Investors in Invex Therapeutics (ASX:IXC) from three years ago are still down 53%, even after 11% gain this past week

While not a mind-blowing move, it is good to see that the Invex Therapeutics Ltd (ASX:IXC) share price has gained 24% in the last three months. Meanwhile over the last three years the stock has dropped hard. In that time, the share price dropped 88%. So it's good to see it climbing back up. The rise has some hopeful, but turnarounds are often precarious. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.

On a more encouraging note the company has added AU$601k to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.

View our latest analysis for Invex Therapeutics

We don't think Invex Therapeutics' revenue of AU$1,212,256 is enough to establish significant demand. You have to wonder why venture capitalists aren't funding it. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). It seems likely some shareholders believe that Invex Therapeutics will significantly advance the business plan before too long.

Companies that lack both meaningful revenue and profits are usually considered high risk. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Some Invex Therapeutics investors have already had a taste of the bitterness stocks like this can leave in the mouth.

Invex Therapeutics had cash in excess of all liabilities of AU$5.6m when it last reported (June 2024). That's not too bad but management may have to think about raising capital or taking on debt, unless the company is close to breaking even. With the share price down 23% per year, over 3 years , it seems likely that the need for cash is weighing on investors' minds. You can click on the image below to see (in greater detail) how Invex Therapeutics' cash levels have changed over time.

Of course, the truth is that it is hard to value companies without much revenue or profit. Given that situation, would you be concerned if it turned out insiders were relentlessly selling stock? I would feel more nervous about the company if that were so. You can click here to see if there are insiders selling.

What About The Total Shareholder Return (TSR)?

We've already covered Invex Therapeutics' share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. We note that Invex Therapeutics' TSR, at -53% is higher than its share price return of -88%. When you consider it hasn't been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.

A Different Perspective

It's good to see that Invex Therapeutics has rewarded shareholders with a total shareholder return of 61% in the last twelve months. There's no doubt those recent returns are much better than the TSR loss of 8% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 3 warning signs for Invex Therapeutics that you should be aware of.

Invex Therapeutics is not the only stock that insiders are buying. For those who like to find lesser know companies this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Australian exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.