Shareholders in GI Dynamics (GID) found some relief this morning with the stock bouncing after retesting its record low of 52 cents yesterday.
The developer of an intestinal liner for weight loss jumped 1 cent, or 1.9%, but it is too early to say if GI Dynamics has bottomed.
The stock had been falling on heavy volume on speculation that it was about to undertake a capital raising, even though it reported holding $58.6 million in the bank at the end of 2013. Indeed, it is not a question of “if” but “when” management goes cap in hand to shareholders for extra cash.
But that’s to be expected for any early stage life science company and GI Dynamics is undertaking an important but expensive clinical trial in the United States to prove that its intestinal liner can be safely used on diabetics to help control their diet.
The product is already being sold to those looking for a relatively easy way to lose weight and governments in a few countries that the product is sold in (this includes a number of European countries such as Germany) will reimburse citizens using the product for health reasons.
However, shareholders will need to be patient as 2017 is tipped to be a pivotal year for GI Dynamics. It will likely take that long for GI Dynamics to turn a profit, which is around the same time the results for its clinical trial will be available.
GI Dynamics is currently recruiting patients for the trial, which is expected to be completed by end of this calendar year. It will take another two to three years for the trial to be completed.
You can read more about GI Dynamics here.