Arca Biopharma Inc (NASDAQ:ABIO)

CAPS Rating: 1 out of 5


Player Avatar zzlangerhans (99.85) Submitted: 2/26/2013 5:23:42 PM : Underperform Start Price: $3.18 ABIO Score: +19.63

Sadly, I'm prevented from playing Arca in CAPS most of the time because of the dumb liquidity restrictions that filter out many interesting, highly liquid stocks. Fortunately I was able to grab a red thumb here before the stock slipped back under the 50 cent threshold, possibly for years.

Arca has to run a 620 patient phase III trial, which they haven't started. Arca has 3M in the bank. That's not a formula for success. Arca needs at least 30M to run the trial and pay salaries and expenses until it finishes. That means Arca needs to print about 60M new shares on top of the 15M shares they already have. No one is going to buy 60M new shares. No one is going to give Arca money for a Gencaro partnership.

Sadly, Arca has been in this situation for about three years, during which time management has collected salaries without accomplishing anything of substance. Periodically, the share price spikes on press releases of news of dubious significance. I was unable to take advantage of the most recent spike due to the liquidity restrictions, so I'll take my red thumb at a lower price. Eventually Arca will have to either kick off their phase III or go out of business, but I expect management to milk the teat as long as humanly possible.

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