Tiny Float Biopharma Stock Exhibiting Value
Spherix is paying a stock dividend real soon
Good day everyone,
Today we are initiating coverage of Spherix Incorporated (NASDAQ: SPEX), a biotechnology company with a diverse portfolio of small-molecule anti-cancer therapeutics.
Current price $1.38 per share
Outstanding (est.) 4.8 million shares
(Does not include a recent offering of 3M shares)
Float (est.) 2.86 million shares
Insider ownership 40.87%
Book value (mrq) $2.18 per share
SPEX has some of the share metrics we like. A modest share structure with a very low float, priced less than book value and a high level of insider ownership.
SPEX shares had a broad trading range last week, starting out at $1.10, then hitting a high of the day of $3.69 on Tuesday before settling at the current price Friday. SPEX usually trades thousands of shares per day but on Tuesday traded 24M shares.
These two developments could have influenced the wide swing in the SPEX share price last week:
On Monday of last week, SPEX announced the details of a distribution to Spherix shareholders of 70,000 shares of Hoth Therapeutics, Inc., a Nasdaq company (Hoth) Spherix has invested in. Each Spherix stockholder will be entitled to receive one share of Hoth common stock for every seventy (70) shares of Spherix common stock held as of 5 p.m. Eastern Time on March 4, 2020. HOTH has a current price of $4.05 per share. If you are interested in the HOTH stock dividend, you need to hold the shares through March 4th.
The company filed form S-1 on February 27th announcing a capital raise that could yield $7.5M. The company will offer 3,073,770 warrants, convertible into common shares immediately or up to five years later. The target price for the warrants is $2.44 per unit but are being sold on a “best offer” basis. The offering has the potential to increase the outstanding share count from 4.8M to 7.9M depending on the number of warrants converted.
The cash raised in the offering will go toward the development of the drugs SPEX has acquired the rights to that are described below.
On December 5, 2019 SPEX completed the acquisition of the assets and rights from CBM BioPharma, Inc. This acquisition came with the patent and licensing agreements for the current SPEX pipeline.
The SPEX Pipeline:
Their pancreatic cancer drug was developed at University of Texas at Austin. DHA-dFdC, is a new compound that holds promising indications of becoming the next generation of chemotherapy treatment for advanced pancreatic cancer. The drug has also demonstrated activities against other cancers (e.g. leukemia, lung, melanoma).
The SPEX AML (acute myeloid leukemia) drug, KPC34, developed at Wake Forest University, is a next generation targeted therapeutic designed to overcome multiple resistance mechanisms observed with the current standard of care.
The company just attended the AI & ML Drug Discovery Summit. The AI-ML in Drug Development Summit brings together industry leaders, technology experts and academics focused on augmenting the R&D processes using Artificial Intelligence and Machine Learning. Mr. Anthony Hayes, CEO of Spherix stated, “We believe that the use of machine learning and artificial intelligence in drug discovery and development will be an important part of the future for this industry.
The company recently stated: “With our newly acquired oncology assets, we expect to transform Spherix into an innovative pharmaceutical company dedicated to translating fundamental biological insights into new drugs and treatments that address unmet medical needs.”
We believe the press releases from last week caused the fluctuation in the company share price and may not have a long-term impact. That said, we believe there may be a spike in the share price just ahead of the HOTH share distribution.
The introduction of AI and machine learning to develop new treatments may become the standard practice in biotech and SPEX may be at the forefront of that technology.
The tiny float, a 2.0X book price, 40% insider ownership, the recent share price drop, the stock dividend and robust NASDAQ trading volumes could be a formula for nice near-term gain.
In October, ValueEngine changed its rating on SPEX shares from “hold” to “buy”.
Given the stock dividend terms, the current prices of SPEX and HOTH shares indicate a nice potential gain for shareholders.
Once again, the float is only 2.86M shares and the book value is $2.18 per share.
SPEX filed their FYE 10-K form and a S-1/A form in February. Both filings are filled with good data about the company and could be an integral part of your due diligence.
Although SPEX shares crossed their 50 DMA and 200 DMA of $1.21 and $1.84 respectively during the last week, they are now below those levels, an indication the shares could have been oversold.
Stay tuned for updates and more ahead, this will be a busy week for us.
The Traders News Group
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