PharmaGap Inc. (CVE:GAP) (PINK:PHRGF) share price remains on a slow and steady uptrend ignoring the two important recent news announcements.
Activity in GAP had gone up yesterday when the trading volume topped 2 million and was nearly 5 times the average of 415 thousand. The same didn’t happen with the price though. The stock continues to climb up, albeit in a distorted manner reminding of the volatility and liquidity issues.
Recent positive news on company’s research didn’t change things either. On May 4th PharmaGap announced they made significant progress with the initial testing of a liposomal delivery formulation for cancer drug GAP-107B8.
The company said they are now prepared to take the final step required prior to going into clinical trial phase. Results from in vitro cell proliferation studies on prototypes are expected around the end of May.
The lack of positive reaction might be associated with the recently published annual report, which was filed on April 29, 2011. The audited books show that the financial situation of PharmaGap remains impaired:
- Still no income from any source;
- Annual expenses jumped up 22.9% leading to increase in net loss;
- Working capital deficit increased to $1.2 million;
- Lack of cash looks troublesome;
- Liabilities top assets nearly 5 times;
- Stock dilution was 32.2%.
As the company gets closer to the clinical trials additional capital will be required and thus dilution rates are likely to increase further. The company gets most of their capital from selling common shares.
