To say that Oxygen Biotherapeutics, Inc. (NASDAQ:OXBT) has made its presence known over the past three weeks would be an understatement. It would be more accurate and fairer to say OXBT been an "in your face" kind of name that you couldn't look past even if you wanted to. Rather than continue to sidestep it, care to stop, invest two minutes of time, and get the Q&D version of what's really going on here? If so, read on.
First and foremost, yes, Oxygen Biotherapeutics is - as small cap biotech names frequently are - a hyped up stock. What's interesting about OXBT, however, is that there's some substance to the company.
Oxygen Biotherapeutics specializes in finding ways to deliver oxygen to patients that may not otherwise be getting as much as they need to sustain good health, or in more extreme cases, sustain life. Its products include Dermacyte and Oxycyte. The latter is a topical oxygenating cream (part of a beauty regimen), while the former is being tested as a treatment for traumatic brain injuries... though Oxycyte may be useful as a treatment for several other conditions. Don't get too excited about the premise being turned into big revenue anytime soon though. Oxycyte is only in Phase 2 testing, and the already-on-the-market Dermacyte only translated into a few thousand dollars worth of sales for OXBT in any of its last several quarters.
Neither of those products are the reason OXBT has exploded upwardly since mid-October, however. The prod for that move was an announcement that Oxygen Biotherapeutics was acquiring a drug called levosimendan from its developing company, Phyxius Pharma. The heart medicine - ready to begin Phase 3 trials - has been shown to improve survival rates of heart surgery patients who already have reduced heart function.
The total price tag for the drug and all the rights and privileges of owning it? A mere $4.8 million worth of stock. The market size for levosimendan? Oxygen Biotherapeutics, Inc. says it's a $600 million, underserved market. The numbers say the acquisition was a brilliant decision. Just bear in mind, though, that most small biotech companies tend to tout the market size for a new drug rather than the plausible penetration of that market. In other words, heart-surgery patients with weak heart functioning should probably use $600 million worth of the drug every year, but skeptical and unaware patients (and doctors) may mean only a few million worth of the drug is ever sold per year, if it's approved. For perspective, OXBT is now a $31.6 million company.
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That's it. That's the whole shebang that drove the stock from $1.37 in mid-October to a high of $11.40 yesterday, although a healthy promotional effort from smallcaptraders.com did most of the legwork.
As for whether it's worth it or not, and whether or not OXBT is going to pull back even more than today's dip to the current price of $6.40, that depends. There's certainly something of a disconnect between the stock and the company... a separation created by hype. But, there's something reasonably marketable about Oxygen Biotherapeutics' pipeline, and you could certainly do worse. The good news is, it's not like this is a complicated story to handicap.
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