Shares of Penny Stock Pulmatrix (PULM) Soar After Latest Term Sheet Announcement
If one thing’s certain, penny stocks can be unpredictable. It’s this volatility that has continued to attract investors of all shapes and sizes. On April 1, 2019 this biotech penny stock announced something that triggered a move of more than 60%.
What Did Pulmatrix Inc. (PULM) Announce?
Pulmatrix Inc. (PULM – Get Report) announced that it had entered into a term sheet with Cipla Technologies LLC. This is great right? The penny stock saw a big surge in trading volume and stock price but who is Cipla and why is this so exciting?
Cipla Technologies is a subsidiary of Cipla Limited and the binding term sheet was for the co-development and commercialization of Pulmazole. This is an inhaled “iSPERSE™” formulation of an anti-fungal drug (itraconazole). It’s purpose is to treat allergic bronchopulmonary aspergillosis in patients with asthma. Also known as ABPA, this is an allergic reaction triggered by a fungus sourced from things like soil, dust, water and even rotting vegetation like leaves.
ABPA is also a rare cause of poorly controlled asthma and occurs in less than 1% of asthma patients. The term sheet sets the stage for entry into a definitive agreement with Cip Tec during the second quarter of 2019 according to the company.
What’s more is that it calls for Cip Tec to make an upfront payment of $22 million to Pulmatrix in exchange for the assignment of all of the rights to Pulmazole, to Cip Tec. Also, Pulmatrix will retain the right to be given 50% of the free cash flow from any future sales of Pulmazole…not a bad deal, right?
Can Pulmatrix Move Higher?
With all things relating to penny stocks, this move up by Pulmatrix may or may not be the last big move for the company in the near term. Keep in mind that this is just a term sheet and both companies will need to signoff on the deal before it can become definitive. Even with that in place, there will likely be final steps to formally close this deal. For now “we let them eat cake” as shares of PULM are making a move toward the $3