SciClone shares fall on revenue worries, secondary offering fears (SCLN, ARNA)
SciClone Pharmaceuticals Inc. (SCLN) shares are down more than 7 percent in early trading Wednesday, after analyst Hamed Khorsand at BWS Financial expressed concerns about the company’s unsustainable revenue growth.
Khorsand says that China was stocking the SciClone drug Zadaxin as a vaccine against swine flu. But essentially, it’s a one-time event that gave a boost to revenue in the second-quarter that won’t be sustained going forward.
The assumption that SciCone can maintain such a strong growth rate is misplaced, Khorsand says, setting up investors in the company for a disappointment.
Also of note, SciClone filed a shelf registration in May 2009. The company has not yet tapped it, but the risk that it will do so — and dilute the shares of existing holders in the process — increases along with the company’s stock price.
As noted in previous posts, an anecdotal market observation of BioHealthInvestor.com is that the market in recent months is seeing an increase in the number of stock offerings, especially among companies with the most at-risk balance sheets. A recent quantitative analysis at 247wallst.com may back up that observation. — Mike Tarsala
See related post on Arena Pharmaceuticals Inc. (Nasdaq: ARNA)
