Can the 800% Gain in Immuron Be Rationalized Very Easily?
The day traders are back at it, chasing stocks on news with very few thoughts about what the fundamentals may be if the good news pans out. In day trading, that just doesn’t matter because a trade is a trade and someone else can figure out the long-term aspects. An Australian company that is listed in both the United States and in Australia called Immuron Ltd. (NASDAQ: IMRN) managed to surge by more than 1,000% at one point on Tuesday, and it’s not even on news of a buyout.
With a prior market cap of only about 9 million and an average U.S. volume of 20,000 shares or so, Immuron managed to close up 809% at $20.00 on more than 70 million shares on Tuesday. That’s after a prior $2.20 closing price, and now its 52-week range is $1.55 to $28.99. The company did not announce a cure for COVID-19, it did not announce a cure for Alzheimer’s and it did not announce a cure for cancer.
Immuron’s big news was an update on its research collaboration with the Naval Medical Research Center (NMRC) to target campylobacter and ETEC (E-Coli) by developing and clinically evaluating a new therapeutic treatment.
The NMRC has recently requested a pre-investigative new drug application meeting with the U.S. Food and Drug administration to treat moderate to severe campylobacteriosis and ETEC infections. Effectively, this is for guidance on two Phase 2 trials targeting the prevention of acute infectious diarrhea.
According to the company’s press release that caused such a stir, two human phase II clinical trials are going to be conducted in 2021. The first trial is said to focus on the ability of the hyperimmune product to protect volunteers against moderate to severe campylobacteriosis. Immuron noted that the second drug trial will focus on ETEC infections.
The report noted that the FDA is expected to provide written comments on the non-clinical information in the pre-IND information package which the company is planning to submit on June 10, 2020. Immuron’s also noted that the NMRC plans to file an investigational new drug application later this year and it expects to begin Phase 2 studies during the first half of 2021 following the FDA’s guidance and feedback.
The driving force behind Tuesday’s move was that the Naval Medical Research Center’s (NMRC) request for a preliminary meeting with the FDA is aimed at getting around some of the current slowdowns as the FDA and U.S. agencies have been hyper-focused on targeting cures, vaccines and treatments against COVID-19. This is causing well publicized delays in many other drug companies efforts, and it has even impacted patients’ willingness to participate in many public drug studies over fears that they could get COVID-19 in a hospital or medical clinic setting.
Earlier in 2020, Immuron announced that its CEO had offered his resignation and that the company was lowering external consultant costs, cutting board of director fees and were cutting cash operating expenses by over $2 million annually. That was in response to the impact of COVID-19 and travel affecting its sales of Travelan as an OTC gastrointestinal and digestive health immune supplement.
It was in early October of 2019 that The U.S. Department of Defense entered into a research collaboration with Immuron with a $3.7 million in approved funding for the two indications. The release at that time noted that the Naval Medical Research Center would be funding the manufacturing and funding the therapeutic evaluation of its therapeutic to protect against acute infectious diarrhea.
It is not surprising to see small and micro-cap biotech companies surge on news, but seeing an 800% gain is hard to explain rationally. The reality is that E-Coli is a nasty illness and it is unfortunately contagious and equally as unpleasant for anyone who gets it.
There are many cult stocks out there like this, and this is a new member of the cult stock hall of fame for an exponential one-day gain. Just keep in mind that all of the target dates of 2021 means that this is a long-term story rather than a short-term story. And to prove the news versus that gain, its shares were trading as low as $15.60 in Tuesday’s after-hours trading session.
This company does have 7 studies in its pipeline in various stages of studies or evaluations. Unfortunately, outside of a very bullish H.C. Wainwright note some time ago, Immuron has no current research reports that we have found which would better explain this company and its history.