Small-Cap Pink Stocks
Last week, we talked about a new safe haven on the Pink Sheets. It’s a new premium listing service called OTCQX, which began trading on March 5. The new listing service includes three different levels, each with specific requirements for the companies.
Today, we’ll take a look at an Australian biotech that trades on the International OTCQX. More on this company in a minute.
As for this new listing, the top tier is called PremierQX. These are securities that trade for a minimum of $1 and meet all of the requirements to be listed on a national stock exchange. This means the companies are required to post quarterly and annual reports, and also interim information that could affect share prices.
PrimeQX stocks must also meet the requirements to be listed on a major exchange. However, the stocks listed in this group do not have to trade for the $1 minimum. International OTCQX stocks must meet requirements of their foreign exchange and make their reports available in English.
There are only seven companies listed on the OTCQX right now: Computer Services, Inc. (OTCQX: CSVI), Meritage Hospitality Group, Inc. (OTCQX: MHGU), Moro Corporation (OTCQX: MRCR), Day Software Holding AG (OTCQX: DYIHY), Globex Mining Enterprises Inc. (OTCQX: GLBXF), Wal-Mart de Mexico S.A.B. (OTCQX: WMMVY) and Starpharma Holdings Ltd. (OTCQX: SPHRY).
Starpharma Holdings Limited is the company we will be looking at today. It trades in Australia under the symbol SPL, and its ADR is traded on the pinks as SPHRY.
Starpharma makes and develops its products using nanotechnology. Its main drug is called VivaGel, a gel-based microbicide designed to protect women from sexually transmitted diseases, including HIV.
The gel has made it through Phase 1 clinical trials, and the FDA has even granted the drug fast-track status — and fast-track designation is nothing to scoff at. The term was coined in the FDA Modernization Act of 1997 in an effort to speed up the approval process for some worthy causes. The designation is reserved for new drugs that could address unmet medical needs and treat serious or life-threatening conditions.
While a fast-track designation is not a guarantee that the drug will ever be approved, it is an indication that the product has a better chance at one day being actively marketed than the average new drug applicant.
A study at the Tufts Center for the Study of Drug Development says that the FDA’s fast track program results in a 62% approval rate after the first three years. Considering that the length of the total drug testing and approval process is conservatively estimated at 12 years, this is an immense difference.
On top of its fast track designation, this company has been awarded $20.3 million by the National Institute of Health to accelerate its development. While this all speaks very favorably for the future of this drug, it could still very well be many years before the product actually materializes.
Of a more immediate concern to shareholders is a recent acquisition. In October, Starpharma bought Dendritic Nanotechnologies, Inc. Dendritic’s specialty chemicals are much more closer to commercialization than Starpharma’s technology. The firm’s near-term success will most likely be based on its ability to get some of this acquired technology on the market.
Still, this is a company worth checking out. It’s easier to find information on companies like Starpharma listed on the Pink Sheets’ premier and prime exchanges. And more stocks should be added to these groups in the very near future.
Pink Sheets’ execs are currently processing applications filed by 20 more companies. The quotation service will probably announce additions to the OTCQX lists soon. We’ll keep you posted on any breakout winners from the list as the year progresses.
April 9, 2007
P.S.: This just in… Coming this month, you can check out more promising small and micro-cap biotechs in the new Penny Stock Fortunes.
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