Prometic Life Sciences (TSX:PLI) stock rose 1.04% on July 10. Shares have plunged over 90% in 2019 so far. The Quebec-based biopharmaceutical took a big hit after it pursued a dilutive restructuring back in the spring.
The biotech’s big draw involves a development of a process to separate plasma proteins to treat orphan illnesses. However, it encountered a delay in its U.S. Food and Drug Administration (FDA) approval and in
receiving a research and development tax credit.
Prometic said that it was forced to pursue this course in order to reduce the firm’s debt burden and make interest payments. It also required additional cash to go forward with operations. Several prominent shareholders voiced their displeasure at the unilateral action.
So how does Prometic look today as it hovers around 52-week lows? Prometic’s development looks promising, but the company is swimming in debt. Its fight to get ahead of this problem has done a
number on shareholders. However, one technical would seem to suggest otherwise.
After its April dilution, Prometic stock fell sharply and sent off a familiar buy signal. Shares had an RSI of 33 at the time of this writing. This puts the stock just out of technically oversold territory as of close on
July 10. Shares have spent most of the spring and summer at oversold levels.
Still, Prometic has too many issues to bet on today. It is worth a watch going forward, but the company needs to achieve more financial stability before I will consider pulling the trigger on a buy.
