CytoDyn Inc (OTCMKTS:CYDY) Climbs Above $1 Once Again
Yesterday CytoDyn Inc (OTCMKTS:CYDY) accelerated their climb up the chart and as a result they were able to break through the $1 per share mark. By the time of the closing bell the stock was sitting at $1.09 for a daily gain of over 10%. The outcome of the trading day was indeed rather positive but there are a couple of things that must be taken into account.
First, investors showed below-average interest in the stock with the daily volume of 241 thousand shares being lower than the monthly average of 288 thousand shares. There is also no immediately obvious reason for the sudden change in sentiment towards the company.
On May 11 CYDY filed an 8-K form that caused the stock to plummet downwards and to continue going lower for the next several sessions. Investors were far from thrilled to learn that the FDA had sent a letter to the company in response to CYDY‘s request for an orphan-drug designation for the PRO 140 for the treatment of graft versus host disease (GvHD) asking for more data. According to the letter the company will now have to provide the required information by May 2017.
Such a turn of events could have had even more disastrous consequences if CYDY wasn’t far from the typical biotechnology pennystock company. Opening the latest quarterly report reveals that at the end of February they had:
• $10.2 million cash
• $12.2 million total current assets
• $3.37 million total current liabilities
• ZERO revenues
• $5.05 million net loss
As we said, there aren’t that many pennystocks with over $10 million in cash reserves and a positive working capital of $9 million. Between April 26 and May 10 CYDY raised another $4.3 million in a private placement boosting its financials even further.
For a company that is still trying to get its drugs and treatments approved having sufficient capital is of vital importance. The problem is that the sale of millions of shares has diluted the common stock severely. During the last private placement 4.3 million shares were sold at $1 each while between October 6, 2015, and January 29, 2016, 33.3 million shares were sold at $0.75 alongside warrants for the purchase of 16.6 million shares at an exercise price of $0.75 per share.
No matter how enthusiastic you might be about CYDY‘s potential you should still use caution when approaching the stock. Plan your trades carefully and do extensive research before putting any amount of money on the line.