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  • Sabizabulin’s mechanism of action doesn’t make sense to treat Covid.
  • Veru already had a relationship with the centers doing the Phase 3 Covid Trial, suggesting the potential to negatively affect the data.
  • Veru provides little detail regarding its trial randomization.
  • Beyond Spring, a bio with a rejected cancer drug, has similarities to Veru’s trial.
  • Other Covid drugs that got issued an EUA have different characteristics from sabizabulin.
  • Most companies don’t publish a peer reviewed article until after the FDA Review is finished.

We believe there is a likely scenario of the FDA delaying approval or outright rejecting the EUA application of Veru’s drug Sabizabulin to treat hospitalized Covid patients, because of the following red flags in the Phase 3 study outcomes and design:

  • Extremely high mortality rate in the US placebo group of 62%.
  • Drastic widening of patient eligibility over the course of the study.
  • Differences in baseline patient populations, favoring the treatment group over the placebo group.
  • A high mortality rate in the treatment group between Day 15 and Day 29.
  • An unprecedented small study size for an EUA application.
  • A2Z Smart Technologies (AZ) is a technology company that’s only sellable product is its Smart Cart shopping cart, the Cust2Mate.
  • AZ is a renamed version of pump and dump scam Inrob Tech (IRBL), with the same failed tech products transferred over.
  • AZ’s CEO, Joseph Bentsur, sneakily omits from his biography that he was CEO of Inrob Tech.
  • Inrob Tech was backed by hedge funds that were charged by the SEC with securities fraud, and its general counsel was sentenced to 34 months in prison for securities fraud.
  • AZ acquired 77.51% of Cust2Mate for only $1.56M in November 2020 from the CEO, Joseph Bentsur, which was a related party transaction.
  • AZ pays Bentsur about $1M per year, despite only generating $2.7M in revenues in 2021.
  • AZ doesn’t have any patents on its Cust2Mate, leaving it vulnerable to bigger, better, and more capitalized competition.
  • Reliq Health Technologies (RHT.V or OTC:RQHTF) founders, Eugene Beukman and Aman Thindal, have a history of stock promotion of worthless Canadian penny stocks. Reliq is just one of the many companies they’ve promoted and we think it will suffer the same fate as the others, with almost 100% downside.
  • We contacted several of Reliq’s so-called partners, who said they aren’t partners and never were. Such as Cognizant, which revealed to us that Reliq is only a customer, not a partner as some shareholders believe.
  • Reliq’s CEO Lisa Crossley has a history of misleading investors about clients, partnerships, and revenue projections, to the point that a petition on is asking for her resignation.
  • Reliq’s revenues are miniscule, despite huge projections over the years from customers that our research shows most likely do not even exist.
  • Reliq’s Q421 earnings report had an abnormally high increase in accounts receivable, suggesting that it’s low-quality revenue. We’ve seen this with Reliq’s financial misstatements in the past.
  • Reliq tumbled 90% in 2018 due to the company’s admittance of fraud and needing to restate its financials. The share price has partially recovered and we see a deju vu happening.
  • Focus Universal (FCUV; $550m market cap, $13.50 stock price) promotes itself as a tech company in the IoT (Internet of Things) space working on a number of disruptive technologies.
  • But the reality is, FCUV is simply a tiny, unprofitable, reseller of hydroponics equipment and pays for a variety of stock promotion fueled by “sell-side equity research” and paid articles.
  • FCUV’s revenues from its main business, mundane reselling of hydroponics equipment sourced from a controlled company in China, plus installations of home cinemas, actually declined from 2020 to 2021.
  • FCUV’s only supplier (Tianjin Guanglee Technologies) is 100% owned by FCUV’s CEO/largest FCUV shareholder and his wife, which is a clear conflict of interest and isn’t disclosed in SEC filings.
  • Paid research firm Argus Research drastically reduced its revenue forecast on FCUV, yet still increased its price target from $15 to $16, without giving a reason.
  • When reality sets in, we expect the stock to trade like other hydroponic equipment retailers (such as Hydrofarm, FCUV’s major client), at 2x TTM revenue which would be a $12M market cap, and a $0.28 share price.

• Global Tech industries (GTII) has a long history of failed acquisitions of random businesses done for stock promotion, not business.
• GTII has never generated any meaningful revenues or profits with an increasing accumulated deficit.
• Gave a consultant 200K shares (worth over $400K at the time) to find a Picasso print for the company to buy for $32.7K for its “Meta art gallery”.
• There is a recent pending lawsuit where GTII’s former investor relations firm, International Monetary, retained by GTII in December 2020, is suing GTII for not allowing it to sell its 6M GTII shares that were payment for services rendered.
• Rumors about a short squeeze from the issuance of “art tokens” is going stale as it has been 4 months without SEC approval or any mention of it.
• Excessive executive compensation while making no progress in product development or a clear direction which industry the company is in.

  • IronNet’s (IRNT) former director has doubts about the company’s ability to continue without getting acquired.
  • IRNT had even less revenue, $6.9M, in Q321 than a year ago, it had $7M in Q320.
  • IRNT loses a whopping $20M+ per quarter.
  • IRNT recently got pumped from a misleading Russian invasion blog post that, in reality, has nothing to do with its cyber-security product.
  • IRNT recently made an ATM type of financing deal with Tumim Stone Capital to sell shares below the market price
  • What AuthID (AUID) claims is a “key partner” denies having a partnership with AUID.
  • Upon a closer look, AUID’s new leadership doesn’t have impressive resumes.
  • AUID’s new CEO, Tom Thimot, refers to himself as a “Pivot CEO”, similar to the disgraced CEO of Intrusion (INTZ) we published on earlier in 2021.
  • We found AUID’s previously announced selfie-ID customers either weren’t real companies to begin with, or went out of business quick.
  • A closer look into AUID’s selfie technology shows that it can be tricked.


See our interview on highlighting this report here.

  • (AUID) has appreciated 300% over the last year after its Nasdaq uplisting due to hype regarding its “selfie” identity verification program.
  • Management misleads investors claiming that AUID is a pure-play SaaS business. None of its revenues have been from its SaaS product (Identity as a Service – IDaaS) and 70% are from low tech, legacy businesses.
  • The only IDaaS customer that AUID has mentioned appears to be one that will lead to little or no revenue or, at worst, could be a fake customer.
  • Sanjay Puri, who was the COO of the fraud MoviePass (owned by publicly traded Helios and Matheson) from 2016 to 2019, helped create AUID’s identity verification promotion. MoviePass wiped out investors and settled fraud claims with the SEC.
  • AUID’s revenues from software are small on a percentage basis (27% of total), and negligible in dollar terms ($600K annually). These revenues aren’t from its identity verification application, but from a single contract for a legacy, backend fingerprint matching algorithm sold to one government entity.
  • Despite being on the market for years, its SaaS product has failed to generate any revenues, and we doubt it will ever generate anything significant.
  • There are plenty of other “selfie” identification apps out there. Our research found that we could likely create an identical product for less than $15,000.
  • The AUID story is similar to that of cybersecurity company Intrusion, Inc (INTZ), one of our most successful short ideas.
  • In its Complaint, the SEC used the “F-Word” (fraud) in describing Momentus (MNTS) and its founder, Mikhail Kokorich, who lied his way into a SPAC deal.
  • MNTS vehicle technology is the Microwave Electrothermal Thruster (MET) water plasma propulsion system. Yes, water.
  • MNTS MET failed its tests in 2019, which were the only real life tests of the technology so far. The technology is a dud. Yet the company lied and said it worked, thus creating a worthless scam.
  • Today, MNTS admits that MET doesn’t work, as the company says it will be well suited for in-space transportation “when its matured”.
  • Without the MET technology working, MNTS doesn’t have anything. Kokorich, the key promoter, laughed all the way to the bank as he was able to cash in his stake and is long gone.
  • NextPlay (NXTP) is a former OTC stock that got uplisted to the Nasdaq on 7/8/21 and immediately changed the company name and stock ticker.
  • NXTP’s actual revenues for its latest quarter ended 5/31/21 was less than one thousand dollars. For the year ended 2/28/21, its actual revenues were only $5.1K.
  • NXTP is paying $10M+ for strange companies in different countries that have no revenues and no customers.
  • NXTP’s new subsidiary, NextBank, appears to have just one employee, and no business. NXTP acquired it for $11.2M earlier this year.
  • Elite International Bank is across the hall from NextBank, it’s the same type of financial institution, but established, and makes only about $5M-$10M in revenues per year.
  • Axion Ventures (AXNVF), now trading at $0.001, was run by the same executives of NXTP, and is a hotbed of lawsuits, self-dealing and related party transactions.
  • Regarding Axion, the court ruled against the Co-CEO of NXTP, Ms. Boonyawattanapisut, and her husband Todd Bonner, the co-chairman of NXTP, stating: “There are many other innocent people who have fallen as victims” to these defendants.
  • Axion is suing NXTP for allegedly stealing its HotPlay IP. The case is ongoing, and HotPlay may get taken away from NXTP if the court rules in Axion’s favor.
  • Flora Growth (FLGC) is a startup Canadian cannabis producer with 95% of its operations in Colombia, including a cultivation facility.
  • The company was incorporated on March 13, 2019. Essentially FLGC is a roll-up of low quality, cheap companies. The key asset that is supposed to grow cannabis, Cosechemos, was acquired in October 2019 for a mere $80,000.
  • FLGC won’t be able to export cannabis to the US or most other major countries because politicians want their own countries to produce it. As well as interstate commerce laws prohibiting it.
  • FLGC claims to be able to produce cannabis at $0.06/g but has not produced any yet to prove it.
  • We sent an investigator to see FLGC’s cannabis cultivation facility in Bucaramanga, Colombia and found that it’s in the middle of nowhere on rocky terrain, up a steep, muddy mountain. It looks impossible for commercial production and only an all-terrain vehicle could make the trip to ship the cannabis.
  • No taxi or an uber driver in the area wanted to take the investigator up the mountain, he could only find a driver on a motor bike to do it.
  • Our investigator wasn’t allowed to do a tour of FLGC’s cultivation facility, which raises questions about whether the business is real.
  • Our investigator took pictures and video recorded everything, including the rough trip up the mountain, and an argument with an FLGC executive when he wouldn’t let him see the facility.
  • Our investigator went to the office addresses that FLGC showed in their filings, but found they didn’t exist.
  • FLGC’s co-founder and director, Stan Bharti, has recently resigned, right before a major unlock on 8/24/21, likely to sell his shares without needing to report it.
  • Bharti is a Canadian financier who is heavily involved in junior mining. In his previous endeavors in junior mining Bharti got sued for extracting money from companies that he was involved in and ripping off other investors.
  • FLGC has done several promotional campaigns before the lockup expiry on 8/24/21, which allowed insiders to dump over 8M shares.
  • Luis Merchan, the CEO of FLGC, is only 39 years old. He doesn’t have any CEO experience, and before this job he worked at Macys and Target since 2007 in a wide variety of positions. He lacks the expertise to compete in the small but competitive cannabis export industry.
  • Insiders bought shares in FLGC at average $0.76 per share price.
  • Lightwave Logic has risen 500%+ over the past two months on company announcements, not on product or business progress in my opinion.
  • LWLG has generated no revenues over the last six years and almost no revenues in its 20-year existence, not even collaborative revenue from foundry partners.
  • LWLG’s CEO has a side job, a home 1200 miles from the company HQ, and a history of working with start-ups that failed.
  • An expert states that LWLG’s technology, polymers, still has reliability issues that need to be overcome.
  • We don’t believe LWLG will accomplish anything meaningful and will fade back down to $2-$3 within a year.

