Soligenix Inc (OTCBB:SNGX)’s Market Cap Shrinks for No Apparent Reason

Here’s something you don’t see every day in Pennyland. If you take a look at the chart on the right, you’ll notice that Soligenix Inc (OTCBB:SNGX) has actually proven itself to be quite a good long term investment for some people. In the summer of 2012, for example, the stock was hovering deep below the $0.30 per share mark. Right now it’s sitting at $1.52. In other words, if you were lucky enough to place your buy orders two and a half years ago and if you’re still holding on to your shares, you’ve seen your investment grow by a whopping 560%. And that doesn’t happen too often in the world of the OTC Markets.

Another thing that makes SNGX different from the rest of the penny stocks out there is the fact that it seems to be attracting attention from quite a lot of people. Several analyst firms are covering the stock and some, like Vista Partners LLC, have put rather lofty price targets for the ticker. Having said that, we should probably note that according to the fine print, Vista has been compensated by the company for advisory services.

So, the analysts’ opinions might be influenced by the money they have received, but despite this, they seem to be genuinely excited about SNGX‘s future and the stock has already proven to us in the past that it has the tendency to reward some of the more patient investors. Not everything is going according to plan, though.

SNGX hasn’t registered a green session since November 14 and over the last month it has managed to wipe out almost a quarter of its value. On Wednesday, the ticker slipped by another 3% and finished the day at $1.52 on a dollar volume of $225 thousand. So, let’s take a closer look and see if we can spot the reason for the disappointing performance.

The latest 10-Q came out on November 10 and while it’s far from perfect, there’s nothing in it that could prompt such a sell off. Here are the figures as of September 30:

• cash: $4.2 million
• current assets: $5.7 million
• current liabilities: $10.5 million
• quarterly revenues: $2.7 million
• quarterly net loss: $4.3 million

You can see clearly that the current portion of the liabilities is quite big, but most of it consists of warrant liabilities. Without them, SNGX can actually brag about a working capital surplus of around $2.6 million. The revenues have experienced a significant jump both on a quarter-over-quarter and on a year-over-year basis and this is not the sort of thing that usually depresses the share price.

The dilution also appears to be kept at bay. SNGX does have an equity purchase agreement with an entity called Lincoln Park Capital Fund and the latter has already bought some shares over the last year or so. The purchase price, however, is not hugely discounted and the O/S count hasn’t exploded.

So, there’s quite a lot of things that could lead you to believe that the current shaky performance will be overcome and that SNGX will soon stabilize itself. One factor, however, suggests that the volatility might continue in the future.

The company does have revenues and, as we mentioned already, they are growing. Unfortunately, they’re not coming from commercialized products, but from government grants. SNGX are still deep in the development stage and in their reports, they say that they may be forced to remain there for the next few years. And nobody can say for sure what will happen to the stock during this time.

About twenty-five minutes after the opening bell, SNGX is sitting at $1.60 per share (5% in the green).