As an investor, mistakes are inevitable. But you have a problem if you face massive losses more than once in a while. So take a moment to sympathize with the long term shareholders of Synthetic Biologics, Inc. (NYSEMKT:SYN), who have seen the share price tank a massive 99% over a three year period. That might cause some serious doubts about the merits of the initial decision to buy the stock, to put it mildly. The more recent news is of little comfort, with the share price down 94% in a year. The falls have accelerated recently, with the share price down 19% in the last three months. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.

We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

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See our latest analysis for Synthetic Biologics

Synthetic Biologics didn't have any revenue in the last year, so it's fair to say it doesn't yet have a proven product (or at least not one people are paying for). We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. It seems likely some shareholders believe that Synthetic Biologics has the funding to invent a new product before too long.

As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. There is almost always a chance they will need to raise more capital, and their progress - and share price - will dictate how dilutive that is to current holders. While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Some Synthetic Biologics investors have already had a taste of the bitterness stocks like this can leave in the mouth.

Synthetic Biologics had cash in excess of all liabilities of US$21m when it last reported (March 2019). While that's nothing to panic about, there is some possibility the company will raise more capital, especially if profits are not imminent. With the share price down 81% per year, over 3 years, it seems likely that the need for cash is weighing on investors' minds. The image below shows how Synthetic Biologics's balance sheet has changed over time; if you want to see the precise values, simply click on the image.