HOLLISTON, Mass., Oct. 6, 2017 /PRNewswire/ -- Biostage, Inc.
("Biostage" or the "Company"), a biotechnology company developing
bioengineered organ implants to treat cancers and other
life-threatening conditions of the esophagus, bronchus and trachea,
announced today that the Company received written notification from
The Nasdaq Stock Market LLC ("NASDAQ") indicating that the NASDAQ
Hearings Panel (the "Panel") has determined to delist the Company's
common stock from The NASDAQ Capital Market, effective with the
open of business on October 6,
2017.
As previously disclosed, on November 18,
2016, the Company received a notice from NASDAQ indicating
it was not in compliance with NASDAQ's minimum bid price
requirement, and on May 22, 2017,
NASDAQ notified the Company that based noncompliance with that rule
and with the $2.5 million minimum
stockholders equity requirement, the Company's common stock would
be subject to delisting. The Company requested a hearing with
the Panel and, on July 10, 2017, the
Company announced that the Panel granted the Company's request for
continued listing subject to a number of conditions, with the
Panel's decision ultimately requiring that the Company evidence
full compliance with all requirements for continued listing on The
Nasdaq Capital Market by no later than November 13, 2017. The Company determined
that as a result of the events described below, the Company could
not regain compliance with The NASDAQ Capital Market listing
standards by the deadline imposed by NASDAQ, and on October 4, 2017 the Company withdrew its appeal
from the Panel.
The Company has been advised by OTC Markets Group Inc. that its
common stock will be immediately eligible for trading on the OTCQB
marketplace effective with the open of business on October 6, 2017. The Company's common stock will
continue to trade under the symbol "BSTG".
Breach Notice to First Pecos, LLC
As previously disclosed in the Form 8-K filed by the Company on
August 17, 2017, the Company entered
into a Securities Purchase Agreement (the "Purchase Agreement")
with First Pecos, LLC ("Pecos") on August
11, 2017, pursuant to which the Company agreed to sell to
Pecos, and Pecos agreed to purchase from the Company, shares of the
Company's common stock, preferred stock and warrants for an
aggregate purchase price of $3,055,500 (the "Purchase Price"). As of
October 6, 2017, the Company has not
received the Purchase Price from Pecos.
On October 5, 2017, the Company
delivered a notice (the "Notice") to Pecos and its manager, Leon
"Chip" Greenblatt III, stating that Pecos is in breach of the
Purchase Agreement as a result of its failure to deliver the
Purchase Price to the Company following satisfaction of all closing
conditions in the Purchase Agreement.
None of the shares of common stock, shares of preferred stock or
warrants that the Company would have issued under the Agreement
were issued to Pecos, and the previously-reported appointment of
Leon Greenblatt III of Pecos and
Saverio La Francesca, MD, the
Company's President and Chief Medical Officer, to the Company's
Board of Directors did not become effective, as their appointment
was conditioned upon consummation of the private placement pursuant
to the Purchase Agreement.
On August 25, 2017, the last date
on which Pecos should have delivered the Purchase Price, counsel to
Pecos instead delivered a letter to the Company alleging that the
Company was in breach of its obligations pursuant to the
Agreement. Such notice requested that the Company agree to
additional conditions to closing that were not included in the
Purchase Agreement, including, among others, the appointment of
Saverio La Francesca, MD as co-Chief
Executive Officer of the Company.
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. However, in order to ensure receipt of the
Purchase Price and preserve shareholder value, the Company notified
counsel to Pecos in writing on September 1,
2017 that it intended to comply with the new conditions
demanded by Pecos. Despite that, on September 29, 2017, Pecos requested that the
Company enter into a Supplemental Agreement that introduced
additional new demands. The Company again indicated its
willingness to meet the new demands of Pecos. Despite the
Company's timely efforts to meet each new demand of Pecos, Pecos
has not met its obligation to deliver the Purchase Price. The
Company believes that Pecos has acted in bad faith and, despite the
satisfaction of all closing conditions, has no intention of
delivering the Purchase Price as required by the Purchase
Agreement. The Company is reviewing all of its rights and
remedies against Pecos that may be available to the Company.
As a result of Pecos' refusal to deliver the Purchase Price, the
Company is facing significant capital issues, as its current
financial obligations exceed its cash on hand, and is exploring
financing and other strategic alternatives. The Company is in
discussions with its advisors regarding these alternatives.
The Company cannot provide any assurance that it will be able to
obtain sufficient financing.
Resignation of Saverio La
Francesca, MD
On October 5, 2017, Saverio La Francesca, MD resigned as President
and Chief Medical Officer of the Company, effectively
immediately.
About Biostage
Biostage is a biotechnology company developing bioengineered
organ implants based on the Company's new Cellframe™
technology which combines a proprietary biocompatible scaffold with
a patient's own stem cells to create Cellspan organ implants.
Cellspan implants are being developed to treat life-threatening
conditions of the esophagus, bronchus or trachea with the hope of
dramatically improving the treatment paradigm for patients. Based
on its preclinical data, Biostage has selected life-threatening
conditions of the esophagus as the initial clinical application of
its technology.
For more information, please visit www.biostage.com and connect
with the Company on Twitter and LinkedIn.
Forward-Looking Statements:
Certain statements in this press release constitute
forward-looking statements that involve a number of known and
unknown risks, uncertainties and other factors that may cause such
forward-looking statements not to be realized. These
"forward-looking" statements in this press release include, but are
not limited to, statements relating to the potential quotation of
the Company's shares on the OTCQB Market, the availability of
strategic alternatives, development expectations and regulatory
approval of any of the Company's products, including those
utilizing the Company's Cellframe technology, by the U.S. Food and
Drug Administration, the European Medicines Agency or otherwise,
which expectations or approvals may not be achieved or obtained on
a timely basis or at all; or success with respect to any
collaborations, clinical trials and other development and
commercialization efforts of the Company's products, including
those utilizing the Company's Cellframe technology, which such
success may not be achieved or obtained on a timely basis or at
all. These statements involve risks and uncertainties that may
cause results to differ materially from the statements set forth in
this press release, including, among other things, the Company's
ability to obtain and maintain regulatory approval for the
Company's products, changes to the listing standards, requirements,
policies or procedures of the OTCQB Market, fluctuations in the
Company's general financial and operating results, changes in the
Company's liquidity and capital resources, fluctuations in the
market price of the Company's securities, changes in the capital
markets; plus other factors described under the heading "Item 1A.
Risk Factors" in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2016
or described in the Company's other public filings. The Company's
results may also be affected by factors of which the Company is not
currently aware. The forward-looking statements in this press
release speak only as of the date of this report. Biostage
expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to such statements to reflect any
change in its expectations with regard thereto or any changes in
the events, conditions or circumstances on which any such statement
is based.
Investor Relations Contacts:
Tom
McNaughton
Chief Financial
Officer
774-233-7300
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SOURCE Biostage, Inc.