Transgenomic, Inc. (OTC:TBIO) added significantly in volatility on the massive trading volume after the company disclosed a new acquisition.The company acquired Clinical Data Inc. business for $15.5 million. Additionally the business raised $6 million through Series A convertible preferred stock sales to Third Security, LLC. The proceeds will be used to fund the cash portion of the acquisition.
Over 774 thousand shares changed hands in the last day of 2010, which was nearly 8 times the average. The share price action, however, is contradictory – the previous week presented a sharp collapse along with a quick recovery and had it all spiced up with gaps.
Such volatile fluctuation depicts indecision and raises doubt of whether the 70 cents resistance can be broken. The 65 cents level that has become support for now is also questionable, considering how easily the stock can gap.[BANNER]
Longer term, Transgenomic doesn’t really have fundamental base for further price appreciation. Despite a solid state balance sheet, net losses and declining sales are pointing to possible price deflation. A new acquisition can be game changing, but the considerably low price paid for Clinical Data Inc. brings doubts on that as well.
The latest recorded net tangible worth of $9 million is surely to support the current market capitalization of $35 million, but to see it rise above that at least a disclosure of the newly acquired Clinical Data’s financials should be required.
