TapImmune Inc. (OTCMKTS:TPIV) Jumps Once More

TapImmune Inc. (OTCMKTS:TPIV) added another 8.39% to its market value yesterday, reaching a price of $0.64 once more. Should investors be worried?

That was a trick question. TPIV is a development stage OTC Markets pharmaceutical company – a healthy dose of wariness is most assuredly in order when dealing with the stock of such entities.

The reason for that is not a secret to anyone – companies in this specific branch and stage of their existence are particularly prone to dilution. Since it is the most easily accessible method of funding their activities, pharmaceutical companies on the OTC Markets have the tendency to issue enormous amounts of common stock to noteholders.

This sort of behavior leads to a lot of shares ending up in the hands of very few noteholders, and the amount said noteholders pay for the shares is usually less than the stock is currently worth. The phenomenon is known as “toxic funding”, and it can have disastrous effects on the company’s market cap, because noteholders have a tendency to want to cash in on the action, and when they dump large amounts of shares on the market, the ticker usually tanks.

TPIV‘s current chart movements make it look like the notes it has issued are finally taking their toll on the ticker in just such a manner. Every time it goes up, a wave of selling plunges it right back down.

As usual, there is no way to be certain if that is the reason behind the ticker’s erratic chart movements. However, in a way it makes sense that it is, and since TPIV is far from free from convertible debt, that theory is certainly plausible.

Dedicated TPIV supporters should take a moment to consider its implications. The company is obviously far from commercial success yet. If its investor value is to be drowned in dilution every step of the way, they will be in for a long and rough journey indeed.

Opportunistic traders also need to factor the above mentioned possibility into the way they perceive TPIV and act accordingly.