Propanc Health Group Corp (OTCMKTS:PPCH) managed to halt its steep decline started last week by surging more than 22% in last trading session. The stocks opened with a gap up and traded high for the most part of the day, only to close at $0.0240. The surge in share price came at a massive volume of 81.72 million compared to the average volume of 13.72 million.
Despite a strong closing, there are lot more factors that are enough to cool down the enthusiasm of investors. The company yet has not taken significant steps on its long road to commercialization. On February 23, Propanc Health announced that it is to commence animal trials after it completes a pre-IND meeting with the FDA. In an event of FDA approval, the company will be allowed to commence a myriad of other clinical studies. It appears as the entire process can take several years which indicates there is no reason to stay invested in the stock.
The financial performance
Here, the question is whether Propanc Health can afford to spend several years in the development phase? The answer is evident by looking the latest financial performance of the company. As per the last report, Propanc merely had $14,000 as cash with total assets hovering around $53,000. The total current liabilities came much higher at $1.9 million. The company recorded no revenues with a net loss of $345,000 indicating that it is a risky bet to invest in its stock.
Lack of liquidity
The financial numbers of Propanc Health clearly indicate that the company doesn’t have ample funds to sustain in the development stage for years. Most of the Pharma companies arrange funds by pushing investors in dilution. However, Propanc Health has already completed with the required dilution process leaving no further options to get easy funds.