OpGen Inc (NASDAQ:OPGN) Soars 50% After Insiders Flex Their Muscles

OpGen Inc (NASDAQ:OPGN) was one of the biggest winners on the stock market yesterday after soaring more than 50% to $1.78 per share on a record-breaking volume of 865 thousand, almost a twenty-fold increase in comparison with OPGN‘s daily average volume of some 22 thousand. The surge comes soon after the biotech developer of diagnostic products applied for early detection of potential life-threatening diseases raised cash through a private placement.

It all started on May 12 during the earnings call transcript outlining OpGen’s Q1 2016 financial results.

The company did have a nice increase in revenue on an annual basis – $1.08 million in Q1 2016 vs. $0.47 million in Q1 2015 – but it was not enough to secure a positive bottom line.   Rather, OPGN concluded the first fiscal quarter of 2016 with a net loss of $4.5 million as opposed to a loss of $2.6 million in the corresponding quarter in 2015. Things get even more striking when we take a look at both losses on a per-share basis – ($0.36) now vs a whopping ($5.61) then. A massive improvement caused by even more massive dilution:

• number of shares outstanding a/o Mar. 31, 2015 -> 0.5 million (out of 7.5 million authorized)
• number of shares outstanding a/o Mar. 31, 2016 -> 12.6 million (out of 200 million authorized)

It doesn’t take a rocket scientist to work out that these figures will hardly impress outside investors, does it?

OpGen’s managers, on the other hand, must have been well aware of that, too, which kind of explains why they attached an eleventh-hour corporate update to the presentation, namely – the intention to raise $10 million of cash through a private placement of OGPN units to accredited investors only. And that was a smart move because most of those accredited investors also happen to be insiders – directors, officers, and affiliates. And when times are tough on the charts, as in OGPN’s case, demonstrating some insider confidence in the stock is always a welcome change, isn’t it?

OpGen does already have a suite of FDA-approved and CE-marked diagnostic products and it has been raking in an average of $1 million of revenue over the last three quarters on record. At this stage, however, it seems to be insufficient to guarantee long-term chart growth and that is what a big part of all the traders out there might be looking for right now. And while showing insider support is a positive step, it will take much more than that in the forthcoming quarters to buck the trend.