Spherix Inc (NASDAQ:SPEX)
Spherix Inc. (NASDAQ:SPEX) shares are up over 50% after a letter to SPEX shareholders was released by the company. Shares closed on Monday at $1.12 but gapped up to open at $1.28 before hitting an inter-day high of $1.72. Volumes have been massive. The holder of telecommunications patents normally trades under 100,000 shares per day but by 12:30PM EST, over 9.5 million shares have traded hands.
The catalyst for the spike in share price and volume was the release of a letter to shareholders from management that more fully explained the acquisition of a controlling interest in Hoth Therapeutics. Cincinnati, OH-based Hoth Therapeutics is the licensee of proprietary, patented, drug compounds developed at the University of Cincinnati. Its lead drug candidate, BioLexa, is a treatment for eczema.
A primary reason for Spherix Inc (NASDAQ:SPEX) acquisition of Hoth was their anticipation of a dramatically shorter time frame for FDA approval because the BioLexa compound uses a combination of two previously approved drugs. BioLexa can take advantage of the shortened 505(b)(2) FDA testing procedures which can often take one quarter to one third the time of new drug testing.
Spherix Inc (NASDAQ:SPEX), in their letter to shareholders, listed acquisitions by Pfizer, Mylan, and Allergan along with the amounts involved which ranged from $5.2 billion to $85 million. These amounts were used by Spherix Inc (NASDAQ:SPEX) to emphasize the demand for dermatological treatments addressing a large unmet need in a large market to large pharmaceutical firms. Partially based on that analysis of the pharmaceutical market demand for dermatological treatments, Spherix management believes Hoth may provide multiple opportunities for profitable exits.
Spherix Inc (NASDAQ:SPEX) also commented on efforts with Equitable IP to secure the monetization rights to over 100 new patents that are largely unlicensed. These patents came from a global network company focused on managed security, network, voice and data services and are all related to improvements in optic fiber transmission.
Reports place analyst consensus price targets for Spherix at around $19 per share. Last year, Spherix shareholders earned $6.76 per share. However, shareholder dilution has been fierce. In 2014, there were 1.04 million shares of SPEX outstanding and that number grew to 3.7 million by the close of 216.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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About the author: Marc has a degree in economics and a MSc. in Finance. Marc worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.