Adamis Pharmaceuticals Corp (OTCMKTS:ADMP) Wants to Get Back to NASDAQ
As stated in the SEC filings, Adamis Pharmaceuticals Corp (OTCMKTS:ADMP) is an emerging pharmaceutical company that is engaged with the development and commercialization of clever and effective treatments for a variety of ailments. The stock performance, however, suggests that not everything is going quite according to plan. So, what’s the problem?
It would appear that investors’ patience has long run out. ADMP have been in the pharmaceutical business for a while, but they are still unable to get through all the trails and tests which means that the revenues section of their financial reports remains empty. At the same time, the losses are piling up and the accumulated deficit as of September 30 amounts to no less than $39 million.
Still, there might just be a light at the end of the tunnel. On August 1, an agreement was signed with 3M Co (NYSE:MMM). As a part of the deal, ADMP acquired an exclusive license for MMM‘s Taper Dry Powder technology which is currently under development and will be used for the treatment of asthma. ADMP paid $3 million for the license and if they pay a further $7 million, they will be able to acquire all the assets related to MMM‘s clever inhalers.
It’s clear that a potential acquisition of the technology will give ADMP a huge boost, but unfortunately, the SEC filings show that the company simply doesn’t have enough money to pay for it. The latest quarterly report covers the period ended September 30 and it shows the following strengths and weaknesses:
- cash: $119 thousand
- current assets: $3.5 million
- current liabilities: $8.4 million
- net loss: $32 thousand
It’s clear that with a financial situation like this, they’ll never be able to complete the MMM deal, but the figures above are about to change immensely. On November 20, ADMP announced that they are proposing a public offering for a total of $25 million. The transaction will include common shares as well as warrants and the proceeds will be used to pay for the acquisition of technology from MMM, for the covering of some convertible notes, and for working capital purposes.
The offering will probably tidy up the balance sheet, but there’s another development which should have an even greater effect on investors’ attitude towards ADMP. The management team want to effectuate a reverse stock split and apply for listing on NASDAQ. The ticker was deleted from the national exchange in 2005 (the company name back then was Cellegy Pharmaceuticals, Inc.) and if it manages to get back, the effects should be tremendous – institutional investors will be drawn in, the shareholder base will be expanded, and lack of liquidity shouldn’t be a problem.
All plus points, but there are still some unknowns. For one, the technology that ADMP want to acquire from MMM is still being developed and we have no idea how far commercialization is. Details are missing around the $25 million offering as well – we don’t know how much shares and warrants will be sold upon closing. The rate of the stock split is also a mystery.
Yet, the ticker soared by no less than 31% during Friday’s short session shifting more than 418 thousand shares. The reason for the jump, however, is not the public offering or the management team’s NASDAQ aspirations. In fact, ADMP got propelled towards the higher end of the charts by a Seeking Alpha article which was published around noon. A quick look at the intraday chart confirms that the effects were virtually immediate.
As you might imagine, the article is extremely positive and it speaks about the huge upside potential offered by ADMP. You can have a look at the arguments and decide for yourself if there’s any merit to them. Even if you do agree with the author, however, you should still do the right amount of due diligence before putting your hard-earned cash on the line.
