The Motley Fool

GID Dynamics Inc enters trading halt: Here’s what you need to know

GI Dynamics Inc (ASX: GID) has entered into a trading hold pending a material announcement regarding its business. The shares will be stuck at 30 cents until the commencement of trading on Monday, 9 March 2015, or until an earlier announcement of the material event is made.

So What: GI Dynamics is a medical device maker located in the United States which is focused on the development of non-surgical treatments for patients suffering type 2 diabetes and obesity. While it could be good news, investors are likely nervous about the announcement given that the stock plummeted 39% when it last emerged from a trading halt in October last year.

At the time, GI Dynamics announced a suspension of sales of its main product, EndoBarrier, due to its reporting systems not being up to scratch. Although shipments have since resumed, the company also lost its Chief Financial Officer while roughly 10% of its workforce was let go, indicating things aren’t going so well for the company.

As it stands, the stock has lost 55% of its value over the last 12 months, while it has fallen 72% since peaking in 2012.

Now What: As demonstrated by Sirtex Medical Limited (ASX: SRX), there is potential to make enormous profits in the biotechnology sector when things go according to plan. But for every Sirtex Medical, there are numerous other companies who show plenty of promise yet never manage to succeed.

While it is unclear what GI Dynamics’ announcement will be regarding, investors need to remember the risks involved in investing in the sector. Notably, there are plenty of safer ways to make money in the stock market.

NEW: The Motley Fool’s top stock for 2015 – Yours FREE!

NEW. The Motley Fool AU Releases Five Cheap and Good Stocks to Buy for 2020 and beyond!….

Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading over 40% off it's high, all while offering a fully franked dividend yield over 3%...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click here or the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.


Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. You can follow Ryan on Twitter @ASXvalueinvest.