Wrap Technologies’ CEO’s comments on the outlook in the previous earnings call suggest that revenues will decline next quarter, especially international.

The LAPD extended their pilot program, and the BolaWrap was unbelievably only used ONCE during the first 180-day extension (from 8/11/20 to 1/31/21).

Facing lower backlogs, WRAP dropped the backlog number from its last two earnings announcements.

Wrap Reality, WRAP’s police virtual reality training, isn’t ready and already has a lot of established competition, including from Axon.

WRAP will likely be dropped from the Russell indexes later this month causing funds that track Russell indexes to sell the stock.

  • Intrusion (INTZ) bought a fake award from something called Global InfoSec as a marketing tactic.
  • In the Q121 earnings call, INTZ said that their customers haven’t paid for their Shield cybersecurity seats yet. This contradicts what management had told an analyst in a private email, and they earlier said that 90% of the companies from the beta testing became paying customers.
  • None of INTZ’s Q121 revenues were from the Shield product, despite INTZ promoting it since the middle of 2020.
  • B. Riley, INTZ’s sole IPO underwriter, key promoter and a supposed happy customer of the Shield, reduced its price target on INTZ to $13.50 from $30 after poor Q121 earnings results and a lack of guidance.
  • The amount of lies and deceit from INTZ’s CEO, Jack Blount, is amazing.
  • All of these lies will catch up to INTZ in their upcoming shareholder lawsuits, but the SEC might get them first.

Intrusion (INTZ) hired a promotional CEO last year, launched a new product called Shield, and its stock has risen 800%+.

Shield has no patents, certifications, or insurance, which are all essential for selling cybersecurity products.

Shield is based on open-source data already available to the public.

The datasheets and white papers on INTZ’s website don’t show details on what their products do, they just have empty buzzwords.

The companies that took part in Shield’s beta test case study are associated parties.

INTZ’s chairman of the board, Tony LeVecchio, was also the chairman of the board for UniPixel (UNXLQ), which was a touch screen technology pump and dump scam that went bankrupt and faced SEC charges.

INTZ’s investor relations rep said the former CFO, Michael Paxton, who was with the company for 34 years, resigned because he’s “scared to death”.

The Paxton family sold hundreds of thousands of INTZ shares at $8 apiece in October of last year, and are continually selling shares today, with millions more shares to go.

We have a $4 price target on INTZ, for an 85%+ downside.

  • California massively cut its EV voucher program (HVIP) for 2021 which GreenPower Motor (GP) receives most of its revenue from.
  • Biden ordered Buy America compliance loopholes to be closed – bad news for GP which imports its vehicles and parts from Asia.
  • Over 90% of GP’s sales are to a single customer, Green Commuter, and GP leases most of their vehicles out to them on GP’s financing.
  • Except for Green Commuter sales, none of GP’s major sales announcements have led to significant sales.
  • With the lockup expiry passed on 2/24/21, we have a $5 one-year price target on GP.
  • Blue Bird Corp. is the leading school bus manufacturer in the US that has developed an electric vehicle solution already available for large scale commercialization.
  • With schools about to open up again, BLBD will face an explosion of pent-up demand for electric school buses.
  • BLBD is significantly undervalued relative to EV peers and even more so as a reopening play.
  • Biden’s 500,000 electric school buses in five years plan is a great opportunity for BLBD’s school bus niche.
  • We think a narrative shift comparable to the contract that moved Workhorse’s valuation to $4B+ could move BLBD multiples higher.
  • Torchlight Energy is engaging in a reverse merger, we believe because it has accepted that its assets are practically worthless.
  • The company it’s combining with, Metamaterial, has no interest in TRCH’s business or assets. It appears to only want the Nasdaq listing.
  • TRCH will sell its assets or spin them off before the business combination happens; the combined company will get none of TRCH’s assets.
  • TRCH shareholders will get 25% of the combined company, which at MMATF’s market cap, puts TRCH’s current value at 35c per share, assuming its assets are worthless.
  • At TRCH’s current share price, it is trading at a whopping 1050% premium to its arbitrage value.
  • ZK International has been ramping up its subsidiary, xSigma, which is a Blockchain research and development lab.
  • xSigma is doing big things like starting a new DeFi platform, a cryptocurrency ETF, and soon launching its own crypto coin.
  • xSigma’s upcoming stable coin, SIG, is already in high demand on social media before its release.
  • ZKIN’s legacy steel pipe business is consistently profitable, and alone is worth about $2.50 per share.
  • We have a $10 price target on ZKIN, but if DEX becomes a top DeFi platform with a popular crypto coin, it could reach $20-$30.

See follow-up bullish report here, published on 3/29/21. We raised our price target from $10 to $20.

  • We have investigative research on GreenPower’s (GP) “maufacturing facility” which shows it is simply a warehouse that stores buses imported from China and resells them in California.
  • GreenPower’s import records show that the EV Star is actually a re-logoed version of Chinese manufacturer Weichai’s Eurise electric minibus.
  • Revenues are significantly limited: Since GreenPower isn’t Buy America Compliant, it can’t receive federal subsidies. It can only receive state subsidies in California, but not in any other states such as New York.
  • We have reported to the SEC GreenPower’s material misstatements regarding its fake manufacturing business and Gavin Newsom and the Calfornia Energy Commission about GreenPower’s business misrepresentation.
  • A better positioned competitor that’s Buy America compliant, Phoenix Motorcars, recently got acquired for only $27M, implying 90% downside for GP stock.
  • GreenPower’s CEO has a shady history with penny stocks and stock manipulation schemes.

CleanSpark is a money losing company whose stock has risen 300%+ since early July on issuing many press releases.

Its press releases often reflect today’s hot sectors, but have led to miniscule revenues.

Its largest shareholder, Discover Growth Fund, is fighting a vicious court battle to potentially receive millions of convertible bonds at a $1.50 exercise price.

CleanSpark stated in its complaint that Discover’s actions “threaten to destroy CleanSpark’s ability to survive as a company”.

Atomera (ATOM) stock is up 300%+ since March, without any fundamental change or improvement in the company.

