It looks like fans of Prometic Life Sciences (Prometic Life Sciences Stock Quote, Chart TSX:PLI) are going to have to put aside their affection for the biopharm company and do the prudent thing: drop the stock. So says Jeff Parent, chief investment advisor for CastleMoore, who thinks that a turnaround is unlikely.
Prometic shares continued to be heavily traded on Monday as the stock heads to lows not seen since 2012. Delays in bringing its products to market have been part of the problem, as are the company’s growing financial woes.
Last week, Prometic issued its fourth quarter and 2018 year end financials, which while featuring an increase in revenues for the year, up to $47.4 million from $39.1 million in 2017, also sported Q4 revenue of $10.6 million and an EBITDA loss of $32.6 million. The company currently has $7.3 million on its balance sheet yet sported a large operating cash loss of $19.0 million by the end of its 2018.
On the company’s plan going forward, Prometic’s COO and CFO Bruce Pritchard said addressing the company’s material liquidity and balance sheet challenges “remains our highest priority.”
“We anticipate that it will most likely require a combination of material corporate, financial and business development transactions to successfully stabilize the financial and liquidity position. This could include a restructuring of the SALP debt and/or recapitalization transaction, and a significant additional equity financing to finance the corporation to value-creation catalysts such as partnerships and monetization of non-core assets,” Pritchard said in a press release.
Back in November of 2015, PLI hit a high of $3.62, but it’s been pretty much downhill since, with the stock losing 80 per cent of its value over 2018 and now a further 35 per cent in 2019.
Parent says the writing is on the wall for Prometic and that investors shouldn’t be swayed by sentiment at a time like this.
“A stock that has gone down from three or four dollars as this one has, along with the pretty significant drop off [last week], I would not be buying this stock,” says Parent, to BNN Bloomberg on Friday. “For a company like this to turn it around, it’s going to require a lot.”
“The volume has been quite a bit lately over the last couple of days on these drops, and that is just a lot of sellers, so I don’t see any bottom on this,” he says. “Any stock that you think has a good story, you just have to ignore that and just look at the price and have a price-based discipline. I’d be staying out of this.”