Positron Corp. (OTC:POSC) Climbs Up Again On Partnership Rumors
By Violeta Slavtchevska
Date: Jun 14, 2010
Expectations about favorable PR to come out soon raised the stock of Positron Corp. (OTC:POSC, POSC message board) on Friday. Investors started buying up again, as high volatility followed the longer period of sideways activity and no reaction to the press releases of the company.
Positron jumped 26.32% up on Friday and closed at $0.12 for a share. Investor demand for the under $1 stock of the biotechnology company is growing, but Friday's volume increase was not impressive and around 2.5 million shares were traded. It looks like news are overdue and the market expects important announcements to come out soon.
Although Positron is already extremely overvalued with $9.1 million in liabilities compared to $1.7 million in assets, investors still look for a sudden increase and expect the stock to bounce off the $1 barrier.
It was the rumors about a partnership with a billion dollar company to upgrade Positron's production that attracted investor attention last week. It is not quite unreasonable to expect another rally, if the management again decides to say what the market wants to hear.
After such rumors have been previously circulating in April, Patrick G. Rooney, the Chairman of the Board of Positron, finally confirmed in a press release that discussions with a potential partner from the industry were actually running. April's PR rally was slowed down afterword by the filing of the financial results for the last quarter in the middle of May.
The slightly higher revenues are still unable to cover the expenses and the company reported a nearly 500% higher loss from operations. This was not due to much more intensive research, but to a spike in the administrative expenses, resulting from the fact that Positron granted 2.5 million preferred stock options to its employees as a compensation.
With a total of 14.9 million shares of redeemable and convertible preferred stock and a weak cash position, further capital will have to be raised soon. Thus, the dilution risks for Positron are high and the only hopes for recurring revenues and future profits are put on the launch of the new Attrius Cardiac PET system and on the sales of radiopharmaceuticals using the Nuclear Pharm-Assist systems.
The Attrius Cardiac PET technology has been approved by the FDA in April 2009, but as it seems Positron has not been able to market it yet and despite management's confidence, there are no guarantees for success.
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