The surging up from Friday was probably in expectation of the news and after the large jump GTHP lost 2.38% yesterday. In fact, it seems that nothing can change by now and the share price cannot break the $0.9 resistance from the last two months, but what is more disturbing is the huge volume. Almost 550,000 shares were traded, which led to the lower close at $0.82.
Such volume had not been seen since last October and its negative impact may be a signal that investors consider the share price as being above the fundamentals of the company. On the one side, this is not really surprising, as GTHP trades currently at a more than doubled P/S ratio as compared to its sector peers, meaning not only that the shares can hardly gain more value, but also that they further lose from their price.
On the other side, yesterday’s decline happened on a promising announcement from GTHP, also confirmed by an SEC filing. The company said that it has submitted Premarket Approval application with the FDA for its LightTouch non-invasive Cervical Cancer Detection Device, which sounds like a milestone event for the company that has no commercially manufactured and sold products so far. Two weeks ago, additional funds were also secured, through the private placement of 3.7 million common shares of the company for total proceeds of $3 million.
The deal was made with an accredited investor and no public offering of the shares will be made. It cannot be the dilution risk that makes investors lose their optimism right now. The only one-day lasting positive reaction of the market was probably much more due to the fact that the $3 million will be enough only to cover the working capital deficit of GTHP as it was at the end of this June.
The changes in the shareholder structure that resulted from that private offering also did not seems as good news for the market. Another company involved in the offering has now become a beneficial owner of the GTHP, holding 6.2% of the shares. In addition, the controlling shareholder of that company now owns a total of 9.1% of GTHP common stock.