ATOM management has talked a big game for years but has never sold anything.

ATOM has had three licensing agreements over the past two years which have never led to production revenue. There are many other examples of ATOM’s agreements falling flat.

The semiconductor processing industry is fiercely competitive, and with ATOM’s low R&D spend, it can’t hope to compete with the established players.

We have a one-year price target on ATOM of $3 and a two-year price target of $0.50.

MicroVision’s (MVIS) business hasn’t fundamentally changed since it was trading at $0.20 through most of March and April.

MVIS’ own financial advisor, a Craig-Hallum analyst, to this day hasn’t changed his 25-cent price target on the stock.

Microsoft buyout rumors caused the initial rally, but MVIS’ financial advisor that is helping to look for an acquirer, said the Microsoft rumors don’t make sense.

MVIS’ own investor relations rep told us the stock rally is from retail investors, not tech investors or “smart money”.

MVIS will report earnings on 8/5/20, and we believe there won’t be any new bullish updates.

Wrap Technologies’ (WRTC) BolaWrap targets a very small subsegment of the market – confrontations with the mentally ill.

Due to the amount of space needed to fire it, the BolaWrap only works outside in open areas.

Most of WRTC sales are to tiny police departments, generating immaterial revenue.

Anti-police violence protests have cooled off, expect related stocks like WRTC to do the same.

Even with a realistically bullish outlook on BolaWrap sales, WRTC revenues would still be below $5M per year.

See follow-up report with disastrous LAPD BolaWrap trial results here.

Riot Blockchain (RIOT) is a Bitcoin Mining Farm. It has no innovation or commerce, only the running of Bitcoin mining machines.

For less than $12M, Riot’s company could be easily duplicated, yet its market cap is over $80M.

Riot utilizes the same amount of megawatts as crypto miner DMGBlockchain, yet Riot’s valuation is over 8x DMG’s.

If Bitcoin falls below $6,500, then all of Riot’s miners would be unprofitable.

Our calculations show that Bitcoin’s price would have to average $19,000 for Riot to break even.

Bitcoin mining has been a money losing endeavor for several years now, especially with Canaan’s second-rate mining machines.

CAN’s new generation miner is less profitable than older generation miners from its competitor, Bitmain.

The Bitcoin Halving Event has just happened on 5/11/20 which means miners are now earning half the Bitcoin they previously earned from mining.

CAN is trying to transition to another business, AI chips, but has failed and likely will never be successful for several reasons.

Given CAN’s expected revenue and losses, its current market cap of $850M+ is nonsensical, we believe it should be $100M-$200M.

  • BioSig (BSGM) is a struggling medical device company turned recent stock promote that acquired an antiviral drug less than 30 days ago to capitalize on the coronavirus pandemic. This caused the stock to rally 100%+ off lows.
  • BSGM had only discussed acquiring Vicromax on 3/12/20, after the coronavirus was in full swing, and it was likely owned by BSGM’s CEO, Ken Londoner, and Director, Dr. Jerome Zeldis.
  • After acquiring Vicromax, BSGM has engaged in an aggressive stock promotion campaign, not to sell any products, but to sell their stock.
  • Recent investors seem to not realize that in buying BSGM stock, they are mainly investing in BSGM’s flagship product, the PURE EP device, which has nothing to do with treating or protecting people from the coronavirus.
  • BSGM and PURE EP sales have always been zero, and will likely continue to be zero for at least the rest of the year.
  • BSGM is almost out of cash and will have to raise money soon, insiders have exercised their options and we believe will be selling soon.
  • Vicromax, also named Merimepodid (“MMPD”), is a well-known antiviral but before BSGM, it hasn’t attracted any interest for coronavirus studies. It hasn’t been used for any other viruses either, such as Zika and Ebola.
  • Vicromax already failed to successfully treat hepatitis C and Zika.
  • Vicromax has nasty side effects, and BSGM’s own published report says animal and safety studies should be done.
  • Management acknowledged it will change the formulation of Vicromax, which we believe suggests there is something wrong with it in its current form.
  • Vicromax is likely worth whatever BSGM paid for it, which isn’t disclosed and likely wasn’t much.
  • BSGM’s management receives excessive compensation and is “double dipping” with its NeruoClear subsidiary for additional compensation.

Dyadic’s (DYAI) enterprise value appreciated 10x from $10M to $110M in one year for no fundamental reason.

DYAI has tried and failed to make a pharmaceutical commercial agreement with its C1 platform for 16 years, and we doubt it ever will.

Over the past year, DYAI has been highly promotional, attending many conferences, publishing PRs and paying different stock analysts/promoters.

The CEO has a questionable past, and was previously fired from DYAI following a scandal.

In DYAI’s recent PR regarding the coronavirus,its collaborative partner failed to mention working with DYAI or its platform.

We’re skeptical that Co-Diagnostics (CODX) new coronavirus test works, as news came out that the CDC’s test may be flawed.

There is nowhere for CODX to test the coronavirus COVID-19 strain except China or a government lab in the US.

There is no committed institutional ownership of CODX and a major holder recently liquidated its entire position.

CODX’ enterprise value to sales ratio is an eye-watering 608, making it one of the most overvalued medtech companies that we have ever seen.

CODX traded at below $1 before the coronavirus hype happened. We predict it will sell-off towards that level as coronvirus news fades.

See follow-up CODX report There Doesn’t Appear To Be Any Real Interest In CODX – $1 PT on 3/17/20 here.

See follow-up CODX info blog post on 3/23/20 here.

Nymox Pharmaceuticals has existed for 31 years, without bringing any product or drug to market.

NYMX has made many broken promises, delays, and a withdrawal regarding applying for marketing approval in the US and EU.

A competitor met the same primary endpoint that NYMX failed to meet.

Management salaries are excessive, with the CEO receiving over $9M per year at the current share price.

We believe NYMX will crash in 2020 on an equity raise and continued lack of regulatory progress.

Our research suggests that NanoViricides (NNVC) is unable to even attempt to create a coronavirus vaccine or treatment.

On 1/24/20, NNVC sold 2.85M shares at $3 apiece, which is about 20% of the current share price.

NNVC has told investors it would create a vaccine for other epidemics in the past, like Zika, but those went nowhere.

NNVC has basically the same pipeline of preclinical drugs that it had since 2008.

On 1/30/20, NNVC announced it is working on a coronavirus treatment, however it states that it has not been offered any collaborative funding.

Alphatec (ATEC) is up 400% over the past year based on 12 new spinal implant product offerings that we show are flawed and are mostly copy cats of the competition.

ATEC’s new CEO, Patrick Miles, is alleged to have blocked Nuvasive (while working there as an executive) from buying Alphatec, calling it a “waste of time”.

To capture customers, ATEC has SG&A expense growing faster than revenues, which is unsustainable.

Insiders have sold $2M worth of stock in 2019, mainly by ATEC’s legal counsel while the company is in patent lawsuits.

With questionable products and leadership, we give a $3 price target to ATEC.

The Meet Group (MEET) has rallied on its new Video Platform as a Service (vPaaS) product, but we believe it won’t be a material revenue driver.

MEET has no IP except for trademarks, it has no innovative or cutting edge technology, and its vPaaS also has no IP.

New evidence direct from MEET’s only vPaaS customer suggests that others can just build their own vPaaS in-house.

MEET’s video has had no revenue growth as it has been flat for the past three quarters.

MEET’s new platform developments including NextDate and Growlr live video implementation are unlikely to provide material growth.

Enochian Biosciences (ENOB) is a pre-clinical stage biotech which purchased its HIV drug patents from Weird Science, LLC.

ENOB’s lead scientist and HIV patent inventor does not appear to have any biotech experience, was accused of identity theft, and plead guilty to commercial burglary in 2018.

ENOB’s lead scientist appears to have had a romantic relationship with the partner of Weird Science, which further puts the patents’ validity into question.

ENOB is already behind schedule with its pre-clinical targets.

With no data and a questionable history, we conclude that ENOB should be valued at $10M, or $0.25 a share, at best.

With Resonant (RESN), an RF filter resonator designer, the more design wins they claim they have, their revenue gets lower or flat, which is nonsensical.

Resonant’s RF filter design simulator process is not unique, and is done by all of the top RF filter manufacturers.

Resonant’s own lead engineer says its XBAR resonator is a long way from becoming a commercial product. It may never get there.

Without a fabrication facility to test the simulator software design, it is hard to improve the software.

Resonant calls XBAR a “breakthrough” yet there are no published white papers or data sheets on it.

White Diamond’s proprietary diligence identified new info that suggests Accelerate Diagnostic’s (AXDX) Pheno system is only a niche product.

The Pheno system is not capable of replacing tissue culture methods due to design flaws and a questionable value proposition.

Management has missed reagent revenues per system target by over 30% and no one is talking about it.

Pheno system lease agreements do not penalize hospitals for low test volumes, which hurts future annuity revenues and AXDX eats the cost for upfront installation and validation.

