Investors in Annexin Pharmaceuticals (STO:ANNX) from three years ago are still down 20%, even after 16% gain this past week

Annexin Pharmaceuticals AB (publ) (STO:ANNX) shareholders will doubtless be very grateful to see the share price up 221% in the last quarter. But that cannot eclipse the less-than-impressive returns over the last three years. In fact, the share price is down 55% in the last three years, falling well short of the market return.

On a more encouraging note the company has added kr63m 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.

Check out our latest analysis for Annexin Pharmaceuticals

Annexin Pharmaceuticals hasn't yet reported any revenue, so it's as much a business idea as an actual business. You have to wonder why venture capitalists aren't funding it. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. Investors will be hoping that Annexin Pharmaceuticals can make progress and gain better traction for the business, before it runs low on cash.

As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. 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 do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). Annexin Pharmaceuticals has already given some investors a taste of the bitter losses that high risk investing can cause.

Annexin Pharmaceuticals had cash in excess of all liabilities of just kr32m when it last reported (June 2024). So if it hasn't remedied the situation already, it will almost certainly have to raise more capital soon. That probably explains why the share price is down 16% per year, over 3 years. The image below shows how Annexin Pharmaceuticals' balance sheet has changed over time; if you want to see the precise values, simply click on the image.

It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. Would it bother you if insiders were selling the stock? I would feel more nervous about the company if that were so. It costs nothing but a moment of your time to see if we are picking up on any insider selling.

What About The Total Shareholder Return (TSR)?

Investors should note that there's a difference between Annexin Pharmaceuticals' total shareholder return (TSR) and its share price change, which we've covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Annexin Pharmaceuticals hasn't been paying dividends, but its TSR of -20% exceeds its share price return of -55%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.

A Different Perspective

It's good to see that Annexin Pharmaceuticals has rewarded shareholders with a total shareholder return of 68% in the last twelve months. That gain is better than the annual TSR over five years, which is 7%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Annexin Pharmaceuticals better, we need to consider many other factors. Even so, be aware that Annexin Pharmaceuticals is showing 6 warning signs in our investment analysis , and 4 of those are a bit unpleasant...

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com