RE: working the numbersThere's alot of discussion about the disconnect betweent the market's undervaluation of this company despite all of the very real and expanding potential. I keep coming back to three fundamental factors.
Over the course of the last three years, Prometic management set unrealistic expectations to analysts, institutional shareholders and fund managers . These guys are the bread and butter of support for a company like this. These are the guys that have the deep pockets and supposedly patient time frames to allow a company like this to transition from formative to concept to execution.
What these guys got were delays, missed milestones and dilutions...
Bottom line, when you combine all of this with the whole Biotech sector falling out of favour.... you can quite easilly end up with large selling overwhelming the market for the stock, this very often becomes self fulfilling. One or two large sellers cause significant and sharp price declines prompting others to sell. When the flow is all one way in such a relative small capitalized company, you get extreme oversold conditions and capitulation.
In the last 9 months alone, Acuity, Synergy , MD Capital and a handful of others have been large sellers. The most recent report, which was Sep30/04 also shows AGF selling over 2.5mm of their 4.5mm position... based on the continued downward price action in October that led to the lows in the 75 cent range, I expect they sold the balance of their position.
Finally... here's my point:
Its quite clear to anyone that follows this company closely that management is in the process of delivering significantly on almost every platform. Even in the arguably best case scenario, this looked very unlikely two or three years ago. What's even more compelling is the fact that all of these catalyst appear to be coming together in the very near term. Tunisia, 1402, PRDT / Macopharma, Hemosol etc. Management has taken care of business. This will not only alleviate the everpresent cash flow / financing questions, this will give management the credibility that will allow the market to attribute higher valuations to the various platforms.
Everything we've been hearing suggests that management is in the process of agressively re-establishing rapports with big money and analysts... We still have some very key marquis large institutions involved and there definitely seems to be a renewed interest from othes. This story is in the process of getting back into the market in a very big way. What's better, is that the risk/ reward is seemingly simpler and better than its ever been, this gives IR and Management the ammunition they need to get further support.
The gap between this company's ever-clearer potential and the value the market attributes it continues to be wide because we continue to be technically very oversold.
The MARKET'S VALUATION of this STOCK is LAGGING THE FUNDAMENTALS...
Over the course of the next few months, I am confident that will change.