Egalet Corp (NASDAQ:EGLT)
Egalet Corp (NASDAQ:EGLT) shares are up over 16% in interday trading. Volumes are heavy as the 30-day, daily average volume for EGLT is 322,000 but by 2PM EST over 7.8 million shares of the biotech firm had traded hands. EGLT closed yesterday at $2.33 but jumped on the news that a major provider had agreed to provide payment coverage for Egalet’s pain drug ARYMO ER. ARYMO ER is a morphine sulfate in an extended-release tablet. The coverage is effective immediately and also applies to Egalet’s OXAYDO pain relief tablets and SPRIX nasal spray through 2018.
Egalet Corp (NASDAQ:EGLT), headquartered in Wayne, PA, is a specialty pharmaceutical company. Egalet develops, manufactures, and commercializes state-of-the-art pain treatments. The company boasts of its Guardian technology which allows them to develop a pipeline of innovative pain management therapies for which existing treatments are inadequate including daily round-the-clock long-term opioid treatments. The technology can be applied across different pharmacological classes with different release profiles.
A look at the numbers
In 2015, Egalet Corp (NASDAQ:EGLT) shares were trading above $16. Since then investors have shied away from the stock and EGLT hits its 52-week low last week at $2.03 a share. YTD EGLT shares are down almost 70% and are down almost 60% for the year. Today’s news may give pause to the stock’s short sellers – of which make up over 20% of the stock’s float. While short sellers have had, so far, the last laugh on EGLT shares analysts seem to be sticking with the company. Of the four investment firms that cover Egalet Corp (NASDAQ:EGLT), three rate EGLT shares as a “Strong Buy” and one rates the shares as a “Hold”. Their consensus price target is $9.50. In early May, Gabelli & Compa upgraded their rating on EGLT.
Egalet Corp (NASDAQ:EGLT) financials have been decidedly unkind to investors. In 2012 EGLT shareholders had an EPS loss of (-$0.39). That loss profile increased each year and in 2016 the EPS loss had expanded to (-$3.70). Sales have dropped over the last year as well. In 2015 reported sales were $22.8 million, a figure that fell to $17.0 million for 2016. On top of that poor performance, EGLT shares have seen dilution. In 2012 there were 13.9 million shares outstanding. By 2016 the number of outstanding shares had grown to 24.52 million.
A brief look at today’s price action is not any more comforting despite the 15%+ increase. In the first fifteen minutes of trading EGLT shares were trading above $3.40 but they were struggling to stay above $2.80 just a few hours later.
I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. All information, or data, is provided with no guarantees of accuracy.
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About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.