May 12, 2017 7:58am

 

Biostage (BSTG) got sued for a wrongful death complaint …

 

“A 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 news <from April 17, 2017> appeared on page 17 of an SEC FORM 10-Q filing after 5 p.m. … Thursday!

… Timely disclosure?  Yet, “The Company did and has contacted its liability insurance carriers to request defense and indemnification of any losses incurred in connection with this lawsuit.”

 

This complaint relates to Biostage’s (BSTG) first generation trachea scaffold technology …

Past problems/issues continue to come to light as an IND was about to facilitate a small clinical trial!

 

Critical information ahead of “our” universe’s open! I provide intelligence and analysis for short and near-term investment.

 

​Lower open expected

 

 

 

Expectation is the word for 2017 – meeting the unknowns with the soon to be exposed concerns will be the subject of investing decisions throughout this year.

 

Lower open expected

Dow futures are DOWN -0.08% and NASDAQ futures are DOWN -0.05 %

 

 

U.S. stock index futures pointed to a lower open on Friday morning as traders anticipated a big day of data.

European markets inched higher as investors reacted to the latest batch of corporate earnings and some fresh deal making activity.

Asia markets closed mixed, following the lower close stateside on weak earnings from U.S. retailer Macy's and ahead of the G7 finance meeting in Italy.

 

Data docket: CPI (consumer price index) and retail sales are set to be released at 8:30 a.m. ET, while business inventories and consumer sentiment are slated to come out at 10:00 a.m. ET.

 

 

The cell therapy sector closed NEGATIVE on Thursday, POSITIVE on Wednesday, NEGATIVE on Tuesday, Monday and last Friday.

The cell therapy sector’s record after the last 5 days (of 43 covered companies):

·         Thursday closed NEGATIVE with 21 decliners, 19 advancers and 3 flats;

·         Wednesday closed POSITIVE with 14 decliners, 27 advancers and 2 flats;

·         Tuesday closed NEGATIVE with 22 decliners, 18 advancers and 3 flats;

·         Monday closed NEGATIVE with 28 decliners, 12 advancers and 3 flats;

·         Last Friday closed NEGATIVE with 24 decliners, 15 advancers and 4 flats;

 

 

Remembering Thursday’s closing bell newsletter, “breaking out is hard to do … This is the usual warning sign of investor complacency and trader speculation.”

Reiterating, “Share pricing dips post reporting should be expected, but, the question is how long will their sell-offs last?”

 

What did I see on Thursday, the DOW closed down -0.11% (-23.69) and The NASDAQ closed down -0.22% (+13.18) while volatility traded near 10.

 

 

You’ve made it to the office, turned on the monitor, having just gotten your coffee and it hits you - what could be today’s trades? 

Watch list:

  • The iShares Nasdaq Biotechnology (IBB) closed Thursday down -0.11%, and is NOT indicating in Friday’s pre-market;
  • The SPDR S&P Biotech ETF (XBI) closed Thursday down -0.14% and is NOT indicating in Friday pre-market;
  • The Health Care Select Sector SPDR ETF (XLV) closed up +0.05% Thursday and is NOT indicating in Friday’s pre-open;
  • The iShares Russell 2000 (IWM) closed down -0.70% on Thursday and is indicating a negative -0.48% in Friday’s pre-open

 

 

A company in my headlights – Biostage (BSTG) …

Doesn’t BSTG need to file a response in May of 2017 to retain the NASDAQ listing?

A reverse split has been mention as the company runs out of money in September

There is a list that goes on and on … won’t they learn …

  • $33 M has been spent and recorded as an accumulated deficit still with NO IND filed;

 

  • $1 Billion in convertible debt has been issued in the past three years <from prospectus>;

 

  • Common stock outstanding before the offering (17,116,570 shares); shares outstanding have jumped to 37,116,570;

 

  • The warrants from the previous 2.8 M offering of shares are still not registered;

 

As of February 1, 2017, 17,116,570 shares of common stock outstanding, which were held by approximately 180 stockholders of record.

A far cry from:

·         January ‘17 started at $0.87, February at $0.74 and is NOW trading at $0.32;

·         Q1/16’s $2.60 and Q1’s $2.86 and Q4’s $1.42;

·         Q1/15’s $4.43 and Q4/15’s $3.47;

 

There is also “a going concern” declaration by their accounting firm …

Is it the Kool-Aid they’re feeding investors!

 

The Bottom Line:  There is a burden of timeliness in notifying investors of material changes – NOT slipping them in a Q on middle pages?

One of my issues is the failure to inform shareholders in a timely and material way!!

Yet again, where is the peer reviewed data in collaboration with Mayo Clinic? Has it been promised for a year? How can investors measure when and if they understand the fundamentals of the business or believe in the management team that changes so frequently that it has inhibited the filing of an IND and implementation of a P1 trial until Q3 - just when/as BSTG runs out of money!

 

STRONG SELL for a $0.32 stock – BUT, it is in the hands of day traders, never to be touch by retail investors or brokers for their investor clients!

 

 

Whether information or intelligence is good, bad or somewhere in between; I put into context what is relevant and useful for investors.

Henry McCusker, the editor and publisher of RegMed Investors does not hold or have positions in securities referred to in this publication.

Henry’s comments are for informational purposes only and are not a substitute for personalized advice. Consult your advisor about what is best for you.