February 17, 2022 10:03am
Too many questions remain unanswered …
WHO is BUYING shares of a company with a two + year-old IND with NO clinical trial initiation and a terminal death law suit STILL hanging over its share price like a “Sword of Damocles”?
What is the status of the management team, all VPs, no pre-clinical scientists or an IND fulfillment team as well as the CRO (clinical research organization) which has been left to manage any initiation of a clinical trial?
One major accomplishment by the interim CEO and Chairman, David Green – the deferral of the personal liabilities to management and its board of directors sending the burden to the investor base substantiating temporarily the indemnification of Harvard Bio (HBIO) who spun-out Harvard Apparatus (HART now BSTG) as related to the terminal death lawsuit against Biostage (BSTG) and by fighting their insurance companies court finding of negligence which resulted in a TEMPORARY injunction?
There are more questions …
Where will a clinical trial begin, as even a number of past interested MD/PhDs have left the Mayo Clinic and where will the oversight of clinical monitors come from?
When will the overhang of the multiple non-registered PPM (private placement memorandum) shares be addressed as a MAJOR factor before ANY public offering has been proposed by the Interim CEO and new Chairman?
Why the “pump share pricing and volume promote” – can’t BSTG get investors beyond its major funder DST (Mrs. bin Zhao and managed by Hong Yu president of BSTG)) or non-U.S. investors which has ALWAYS been the issue …
Is the current or future investment coming from those associated with three (3) directors of BSTG, Jason Jing Chen (chairman of BSTG’s board of directors who resides in Beijing, China and is employed by a subsidiary of Dixintong technology Group – D. Phone), Ting Li (Donghai Securities Co., Ltd) and Wei Zhang, MD (Peking University) all reside in China – what are their affiliations?
Or are they coming from associates or companies aligned with Lui Dong Hai, chairman of Dixintong Technology Group (D. Phone, the largest smartphone retailer in China) the husband of Mrs. bin Zhao, who resides in Weston, Ma. of DST Capital?
Additional and lingering question regard these individuals’ roles …?
- The recent trading activity shows how the “pimp/pump and promote” works with the shares trading Wednesday down -$0.06 (was-$0.98) with 420 shares traded after Tuesday closed flat 200 shares traded after Monday closed flat with 1,899 shares traded after
- Friday (2/11) down -$0.02 with 1,739 shares traded after Thursday’s +$0.60 with 2,841 shares traded after Wednesday’s down -$0.61 (was as low as -$1.09) with 4,030 shares traded after Tuesday’s +$0.05 with 1,293 shares traded after Monday’s +$0.55 with 2,311 shares traded,
- The previous Friday’s (2/4) +$0.22 with 305 shares traded, Thursday’s flat ($0.00) with 3 shares traded, Wednesday’s down -$0.53 with 502 shares traded, Tuesday’s +$0.40 with 1,088 shares after Monday’s 11 shares traded after Friday’s +$0.05 with 3,225 shares traded after Thursday’s +$0.24 with 10,073 - double the mornings 5,030 shares traded after last Wednesday’s diving flat with 7,796 shares trading after appreciating +$0.35 (after dropping mid-day -$0.07 – such sarcasm after a (miraculous jump) and the previous Tuesday’s +$0.31 with 2,794 shares traded.
Recent news re terminal death suit: The Court granted BSTG's motion for a preliminary injunction and held that Medmarc breached its duty to defend the Company when it unilaterally stopped paying for the defense. The Court expressly stated that Medmarc engaged in "unlawful conduct" by unilaterally terminating the defense. Although the coverage dispute remains pending between the parties, the Court held that "Medmarc will mostly likely lose its claim" seeking to terminate the payment of the defense, and therefore, it must continue to pay the defense until the coverage dispute is resolved.”
- It’s NOT over, the terminal death law suit still HANGS over the company and any offering to be proposed.
The question that chairman and Interim CEO David Green should be contemplating and asking: are there any OTHER legal liabilities existing (maybe yet unfiled to date out there) is there a possibility of a minority investor derivative lawsuit or action against the majority stockholders that could impede a public offering.
- Shareholders can take legal action against the company's board of directors if the board committed wrongful acts.
WHY do I keep analyzing Biostage (BSTG): I WAS there to experience the lack of investor prerogatives and saw the decay of transparency and more; it takes courage, resolve and patience to stay the course of asking the questions without response!
Bottom line: Maintaining SELL … HOW are these QUESTIONS to be answered and resolved?
What’s “scary” is a $71.1 m deficit without a clinical trial following an IND approval which is two plus years old.
Have they filed an IND annual report to the FDA - it’s a “material” document?
BSTG continues as a “going concern” which also REQUIRES additional funding for future operations.
BIG question, have past quarterlies going to have to “restate” their financials for the past two (2) quarters or even years over “lost” invoicing and payables?
WHO’S making money from BSTG? Connecticut Childrens (hospital) who received $1 Million ($509,500.00 – paid) “gift” from BSTG ($490,500.00 is still owed) while it owned shares (which were exercised for warrant execution); James Schmerling, CEO of and a BSTG board of director (BOD) member also owned shares (which were each exercised for warrant execution)
- What happened to the invoicing from Connecticut Childrens (hospital) which has never been recorded? – Copies exist.
Consider the attrition rate of the past five (5) years: two (2) CEOs, one (1) CMO who became president and was fired, one (1) CFO, one (1) interim CFO who walked-out over irregularities in an audit review, three (3) controllers, a VP of Finance who left without notice and reappeared as a consultant, multiple temporary non-employee ACTING finance managers, five (5) members of the board of directors of which three (3) were on the audit committee, three (3) other operating VPs and twenty (20) scientific employees.
Never forget that RSM US LLP, their auditors resigned stating that, “the client-auditor relationship between the Company and RSM has ceased. Prior to such notification, RSM had recently served as the Company’s independent auditors through the recent Form 10-Q filing by the Company on May 24, 2021.”
- WHO is the new auditor and were the last two (2) Qs in FY21 audited pre Q4 and FY21 – the last I checked Wei, Wei & Co LLP was NOT licensed in Massachusetts? (From 8-k filing)
The constant revolving door – operational, leadership ISSUES and organizational stability – shouldn’t these problems be addressed by its interim CEO and new Chairman for investors.
One last lingering question: WHY the inclusion of a disclosure (from reading) in the 10-K, BSTG has “identified a material weakness in our internal control over financial reporting. Our ability to remediate this, our discovery of additional weaknesses, and our ability to achieve and maintain effective control over financial reporting, could adversely affect our results of operations, our stock price and investor confidence in our company.”
Are there patterns here?
WHY do I keep reporting on Biostage (BSTG): I WAS there to experience what occurred and saw the decay of transparency and more; it takes courage, resolve and patience to stay the course of asking the questions without response!
Opinions expressed are those of the author and are subject to change, and not intended to be a forecast of future events, a guarantee of future results, nor investment advice. Whether information or intelligence is good, bad or somewhere in between; I put into context what is relevant and useful for investors. All investments are subject to risks. Investors should consider their investment objectives.
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Henry McCusker, the editor and publisher of RegMed Investors does not hold or have positions in FATE, CRS, securities referred to in this publication.