ARDM’s 15.20% jump yesterday coincided with President and CEO’s presentation at the 2010 Annual BIO Investor Forum. The event must have additionally raised the already high excitement about ARDM stock on the market and the shares closed at a price of $0.219 each on record volume for this year of 1.82 million shares traded. From a technical point of view, the moving averages point at a strong uptrend currently and some other technical indicators also suggest that the share price could jump up once again on the short-term.
Though, ARDM has accumulated a lot of value since the middle of August and further appreciation seems risky from a fundamental point of view. The company has no product sales yet, but received a $4 million royalty payment this year as the only revenue. Although the financial condition has been improved, it came at the cost of dilution and the shares still seem too optimistically priced.
In a private placement in June, 34.7 million shares were issued, along with warrants to purchase another 7.5 million shares. In the middle of September, the company increased the number of its authorized shares to 213.5 million, which opened the way for the exercise of these warrants. In addition, ARDM issued another 26 million shares in exchange for the cancellation of all of its outstanding long-term debt under a promissory note, which amounted $9.1 million at the end of June.
Thus, substantial cash has been raised this year, but a registration statement for the new 68.2 million shares issued was filed on Tuesday and the shares may after that be sold on the market. After the debt is extinguished and taking the potential dilution into account, even with a debt-free balance sheet there is no reasonable fundamental support for the current price level.