Highly anticipated results of the upcoming Mayo/UCLA study will likely be a bust, revealing no statistically significant improvement in LOS (Length Of Stay) or patient mortality.

See a shortened version of the report on Seeking Alpha here.

United Health Products reached a $400M market valuation on speculative hopes related to its HemoStyp surgical gauze.

UEEC’s only product, HemoStyp, is a 17-year-old, cheap commodity gauze made in China with no published data or clinicians supporting it.

UEEC’s website discloses claims of pharmaceutical activity of its HemoStyp, which can compromise FDA 510K submission approval.

The company has been operating from a PO Box with no staff and no R&D investment for many years.

The company suggests a story of a product ready for FDA approval and a big money acquisition, with no factual support.

Follow-up report: United Health Products’ Press Releases Can Not Be Taken At Face Value

Discovery Gold Corp (DCGD) is a $150M+ empty shell – an unheard of valuation for a shell with no cash, no assets, and no business.

Investors appear to believe the company’s new CEO, Justin Costello, is an exceptional businessman in the cannabis sector, but our research reveals that is not the case.

Our research suggests that Costello didn’t graduate from Harvard Business School, despite it saying that in DCGD’s SEC filing and promotional websites.

Our research shows that Costello’s company, GRN Funds, is not a registered hedge fund despite the company saying that it is.

We have tipped off the SEC to these falsehoods and submitted this report to the agency.

Synthesis Energy Systems (SES) has a failed clean energy technology called coal gasification. After years of trying to make it work, the company generates no revenues today.

SES doubled in one week ahead of its 8 for 1 reverse split on 7/22/19, now is good timing for a short.

SES potential asset sale to Australian Future Energy (AFE) is non-sensical. AFE has no developed projects and was funded by SES.

Other stocks have recently been decimated after reverse splits like Neuralstem (CUR) did a 20 for 1 reverse split on 7/18/19, the stock ran up into it, and subsequently fell 60% to new lows in five days.


Applied Energetics (AERG) became an empty shell in 2014 and remained that way for 2.5 years.

There have been no significant achievements since executives laid out a plan to revive the company in 2017.

The share count has more than doubled since 2017, and the stock price has risen over 400% since the beginning of the year.

A whopping 48.7 million shares that were bought for $0.06 or less are now getting registered for sale.

On 5/24/19, the company issued 2.5 million warrants at a $0.06 exercise price, which we believe indicates what the stock is worth.

Although invented 10 years ago, BioSig’s PURE EP System add-on device has had no published clinical data, only bench and animal studies.

The company said they would present clinical data at the Heart Rhythm Society (HRS) conference, but they did not do it, suggesting the data is below expectations.

Cardiologists we have asked have said that there is no need for this add-on, conventional EP machine signals are already clear enough.

Our research reveals that the PURE EP is unnecessary for the treatment of Atrial Fibrillation (AF), which accounts for over 90% of all heart ablations.

2.15M shares for shareholders just got registered to be sold, and the company needs to raise $10s of millions for their upcoming product launch.


Soliton is a Reg A+ IPO, which means they could not get institutional investors, so they had to raise money from crowdfunding.

SOLY has put out 17 PRs since March, fueling a rally with no substance in our opinion.

SOLY’s first lock-up expiry is May 20th, and we believe it will be a bloodbath for the stock, similar to what happened to Reg A+ stock Adomani.

SOLY’s tattoo and cellulite removal devices are still in the pilot stage, unproven with few studies done.

SOLY’s biggest holder, Remeditex, has sold every significant position it has filed on, and we doubt SOLY will be an exception.

Establishment Labs (ESTA) has taken the breast implant industry by storm with its next level technology, 6th generation, Motiva Implants.

The reoperation rate is under 1% with a Motiva implant, no Motiva patient has gotten lymphoma, and the Motiva Ergonomix implants are a game changer.

A recent bearish report on ESTA discussed its related party transactions and an allegedly biased clinical study. But we conclude that these are not a big deal.

The FDA recently sent a warning letter about breast implant safety, which we believe will help ESTA because studies show its implants have a lower number of adverse events.

The breast implant industry is growing, and the growth rate could increase on a new perception of safety from Motiva implants.

Torchlight Energy has an enterprise value of over $130M. The company’s entire perceived value is based on possible oil in its Orogrande Project.

TRCH only paid $3.35M in cash and stock for 75% of the Orogrande in August 2014 when oil prices were much higher than today.

TRCH has little cash with increasing debt, and if it cannot sell the Orogrande, we believe the company is finished.

In April 2018, TRCH said it would sell its Hazel Project, but never did, and raised equity instead.

In April 2019, TRCH said it will sell its Orogrande Project, but we don’t believe that will ever happen.

We believe the 400% appreciation of Conformis (CFMS) in 2019 is not from any positive fundamental developments, but from hype and speculation.

Its customizable hip implant, reported at AAOS, is not new, has been FDA approved since 2017, and is too early in clinical evaluation to justify a rally from it.

CFMS business has many flaws: its customizable implants have not been shown to be an improvement to standard implants, yet they are more expensive and have a longer implant process.

The company made small improvements in Q418, but they do not address fundamental business flaws and increase CFMS risk exposure.

Strapped for cash and lacking market trust, CFMS was forced to collaborate with last resort financier, Lincoln Park Capital.

American Superconductor stock has risen over 100% since July 2018 on little progress in its businesses. We expect a fade back to $7 or less.

The company has had significant losses for the past 19 out of 20 years with its grid and wind businesses, a pattern we foresee continuing for many years to come.

Most of AMSC’s rally has come from puffy PRs and hype regarding its resilient electric grid and ship protection services government businesses.

We believe both of these businesses, which are in the trial stage, are impractical, and we don’t believe the government will spend a significant amount of funds on them.

There has never been a cyber or terrorist attack on an electric grid in the US. Ocean mines have not been an issue since WWII.

T2 Biosystems’ recent Breakthrough Device designation by the FDA isn’t an acknowledgement of the device’s effectiveness or clinical value proposition, only that it diagnoses life-threatening conditions.

The T2Dx Instrument adds additional hospital expense but provides little clinical value, hence the miniscule sales numbers.

The value of the T2Bacteria test is low because it does not measure bacterial susceptibility to antibiotics and, therefore, does not change clinical practice. Other similar technologies have been flops.

In every 2018 quarter, TTOO’s unsustainable research revenue was higher than its much more important product revenue.

TTOO has $44M in debt, paying interest at an usurious 12.5% rate.

Apyx is a provider of J-Plasma technology that has failed every medical application and is now only targeted for two off-label cosmetic applications.

J-Plasma use for dermal resurfacing has nasty side effects and heals very slowly – most cosmetic surgeons we have surveyed will not touch it with a 10-foot pole.

Apyx did not reveal the results of its clinical study on J-Plasma use for dermal resurfacing – a red flag that it may have missed its endpoints.

An almost identical product to J-Plasma called Portrait PSR has been a commercial failure for dermal resurfacing. J-Plasma appears to be following the same path.

Apyx’s new CEO, Charlie Goodwin, was allegedly engaged in fraudulent sales activities at Olympus/Gyrus, which include submitting fake claims to Medicare and making illegal payments to physicians and hospitals.

  • NBEV is a $500M market cap struggling US beverage roll-up attempting to reinvent itself by marketing CBD-infused drinks
  • The Company’s recent ‘key’ licensing deal to sell Marley branded CBD drinks comes with unfavorable economics as NBEV will pay a high 50% of gross margin for the license.
  • Insiders lock-up agreement expires on 2/6/19, which will allow over 6 million shares to be sold.
  • NBEV has run up 100% since its November financing at $3.50 per share without significant fundamental news in our view.
  • NBEV has burned through most of its recent cash raise from a non-core acquisition, we expect more near-term equity financings.

FSD Pharma’s founder, Thomas Fairfull, and director, Anthony Durkacz, have a history of value destruction. Durkacz had an average loss of 92% over 11 stocks in which he had involvement.

The company spent $8 million on listing fees, which is a head-scratcher, as it is multiple times larger than what comps spend.

Durkacz has received an astounding sum of over C$28.7 million total current value in cash and warrants for being both a director and broker for FSD.

FSD Pharma routinely announces investing in other small cannabis companies, but so far has shown little follow-through.

We have a price target on FSD of C$0.09 per share, which was its pre-RTO financing price less than a year ago.

Helius Medical is a reverse-merger, single-product, pre-revenue medical device company with a unique device that delivers stimulation to the tongue to treat a type of brain injury.

Evidence suggests the device is likely a placebo, and positive patient results were from the intense physical therapy treatment, not the device.

The founders, which include Montel Williams and the former CEO who is now a fugitive, have a history of questionable marketing practices.

The phase III trial missed its primary effectiveness endpoint, thus reducing the chances of FDA approval and reimbursement coverage.

