Anatomy of a Pump & Dump
If you have ever wondered what a pump & dump is, take a look at the financials of Genova Biotherapeutics (10Q here). They have $35,000 in the bank and somehow are confident that can use that money and patents they bought for $92,000 to develop a cure for cancer.
The company was formerly a travel agency:
"From inception, Kinder Travel Inc. had been a travel agency offering a full range of travel services including corporate travel, vacations, cruise holidays, and group tours. Since Kinder Travel Inc. was incurring continued losses in the travel industry, the Board of Directors decided it was in the best interests of the Corporation to pursue other business opportunities. Through his past contacts in the bio-medical industry, the then President of Kinder Travel Inc. initiated negotiations with Phoinos Oxford Lifesciences Limited, a company incorporated under the laws of the Federation of St. Kitts & Nevis (“Phoinis Oxford”), for the purchase of medical patents for the treatment of prostate and breast cancers. On April 15, 2009, Kinder Travel Inc. entered into an asset purchase agreement dated April 15, 2009 (the “Asset Purchase Agreement”) with Phoinos Oxford.
The Company subsequently changed its to “Genova Biotherapeutics Inc.” Our shares of common stock now trade on the Over-the-Counter Bulletin Board under the symbol “GVBP.OB”."
The company has issued numerous misleading press releases:
GENova Biotherapeutics and ... signs LOI on ... cancer cure [Cure! Wow, they bought a few molecules and now they already have a cure (not just a treatment) for cancer!]
New stem cell identification technology could cure breast cancer [again, they are curing cancer!]
Genova doesn't even own patented molecules. The patents are pending.The company states in another press release that "The Company is aggressively acquiring patents involving the latest generation of biotherapeutic technologies that can cure cancer without any side effects." That is pretty amazing considering they have $35,000 (Canadian) in the bank. If they can buy cancer cures for that kind of money then they must be brilliant!
Numerous stock touts are pumping Genova stock and idiots are eating it up: the stock closed at $0.80 today on volume of 58 millions shares. Those who believe the hype will soon be left with very little, just as with all pump and dumps (such as recent favorite Spongetech, SPNG).
If you ever run across such a hyped-up company with no real assets, run far and fast. The press releases put out by Genova are over the top even for a pump & dump and I think it likely that the SEC will halt trading in the stock or sanction the company at some point.
Disclosure: No positions. I am a daytrader so I may trade this after the publication of this post. If you wish to see my thoughts on day trading, see my blog at ReaperTrades. I still occasionally blog at GoodeValue.com. In case you care, this post does not mean I will continue to blog here and I likely won't respond to comments ... I just thought it important to spread the news about this horrid sham of a company.