HANDOUT/Reuters
ProMetic Life Sciences Inc.
Last price: 16 cents a share
52-week trading range: 0.10 - 0.175 cents
Annual dividend: none
Analysts ratings: none
Recent history: ProMetic, which has developed technologies used to remove contaminants from blood and extract proteins from plasma, is also involved in therapeutics to treat blood-related disorders. While its shares have languished in recent years because ProMetic has not been able to deliver on its promises, the stock of the Laval, Quebec-based company appears to be starting a new leg up.
The catalyst was a deal announced on Oct. 16 with China's Shenzhen Hepalink Pharmaceutical Co. Ltd. paying $10-million for a 10-per-cent stake in ProMetic. The transaction was done at 0.204 cents a share, or a 63-per-cent premium to the ProMetic's closing stock price. (About $5-million of the financing is slated for upgrading its facility in Laval.)
Outlook: The biopharmaceutical company on Tuesday reported a third-quarter profit of $2.5-million, or 1 cent a share, versus a loss of $2.1-million, or 1 cent a share, a year earlier. It now has two consecutive quarters of profit under its belt. The firm will hold a conference call on Wednesday at 11:30 a.m. ET, where it could provide insights into future sales and potential backlog for its business.
"It appears that the the company has turned the corner on profitability," said Robert McWhirter, president of Selective Asset Management Inc. and owner of ProMetic stock. "The challenge with ProMetic has always been that they don't have enough sales to cover their costs."
With the new financing, as well as a $2-million upfront licensing fee, and potentially $5-million to $7-million in funding for product development from the Chinese company, ProMetic's sales could rise to around $24-million in 2013, said Mr. McWhirter. "Hopefully, they don't have to do any more financing and burn through cash. Your great concern as a shareholder is effectively more shares outstanding [which would be dilutive]."
Shares of ProMetic, which now has a market capitalization of $75-million, have already had a "significant lift" so they could continue to trade at the higher-end of their recent trading range. But they could move higher in the coming months, he said. "My guess is that over the next six months, you'll see additional quarters of profitability...If you were to get coverage by analysts, that would help significantly."