Key points:
- Nabriva stock is up 2,232% this morning premarket
- That thought is largely a nominal price rise, not real
- What portion of this is a real price rise?
Nabriva Therapeutics (NASDAQ: NBRV) stock is up 2,232% (@4.42 AM EST), or, it is also possible to say that NBRT is down around 10% premarket. The difference is whether we want to talk about nominal prices or real. Nominal prices matter in one way and not in the important one of how much is any investment actually worth? For that depends upon real prices. So, it's worth an examination to see what is really going on here.
The problem that Nabriva has is that it develops anti-infective agents. They've a pipeline of products in various stages of testing, plus have some sales. This is a vital area for all of us out here given the manner in which microbes and bacteria become immune to any one antibiotic as it gets used over time. But that then creates economic problems for any who develop new ones. We do not, in fact, want to use the new antibiotics at scale precisely so as to not then create that immunity. We want to keep them as the last line of defence. So, create a new antibiotic and the aim of the medical industry is to leave it on the shelf, for emergencies only.
Nabriva has revenues around the $9 million a quarter level, costs of perhaps $20 million and so an $11 million loss per quarter. It has some $20 million in cash, it's running out of road without a capital raise or a marked turnaround in sales. As a result of all of this the share price is down 75% over the past year. That leaves it well under the NASDAQ minimum offer price of $1 and something must be done.
Also Read: Five Best Pharmaceutical Stocks to Watch in 2022
The answer is a reverse stock split. This simply changes the number of pieces of stock in issue. It doesn't – or at least not directly – change the value of Nabriva the company nor of any individual stockholding. NBRV decided to do a 25 for 1 reverse split – a consolidation to Brits. That means the stock price should go up by 2,500% as the split takes effect this morning.
This would also mean that the NASDAQ listing is maintained. That could then lead to indirect effects. Nabriva looks like it needs more capital, it might be able to get that more easily – which is the same as at a better price – on NASDAQ rather than being relegated to the OTC markets. So, that could add value as an indirect effect.
This morning's 2,232% rise (now, at 5.06 AM, 2,344%) is less than 2,500%, by the Mark I Eyeball measuring method that's about a 10% fall in the stock value. But it's also true that Nabriva rose by 40.65% yesterday, in anticipation of this news. So we've a substantial real price rise here. From the starting point of a $0.19 NBRV price we're at $6.42, which is a 3,300% and change rise, well above the nominal one purely from the stock split.
