you could just buy the company itself? I see this same sentiment on the BioOasis board where their so called groundbreaking technology and all its patents could be had for a relatively low price. Could be wrong.
4. I'm not sure where the ~3M revenue target came from for 2016, but if those slides were released not long ago, they mut have had a helluva Q4 since revenue is 540K through the first 9 months, which means they'd have to turn in a 2M+ fouth quarter to come close to those estimates so ... if that happens, expect a huge boost to the share price, but I'm skeptical of that. (But I have no insider knowledge, so ultimately know nothing). Even if they turned in a 500K Q4, that would give them 1M on the year, less than those slides are projecting. Will have to wait for year end results though. Hopefully they are very positive and there is no reason to expect them not to be, but as it has been indicated, sales can be all over the place in the first few months so who knows.
5. I only invested after the bought deal financing was announced because their cash on hand was becoming a concern; but now that that's rectified, they can do what they need to do. I would have expected the sp to retain its pop after the announcement, which indicates there are a few fatigued shareholders out there who are selling into strength. I expect this selling to continue until we break through the 45 cent range, when most everyone is back in the black and getting greedy again.
6. I would just assume the company not stretch itself for the sake of revenue gain unless that revenue comes A) without debt, or B) without significant issuance of warrants, and C) that revenue is immediately accretive as the biotech market absolutely does not value that type of revenue growth right now (See PHM if you need a bloodbath of an example). Like Janzen says, get profitable then worry about the rest.