The fact that Helius has redacted important trial info should cause investors concern about the potential effectiveness of the device.

Each 2018 quarter, Orchids Paper (TIS) has had a consecutively worse financial performance.

For the past two quarters, Orchids’ gross margin has been almost 0%, while its SG&A and interest expense have ballooned to unsustainable levels.

We believe the banks won’t extend Orchids deadline for a sale of its assets, and it will file for Ch 11 bankruptcy by the end of the year.

TIS recently rose over 100% on insignificant news, which we believe creates a good short opportunity.

Next quarter, marketing for new customers will be even harder for Orchids as competing ultra-premium tissue manufacturing facilities will begin production.

TransEnterix (TRXC) was originally funded by a notorious investor recently charged by the SEC for orchestrating pump and dumps.

A TRXC director just sold ~$23 million of stock; TRXC has a historical pattern of retail fueled rallies that end with insider selling and major stock declines.

Major flaws prevent TRXC’s Senhance surgical robot from being used commercially, it’s mainly used clinically and for training purposes.

Side-by-side clinical studies of the Senhance show inferior results versus standard laparoscopy.

We see near-term downside of 30-50%, longer-term, TRXC is very likely a zero.

We found Namaste’s consultants are actually officers of the company, including the head of its audit committee.

While other companies spin off assets to shareholders, Namaste instead sold an asset to an officer at a loss. He is now taking it public for his gain.

Namaste acquired AF Trading, which appears to be owned by an employee of Namaste, yet another related-party transaction.

Cannmart’s head office is tiny and does not appear to be worthy of the title “Amazon of cannabis.”

Namaste insiders may be profiting at shareholders’ expense.

Generation Next Franchise Brands Is A House Made Of Frozen Yogurt That’s About To Melt

  • Generation Next Franchise Brands’ (VEND) $130M market cap is based on the potential success of its sole product, a frozen yogurt vending machine called “Reis & Irvy’s” or “Froyo Robot”.
  • As the company has only just begun delivering Froyos, its revenues are miniscule. The company also loses a lot of money, reporting a $5M loss in quarter ended 3/31/18, a $3.8M loss in 12/31/17, and a $4M loss in 9/30/17.
  • We conducted in-field research on the company’s new Froyo installation in Philadelphia. In the day we were there, we witnessed it made considerably less sales than the company is claiming it does.
  • Upcoming catalysts: 12.8 million VEND shares sold in a private placement at $0.50 apiece on January 2nd will have a lockup expiry on July 2nd. This will double the float. We believe most of these shares will be sold. Another negative catalyst is VEND has been trying for months to get investors involved in their next private placement at $1.50 per share. This private placement will happen any day now as the company is almost broke and has a negative shareholders equity.
  • The Froyo is not “the future of frozen yogurt” like the company claims. It was created in 2007 and has already been tried and commercially failed. There are several YouTube videos that are 5+ years old of almost the exact same Froyo robot as VEND is marketing today. VEND acquired Reis & Irvy’s intellectual property assets from its creator, Robofusion, in December, 2016. There are also many other frozen yogurt vending machines being sold today.
  • VEND’s healthy snacks vending machine business has commercially failed and was discontinued by the company in 2016. We believe the Froyo is an even worse vending machine idea and will also fail commercially.
  • VEND management was tried and convicted of fraud in regards to statements made to customers about their last vending machine.
  • VEND has only just begun delivering Froyos this month, despite having reportedly booked 1,000 units aggregating $41 million in deferred revenues, dating back to 2016.
  • In its 10-Q for quarter ended 3/31/18, VEND reported $36.3M in customer advances and deferred revenues in its current liabilities. Even though the company received $23M in cash received on the Froyo orders, the company has instead spent that cash on operating expenses as it’s almost broke. The company reported a stockholders deficit of ($17.7M).
  • VEND reported unrestricted cash of only $5.3M in quarter ended 3/31/18. At a $4M+ loss per quarter, not counting cash coming in from new orders, that would put the cash balance at a little over $1M by 6/30/18.
  • VEND has recently spent more than normal on R&D. It spent $1.7M last quarter, compared to $435K on quarter ended 3/31/17.
  • In the latest 10-Q it states: “Given our current cash position, we may be forced to curtail our plans by delaying or suspending the production and purchase of frozen yogurt robots until such time that we may be able to prepay for the robots.” What that means is if they can’t raise the money to purchase the robots that their customers pre-ordered from them, then the company will either have to raise more money, or declare bankruptcy and not fulfill their obligations.
  • The total amount of daily and monthly expenses to maintain a Froyo are very high, and make it a bad investment at almost any type of location. Additionally, 12% of franchisee revenues go to VEND as a franchise fee. We break down the expenses per Froyo in the report. In order to break even, each Froyo will have to generate $2,840 per month. At $6 per cup of frozen yogurt, that’s 15 cups sold every day. Not a realistic number in almost any location.
  • The company has a list of possible locations for the Froyo however most do not have the needed foot traffic of prospective customers to make it a suitable location.
  • There’s no institutional ownership in VEND. Just a bunch of scattered retail investors.
  • VEND’s only competitor, the Frobot, is the only other frozen yogurt vending machine company, has the same number of employees as VEND, about 43, and an estimated annual revenue of only $4.5M. VEND will likely not have significantly higher revenues than that over the long term, making the stock significantly overvalued today.



Viveve Medical (VIVE) had a horrendous Q1 2018 report with a big revenue miss, decreased gross margins, and a $12M loss.

With the company’s sizable expenses, it will take over 4x as many sales as they have now just to have a break-even year.

The Viveve System got FDA 510(k) regulatory clearance in the US in October 2016, almost two years ago, there’s now market saturation, and the easy sales have already been taken.

Viveve management’s recent actions show desperation, such as the CEO’s abrupt departure and the permanent replacement with the CFO.

Viveve is now attempting to have other indications for the Viveve System that we do not believe will work, and expand to other products, but those sales have flopped.

Level Brands (LEVB) is among the latest 2017 Reg A+ IPOs – so far they are all trading below their IPO price.

Level Brands CEO, Martin A. Sumichrast, has a long, checkered past. His latest partner was running a huge Ponzi scheme.

Level Brands hired RedChip which has been aggressively promoting the stock on TV and in email and social media campaigns ahead of the lock-up expiry on May 17th.

Level Brands does not produce any products, it is a newly formed marketing company for products that have not generated much sales.

The company made a costly deal with Kathy Ireland just to use her brand name. She’s not an executive or director of the company.

Capstone Turbine has gone up over 100% in the past 3 months, but business is not doing well as they recently missed revenue consensus.

The expensive microturbine can’t compete with cheap electricity from solar and wind energy and cheaper per-watt engine generators.

Capstone is currently paying for road shows and investor presentations, not to sell microturbines, but to sell stock.

We believe Capstone will remain unprofitable for many years to come, keep burning cash, and keep selling stock to stay afloat.

Capstone’s chance for profitability is Russia, but oil and gas needs to go up considerably for more remote O&G installations.

Longfin had a Reg A+ IPO on December 13, 2017, originally at a $382.5M market cap which ballooned to its $3.27B market cap today from its acquisition of Ziddu.

Ziddu, a cryptocurrency microlending company, has a business model that doesn’t make sense because Ethereum is too volatile to use for loans.’s website history shows that Ziddu coin is only a basic ethereum token and wallet that got rebranded by Longfin in December 2017 as a microlending story.

Longfin recently engaged in dilutive financing with Hudson Bay Capital, a fund known for financing microcap, speculative companies that most funds would not invest.

Longfin’s company headquarters in New York City is a WeWork shared office space for fledgling entrepreneurs.

Nymox drug, fexapotide, to treat enlarged prostate, is about to have its marketing application decided in Europe within a few months, and we’re betting on a rejection.

Nymox did two phase 3 trials for fexapotide in the US with a total of 1,000 patients testing throughout one year. Both trials failed to show improvement over placebo.

Years after the phase 3 trials, Nymox reported follow-up studies with positive data to those trials, but evidence shows it is unreliable data.

For Nymox’s follow-up studies, there was no independent verification party, no pre-specified endpoints, and it’s unlikely that a drug’s efficacy would take effect years later, after having no effect at one year.

Nymox switched from trying to get approval in the US to Europe, but recent events show Europe might actually be tougher to get approval.

Although we started shorting Ampio (AMPE) in the high $3s, we continue to hold our short position. We don’t believe that Ampio’s osteoarthritis drug, Ampion, will ever get approved, and the company will likely be required by the FDA to do another trial to seek approval. Their next trial will likely have the same result as their previous Ampion trial, which failed to show improvement over saline injections.   If our thesis is true, the stock will go sub $2 in short order. The following are 10 reasons why we are confident in our thesis.

