GeoVax Labs Inc (OTCMKTS:GOVX) is once again showing signs of bottoming out after a harrowing plunge. An 80% plus fall has left the stock languishing at all-time lows and in need of some groundbreaking catalysts.
While the plunge has come on a huge turnover of traded shares, one cannot dispute the fact that the company has made impressive strides to safeguard its prospects as a biotechnology company. For starters, the company has achieved significant milestones, on the development of novel vaccines targeting various diseases.
The company is currently working on a line of cancer immunotherapy in partnership with Leidos. The two have also joined forces on the development of a Malaria vaccine. Likewise, the biotechnology company is also working on a Lassa fever vaccine as well as vaccines for Ebola and Marburg.
Milestones on the development of novel treatments have, on the other hand, been offset by rising investors’ concerns over stock dilution. It thus does not come as a surprise that the stock has continued to edge lower as investors remain skeptical about the company’s financial position.
Conversely, the stock has plunged to the $0.0027 level from where it is trying to bounce back. A 40% plus bounce back in recent weeks might as well signal GeoVax Labs has reached a bottom and due for a correction on the upside.
For the stock to turn bullish, then it will have to rise and find support above the $0.01 technical level. A rally past the critical technical level could help fuel a rally from the bottom. Likewise, failure to take out the critical technical level leaves GeoVax Labs susceptible to further drops in continuation of the long-term downtrend.
GeoVax casts itself as a clinical-stage biotechnology company focused on the development of human vaccines for addressing infectious diseases and cancer. The company is currently working on preventive vaccines targeting HIV and Zika Virus as well as malaria and Ebola.
Stock Dilution Concerns
GeoVax Labs has taken a significant hit in response to growing concerns about stock over dilution. The number of outstanding shares outstanding has been on the rise, clocking highs of 95 million as of the end of September.
While most people would have expected an increase in stock outstanding to coincide with new financings that has not been the case. The increase stems from a surge in the liquidation of convertible preferred stock by third parties. Stock dilution could continue as there are about 3,054 shares still unconverted.
Liquidation of convertible stock has continued to pile pressure on the stock’s sentiments in the market resulting in the downward spiral.
“But we look forward to the day in which the preferred stock is fully converted, thus simplifying our capital structure and allowing us to seek additional financing with better, more supportive terms. In the interim, we continue to evaluate alternative options to support and improve the value of our stock and Company value,” CEO David Dodd in a statement.
Vaccines Development Milestone
Amidst the stock dilution concerns, GeoVax continues to work on the development of a pipeline of vaccines from which it hopes to generate significant value going forward. The biotechnology company is currently in advanced stages on human clinical testing of its HIV preventive vaccine. The company has also inked a strategic collaboration with the American Gene Technologies International for the use of its HIV vaccine in a gene therapy program to develop an HIV cure.
GeoVax is also in advanced stages on the development of Ebola and Marburg Vaccines with immediate trials having already shown that the vaccines can offer 100% preclinical protection. The company has consequently offered the vaccines to public agencies worldwide, awaiting additional funding to proceed with advanced clinical development.
“Despite our limited financial resources, during the first half of 2019, we made progress in several product development areas. These accomplishments were made possible through the efforts of our dedicated staff as well as through the support of our various government and corporate collaborators,” explained Mr. Dodd.
GeoVax has had a phenomenal run after a harrowing plunge to all-time lows. An impressive bounce back from record lows is clear evidence that a positive trend is brewing. At current levels, OTCMKTS:GOVX looks to be a high risk/reward opportunity. Investors should trade accordingly.
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Disclosure: We have no position in OTCMKTS:GOVX and have not been compensated for this article.