Georgi Kamburov

Emisphere Technologies, Inc. (OTCMKTS:EMIS) Bounces

by Georgi Kamburov June 15, 2016

At the start of June the stock of Emisphere Technologies, Inc (OTCMKTS:EMIS, EMIS message board) climbed all the way up to a new 52-week high of 91 cents per share. In the following sessions, however, the ticker rapidly retraced its steps back down the chart wiping a significant portion of its gains. Yesterday EMIS made another bounce logging in a gain of 13% and closing at $0.74 but will they manage to sustain the momentum and climb even higher?

EMIS' stock has been highly volatile lately and without any new press releases or filings it may continue to jump up and down the chart. That is why doing extensive due diligence before committing to any trades is of vital importance.

EMIS is far from the typical pennystock and this becomes evident after a single glance at the recently filed quarterly report. It showed that as of March 31, 2016, the company had:

• $10.4 million cash
• $12.7 million total current assets
• $21.7 million total current liabilities
• $373 thousand net revenues
• $1.8 million net loss

Last October the company amended its licensing agreement with Novo Nordisk (NYSE:NVO) receiving $5 million as an upfront fee and $9 million as a prepayment for a product development milestone. During the first quarter of the year NVO commenced a Phase 3a clinical trials for oral semaglutide utilizing EMIS' Eligen Technology carriers.

Underestimating the risks around EMIS could be very dangerous, though. Despite its impressive cash position at the end of March the company still had a working capital deficit of close to $9 million. At the same time the accumulated deficit has surpassed $556 million. At the end of the quarter EMIS had financial obligations of approximately $72.2 million. Furthermore, they were required to use half of the money received from NVO to pre-pay certain loans and notes by May 20, which would have severely reduced the available cash of the company with EMIS projecting that their funds would only last through July 2016.

The creditor, however, had agreed to extend the deadline to June 13 if by May 20 EMIS had submitted a new proposal. We are now past the June 13 date but no new information on the situation has been provided by the company. The latest SEC filing is an 8-K form from June 2 about the intention of the company's Vice President and Chief Financial Officer to resign as of June 25, 2016.

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