Biostage Inc. (NASDAQ:BSTG) Delisted As Financial Woes Deepen

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.

Biostage Delisting

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.

Capital Woes

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.

Biostage Inc (NASDAQ:BSTG) Stock Drops on Financial Results

Biostage Inc (NASDAQ:BSTG)

Biostage Inc (NASDAQ:BSTG) stock dropped after the biotechnology company posted a second quarter financial report that disappointed investors. BSTG stock ended last Friday at $0.51 and closed at $0.44 for a 14% loss. Volume was more than double the listed average.

Biostage Inc (NASDAQ:BSTG)
One month stock chart for BSTG

Holliston, MA-based Biostage Inc (NASDAQ:BSTG) reported a Q2 2017 net loss of approximately (-$3.6) million, or a per share net loss of (-$0.10). In Q2 2016, Biostage reported a net loss of approximately (-$2.7) million, or (-$0.17) per share. The $0.9 million increase is largely due to increased R&D spending on outsourced preclinical studies and $1.0 million in employee expenses.

Holliston, MA-based Biostage Inc (NASDAQ:BSTG) is a biotechnology company that seeks to develop bioengineered organ implants based on the Company’s proprietary Cellframe™ technology. Cellframe technology combines a proprietary biocompatible scaffold with the patient’s own stem cells to create Cellspan organ implants, essentially re-growing the patient’s own organs. Cellspan implants are being developed to treat life-threatening conditions of the esophagus, bronchus, or trachea with the hope of dramatically improving a petient’s treatment outcomes. Based on preclinical data, Biostage selected life-threatening conditions of the esophagus as the initial clinical application of its technology.

On May 4, 2017, the Cellspan Esophageal Implant was surgically implanted into a 75-year old male with a life-threatening cancerous mass in his chest. The surgery was required to address the tumor’s encroachment on the patient’s lung, heart, and esophagus. The portion of the esophagus affected by the cancer was removed and the Cellspan Esophageal Implant was utilized to reconstruct the esophagus. The patient is now alive three months after surgery. Biostage believes that the Cellspan Esophageal Implant has performed as designed.

While BSTG shares are down YTD by over 42%, they have been in an uptrend since the end of June when the above procedure was made public. Accordingly, BSTG shares are up over 60% for the quarter and more than double their 52-week low of $0.22. The analyst’s consensus target price of the stock is $3.00.

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.

Don’t miss out! Stay informed on $BSTG and receive breaking news on other hot stocks by signing up for our free newsletter!

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.