GT Biopharma ( GTBP) , you need to be better than this.
The press release put out on Monday was a rookie mistake.
Before I get into that, I still believe in the science behind the company, the data continues to be strong, and those on the science side of the business are remaining with the company. This clinical stage biopharmaceutical company is focused developing immuno-oncology therapies.
The problem now, though, is announcing a "transition" of CEO and CFO in a cookie cutter press release.
Younger biotechs often have a change at the top. Often, the first person in the C-suite is a founder of the science, but that person may not be acclimated or have the time for capital raising and the Wall Street schmoozing that is necessary. That may sound cliche, but it is true. The move for many companies, not just biotechs, is to bring in a front person that has experience raising capital, knows what to say and when to say, and can play to the crowd.
Once a company begins to mature and grow into its own, a transition to a new CEO, one less forward facing and more inward business facing, is quite common. What's not as common is when both the CEO and CFO are "transitioned" and done so out of blue. Even when a CEO is changed, many investors and traders can get past that, but when a CFO is shown the door without an immediate and suitable replacement, it better come with a darned good explanation or investors will immediately flee.
That's the case with GTBP.
Unanticipated CFP departures can be yellow flags. When they come without explanation, they can be red flags. Even, if in the end, there's a justifiable reason, when it is not provided initially investors will shoot first and ask questions later. The first hour of trading showed us that very well on Monday. For dip buyers, you have the low around $4.50 as your clear stop now. A decent explanation from the company could get this back into the low $6s.
I would expect, or at least hope, we'll get one this week. If they opt to say nothing further, then I suspect we'll test that $4.50 level again.
We were fortunate to first grab this one under $5, take off all the initial risk capital plus some, when it ran up into the teens, and maintain a position with less stress. That said, no one likes to watch a holding fall 20% or 30% after it has already fallen 66% off its highs.
Is it worth a shot down here? The trader in me thinks that the $4.50 level will hold, so if you are willing to risk $0.80 per share, then yes. But that's a big number in terms of percentages. There is still warrant hangover around $5.50, so I prefer to see us close over that level.
For my remaining shares, I'm going to set a stop on a close below $4.50. I am not adding, though. While I think this won't come down to accounting irregularities, it would be throwing good money after bad without knowing for certain. My gut says the news isn't disastrous, but the way in which it was disseminated fails to bring much confidence, so I have enough room to give existing shares a chance but not enough to add more without a close over $5.50.
Please note that due to factors including low market capitalization and/or insufficient public float, we consider GTBP to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.
