Advanced Cell Technology (OTCBB: ACTC) opened 2011 as a stock on the rise when monumental volume pushed shares from the area of six cents to the mid twenties within just weeks after the FDA granted an historic authorization to allow the company to commence a trial based on its embryonic stem cell-based retinal pigment epithelium (RPE) program to treat severe vision loss.
At the time, it was only the second such authorization granted by the FDA concerning an embryonic stem cell based therapy, the first having been granted to Geron (GERN), who has since put its stem cell program on hold.
The opening of 2012 is looking to be a near repeat of the opening of 2011 for ACT, however, as shares have already nearly doubled on heavy volume to close Monday at fifteen cents.
Shares had dropped to below ten cents when news of a lawsuit hit the wires, filed by certain entities seeking compensation relating to previous share and warrant agreements. The lawsuit has since found resolution, although the share price was not effected until this week when the fifteen cent mark was found again.
Lawsuit aside, the potential of ACT and its possibly ground-breaking technology was never in doubt, and those that took advantage of the sub ten cent prices again are already sitting on healthy returns for the new year.
No significant news accompanied the early-year price run, although it was announced that ACT's chairman and CEO, Gary Rabin, will present at the EBD Group’s Biotech Showcase this week in San Fransisco. Additional exposure, such as will be offered this week in Cali, combined with positive pipeline developments could justify the belief that ACTC's recent rise will be sustained.
There will always be speculation, however, that - as long as ACTC is considered an OTCBB penny stock - a reverse split will occur in conjunction with a move to a bigger trading board. Such a move would not necessarily be a negative, although most reverse splits are immediately followed by a decline in share price, in the sense that larger funds could then jump on board. The stock would also be considered as a potential investment to a more broad spectrum of investors, as well, since many still won't touch the bulletin boards or the pink sheets with their money.
Additional speculation will look for a major partner jumping in to bring ACT's RPE line to market, if not complete a buyout of the company outright.
Some larger pharmaceutical companies could consider the potential of ACT's pipeline as a steal for the current market cap, even given the recent price spike. It's most likely, however, that any potential suitor would want to see the results of the ongoing trials before completing any such deal.
Regardless of the speculation surrounding this stock, it's already been a solid year of returns for the traders in the game, and there could be more to come if the ongoing trials start producing solid updates.
Keep an eye on this one; with Geron out of the game for the time being, ACT could arguably be considered the enterprise leader of the development of embryonic stem cell therapies.
For now, it's probably smart to expect the same volatility this year that we also saw at the beginning of last year.
Disclosure: Long ACTC.