Orthocell (ASX : OCC) has had two ASX “slaps” in the last month, to which the company pleaded “Schultz“. The first involved a bout of trading around the 6th of July. The second, a more detailed price query follow-up including some concerns in relation to activity on/around the 14th of July. Today we saw another bump with some noticeable recent volume increase. I suppose we will see yet another toothless ASX letter in the next couple of days. Fundamentally, how can a company roughly triplcue in value with no meaningful news?
It just doesn’t make “sense”.
I have previously written about this company and I am lukewarm about it. I don’t think it has anything to really add to the world of treating orthopedic injuries and tenocytes don’t really get me out of bed in the morning. Frankly, I believe that this company has buried plenty of data along the way and I think it it has been subtly changing its story over the past six months. If I compare and contrast investor presentations from late last year, and early this year, the commercial emphasis around the CelGro scaffold has increased and tendon injury is less prominent, a possible red flag. The company has said for a while that it would be expecting ARTG registration about this time, so maybe the recent stock movement really is just about a bunch of priapic shareholders getting ready for the good news (though the volume suggests a bit more than a few retail punters).
Personally I think, and I have stated this before, there is prior MSAC analysis of a relevant indication that is less then encouraging about the reimbursement potential of the Ortho-ATI/ACI product(s) so, really, ARTG inclusion isn’t the key driver here is it? Also, with the TGA conducting a consultation regarding the regulation of autologous stem cell treatments, we know that there is a general heightened awareness around any type of novel autologous cell therapy. Do we really think this will be a shoo-in? I don’t see it, but maybe I am a pessimist and the “big picture” is hampering my ability to focus on a story that is really much simpler than I realise.
Unless, of course, Orthocell has new data that is totally mind-blowing.
Surely, though, it can’t be their most recent publication that has caused all this excitement? You know the one I am talking about, the “peer-reviewed validation” of the Ortho-ACI product through the international, multi-centre collaboration between Australia, Sweden and India … in … er … rabbits. Hey – if you don’t have meaningful clinical data (other than the whopping huge 20 patients reported in AJSM), might as well pull a rabbit out of the hat. It certainly makes for good theatre but surely a cheap trick around publicising marginal publication(s) doesn’t move the stock price like this?
The way I see it, there are three possible scenarios:
1) Shareholders are just super excited. Like “puppy” excited. Visualise a lot of panting, tongues rolling about, leg humping, tails wagging and a few discreet puddles of urinary ecstasy on floor boards. Of course ARTG is going to happen any day now, and of course that means a license to sell (which it does and it doesn’t).
2) The company is selling a story behind the scenes, that it isn’t selling in public. This would surprise me about as much as Geoff Cumming announcing that Anteo has gone into solar. Certainly none of the recent ASX responses provide, in my personal opinion, adequate explanation for the stock movement.
3) Someone is sniffing at Orthocell and the management team can’t keep its mouth shut. Notwithstanding the mediocre quality of the science, someone might decide that it is worth taking out, like maybe some rich dude in Hong Kong that had is knee fixed and thinks he sees his next $100m of wealth inflection. The problem in this scenario is that it strongly “hints” again at 2), which is a bit inflammatory. Of course, if you are a public company and you think you are going to get acquired, a bit of a run in the lead-up helps so long as the regulator doesn’t give you a good slapping in return.
I shall be interested to read the 3rd letter from the ASX. If anyone has any enlightening information, I’ll be delighted to hear from you.
Awesome Photo Credit: Ryan McGuire. http://www.gratisography.com/.