Prometic Life Sciences (TSX:PLI) may have seen its share price tumble over the past year, but even at the discounted rate there’s a lot of risk involved in owning it, says James Hodgins, chief investment officer at Curvature Hedge Strategies.
Laval, Quebec-based biopharm company Prometic Life Sciences currently trades in the $0.70 range, which is down from $2.16 a year ago and even further off a high of $3.62 reached near the end of 2015. The decline has come as shareholders have had to deal with longer than expected timelines and missed milestones concerning key products.
Yesterday, Prometic released its Q1 ended March 31, 2018, financial results, which included total revenues of $4.3 million, down from $4.9 million in Q1/17, and a net loss of $34.6 million, compared to a net loss of $29.1 million a year ago.
Commenting on the quarter as well as what lies ahead for Prometic, CEO Pierre Laurin said that there’s more upside for shareholders than the dwindling share price indicates.
“Our number one goal for 2018 is to close the gap between the fundamental value created over the last few years and the current share price as it does not reflect, in our view, all the clinical and operational milestones achieved. We have streamlined our clinical development programs to ensure that our most promising clinical assets and their respective indications are prioritized,” said Laurin, in a press release.
But there’s still a lot of risk involved in Prometic, says Hodgins.
“They have some patents on plasma protein drugs that are interesting and they had a significant amount of success pushing these formulations through [US Food and Drug Administration] and Health Canada at various stages until recently, and they announced a delay in one of them and the stock fell quite precipitously,” he said to BNN Bloomberg.
“We’ve been short it for quite a while just because we thought the market cap was overvalued for the ultimate end market that they were pursuing. We’re still short it but because the stock has fallen so much, it’s not a material position anymore,” says Hodgins. “It’s highly, highly speculative at this point, so I would stay away.”
Last week at the company’s AGM, management rolled out a new corporate action plan, which included a financial framework and a new business development strategy, with the company saying that its two leading drug candidates, PBI-4050 and Ryplazim (plasminogin), have produced “very encouraging” clinical activity data and have “demonstrated potential to target large unmet medical needs.”