Is it time for Diffusion Pharmaceuticals Inc (NASDAQ:DFFN)?

Diffusion Pharmaceuticals Inc (NASDAQ:DFFN)

Diffusion Pharmaceuticals Inc (NASDAQ:DFFN) shares are up over 20% after the clinical-stage biotechnology company reported the completion of a major production run of its lead drug candidate trans sodium crocetinate (TSC). DFFN shares had ended Tuesday at $1.94 and, after the news hit the market, gapped up to open at $2.51 before hitting the inter-day high of $3.04. Volumes for DFFN shares have been heavy, 5 million shares had traded hands by noon EST. The 30-day, daily volume average for DFFN is only 70,000 shares.

Trans sodium crocetinate (TSC) will be used in Diffusion Pharmaceuticals Inc (NASDAQ:DFFN)’s planned Phase 3 trial which will test TSC in the treatment of newly diagnosed inoperable glioblastoma (GBM) brain cancer patients. After this production run, TSC quantities are of sufficient quantity to support the entire trial. Diffusion Pharmaceuticals Inc (NASDAQ:DFFN) plans to initiate this clinical trial by the end of the year.

David Kalergis, Diffusion’s Chairman and CEO, stated “Diffusion has reached an important milestone for initiating the Phase 3 trial with this successful manufacture of Phase 3-ready TSC. In its End-of-Phase-2-Meeting response, the FDA required that any TSC used in upcoming Phase 3 studies must be made using commercially-ready processes, both for the active pharmaceutical ingredient (API) and formulated drug product. The necessary advanced production and formulation processes were implemented over the last eighteen months and were cleared with the FDA in June, immediately prior to the successful clinical trial supply production run earlier this month.”

Diffusion Pharmaceuticals Inc. (DFFN) is a clinical-stage biotechnology company developing novel small molecule therapeutics for cancer and other hypoxia-related diseases. Diffusion’s shares have had a rough time of it in the market. YTD, DFFN shares are down over 14% and are down over 80% for the year. DFFN shares are over 85% off their 52-week high of $15.50 and had been trading barely above the 52-week low of $1.80.

Diffusion Pharmaceuticals Inc (NASDAQ:DFFN)
6-month daily candle chart for $DFFN

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. 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.

Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) Warrant Expenses Widen Q1 Net Loss

Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN)

Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) Q1 2017 net loss widened to (-$28.6) million compared to a net loss of (-$6.2) million as of Q1 2016. The clinical stage biotechnology company attributes the increase to warrant related expenses that totaled $26 million in the quarter.

Diffusion Pharmaceutical Q1 Results

Research and development expenses dropped to $1 million from $2.4 million. The drop was attributed to a decrease in expenses related to the pancreatic cancer program as well as animal toxicology program. General and Administrative expenses were also down, coming in at $1.6 million compared to $3.9 million as of last year same quarter. The company attributes the drop to a decrease in costs attributable to reverse merger transaction

Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN)’s net cash used in operating activities totaled $3.4 million compared to $4.6 million as of the end of Q1 2016. During the quarter, Diffusion Pharmaceutical incurred $25.6 million in warrant related expenses associated with a private placement of its stock. The company raised a total of $25 million from the oversubscribed private placement of its Series A convertible stock.

Cash and cash equivalent as of the end of the quarter totaled $12.2 million.

TSC Clinical Trial

According to CEO David Kalergis, completion of a private placement in the quarter provides the company with much needed financial muscle. Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) intends to use part of the funds to complete its clinical development strategy.

“[…] we believe we are now well positioned to advance our clinical development strategy for our lead product candidate, Tran’s sodium crocetinate (TSC). We are in dialogue with the U.S. FDA regarding the design of a Phase 3 trial of TSC in newly diagnosed inoperable GBM patients, and plan to complete a protocol review in the third quarter of 2017,” said Mr. Kalergis

The FDA signing off the final protocol design for the phase 3 trial of TSC will allow the study to begin at the end of the year. The drug is being developed as a novel treatment for pancreatic cancer that currently accounts for 7% of all cancer deaths in the U.S

Last month, the biotechnology company was awarded a U.S Patent for TSC. Dubbed Bipolar Trans Carotenoid Sales and Their Uses, the patent expands coverage of TSC to five hypoxia-related conditions. TSC is currently being used in Oncology, stroke and neurodegenerative disease indications.

Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) stock was up by 5.61% in Thursday trading session ending the day at highs of $3.20 a share.

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.

About the author: James Marion is a University of Houston student studying Business with a concentration in Finance.

UPDATE! Is Someone Pumping Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN)?

Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN)

UPDATE: After speaking with an executive at Diffusion Pharmaceuticals Inc., StockNewsUnion.com can confirm that a patent was formally issued to the biotech firm yesterday. HOWEVER, and this is important, the patent award was disclosed this past summer. So the financial impact of the patent issuance had already been “baked” into the share price of DFFN before yesterday’s trading when the patent “news” was revealed by a stock news service.

Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) has been hit with massive volumes in mid-day trading sending DFFN shares up over 70%. Volumes began spiking around 11:19 AM EST. Trader chat rooms were abuzz on the stock’s activity in the absence of any news release from Diffusion. Rumors began circulating that a web service that caters to day-traders had published an announcement that Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) had been awarded a patent however no confirmation exists outside of that service. Curiously, many traders in the chat rooms who are claiming to be long shares of DFFN expressed glee at the plight of any short-sellers and speculated that DFFN shares would explode further to the upside once the short-sellers covered their positions. However the “short float” on DFFN shares is only 0.06%. It is also highly curious that a day-trading signal service would acquire knowledge of a patent award prior to the release of the news through the company’s official channels.

Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) ended yesterday at $2.74 and opened at that price. DFFN’s price held within a few pennies of $2.74 until 11:19 AM EST when volumes started picking up. Eleven minutes later, 11:30 AM EST, the inter-day high of $4.80 would be reached. From that point forward, DFFN shares began a slide and the stock is currently trading around $3.60 at 1:44 PM EST. Already volumes have reached 20 times their normal daily average.

Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) is a nano-cap biotech with a market-cap of less than $30 million. A patent award would be huge for such a small company that has reported no sales since 2013 when it reported a figure of $100,000. EPS losses have been fairly heavy. On a diluted share basis EPS losses in 2011 were -$303.86. EPS losses continued each year since and in 2015 the EPS loss was -$12.80. Dilution has also been a nemesis of DFFN shareholders. In 2008, there were 80,000 shares outstanding. By 2015 there were 1.86 million.

Any readers with information on today’s price action surrounding Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) are urged to leave it in the comment box below.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

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.