  1. In Ampio’s latest trial on its osteoarthritis drug, Ampion, it wasn’t compared to a placebo, as the CEO, Michael Macaluso, stated December 14, 2017 in this conference call at time 11:52. He states: “This was not a saline controlled trial.”
  2. Ampio’s recent JP Morgan presentation on January 8th has no information about a path to approval, nor does it say the company is confident that it will get approved.
  3. The CEO states about the Ampion trial in this conference recording in March 2017, that out of 9 trial options CBER (Center for Biologics Evaluation and Research) gave Ampio for an FDA-approvable trial, Ampion’s trial was none of those 9 options. He stated this at time 51:00 in the recording.
  4. Ampion’s previous larger phase 3 trial, which was randomized, saline-controlled and done under real SPA, failed. This was announced in June, 2016.
  5. On January 2, Adam Feuerstein published an article stating that saline is just as effective a treatment as Ampion. We trust Adam F’s judgement as a top biotech analyst.
  6. This PR from May 1, 2017, announced the Ampion trial. It uses the words “unmet medical need” in parentheses, which in itself is odd, and the drug doesn’t have fast track with the FDA.
  7. Ampio’s CEO has a shady background, he was CEO of a previous company Isolagen that had numerous transgressions against shareholders. They got hit with a shareholder lawsuit that they settled in 2008 as shown here.
  8. Ampio was trading below $1 between February and October, 2017. That’s an indication that biotech investors didn’t take this trial seriously.
  9. A scientific paper from the World Journal of Orthopedics, published here, shows that drugs have an exceptionally high placebo effect in osteoarthritis trials in particular.
  10. As shown in its latest 10-Q, Ampio issued 11M units at $0.60 apiece for $66M in gross proceeds. Each unit represented one share and one warrant at a $0.76 exercise price. Some of those warrants are now being exercised, as stated in the December 14, 2017 conference call. This dilutes the outstanding shares, and the increased trading volume will more easily push the stock price down. Ampio’s fully diluted share count is roughly 100M.

At only 19% borrow rate on Interactive Brokers, we are fine holding our AMPE short position for 2-3 weeks as we expect the traders and weak hands to churn out of the stock as it declines to below $2 per share.

Position Update: We remain short AMPE. On 3/12/18, we published a follow-up article on Seeking Alpha in regards to the CEO’s conference call on 3/7/18, where he backtracked from claims of partnership negotiations. See article here.

ClearSign Combustion’s Duplex Technology Is A Commercial Failure, The Stock’s Downtrend Will Continue

  • ClearSign’s green energy Duplex technology has been tested by refineries for many years but has resulted in very few adoptions. This is because oil and gas companies care about profits, not pollution control.
  • Evidence suggests the Duplex technology sacrifices some production in order to decrease emissions.
  • We interviewed the inventor of the Dupex Technology and he had some interesting insights about the company.
  • ClearSign’s over 100% rally from Asia and Middle East expansion news is reversing as new locations likely won’t bring new success to an already failed technology.
  • With the Trump administration in power, the anti-pollution technology sector is out of favor.

Read our add-on article published on 1/17/18: An Engineer’s Physics report On How ClearSign’s Duplex Technology Is Inefficient

Marrone Bio is broke and approaching bankruptcy with $2M cash burn per month and over $23M in debt principal due next year.

The company has not been able to significantly decrease its high quarterly losses with its tough business of selling niche bio-based pesticides.

The company is in a desperate situation with directors leaving and a key emergency lender appears to have gotten cold feet.

We believe a big equity raise will happen any day now and will be similar to SenesTech’s recent raise which plummeted its stock by 70%.

We have reached out to over 100 European surgeons who use the da Vinci surgical robot. The surgeons’ opinions on the TransEnterix Senhance System were almost all negative.

TransEnterix has been aggressively marketing the Senhance System in Europe since late 2015 and hasn’t sold one in Europe since February 2017. Has only sold two systems in total in Europe.

TransEnterix CEO Todd Pope has always been salesy and over-enthusiastic in the earnings calls. We believe his statements should be taken with a grain of salt.

Even if TransEnterix miraculously is able to make revenues of $100M in a year, it will still take a $30M+ net loss mainly because its gross margin is only 40%.

Our research overwhelmingly shows that the Senhance will not sell well in the US just like it has hardly sold any in Europe.

PolarityTE is a reverse-merger, pre-revenue, pre-clinical tissue regeneration med-tech company with a main product that’s patent-pending.

PolarityTE’s first product, SkinTE, just got registered for commercialization through a non-FDA approval route. The company is ready to sell to physicians who will contribute to SkinTE’s clinical studies.

SkinTE has generated a lot of buzz, as COOL stock has skyrocketed over 800% since the beginning of the year to a fully diluted market cap of over $400 million.

Is this technology revolutionary, with a large addressable skin wound market, or is it ineffective or in a niche market? With sales and studies underway, the answers will come soon.

The company’s September preferred stock financings have price protection on the conversion price, which is akin to death-spiral financing and adds to our skepticism.

In October 2016, Everspin (MRAM) IPOed at $8 per share and traded there until a Barron’s article in May caused a strong rally. It is now fading back to $8.

Everspin’s MRAM is too expensive to compete with DRAM, as DRAM will continue to get cheaper and better, and Moore’s Law will continue for many years to come.

Everspin has overly high analyst estimates, and management has hinted that it will miss guidance.

Small companies like Everspin do not last in the memory chip business, economies of scale are essential for profitability, and system designers are reluctant to purchase from a small, and sole, vendor.

At $5M per quarter cash burn, Everspin will need to do an equity raise sometime next year.

ShiftPixy uses a social networking app to match employers with part-time “shift” employees.

ShiftPixy’s CEO, Scott Absher, has a checkered past with some pump and dump scams where the SEC had to step in.

ShiftPixy management talks a lot about the new app, but it’s dysfunctional, and has very few downloads after being released a month ago.

We believe ShiftPixy is nothing but a struggling staffing agency trying to look like it has a revolutionary “Uber-like” technology.

With very small net revenue and high expenses, we see 50%+ downside in the stock within a year, and likely an eventual delisting.

  • At an adjusted book value of $0.066, GRST has limited downside, and is a potential 10x bagger over time.
  • Ethema Health owns two treatment centers, runs one, rents the other, and is currently acquiring a detox center.
  • Ethema Health’s treatment center in Delray Beach, Florida is breakeven at only 14% capacity.
  • There are only two other publically traded behavioral health companies – AAC Holdings (AAC) and Acadia Healthcare (ACHC) and they have gone on a strong uptrend recently. We expect GRST to go on a similar tear.
  • Management has the proper steps in place to fill up its facilities with patients and demonstrate superior treatment to its competition.

In the past month, Delcath has risen 1000%+ on promotional hype and no fundamental news.

Delcath is engaging in death spiral financing, the convertible note holders can buy shares at a 15% discount to the recent market price and then immediately sell in the open market.

Delcath’s outstanding share count went from 39 million on February 10, 2017, to 374.4 million on June 5th, 2017, and 439 million on July 5th.

Delcath is conducting clinical trials on its same technology that failed to be approved by the FDA in 2013.

Despite being a struggling company, Delcath’s gluttonous executives award themselves high salaries, fly first class, and are in a ritzy office located in midtown Manhattan.

Specialty pharma company PDL BioPharma has invested a lot in its acquisition of hypertension drug Tekturna, and has hired a 40 person salesforce solely for it.

PDL’s salesforce is already rolling with convincing doctors and copayers to prescribe and pay for Tekturna, and its sales will grow.

Despite reaching a low in its current downtrend, PDL expects to remain profitable, has a large cash position, and a share buyback is in place.

It has very low interest rates with its convertible bonds, and there is very little dilution risk because the bond conversion price is far above the current share price.

PDL BioPharma has a book value of about $4.50, almost double the current share price.

If Ominto Was A Private Company, It Would Be Worth A Fraction Of Its Current Price

  • Ominto, an online cash back provider, has risen over 150% solely on the hype and exposure of being uplisted to the Nasdaq from the OTC exchange on 2/14/17.
  • It has tiny sales, stagnant growth and consistently loses $1M-$3M per quarter over the past four years.
  • A CEO of a top cash back website we interviewed hasn’t even heard of Ominto or its cash back website
  • Ominto has made what appears to be a non-arm’s length merger with a company that has a completely different business.
  • We estimate Ominto’s value to be $1-$2 per share, for an eventual 90% decline.

Matinas BioPharma (MTNB) is one of those rare, no-brainer, diamond in the rough, short ideas.

Matinas BioPharma’s stock has moved from the OTC to the NYSE MKT on March 2, after running up 200% in two months. It has since fallen 20%.

We value MTNB at $0.63 per share, and believe the stock will continue downtrending for a 45-80% decline from here.

We uncovered evidence that Matinas’s largest shareholder, GJG Capital, is covertly run by a barred broker, and on 3/15/17 converted warrants into common stock, suggesting it’s ready to sell.

