Delcath Systems, Inc. (NASDAQ: DCTH) is in the green today for the first time in several trading sessions, and for good reason. A short sale restriction was placed on the stock, at least stopping the manipulation today and allowing for gains. However, now may be the time to get in anyway. Today, we’ll talk about the short sale restriction, what happened yesterday that leads me to believe something big is coming, and what investors should be watching for ahead. In the mean time, a big thanks goes out to Trade Ideas for always being the first to alert us to movement on DCTH. The stock is currently trading at $0.17 per share after a gain of 2.53% thus far today.
DCTH Short Sale Restriction
As mentioned above, today has the potential to be an incredible day for Delcath Systems. One of the big reasons for that is that there is a short sale restriction on the stock that will stay in place all day. That means that the unethical jerks that have been driving the price of this incredible company downward simply won’t be able to do that today, giving the bulls the opportunity to give DCTH the credit it deserves. While this is great news, this isn’t even the big story. Here’s the big story…
Patent Approval, No PR
The big story is the fact that the company has had a patent approved, but still no press release. Before we get into why that’s good news, let’s talk about the patent that was approved. The patent is for a filter that removes small molecule chemotherapy agents from the blood and a process by which this is done. Here’s a brief quote from the patent:
“A filter for removing small molecule chemotherapy agents from blood is provided. The filter apparatus comprises a housing with an extraction media comprised of polymer coated carbon cores. Also provided are methods of treating a subject with cancer of an organ or region comprising administering a chemotherapeutic agent to the organ or region, collecting blood laded with chemotherapeutic agent from the isolated organ, filtering the blood laden with chemotherapeutic agent to reduce the chemotherapeutic agent in the blood and returning the blood to the subject.”
Why The Fact That No PR Came Is Possibly A Great Thing!
With a great patent that was just approved yesterday, wouldn’t you think that DCTH would want to tell its investors? Of course they would. So, why haven’t they? Well, it’s likely because they can’t. You see, investors often get upset when a quiet period takes place. They don’t understand why companies don’t want to communicate with them. However, the idea that DCTH doesn’t want to communicate with its investors is likely far from the truth.
At the end of the day, quiet periods generally mean something big is coming. In some cases it could be an earnings report; in others, they may be getting close to a key approval for something important. However, in this particular case, I’m going to speculate that a buyout may be on the table. At the end of the day, if Delcath Systems is working toward a buyout and having these conversations with a perspective buyer, they are not going to communicate. Their lips would be sealed until a decision was made.
The Case For A Buyout Is Strong
The reality is that the case for a buyout is a very easy one to build. At the end of the day, DCTH has a product approved and saving lives in Europe. They have also got a couple of ongoing clinical studies, one for which data is very close to being released. At the same time, the market cap on the company sits right around $90 million. That, my friends, is chump change in the oncology industry.
Knowing this, why wouldn’t a big player want to step in and take control of these assets? Even at a strong premium, the potential of the assets offered is absolutely tremendous.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will be keeping a close eye on DCTH. There’s quite a bit to watch too. First and foremost, we’re looking for a takeover; but even if that doesn’t happen, we’ve still got plenty to be excited about. With multiple studies ongoing, the company could have big news with regard to data on the horizon. Regardless of what the big news is, I firmly believe that something big is coming. Keep your eyes peeled; we’ll do the same and bring the news to you as it breaks!
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