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ImmunoCellular Therapeutics Ltd (NYSEMKT:IMUC) Just Bounced; What's Next?

ImmunoCellular Therapeutics Ltd (NYSEMKT:IMUC) Just Bounced; What's Next?
Written by
Chris Sandburg
Published on
August 19, 2017
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ImmunoCellular Therapeutics Ltd (NYSEMKT:IMUC) is running up this week subsequent to the release of its second quarter financial results. The news has come at a pretty good time for shareholders, with ImmunoCellular having lost a substantial portion of its market capitalization throughout the early part of the third quarter on what amounts to nothing more than sentiment surrounding capital structure concerns. On August 15, we also saw a couple of the company's directors, Mark A. Schlossberg and Gregg A. Lapointe, resign from the Board. Both have said that the resignations haven’t come on the back of any sort of disagreement, but there's always speculation and right now negative speculation is far from what this company needs.Anyway, back to the numbers, things don't look too bad and that's what's boosting the company's market capitalization right now. For the second quarter of this year, ImmunoCellular recorded a net loss of $3.6 million, or $1.02 per basic and diluted share, compared to a net loss of $5.3 million, or $2.30 per basic and diluted share, for the same quarter a year earlier. A net loss isn’t great, of course, but a tightening net loss is a move in the right direction and for a company that operates at this end of the biotech space anything that serves to narrow burn is a bonus.Research and development costs hit $10.4 million for the quarter and this is something of a black spot on the financials as things stand. Why? Because the majority of these costs are rooted in the ICT-107 program which is currently on hold (and likely won't kick off again anytime soon, at least under the umbrella of ImmunoCellular), but the lifting of said program's impact on expenses (again we're referring to reducing burn here) is a small positive from a larger negative that's been weighing on the company for some time.So what's next?This is where things get a little speculative. At last close, ImmunoCellular went for $0.34 a share. This represents a 34% premium to the $0.25 a share registered at the end of last week. The driver behind the gain is the numbers, but we think there's also a degree of speculative loading that's helping to buoy price in the background right now. Specifically, this buying is rooted in the potential for a buyout or a partnership.While the 107 program is dead (for now) the technology that underpins it has the potential to be valuable, be that for ImmunoCellular or another entity. The former doesn’t have enough cash on hand to get a program underway but it does have a couple of deep pipeline assets that may look attractive to an entity with deeper pockets that's looking to pick up an oncology exposure.If the company can set something up with one of these entities that brings with it an injection of capital, there's almost certainly some immediate upside on current market capitalization of just $3.5 million. It almost doesn’t matter what the terms are (within reason, of course); it's all about bringing this stock back from the dead.A buyout at current levels is also a strong possibility. For an entity that doesn’t want to mess around with partnerships, the company is cheap enough (even at a premium to current prices) to be a reasonable speculative acquisition. There's some credence to the suggestion that the above-mentioned resignations come in anticipation of such a buyout, but again, that's pretty speculative at this point.Bottom line here is that this is a risky play given the state of the company's pipeline but it won't take much to get it moving and, if any run starts to squeeze some shorts out of the picture, it has the potential to serve up a considerable short term revaluation.Here's our previous coverage of this one. We will be updating our subscribers as soon as we know more. For the latest updates on IMUC, sign up below!Image courtesy of Filter Forge via FlickrDisclosure: We have no position in IMUC and have not been compensated for this article.

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