Emisphere Tehcnologies, Inc. (OTCMKTS:EMIS) Suffers A Painful Crash

Back in mid-June the stock of Emisphere Technologies, Inc. (OTCMKTS:EMIS) was sitting at around 40 cents per share. Since then, however, the ticker has managed nearly double is valuation posting a high of $0.78 on August 6 and 7. The climb wasn’t an entirely smooth ride but still an increase of almost 200% is nothing short of impressive. But is that as far as the stock will go? 

During the weekend investors’ sentiment towards the company changed dramatically and when the market opened yesterday the stock began sliding downwards right from the get-go. By the time of the closing bell EMIS had lost close to 23% finishing the session at $0.58 per share.

There isn’t an immediately obvious reason for the sudden crash. The last PR from the company was published last Thursday and it announced that EMIS will hold a conference call on August 12 during which they will discuss the financial results for the second quarter of the year. The numbers disclosed tomorrow are extremely important for the fate of the company – in the second half of March EMIS launched their Eligen B12 drug, the only once-daily oral prescription medical food tablet shown to normalize B12 levels without the need for an injection, and the conference call will show just how much did the company generate in terms of revenues after a full quarter of sales.

The financial report for the first quarter was not particularly encouraging:

• $4.85 million cash
• $7.6 million total current assets
• $17.6 million total current liabilities
• $6 thousand in revenues
• $19 thousand gross loss
• $32.9 million net loss

The sizable cash reserves, at least by pennystock standards, simply cannot offset the rest of the balance sheet. At the end of March EMIS had a working capital deficit of approximately $10 million and an accumulated deficit since inception of over $547 million. At the same time the general and administrative expenses were nearly 2.5 times higher than the ones reported for the same period last year – $4.4 million compared to a little less than $2 million at the end of March 2014. It should be noted that during the first quarter of 2015 EMIS finally became a revenue generating entity and although the reported sales were far from impressive as we said earlier the Eligen B12 was launched just two weeks before the end of the quarter.

Back in August 2014 EMIS entered into a $20 million loan agreement but with the $5 million borrowed on April 6 and the $2 million from July 1 the company has drawn the entire amount of the financing deal. This could mean that if the sales of their drugs don’t pick up speed rather fast the company could be forced to look for other outside sources of funds. Investors should also take a look at the Form 4 filed at the start of July which shows that EMIS has several outstanding notes that could be turned into common shares at a conversion price of $0.50.

In anticipation of the conference call EMIS could once again see some intense trading today. The volatility of the stock should not be underestimated and doing your own due diligence should precede any trades. 

You may also like...