Advanced Cell Technology Inc. (OTC:ACTC) Rides Dr. Oz Fame, Relies on Stem Cell Hype
What is more suitable for a new year than a medical therapy promising total renewal, this time with stem cell technology? Our old acquaintance Advanced Cell Technology Inc. (OTC:ACTC) makes the rounds again, picking up speed on PR messages featuring health guru Doctor Oz. The stock added nearly 4% yesterday after a month of up and down motion.
The company is busy developing real and marketable therapies with stem cells, but so far the underlying activity failed to match the ticker’s trend. ACTC spikes up on news of minor breakthroughs and quickly corrects in a matter of days. The inclusion of America’s most influential medical persona on TV, Dr. Mehmet Oz, however, is only a minor prop for the business of ACTC. Dr. Oz only mentioned the potential of stem cell therapies in general and never mentioned any specific companies. In the past, his TV endorsement has made the day for minor pharmaceutical companies by endorsing their food supplement products.
The company starts the new year with the following financial strengths and weaknesses:
- $126 million market cap
- $8.2 million cash as of September 30, 2012
- $8.5 million net loss
Along with diminished cash to previous quarter’s $13 million, the company shows some stock dilution, and in its plans for 2013 stated it may correct this with a 40-1 or 80-1 reverse split. We expect the ACTC ticker with a renewed higher price and less dilution may try to graduate to a more respected exchange such as NASDAQ and attract more attention among other better-established pharmaceutical researchers.
However, the investment in ACTC remains insecure and losses come within months and weeks, possibly wiping out a large part of investors’ money. The company may hold some true promise of development, but so far the research phase is draining a lot of resources and outright marketing success with a viable therapy is still far in the future.
The ACTC ticker has not seen a promotion for a long while, and another positive sign is that insiders hold only around 48 million shares to more than 2 billion shares outstanding, and regularly sell their holdings, yet the volume can hardly overcome the market. The last recorded promotion for ACTC is from the beginning of 2011 by Stock Rich, and we suspect it is a one-time free promotion to improve the pumper’s record. Another health-related pick, Biomagnetic Diagnostics Corp. (OTC:BMGP) went in a $38,000 budget promotion, was bought quickly in March last year and went on to lose 90% of its value.
In the case of ACTC, the company shows growth potential, but it is best if investors do their own due diligence and estimate if the stem cell hype is enough to justify buying this ticker.