Stemline Therapeutics Inc (NASDAQ:STML) has garnered increased interest over the last year. The New York-based clinical-stage biopharmaceutical company is in the process of gaining approval on its first cancer drug. STML stock has risen to its highest level in three years on the news.
However, with no other revenue sources, and regulatory approval far from a given, the future of Stemline stock depends totally on gaining approval for at least one of its drugs.
The Fortunes of Its Cancer Drugs Drive STML Stock
The stock has lost more than 25% of its value since hitting a high on March 9. Since that time, STML stock was hit by negative news. For the fourth quarter of 2017, the company lost 93 cents per share. Analysts had been looking for a loss of 70 cents per share. The company lost 56 cents per share in the fourth quarter of 2016. For all of 2017, the company lost $2.94 per share, or $67.8 million, on a reported $898,000 in revenue.
Stemline Therapeutics Inc focuses on three drugs, all in various stages of development. The drug now known as SL-401 has moved closest to gaining approval and is in clinical trials. The company presented data on testing results for SL-401 to the American Society of Hematology late last year. STML also expects to complete its rolling Biologics License Application (BLA) in the first half of 2018. SL-801 is now in Phase 1 trails, while SL-601 has made it to Phase 2.
Most revenue has come from various forms of financing. In fact, the company announced an agreement to sell $50 million worth of additional common stock on March 19. STML stock rose by over 50% in the last six months. It has more than doubled in the last 12 months.
STML Stock Is a Bet, Not an Investment
However, if one is looking for a reason to invest in STML stock, they will find no rationale from the financials. Because none of its drugs have received full approval, revenues remain negligible. Hence, it finances itself with stock sales. The stock trades at an astounding 355 times sales and almost nine times book value. As of the end of 2017, the company lists $67 million in total assets, of which $52 million is cash. The company will burn through that in less than a year at current spending levels.
Detractors of the stock market refer to it as a glorified casino. I normally disagree with that sentiment; however, I concur in the case of STML stock. If an investor happens to have a PhD in biopharmacology or expertise in the FDA approval process, they could have an advantage in evaluating Stemline stock. For everyone else, this stands as a roll of the dice.
If at least one of the drugs get approved and brings society measurably closer to defeating cancer, STML stock rises into the stratosphere. It would then gain respect and become a legitimate peer to firms such as Amgen, Inc. (NASDAQ:AMGN), Gilead Sciences, Inc. (NASDAQ:GILD), or Celgene Corporation (NASDAQ:CELG). If regulators deny approval of all their drugs, Stemline Therapeutics Inc will likely cease to exist.
The Bottom Line on STML Stock
The future of STML stock has become a gamble on at least one of its cancer drugs gaining approval from regulators. The company has three cancer drugs in various stages of approval.
However, with stock sales standing as its only current source of revenue, STML stock has become a bet on FDA approval of at least one of their drugs, not an investment. Hence, investors should look at a position in Stemline stock as one for their gambling fund, not their investment capital.
Time will tell if one’s odds are better in Stemline stock or a Vegas casino.
As of this writing, Will Healy did not hold a position in any of the aforementioned stocks.
