Brainstorm Cell Therapeutics Inc. (OTCBB:BCLI) Spikes On Media Attention Again
After its late May climb, Brainstorm Cell Therapeutics Inc. (OTCBB:BCLI) made a slow start in Jun, fluctuating around the $0.30 mark for about seven sessions, until a popular online stock commenter issued a favorable review of the company. The positive sides to BCLI listed in said analysis caught people’s attention, making the ticker jump 12.26% in a single day, but the climb was short lived.
All the gains made during that jump were lost on the very next day, on the news that the company has issued 42 million shares at rates of $0.25 per share. BCLI crashed, and has been recovering from the ordeal ever since. It more than managed to do so on June 24, when another positive article from the same analyst hit the web, to great effect. BCLI stock prices soared for two days in a row, pushing the ticker to a new 52 week high at $0.361 yesterday.
It is obvious how a popular online analyst’s comment that BCLI is “undervalued” and “has a lot of potential” could peak the investors’ interest, causing the share price to swell. Further, the information given in the article appears accurate – the due diligence checks out, thus the optimistic conclusions that the author comes to about BCLI seem justified. But that’s not all there is to know about BCLI.
It is true that the company certainly appears financially sound. BCLI‘s latest 10-Q, covering the quarter ended March 31, looks absolutely solid:
- Cash and cash equivalents – $3 million
- Total current assets – $3.8 million
- Total current liabilities – $1.6 million
- Net loss – $2.1 million
Toxic funding and lack of progress seem to be the biggest problems for most OTC Markets biotech companies. BCLI does not seem to suffer from these flaws – it has demonstrated its ability to secure non-dilutive funding on multiple occasions, including receiving $800 thousand from Israel’s Office of the Chief Scientist.
All in all, from a financial standpoint, funding does not seem to be an issue. On June 13, BCLI announced that it “will receivegross proceeds of $10.5 million, resulting from the issuance and sale of 42 million shares at a price per share of $0.25“. The sum has already been received, as documented by the June 19 8-K, and while not great, the conversion rate could hardly be called horrible. Although the news of dilution was not welcomed at first, investors quickly realized that the funding BCLI received is invaluable for the company, and did not stay away from BCLI stock for long.
BCLI has already won many battles on the scientific front as well, and as far as one can tell, the company’s research is solid – and with extensive tests going on, it is getting better all the time.
So far – so good. The company really does show potential – that much is certainly true. However, investors also need to be fully aware of how much time it takes for the potential a biotech company has to turn into something tangible – like revenues. BCLI‘s Phase II trial doesn’t seem likely to be concluded before the end of 2015. And even when it is over, the company will still be a long way away from bringing a product to the market. If BCLI manages that, it’ll most likely become hugely successful indeed, so there is, indeed, light at the end of the tunnel – but that doesn’t mean it’s close by.
So maybe, for the time being at least, BCLI‘s current $66 million market cap may not be all that unreasonable – especially if you consider the fact that it is just a development stage company that’s still very, very far from commercial success. As it stands, maybe it’s not BCLI‘s stock that is ndervalued – maybe it’s the stock of other OTC Markets biotech companies with even less achievements, that’s severely overrated.
Another biotech penny stock that is currently popular on the OTC Markets is Advanced Cell Technology, Inc. (OTCMKTS:ACTC), whose stock price has risen 2.2% yesterday on a 1.4 million dollar volume.
