Gediminas Jasionis
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Intriguing Drug Potential Sets Share Price Higher for PharmaGap Inc. (CVE:GAP) (PINK:PHRGF)

by Gediminas Jasionis Apr 19, 2011
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gap_chart.pngPharmaGap Inc. (CVE:GAP) (PINK:PHRGF) broke the established downtrend after bouncing up on a huge trading volume on Monday. The effect was caused by an announcement of positive results from in vivo preclinical testing at the Ottawa Hospital Research Institute.

The company attempts to create a peptide formulation based drug to cure ovarian cancer. The substance called GAP-107B8 proved to be able to reduce tumour burden by 19% and suppress ascites formation by 73% compared to the control group in a pre-clinical testing.

If successful the drug would pioneer the treatment of ovarian cancer as there are currently no drug based treatment for it.

Share price ended the day with a mere 5% increase in price, but it was a noticeable change in the dynamics of share price action. Trading volume was nearly 8 times the 90 day average. The similar situations happened three times over the past half a year, but this time the difference lies in related news.

pharmagap_logo.jpgSince in vivo tests were positive the drug automatically appears more trustworthy. However, traders might be jumping in too soon.

The financial situation of PharmaGap is critical:

  • No regular income from any source;
  • Liquid capital not enough to cover even one quarter's expenditures;
  • Liabilities top assets more than 3 times;
  • Additional capital always brought in through sale of more shares.

They will need more cash and thus the share price is likely to go back down after the shares offering. $12 million market cap is not supported by the underlying assets of PharmaGap and their product is of a discussable worth at the moment.

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