Midatech Really Down 3.5% On 500% Rise – How’s This?

Midatech Pharma (NASDAQ: MTP) stock is listed as being up near 500% today premarket – this is really, when we think about it, more like a 3% fall in MTP. The answer here is that we've an entirely nominal change in the stock price entirely obscuring any change in the real price. Given that Midatech (LON: MTPH) has a London listing we have a nice example of what is really going on here. One share price, MTPH, which seems not to have moved at all, with another, MTP, which seems to have bounced that 500% or so. Given that they're both shares/stocks in exactly the same company we'd not expect such a difference in price movements across the two listings. Unless, of course, one is purely nominal and that is indeed the explanation here.

As to what Mideatech does it's from the name, a pharma company. The concentration is upon drug delivery rather than drugs themselves. So, delivery of drugs to treat glioblastoma, a topical application for psoriasis and so on. Over time there's been some interest in Midatech, 35% price jumps in a day for example. An 88% jump in MTPH on a discovery announcement. And of course continued fundraising in MTP stock given that this stage of drug or treatment development just does eat capital.

More specifically though we get an example of the difference between nominal and real price changes. The London quote, MTPH, is pretty much unchanged today:

Not all of the American tickers are properly updated as yet but here's Midatech on NASDAQ before today's events:

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And here's the NASDAQ ticker for MTP as properly updated:

As we can see there's a considerable difference in that American Midatech stock price. $0.57 cents on Friday, $2.75 on Monday – that sure is a difference. It's actually just shy of 500%, which is why we can describe this as a 3.5% fall. But there's been no real change in the Midatech price if we look at the London quote, MTPH – that's looking unchanged entirely. So, what's going on here?

The problem is that if your price on NASDAQ goes – and stays – below $1 then you'll end up losing the quotation on that market. As we've already said, Midatech desires access to American capital – that's the reason for the quote in the first place. So, something must be done, that something is a reverse stock split – a consolidation to Brits. Declare that what was 5 shares on Friday is now one share.

This isn't quite and exactly what has happened here though. The American, NASDAQ, quote for MTP is actually an American Depositary Receipt. The London stock, MTPH, is the share itself. ADRs are usually some number of the London stock, so what has been done is to declare that the ADRs are now fives times as many of the London stock as they used to be. With, obviously, a reduction in their number to one fifth of what there used to be.

That's how we get no move in the London, parent, stock of MTPH but a roughly 500% move in the ADR, or MTP. The difference between real price moves and nominal ones.