MDRNA & Rosetta Play Three Card Monte on Traders (ROSG, MRNA)
There is an old game that you probably have seen played on the streets of New York, and that is Three Card Monte. Any time you see small-cap and micro-cap biotechs issues very great sounding news, but then they turn around and immediately announce a secondary offering or a capital raise, this feels like you just got suckered into a game of Three Card Monte. This is the case in both Rosetta Genomics, Ltd. (NASDAQ: ROSG) and in MDRNA, Inc. (NASDAQ: MRNA).
Yesterday was a huge day for Rosetta Genomics, Ltd. (ROSG). The company issued a release showing “Rosetta Announces that Johns Hopkins University Researchers Demonstrate miRview squamous Classifies Non-Small Cell Lung Cancer with Extremely High Degree of Accuracy”… This stock closed at $1.85 on Tuesday, yet the stock ran to $3.09 yesterday on a whopping 1.2 million shares. Not bad considering average volume was barely 30,000 shares. Then after the close yesterday came the announcement that it was raising $5.1 million in a registered direct stock offering.
MDRNA, Inc. (MRNA) rose sharply yesterday after the company announced ‘potent anti-tumor activity against multiple targets in liver and bladder cancer.’ This closed at $1.39 yesterday on a whopping 29 million shares, up from a close of $0.95 the day before. Then this morning came the announcement that it is raising $5.5 million in a registered direct stock offering.
It is no shock that both stocks are getting shelled and drummed this morning. They deserve it. Rosetta is down 32% at $2.09 and that MDRNA is down 22% at $1.08 right after the open today.
The only good news here is that good news followed by a secondary doesn’t mean that no more good news can come. It just feels that way if you get suckered in by the news and then see the drop this much. If you have seen a game of Three Card Monte played on the street of New York, have you ever seen anyone really win? Exactly.
JON C. OGG
January 14, 2010