ContraVir Pharmaceut (OTCBB:CTRV) Starts Trading on the OTC Markets
ContraVir Pharmaceut (OTCBB:CTRV) went through one of its first trading sessions on the OTC Markets yesterday and it was quite an interesting one. The ticker opened the day at $1.50 per share but started sliding almost immediately. Six and a half hours later, it stopped at $1.20 while the 613 thousand traded shares meant that the dollar volume stood at around $790 thousand. That’s a lot of activity for a brand new ticker, but before we get to the reasons for the 19% drop, let’s take a look at how CTRV came to be.
It all started in August 2012 when a NASDAQ pharmaceutical company called Synergy Pharmaceuticals Inc (NASDAQ:SGYP) acquired some assets from another big enterprise – Bristol-Myers Squibb Co (NYSE:BMY). The assets in question were related to the development of a shingles treatment called FV100. In May 2013, SGYP decided to form a wholly owned subsidiary called ContraVir that was supposed to be focused on launching the drug on the market.
Three months later, Synergy decided to spin-off the relatively new daughter company and turn it into an independent publicly traded enterprise. They took care of all the paper work and a couple of days ago CTRV appeared on the OTC Markets.
The turbulent performance from yesterday suggests that the market isn’t quite sure how to react to the new ticker, but we decided to check out the filings of the newly-born penny stock and see what its chances of success are.
It’s fair to say that the latest 10-Q isn’t exactly confidence-inspiring. It covers the period ended December 31, 2013 and it contains the following figures:
- cash: $3,275
- current assets: $8,827
- current liabilities: $498 thousand
- no revenue since inception
- quarterly net loss: $168 thousand
It’s clear that the financials above are not really substantial enough to support the operations of a serious biopharmaceutical company and that’s why, two weeks ago, CTRV closed a private placement. They raised $3,225,000 by selling 9,485,294 equity units at $0.34 a piece. Each unit consists of one common share and one warrant exercisable at $0.37.
Compared to the current price, this presents quite a discount and a huge profit opportunity for the investors who took part in the private placement. The question on everyone’s mind is: “Will they cash in on the current market cap, or will they wait until CTRV commercialize FV100 and start making money from it?“.
It’s really hard to say at the moment. On the one hand, the fact that the FV100 technology was once owned by big names like SGYP and BMY should mean that there really is something to it. On the other, CTRV say in their 10-Q that they do not expect to fully develop the product until several years from now. And, as we all know, this is a really long period in Pennyland.
Unlike CTRV, Primco Management Inc (OTCBB:PMCM) has been on the OTC Markets for quite a while. It made an explosive run last week when the company announced their entrance into the marijuana business, but as we wrote yesterday, the shareholders learned some interesting facts about the share structure a couple of days ago. This has had an absolutely devastating effect on the ticker. In just two sessions, PMCM managed to wipe out no less than 43% of its value.
