The stock of ZymoGenetics rose by 3.34% on Friday and closed the trading session at $4.02 on an enormous volume spike. More than 3 million shares were traded, representing more than four times the volume from Thursday and nearly ten times the average volume for the stock. It seems that as the date for the earnings release approaches, investors are intensively reconsidering their positions.
ZymoGenetics’ second quarter results are to come out next Tuesday after market close and they will be discussed by members of the senor management in a conference call.
Though, it is questionable if that is the reason for investors to be that optimistic, since after the first for the year event of that kind at the beginning of May the stock has lost more than one third of its value. Which however does not mean that it has become now undervalued With no considerable corporate updates since then, apart from several new directors, investors are still paying a high premium above the supposed fundamental value of ZymoGenetics’ stock.
According to latest 10-Q, the company has more assets, but not of better quality. Their structure is not promising, as more than half of them are investments on the financial markets, which will hardly have a positive effect on the core business of ZymoGenetics soon.
Explaining to some extent the positive attitude, the only marketable product RECOTHROM seems to be finally penetrating the market, though that seems to be the only positive thing about ZymoGenetics.
The cash position was only $28 million as compared to $141 million for the same period last year, an amount that can barely cover the costs, suggesting thus that no additional research and development are planned for now and no updates on the other still unapproved products can be expected.
The largest part of the revenues still comes from collaboration and license fees, which however are not able to cover all the expenses. Income from investments being mentioned among the future sources of cash, along with new offerings of debt or equity securities, also does not sound like great prospects for the biotechnology company, especially after 16.1 million shares of common stock have already been sold at $6 each in January this year.
