Shares in speculative biotechnology business Benitec Biopharma Ltd (ASX: BLT) nearly doubled in price from yesterday's close of 11 cents to 21 cents in trade today despite the company issuing no announcements to the market.
The stock closed up around 85 per cent and the wild price volatility reflects the company's tiny $19 million market capitalisation that means small trading volumes can see the share price move quickly in either direction. I
t's also likely that speculative day traders may be behind the large price swings as they seek to make quick profits by buying and selling the stock, with no regard to the underlying valuation of the company.
The company which also has an equity listing on the U.S. NASDAQ exchange is seeking to develop therapeutics for the treatment of ocular (eye) diseases. On February 2 it announced that its ddRNAi technology may have an expanded potential that is related to a collaborative study the company is undertaking with 4D Molecular Therapeutics.
Like pretty much all junior biotechs the company is still in an early investment stage that means it is taking large cash outflows as it looks to spend on the research and development or clinical trials that could lead to the commercialisation of its products.
For the quarter ending December 31 2016 it posting $3.6 million in operating cash outflows, with just $55,000 recorded under receipts from customers.
Evidently then this looks a company for speculators rather than investors, although it does have $12.2 million cash on its balance sheet to help fund its commercial ambitions.
