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Tuesday, November 24, 2020

Is Bioamber Inc (OTCMKTS:BIOA) Finally Setting Up for a Bounce?

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Bioamber Inc (OTCMKTS:BIOA) has been in nearly continuous freefall over the past year, with the decline accelerating first in August of last year and again over the past couple weeks. In each case, it would appear that dilution is the big bogeyman for the stock, with multiple attempts to issue more shares and/or warrants and debt to service current obligations and fund continuing operations. The market, it would appear, is casting this as a possibly hopeless story.

But some investors might want to take a closer look just in case a bounce may finally be in the offing following news that the stock is being delisted from the Toronto Stock Exchange. In our experience, in many cases of dilutive death spiral behavior, the washout that finally yields at least a short covering bounce is often that of a major exchange delisting. The key will be to note a loss of downward technical momentum. We will address this below, but let’s first take a birds-eye view of the company.

Bioamber Inc (OTCMKTS:BIOA) bills itself as an industrial biotechnology company that produces and sells bio-succinic acid to various chemical market customers primarily in the United States and Canada.

Its proprietary technology platform combines industrial biotechnology and chemical catalysis to convert renewable feedstocks into chemicals that are replacements for petroleum-derived chemicals.

The company’s bio-succinic acid is used in various applications, including plasticizers, polyurethanes, personal care products, resins and coatings, de-icing solutions, PET resins, lubricants, polybutylene succinate, fine chemicals, and food additives. Its product pipeline also includes bio-succinic acid derivatives, such as 1, 4 butanediol and tetrahydrofuran used in elastomers, engineering plastics, shoe soles, spandex, and solvents; succinic acid based polyesters for use in automotive interiors, fibers and non-wovens, food packaging, plastic bags and cups, and organic composite boards; and C6 building block chemicals comprising adipic acid, caprolactam, and hexamethylenediamine used in carpets, engineering plastics, textiles and fibers, films, and polyurethanes.

The company was formerly known as DNP Green Technology, Inc. and changed its name to BioAmber Inc. in September 2010. BioAmber Inc. is headquartered in Montreal, Canada.

According to company materials, “BioAmberBioAmber (OTCPK:BIOA) is a renewable materials company. Its innovative technology platform combines biotechnology and catalysis to convert renewable feedstock into building block materials that are used in a wide variety of everyday products including plastics, paints, textiles, food additives and personal care products.”

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As noted above, the company just announced that the Toronto Stock Exchange (TSX) has notified the Company that it has determined to suspend trading in the Company’s shares of common stock, effective February 16, 2018, and to delist the Company’s securities effective at the close of market on March 16, 2018.

So far, selling following a prior announcement of a coming direct offering of 46M shares (further dilution) and then in response to the notice of delisting has been relentless, with shares falling as much as 87% the past two weeks. However, last week concluded with a notable decline in volume and a late-day recovery that saw the stock close higher on the day by nearly 10%. The stock’s RSI score has been closing under the key 20 oversold level for ten sessions.

At this stage, the decline in trading volume might be a signal that the washout selling is now behind us. While that may portend bounce potential, it is also possible that prior issuance of converts will foster a steady offer that limits bounce.

Now commanding a market cap of $3.6M, BIOA has a significant war chest ($10.2M) of cash on the books, which compares with about $18.8M in total current liabilities. BIOA is pulling in trailing 12-month revenues of $10.2M. However, the company is seeing declines on the top-line on a quarterly y/y basis, with revenues falling at -9.8%. This may be a very interesting story and we will look forward to updating it again soon. Sign-up for continuing coverage on shares of $BIOA stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $BIOA, either long or short, and we have not been compensated for this article.

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