Biozone Pharmaceuticals Inc (OTCBB:BZNE) is Still Unstable

It’s fair to say that back in September, people weren’t really all that interested in Biozone Pharmaceuticals Inc (OTCBB:BZNE). The stock was quietly simmering between $0.65 and $0.69 per share and trading volumes rarely exceeded a few thousand shares. Then, on September 26 everything changed.

As we mentioned in one of our previous coverages, a contributor on Seeking Alpha (SA) published an article which boasted BZNE as a great investment opportunity simply because Opko Health Inc. (NYSE:OPK)’s CEO, billionaire Dr. Phillip Frost, has invested a large amount of money into the small cap bioscience venture. Over the next couple of weeks more reviews appeared on SA as well as other investment websites and they all seem mightily optimistic.

For all the enthusiasm, however, the chart movement remains somewhat shaky. During the first active sessions we saw some immense trading volumes which were accompanied by surges in the right direction as well as scary drops. In terms of interest, things have subsided somewhat over the last couple of weeks and yet, the performance remains as unpredictable as ever. But what is the reason for this? And is there anything to suggest that things are about to get better?

Well, the authors of the numerous articles that appeared back in September and October are probably right in saying that Dr. Frost is a renowned investor and that not just any penny stock is allowed in his portfolio. The thing is, they all (coincidentally or not) fail to mention a couple of problems that might put a spanner in the works.

Few, for example, talk about the fact that, according to the latest 10-Q, BZNE‘s quarterly revenues have shrunk by as much as 60% year-over-year. They also don’t say anything about the amendment to the articles of incorporation that was carried out recently in order to allow the issuance of 100 million more shares of common stock. We reckon that this is particularly important since the recent equity financing and the lack of profitability might suggest severe dilution in the future. Not even a word is said about the convertible notes that can easily be turned into common stock at a rate of just $0.20 per share (some of the conversion has already taken place), and while there’s a lot of talking about Dr. Frost and his successful investments, the authors of the aforementioned articles seem somehow reluctant to talk about BZNE‘s own management team. Should they?

Well, some things are well worth mentioning. Like, for example, the fact that BZNE‘s CEO, Mr. Elliot Maza, is also at the helm of another small cap venture – Intellect Neurosciences, Inc. (OTCMKTS:ILNS). ILNS‘ financials and the state of the chart on the right reveal that this isn’t really the most successful company out there.

Is BZNE different? Well, unlike ILNS, they did register some revenues over the last reported period and they do seem to have a clever piece of technology which is probably what caught the eye of Dr. Frost. Even so, the problems that can and, to some extent, have hampered the progress are quite a lot which is why, doing your own due diligence and relying on it, rather than the articles found on Seeking Alpha is a good call.

Another ticker that has received much coverage on SA over the recent months is Nuvilex Inc (OTCMKTS:NVLX) and it’s pretty clear from the chart on the right that the performance has left much to be desired. Pan Global Corp (OTCMKTS:PGLO), on the other hand, has been showing exceptional growth over the last couple of weeks. The presence of a paid promotion, however, makes a sudden and dramatic fall a very real possibility.