Trading in Alchemia Ltd. (ASX: ACL) was halted this morning. A capital raising announcement is likely, as it is short of cash and burning through it fast. Alchemia won't make it to profitability without a cash injection.
From the horse's mouth…
Alchemia is seeking the trading halt to assist in managing its disclosure obligations in relation to the proposed capital raising and maintaining an orderly market in the trading of the company's shares and to ensure that trading does not take place in an uninformed market.
The Phase III trial of Alchemia's oncology program, HA-Irinotecan, for the treatment of colorectal cancer, has started recruiting patients so cash burn will skyrocket again.
One key to valuing Alchemia is a good estimation of revenue from its approved generic drug, Fondaparinux.
Generics typically achieve a 30% market share. In late October Alchemia announced that since launching a few months ago Fondaparinux has gained a market share of around 10%. Alchemia expects manufacturing volume and market share to increase in the coming months.
Profits from Fondaparinux will begin rolling in next year, after its partner Dr Reddy's has recouped development and registration costs.
Alchemia is a story worth digging in to. After peaking at 86 cents in July, it last traded at 27.5 cents and had a market cap of $53 million.
Thanks to Ron, for bringing this story to our attention.
Dean Morel is The Motley Fool's Investment Analyst. Dean has no position in Alchemia. The Motley Fool's purpose is to educate, amuse and enrich investors. Readers can click here for a free Motley Fool report titled Read This Before The Next Market Crash.