Matinas’ entire pipeline consists of two preclinical drugs that were acquired from Rutgers University in 2015 for $2.5M. One of them, MAT2203, had already failed with another biotech company.

Matinas has yet to present clinical efficacy data on its two drugs, yet its market cap is over $200M, we believe it should be below $100M.


Lead attorney for Straight Path’s shareholder lawsuit says Straight Path management perpetrated a “years-long fraud”.

“Use it or lose it” is the FCC’s harsh attitude towards unused spectrum like Straight Path’s. Straight Path has a one year deadline to sell its spectrum.

Evidence from the FCC, telecoms, and technology firms all suggest 28GHz spectrum is far superior to 39GHz spectrum. 86% of Straight Path’s spectrum is 39GHz, 14% is 28GHz.

Verizon has the option to buy XO’s spectrum for only $200M, which the vast majority is 28GHz. XO has almost as much total spectrum as Straight Path in MHz-POP.

We believe Straight Path raises many red flags with its statements and actions.

While there has been talk of doing away with private prisons for years, investors of private prison operator stocks GEO Group (GEO) and Corrections Corp (CXW) haven’t taken it too seriously. That is, until August 18, 2016, which was a dark day for privately run prison companies. Corrections Corp (CXW) opened that day at $27.06, and closed at $17.57 for a 35% loss. GEO Group (GEO) opened at $32.32 and closed at $19.51 for a 40% loss. Since then, GEO has recovered a little bit, and CXW has continually slid further down.

With Scientific Games large size, the recent CEO change was likely the right choice and investors should buy on current weakness.

Billionaire Ron Perelman, a 40% shareholder of SGMS, late last year bought shares at $8 so that price may serve as a floor of its current weakness.

With the rise and spread of legalized gambling worldwide, there are many positive upcoming catalysts for Scientific Games.

Scientific Games technology is thriving in the hot online gaming market and in person gaming.

The current global economic boom is good for the gaming industry.

Hyperkalemia, or high potassium in the blood, is unnecessary to treat unless it’s at a severe level.

Most medicare and most insurance companies don’t cover Veltassa for a reason.

Veltassa is inferior to its competitor, ZS-9, because ZS-9 can treat both acute and chronic hyperkalemia patients, while Veltassa can only treat the chronic market.

Veltassa’s black box label is a big drawback.There are problems with the drug and its trials, as revealed by government-funded researchers.

A potential Veltassa black swan event, And Relypsa’s CEO, John Orwin’s previous company’s deadly drug.

With energy prices low, Synthesis Energy’s (SYMX) syngas technology is even more uneconomical than it was when energy prices were high.

The company hasn’t had a profitable quarter in over 7 years.

SYMX has a shady past with deals that never go through, and that won’t change despite management’s big talk.

Even though its production is idled, the company is putting out PRs saying it will take on more projects in order to excite retail investors.

– We have a price target on TransEnterix (TRXC) of $1.20 by the end of the year. TRXC real goal is to sell stock to uninformed retail investors. The company, insiders, and institutional shareholders are selling their shares, or filing to, on this recent pump.

– TRXC has three products: their SPIDER surgical system, a failed product which they are discontinuing, and two surgical robots: the ALF-X and the SurgiBot. Evidence shows both are impractical and have little to offer surgeons.

– The ALF-X has already been a commercial failure. It has been on the market since 2012 with the plan to take market share from Intuitive Surgical (ISRG). The ALF-X didn’t sell a single unit in 2013, 2014, or 2015. TRXC acquired the ALF-X for $25M in cash plus stock in late 2015 for the purpose to parade it in front of uninformed investors.

– The SurgiBot is an impractical surgical robot that TRXC has done enough for it to likely gain FDA 510(k) clearance. It will also likely be a commercial failure like the ALF-X and SPIDER.

– In TRXC sponsored studies of the SurgiBot, surgeons say it “has potential” but isn’t quite there yet.

– TRXC management knows its products aren’t very good, one indication of this is the lack of patents. TRXC has only one US patent for its SurgiBot. 

– Management aren’t robotics experts, but their competitors are.

– Johnson & Johnson has its own surgical robot company that will compete with TRXC.

– TRXC’s CFO, Joseph Slattery, former company was Trans1 which settled with the US Department Of Justice for $6M for medicare fraud.

ReWalk’s (RWLK) Veterans Affairs (VA) coverage was expected from the last two earnings calls and already partially priced in.

No sell-side analyst showed excitement on the coverage news. Barclay’s analyst raised the PT from $9 to $11, 25% below the current price.

A negative catalyst is coming up: With only $25M in cash, and $6M per quarter cash burn, RWLK is filed and ready to do a large share dilution soon.

Due to a low gross profit margin, RWLK needs to sell at least 2,000 exoskeletons per year to break even. It will only sell about 70 in 2015.

RWLK’s President and Founder resigned last month. He previously criticized their exoskeleton as being “too bulky”.

Lack of scale will prevent RWLK from expanding to many other countries.

– Emerge Energy Services (EMES) had an atrocious 3rd quarter and is a bankruptcy risk. We have a $2.50 price target on the stock.

– There are three possible upcoming negative catalysts for EMES: 1.The amendment of its credit facility 2. The start of an ATM equity financing. 3. The 10-Q with “going concern” language in it.

– OPEC is picking up production while US shale is decreasing. Iraq is suddenly flooding the US market with crude! Kuwait’s OPEC rep says the oil glut could last 5 years.

– EMES earnings call sounded pessimistic, but management spun some M&A false hope which propped up the stock price.

– The price action of EMES will likely mimic that of ZINC, which bounced off lows and quickly faded.
Note: on 11/15 we posted a follow-up report on EMES: Has the bear case gotten stronger?


Horsehead Holdings (ZINC) has risen 100% over the past two weeks from a spike up in zinc prices, which has created a ripe shorting opportunity.

If zinc prices don’t rise soon, Horsehead can go bankrupt in two years. Its zinc hedge expires after 2015.

Horsehead has had perpetual problems getting its biggest plant, Mooresboro, to half capacity. Its latest update on 10/1/15 wasn’t good.

Horsehead is in dire need of cash but can’t issue new debt, because its 2017 convertible bonds currently have a yield-to-maturity of 35%, way too high. Issuing equity will also be very hard in such an unfavorable commodities sector.

We agree with Goldman Sachs that the Glencore production cuts are “not a reason to get bullish” on zinc, and zinc will give back its recent gains on the Glencore news.


– VBL Therapeutics (VBLT) put out a PR for its ovarian cancer drug, VB-111 with the word “positive” in the title. However, the drug is a complete failure and the data isn’t positive at all.

– The word “positive” in the title mislead investors and is what caused the stock to rise from a close on May 13th of $4.08 to the mid $5 range today.

– VB-111 + chemotherapy combo has a worse response rate than chemo treatments alone. Avastin +chemo for ovarian cancer showed a much better response rate than both the VB-111+chemo combo and chemo alone.

– VB-111 didn’t show any improvement of reduction in muellerian (ovarian cancer) tumors , so had a 0% objective response rate.

– VB-111 is also very toxic, causing many serious adverse events, and even causing a death in the small 14 patient trial.

– VB-111 is ineffective and toxic, and should not be used in any more trials, for any type of cancer.

– VB-111 was VBLT’s last drug, and it has nothing more in its pipeline. The company is worth its cash value or less.

In the after hours on May 13th, VBL Therapeutics (VBLT), put out a PR with the title: VBL Therapeutics To Present Positive Phase 1 /2 Data for VB-111 in Recurrent Platinum-Resistant Mullerian Cancer at ASCO Annual Meeting.

Because the word “positive” is in the title, investors thought the trial was successful and the stock rose from a close of $4.08 on May 13th, to over $7 on May 14. The stock has now settled in the $5-$6 range. But the truth is, the data is not positive, it’s very negative. VB-111 is a complete failure.  The data shows that not only is the drug ineffective in fighting tumors, but is also very toxic and dangerous and shouldn’t be used in any more trials. The stock should have fallen on the data, not risen. There should be some legal ramifications for the company to put such a misleading title. The following data points and trial comparisons with other drugs show why VB-111 is a failure and should be discarded.

CA 125 Is Not The Proper Response Criteria

Here is the VB-111 ASCO data for mullerian cancer (which is primarily ovarian cancer) that VLBT released on May 13th . VLBT used the biomarker CA 125 to state that VB-111 had a 57% response rate. This alone is a red flag. CA 125 is a protein that is commonly used as a biomarker to predict what kind of response certain drugs will give. It isn’t meant to be used as the final measure of a response. For example this report states the lack of reliability of CA 125: “Three patients would have terminated treatment prematurely had CA125 had been used.”

RECIST (Response Evaluation Criteria in Solid Tumors) is the golden standard to evaluate responses. RECIST shows ORR (objective response rates), while CA 125 just shows “response rates” that aren’t objective. RECIST measures the tumor level after the patient takes the drug. The RECIST partial and complete responses (both tumor shrinkages) are what really matters in evaluating the drug’s efficacy.

