Is Aoxing Pharmaceutical Company Inc (NYSEMKT:AXN) in for Some Downside?

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Aoxing Pharmaceutical Company Inc (NYSEMKT:AXN) shares were up 0.63% to $0.800 on Tuesday. The company has a market cap of $61.35 million at 76.21 million shares outstanding. Share prices have been trading in a 52-week range of $0.800 to $0.830.

Aoxing Pharmaceutical is a specialty pharmaceutical company, which specializes in research, development, manufacturing and distribution of a range of narcotics and pain-management products and drug-relief medicine. Its subsidiary, Hebei Aoxing Pharmaceutical Co., Inc., is engaged in developing narcotics and pain management products. Its products are produced in various formulations, such as injection, tablets, capsules, oral solution and powders.

Among its main products is Zhongtongam, which is a capsule of herbal extraction manufactured for the indication of oral and dental pain, and Bismuth Potassium Citrate, which is an oral solution containing bismuth subcitrate potassium, for the treatment of chronic gastritis and stomachache due to excessive stomach acid.

This company is registered in California but its operations are mostly in China. For the first quarter of the year, Aoxing Pharmaceutical was able to make $6.5 million in revenue for gross profits of $4.9 million and net income of $622K. Cash on hand is at $6 million with total current assets at around $30 million.

However, it’s also worth noting that Aoxing Pharmaceutical has $26 million in debt and an additional $11 million in accounts payable. The company shared that it has an accumulated deficit of $54.4 million as of March 2016 and negative working capital of $8.7 million.

Capitalization is usually an issue for development-stage pharmaceutical companies as it takes a tremendous amount of spending on research and development before profitability upon approval and commercialization of its products is achieved. However, Aoxing Pharmaceutical already has a portfolio of around 22 established drugs, with 19 available over-the-counter and 3 for prescription. The company still has 7 drugs under development and may continue to incur costs related to clinical trials.

 

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