Biostage Inc. (NASDAQ:BSTG)
Biostage Inc. (NASDAQ:BSTG) shares fell 52.4% after the NASDAQ Stock Market LLC said it will delist the stock for failing to meet the minimum requirements needed for continued listing. Following delisting, the stock is to move to the OTCQB Marketplace, a transition that appears to have rattled investors.
Delisting from the NASDAQ does not come as a surprise as Biostage has struggled to rise above $1 a share for the entire year. The stock has shed more than 80% in market value in 2017 and continues to trade in a strong downtrend.
Biostage first received warning of its failure to meet listing requirements late last year when the NASDAQ Market first took note of the company’s stockholding equity when it dropped below the required $2.5 million level. Things have gotten worse ever since, the stock having slumped from the $0.90 to current lows of $0.10 a share.
The NASDAQ Hearings Panel accepted the company’s request for continued listing on the exchange, subject to a number of conditions. However, failure of the company to meet some of the conditions over the past 180 days left the exchange with no other option than to proceed with the delisting.
Delisting from NASDAQ is not the only problem that Biostage Inc. (NASDAQ:BSTG) is grappling with. The biotechnology company is facing significant capital issues as its financial obligations continue to exceed cash in hand. Financial woes have been exacerbated by Pecos LLC’s decision to exercise rights it owns under a Securities Purchase agreement agreed in August.
Biostage Inc. (NASDAQ:BSTG) entered into a Securities Purchase Agreement with Pecos LLC pursuant to which the company was to purchase preferred stock and warrants. The transaction could have generated $3 million for the embattled biotechnology company, an amount that could have helped offset some of the financial challenges the biotechnology company is facing.
“The Company believes that it is not, and was not, in breach of the Purchase Agreement, and that Pecos’ notice was unjustified and without any legal merit or factual basis, and was delivered as a result of Pecos being either unwilling or unable to deliver the Purchase Price,” Biostage in a statement.
In its defense, Pecos LLC has accused Biostage Inc. (NASDAQ:BSTG) of a breach of its obligations pursuant to the agreement. Reports indicate that the firm was pushing for additional conditions that were not included in the first Purchase Agreement. One of the conditions called for the appointment of Saverio La Francesca as the co-Chief Executive Officer.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.