And people invest why?
At some point one just might think investors would learn from past mistakes. That they would eventually cry uncle and vow once and for all that never again will they invest in any company attempting to develop a non-invasive glucose monitor. That BEFORE investing in these companies they would do even a minimal amount of due diligence, research which would reveal that no one and we do mean no one has ever successfully developed, let alone commercialized a true non-invasive glucose monitor. That millions, perhaps billions, have been wasted in this quest for what many still believe is the Holy Grail of diabetes devices. That even if this were to happen, the fact that the system is non-invasive wouldn’t change a thing when it comes to glucose monitoring.
Yet in spite of overwhelming evidence that this quest is fruitless, that non-invasive companies are modern day snake oil salesmen, people continue to willingly invest in this category. So in Diabetic Investor continuing quest to be a good public servant we will share another reason why this category should be avoid like the plague.
Today Echo Therapeutics released 2014 results and according to a company issued press release; “The decrease in research and development expenses was primarily related to the lack of financing that eventually led to a temporary shut down of operations in the fourth quarter of 2014. Selling, general and administrative expenses were $7.4 million during 2014 compared to $6.7 million in 2013. The increase in selling, general and administrative expenses was primarily due to increased legal costs and expenses associated with the proxy fight that enveloped the Company in 2014. Echo reported a cash balance of approximately$1.3 million as of December 31, 2014.”
Now we hate to cast aspersions on Echo, a company that has graced the posts of Diabetic Investor in the past, but it doesn’t seem like things are going all that. That it isn’t necessarily wise to invest in any company that had to temporally shut down operations. Keep in mind this is a stock that has dropped over 44% in the past year and an astonishing 87.99% over five years. Yes we all know that even a dead cat bounces when thrown out of a high rise building window but for Echo investors they better hope that building is the Burj Khalifa in Dubai and the cat is thrown off the roof of this building.
What’s astonishing is that Echo continues to find investors dumb enough to invest in the company. That there are still plenty of suckers who buy into the dream. That one day Echo will go where no man has gone before, that they will take a giant leap for mankind, that they will leap tall buildings, is faster than a speeding bullet and stronger than a locomotive. When in reality this supposed superhuman company has found nothing but Kryptonite. That it’s arch enemy is not Lex Luthor but real world science.
As we have noted in the past some supposedly very smart companies have also bought into this delusion. The simple fact is no matter how much evidence exists that this is an exercise in futility these companies have no problem getting funded. They continue to convince investors they have the magic potion when in reality all they have is flavored water in a fancy package. It looks good, it tastes good but when it’s all said and done its just water.
Honestly we think these companies should be required to put a warning label on any material they send to investors just as packs of cigarettes have warning labels that state what everyone knows smoking cigarettes causes cancer. Yet even that might not work for as we know there are still people who smoke. As Momma Kliff used to say and she has been quoted by many stupid is as stupid does.