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MYOS RENS Technology Inc (NASDAQ:MYOS): Here's What's Next

MYOS RENS Technology Inc (NASDAQ:MYOS): Here's What's Next
Written by
Chris Sandburg
Published on
January 13, 2017
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It has been a big week for low float runners in the biotech space, and things don't look like they're going to slow down as the week draws to a close. Another example of this sort of action has just popped up, in the form of MYOS RENS Technology Inc (NASDAQ:MYOS).The company ran up from a little over $1 a share on Tuesday to close out at $6.82 on Wednesday, a nearly 600% gain in a 24-hour period. It has since pulled back and now goes for around $3.75. That's still a substantial run on what is essentially no real fundamental developments, and it just shows how much of an impact a volume spike can have on a company with a low float such as this.The problem is, these seemingly unsupported runs make it very difficult to form a bias as to what happens next. We have seen that volume will move the stock, but if this volume dries up, is MYOS just going to collapse back down to the dollar mark?For some companies that have run this week, this is probably the case. For MYOS, however, there is something going on in the background that could prove supportive of its recent reevaluation, and further, could push the company higher as the first quarter of 2017 matures.For those new to the company, MYOS is a biotechnology company with a focus on what's called bionutrition – basically the development of supplements and pharmaceutical grade assets that worked to improve muscle health and function. The former category, the supplements, falls within the gym and fitness arena. Enhanced protein shakes, muscle strengthening products, that sort of thing. The latter category, the pharmaceutical grade side of the business, attempts to address degenerative muscle conditions – things like sarcopenia, cachexia, and inherited and acquired muscle diseases.Right now, the company isn’t really making any money on its products. Third-quarter revenues came in at just $40,000, down from the $70,000 recorded during the second quarter and flat on the $40,000 recorded during the third quarter of 2015. It put out data from a clinical study back in April 2016, focusing on a muscle mass product called Fortetropin, and the hope is that this will drive revenues over the coming couple of years.That's a long term driver, however, and isn't our focus for the purposes of this discussion.What is our focus, is an agreement between MYOS and a company called RENS Technology Inc., which was first announced back in March 2016.Under the terms of the agreement, RENS invested $5.25 million in MYOS and received 1,500,000 shares of the company's common stock and a warrant to purchase 375,000 shares of common stock at $7.00 per share. A few days after the initial announcement, MYOS reported that it had appointed RENS Chairman, Ren Ren, as Global Chairman of MYOS, and a week or so after that, the company changed its name to MYOS RENS, from MYOS Corporation.Fast-forward to the end of 2016, and all this activity seems to have been overenthusiastic and premature. The two companies are now embroiled in a legal battle, as part of which MYOS claims that RENS hasn't honored its side of the deal, and is seeking compensation from the latter. Exactly what this means for management, name etc. is unclear; the whole thing is something of a mess. With that said, however, a judge just ruled in MYOS's favor on an initial request, and this ongoing litigation looks like it is going to determine market sentiment towards the company for the next few months. If it continues to run in MYOS's favor, then the current gains should hold, and inflate, on any updates.As things stand, and as per the latest 8K, a judge has ruled that RENS cannot unload any of its 1.5 million shares or exercise its warrant, until a reconvening on February 14. At this time, the court is going to determine whether to issue a preliminary injunction containing the same relief, and order the attachment of the stock and warrant to satisfy any judgment entered in favor of MYOS. If the outcome is favorable, we expect this one to continue running.This isn't a long-term play. MYOS's future couldn't really be more uncertain, and it is almost impossible to form any sort of long-term bias based on the currently available public information. As a near-term litigation play, however, there could be some reward on offer for an investor willing to take on a bit of risk.We will be updating our subscribers as soon as we know more. For the latest updates on MYOS, sign up below!Disclosure: We have no position in MYOS and have not been compensated for this article.

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