June 1, 2017 12:00am
Calling out the recent 10-Q page 17’s paragraph re a 24 page legal filing - this is what BSTG did NOT want investors to know or read!
Indemnification is a key word and time will be the lock to be opened; as discovery related materials, meetings, depositions and legal defense costs could outsize the depth of the insurance coverages for a jury trial …
My business is disclosure of public information. If facts exist in the public domain, especially legal and material matters affecting the viability of a public entity, then my job is to publish!
From the 10-Q filing, “On April 14, 2017, anticipated representatives for the estate of an individual plaintiff filed a wrongful death complaint with the Suffolk Superior Court, in the County of Suffolk, Massachusetts, against the Company and other defendants, including Harvard Bioscience, the Company’s former parent entity that spun the Company off in 2013, as well as another third party.”
“The complaint seeks payment for an unspecified amount of damages and alleges that the plaintiff sustained terminal injuries allegedly caused by products, including synthetic trachea scaffolds and bioreactors, provided by certain of the named defendants and utilized in connection with surgeries performed by third parties in 2012 and 2013.”
“This complaint relates to the Company’s first generation trachea scaffold technology for which the Company discontinued development in 2014, and not to the Company’s current Cellframe™ technology and its lead development product candidate, the Cellspan™ esophageal implant.
“The litigation is at an early stage and the Company intends to vigorously defend this case.”
“While the Company believes that such claim is without merit, the Company is unable to predict the ultimate outcome of such litigation.”
“In accordance with a separation and distribution agreement between Harvard Bioscience and the Company relating to the Separation, the Company would be required to indemnify Harvard Bioscience against losses that Harvard Bioscience may suffer as a result of this litigation. The Company has contacted its liability insurance carriers to request defense and indemnification of any losses incurred in connection with this lawsuit.”
The Bottom Line: The canaries are out of the cage … disclosure is NOT an expletive!
Companies need to get out in front of this type of issue.
In the age of hyper-journalism, Twitter and Facebook, companies should be UPFRONT with material facts rather than sticking them on page 17 of a 10-Q.
Being open and transparent shows they’re NOT afraid of any blowback!
While corporate execs were “fiddling” with their corporate filing – they’re about to create a bigger public relations disaster as many wonder why ... a 10-Q page 17 paragraph was sufficient re a death suit in the legal brief(?).
The lack of specific disclosure is easy to explain – it’s the easiest way-out but, it will come back to haunt them …