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Driven up by the high demand and the large volume over the last week, PROLOR Biotech, Inc. (AMEX:PBTH) recorded a new 52-week top on Friday. With no underlying fundamental improvements, the stock continued flying up on sole potential.

The stable appreciation of PROLOR Biotech continued on Friday as the under $10 stock of the biotechnology company added another 3.50% to its value. Although investor interest seems to be dropping slowly down and the trading volume decreased to 1.1 million shares traded, the stock recorded a new 52-week peak and closed at $8.58.

It looks like the market’s optimistic sentiment and investors’ strong believe in PROLOR Biotech huge potential to become profitable in the near future, are still climbing up. The stock has not been explicitly promoted, though it has been present on several “Hot Stocks”-lists over the last week, which might have been the reason for the stock to enter the overbought area.

Thus, the overvaluation for PROLOR gets even higher and the stock trades currently more than 10 times above its book value. Moreover, this level of market overvaluation does not take into account that the assets position of PROLOR has been boosted up by the $24.4 million proceeds from the purchase of securities by certain private investors, closed in March this year.

Further fundamentals also do not really justify the higher premium investors are willing to pay. The company has not generated any revenues since inception in 2005 and has accumulated a net loss of $29 million over that period. Despite the large amounts of money spent on research and development, there are still no officially reported results of clinical success or regulatory approval of the company’s products. Thus, it is not to be expected soon that sales will be realized, which does not mean that the company’s capital needs will be smaller.

On the contrary, the management intends to continue their research efforts in the strong believe that they will be able to bring products into the market, that will provide key advantages over the established competitors. And this is crucial for the the future profitability of PROLOR Biotech’s, whose shareholders will be until then further facing high dilution risks. There were 5.2 million stock options and 3.5 million warrants outstanding at the end of March and the main source of funds so far has been the sale of securities.

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