diaDexus, Inc. (OTCMKTS:DDXS) Devastated After Unfavorable GlaxoSmithKline Results

For the past three months the stock of diaDexus, Inc (OTCMKTS:DDXS) was among the more stable pennystocks out there. The ticker was generally moving in an upward direction starting from around $0.8 at the end of July and reaching as far as $2.20 last month. But with the start of November the trend changed drastically and DDXS started sliding down although still standing above $1.7. That was the case until yesterday’s disaster.

The stock opened with a massive gap down at $1.03. Investors panicked and what ensued was nothing short of mass exodus. More than 4.5 million shares for a company that averages around 300 thousand got dumped on the market forcing the price to go even lower and at closing time it was standing at $0.77. The reason for the disastrous performance were the results announced by GlaxoSmithKline(GSK) for one of their clinical trials.

GSK revealed that the trial evaluating the Lp-PLA2 inhibitor, darapladib, did not meet its primary endpoint measure and a reduction for some of the secondary endpoints is possible. As part of the study they used the DDXS‘ patented research use only activity assay in order to measure patient Lp-PLA2 activity at baseline and during follow-up visits. Despite the outcome the market might have overreacted because the core business of DDXS is still quite stable.

On November 5 they filed the financial report for the last quarter which contained the following:

• $12.2 million cash
• $16.4 million total current assets
• $5.1 million total current liabilities
• $6.3 million revenues
• $354 thousand net loss

The company has a completed product, adequate cash reserves, a positive working capital of $11 million and is generating impressive revenues. The only downside is the fact that they are unable to achieve a positive bottom line and the accumulated deficit is nearing $200 million. If sentiments change DDXS might be able to bounce off of the current depreciated prices. Be sure to use caution though because they are still a pennystock and their volatility shouldn’t be underestimated.

Yesterday Globalstar, Inc. (OTCMKTS:GSAT) managed to retake some of the ground they lost by climbing 7% and closing at $1.65. On the other hand Endeavor IP, Inc. (OTCBB:ENIP) crashed 11% down despite being touted by a pump with a budget of $1 million.