Cocrystal Pharma Inc (OTCBB:COCP) Gets Interesting Again
The start of Tuesday’s session was pretty uneventful for Cocrystal Pharma Inc (OTCBB:COCP). The ticker opened the day slightly below its previous close and it remained flat during the first twenty minutes. Then, however, the company announced a merger and everything changed. It wasn’t just any merger. It was a merger with a company called RFS Pharma LLC – the brainchild of Dr. Raymond Schinazi.
Once you do some research on Dr. Schinazi, you’ll see that he is quite famous in the pharmaceutical field. He has taken part in the development of numerous treatments for a variety of diseases and according to Wikipedia, more than 90% of HIV-infected people around the world take at least one of the drugs he invented.
So, it’s fair to say that he knows his way around the periodic table and his expertise has brought him quite a lot of notoriety. He also appears to be something of a celebrity in the investment world, by the way.
Dr. Schinazi is the founder of a company called Idenix Pharmaceuticals Inc which was once traded on the NASDAQ stock exchange under the IDIX symbol. A few months ago, IDIX was acquired by Merck & Co., Inc. (NYSE:MRK) for a total of $3.85 billion. He is also the man behind Pharmasset (VRUS) and Triangle Pharmaceuticals (VIRS) – two companies that were acquired by Gilead Sciences, Inc. (NASDAQ:GILD) for $11 billion and $464 million, respectively.
All in all, Dr. Schinazi is a very successful man and his involvement with COCP was bound to have an effect on the stock. It did.
COCP managed to add 15% and it finished Tuesday’s session at $0.53 per share. Yesterday, it cooled down which seems a bit strange in light of the good news, but it only slipped by about 2% and many people will attribute the correction to the pre-holiday mood among investors.
COCP currently stands at around $0.52 per share which results in a market cap of just over $63 million and you might be wondering right now if the company really deserves this sort of valuation.
The merger with RFS is certainly a move in the right direction and the fact that Dr. Schinazi agreed to it speaks volumes about COCP‘s reputation. It should also be noted that the balance sheet isn’t as horrific as what we’re used to seeing from pharmaceutical OTC companies. Here’s a summary of the figures as of September 30:
- cash: $3 million
- current assets: $5.8 million
- current liabilities: $7.6 million
- no revenue
- quarterly net loss: $2.5 million
The working capital deficit is an obvious problem, but it should be noted that after the end of Q3, COCP raised $2.5 million by returning some shares to MusclePharm Corp (OTCMKTS:MSLP) (the shares were first issued when MSLP bought Biozone Pharmaceutical). COCP‘s management team now say that lack of cash shouldn’t be a problem for the next twelve months.
So, the news is good and the financial statement is just about patched up. In light of this, many people might be eager to jump in.
They mustn’t forget, however, that COCP is still a development stage company. RFS Pharma is also a long way away from starting the commercialization process and at this point, nobody can give us deadlines for the approval and the start of the sales of the two companies’ drugs. That’s why, carefully considering the risks and the amount you’re willing to invest is absolutely essential.
