GlobeImmune Inc (NASDAQ:GBIM) Slumps 40% Following A Lackluster Corporate Update

[[tagnumber 0]][[tagnumber 1]]Yesterday‘s Q1 and business update announcement easily relegated the stock of GlobeImmune Inc (NASDAQ:GBIM) among the top Nasdaq losers of the day. By the end of the day, GBIM went down a whopping 40% to a mere $1.18 per share. Trading this stock was also fairly volatile, with a little short of 600 thousand shares changing hands, or 8 times higher than average. Today, GBIM is still bleeding at $1.13, down an additional 4% from the preceding session, albeit with a fairly reduced investor interest showing 60 thousand traded shares roughly 30 minutes before market close.[[tagnumber 2]] [[tagnumber 0]]Is this slump a real red flag or there might be a silver lining behind the dark cloud?[[tagnumber 2]] [[tagnumber 0]]Let us see what the company does in the first place. GlobeImmune Inc is a biotech focused on developing treating products in two categories – infectious diseases and various types of cancer – based on its proprietary Tarmogen platform. Contrary to conventional vaccination, tarmogens do not produce antibodies, but rather stimulate a subset of white blood cells – T cells – that destroy infected or malignant cells. To carry out the clinical trials of its product candidates, GlobeImmune relies upon its strategic collaborations with Gilead Sciences, Inc., on the one hand, and Celgene Corporation, on the other. The former involves drugs aimed at treating chronic hepatitis B virus infections (HBVs), while the latter deals with product candidates tackling various types of cancer.[[tagnumber 2]] [[tagnumber 0]][[tagnumber 8]]Even though GlobeImmune has so far as many as 10 product candidates (evenly divided in each category) in its pipeline, none of them has made it to Phase III yet, let alone to an FDA–approval. This means that the road to commercial revenue is still years away. Granted, GlobeImmune is supposed to receive milestone payments at various stages from its corporate collaborators, yet a steady revenue inflow is still far from becoming a reality. This certainly explains why GBIM is still in hot pursuit of new high–potential business opportunities.[[tagnumber 2]] [[tagnumber 0]]At least, that‘s what the company‘s representatives revealed yesterday alongside the new Q1 2016 report. At the same time, however, they have not determined any time–bound course of action for maximizing stockholder value. What is more, they also warned that whatever measures might (or might not) be taken, they will not necessarily result in “any specific action or transaction“.[[tagnumber 2]] [[tagnumber 0]]We will not delve into more details regarding the Q1 numbers themselves. They are what they are. What is more important here, however, is that this corporate update regarding the search for new potential opportunities might contain the answer to the question we asked earlier – is this a red flag or just a silver lining.[[tagnumber 2]] [[tagnumber 0]]From an investor‘s point of view, the company‘s newly announced search for new strategic transactions without committing to a time frame might be tied to [[tagnumber 15]]a)[[tagnumber 16]] stalling developments in its current trials and [[tagnumber 15]]b)[[tagnumber 16]] lack of concrete ideas as to what opportunities exactly to look for. If this is how outsiders interpret what they read yesterday, the nosedive GBIM took looks fairly justified. Unless managers prove the opposite, the stock will certainly be rising against a lot of challenges down the road.[[tagnumber 2]] [[tagnumber 0]] [[tagnumber 2]]