Editor's note: This article has been updated. As of the date of Cell Therapeutics' last balance sheet, the company had a net debt position of $20.8 million. Since then, as indicated in an 8-K filed with the SEC on June 30, 2010, that appears to have swung to a net cash position of $6.7 million as of the end of May, mostly through proceeds received from a preferred stock and warrants offering.
When we look for stocks in our market-beating newsletter Motley Fool Stock Advisor, we don't look for biotechnology companies that are losing money and have more debt than cash on their balance sheets. Cell Therapeutics, already priced under 50 cents a share, could be going to $0. I believe it will eventually be followed by other biotech companies like NPS Pharmaceuticals (Nasdaq: NPSP ) . I hope that I'm wrong.
Both of these companies share the following traits:
- They have more debt than cash as of the last balance sheet.
- They are not generating positive cash flow.
- And in the past decade, these companies have lost their shareholders anywhere from 80% to 99%.
There are more than 10,000 public companies in America, and many of them should never have gone public. These two share that distinction.