Using CA 125 criteria, VB-111 had a 57% response rate, and that’s probably what people think is positive and why the stock went up. However, using RECIST, VB-111 had a shocking 0% ORR.  8 patients out of 13 had a stable disease response from the RECIST criteria but in order to get an ORR, RECIST requires some improvements in shrinking the tumor. There were no partial or complete responses using the RECIST criteria. For an example of a better result from an ovarian cancer trial, here it states the results of Clovis (CLVS) treatment of ovarian cancer that showed a RECIST ORR of 65% and 40%.

But wait, the results for VB-111 get even worse. The patients in the study weren’t only on VB-111, but also on chemotherapy: paclitaxel. It’s a combination study. Usually some patients on chemo alone should get a RECIST partial response. Yet in combination with VB-111, none of the patients even got that. Patients also usually get a longer median progression free survival (PFS) on chemotherapy alone than with the VB-111+chemo combo. Here is a study from 2003 for mullerian tumors using a doxorubicin and paclitaxel combination. There were 4 patients with a complete response and 7 with a partial response out of 38 patients for an ORR of 29%.

Avastin Is Far Superior To VB-111

Here are the results of a phase III trial evaluating Avastin (bevacizumab) plus chemotherapy for platinum-resistant recurrent ovarian cancer. It shows the results using chemotherapy alone, and an Avastin plus chemotherapy combo. The following is a chart of the results:


The above column, CT, is chemotherapy alone, and BEV+CT is the Avastin + chemo combo. The fourth line down, the median, shows the progression free survival (PFS). For CT, it shows the median PFS is 3.4 months, and BEV+CT is 6.7 months. Now, looking back at VB-111 data, the median PFS is only 2.0 months. That’s less than the median PFS of the chemotherapy alone, which is 3.4 months.

Then, the next line down in the above chart is the ORR (objective response rate). The CT alone is 12.6%, BEV+CT is 30.9%. The VB-111 + chemo ORR is 0%. Again, further data shows patients would have been better off with chemo alone instead of in combination with VB-111.

Adverse Events

Now, let’s look at the adverse events. When measuring the severity of adverse events, there are five grades. Grades 1 and 2 aren’t so bad, but grades 3-5 are really bad. In the BEV + CT data above, it shows that 14% of the 179 patients had grade ≥ 3 adverse events and no deaths. VB-111 data had 11 grade ≥ 3 adverse events with only 14 patients – and one death! This shows that VB-111 is a very toxic and dangerous drug.

Mullerian Cancer Is Primarily Ovarian Cancer

Some people get confused with the difference between mullerian and ovarian cancer. A mullerian tumor is a malignant neoplasm found in the female genitalia. Ovarian cancer is the major type of mullerian cancer. VBLT mostly enrolled ovarian cancer patients, as shown on It says “Platinum Resistant Ovarian Cancer” for the VB-111 study, exactly the same as the Avastin study shown above. On VBLT’s website, it saysthe study was on ovarian cancer. It’s an appropriate comparison to the ovarian cancer studies shown above.

After VB-111, VBL Therapeutics Has Nothing Left In The Pipeline

With the failure of VB-201 in February, the only drug that VBLT had left, aside from some preclinical experiments, was VB-111. With such lack of efficacy in fighting mullerian tumors, and the dangerous toxicity of the drug, it should also be considered a failure and the trials shouldn’t be continued as VBLT planned for thyroid cancer or glioblastoma. Without VB-111, VBLT really has nothing left and needs to start over from scratch.The company reported $34.4 million in cash and equivalents on March 31, 2015. The market cap should be around cash level or slightly less since the company needs to start from ground zero. However, the company will likely be doing more fruitless VB-111 trials and burning lots of cash, which will decimate the share price with stock dilution and future trial failures.

It’s a crazy market we’re in. Hot money has pushed InterCloud Services (ICLD), an IT and network solutions provider, from a close of $1.52 on April 30th, to over $4.00 today, for no fundamental reason whatsoever! In time, the share price will return to below $2 per share, because the company hasn’t improved to any degree to merit a higher share price.

Two PRs the company released have fueled this 150%+ rally. It started on May 1st, when ICLD announced that its  backlog has reached an all-time high of over $36 million.  This is not an improvement in the company’s fundamentals. It had announced on December 17th, 2014 that its backlog was over $32 million.  Another $4 million in backlog is no big deal. Backlog is not the same as future revenues. Backlog is just potential revenue, and often doesn’t ever convert to revenues.  Capstone Turbine (CPST) is a good example of a company that boasts large, increasing backlogs that has trouble converting into timely business deals.

To fuel the hype even more, the very next business day, on May 4th, ICLD announced the launching of its NFVGrid, a Network Functions Virtualization Orchestration Platform. It was well known in advance that this product would be launched. It was discussed at length in ICLD’s latest earnings call on March 20th. ICLD has already been selling its NFV to its customers. NFVGrid is an upgrade to its NFV, but isn’t a big development change.

Catalysts That Will Knock ICLD Shares Back To Earth

Time. In time, as the hot money cools off and  leaves ICLD, it will naturally revert to its correct price of below $2 per share. Nature will take its course as trading volume returns to a few hundred thousand shares per day. This shouldn’t take longer than a week or two.

Equity raise. On April 8th, ICLD filed a $100M mixed securities shelf. Now is the time for ICLD to use this shelf and issue equity with the stock’s current high volume and monster share price rally. Don’t expect the company to wait very long and let this opportunity pass.

Earnings report. ICLD will report its Q115 earnings soon. Expect it to be lousy. For the past two quarters, the more revenues ICLD receives, the lower its gross profit becomes. ICLD has huge losses every quarter. Expect this quarter to be no different, as its CEO declined to issue any form of guidance in its Q414 earnings call on March 20th.

Why ICLD Likely Won’t Be Another VLTC

We have read often in social media people saying they are buying ICLD because they think it’s the next VLTC. VLTC rose from under $2 to $21 last month. There are a few reasons why ICLD likely won’t repeat VLTC’s performance. First, VLTC was a wild card, a misunderstood company that legendary investor Carl Icahn increased his stake in. Crazy things can happen in a stock like that. Whereas ICLD is a well known IT network company that has been pumped and dumped many times before, and doesn’t have the backing of a great investor. Second, VLTC started its rally with a market cap of only about $15M, whereas ICLD had a market cap of $50M, which is harder to make rally.  Third, VLTC is a once in a year anomaly. Nobody expected it to happen, and if you expect it to happen with a stock, like people are with ICLD, then it won’t happen.

It was discovered by Reuters on March 27th that Builders FirstSource (BLDR)  was in talks to acquire ProBuild for approximately $1.5B.

– On that news, the stock only moved about 10% from the low $6s to the high $6s.

– It’s possible that major holders didn’t value the merger very highly, otherwise, they’d have bid the stock up higher before the merger happened.

– On April 13th, BLDR announced the buyout of ProBuild, for $1.63B, and the stock has almost doubled in two days.

– Could it be that the runup is overdone on expected news, or did the market think the buyout wasn’t going to happen?

Builders FirstSource (BLDR), manufactures and supplies construction products for residential home building.  On April 13th, it announced that it’s acquiring ProBuild, a building products distributor.  It’s clear there will be some big synergies from the merger, but there will also be lots of negatives that come from any acquisition.

What’s interesting is that the stock didn’t move up on the merger news until it was headline news. Major holders and those “in the know” likely knew this merger was coming. On March 27th, there was an article in Reuters saying the companies were in merger talks. Granted, it was a rumor, but BLDR had already made numerous acquisitions in 2014 so there was reason to believe the rumor was true. Yet the stock never rose over $7 per share as shown below:

This might be concerning for today’s shareholders as the stock has almost doubled since the merger announcement. The vast majority of the buyers today are uninformed investors who are just buying for the “story” and headline news. These types of investors have weak hands. Whether BLDR is overvalued or not will become apparent during and after the company’s upcoming $100M equity financing, which may be priced at far below today’s price.

– Ballard Power (BLDP) sold its fuel cell manufacturing patented technology to Volkswagen for $50 million.

– Selling assets is nothing new for Ballard as it continually depletes its cash, but it sold a core asset – its automotive fuel cell technology patents.

– Ballard has never made any money for the past 20 years.

– In a couple years, for the first time Ballard will be completely shut out of the automotive industry. All Ballard will have as customers are buses, stationary power, and forklifts, which don’t provide enough revenues for Ballard to be profitable.

– Signs indicate that BLDP will report missed earnings and/or guide down in its earnings report on 2/25/15.

Ballard Power Has Been Selling Its Assets And Technology For Years

Ballard keeps selling its assets and technology patents because it needs cash to continue and it has never been able to make a profit from its normal business.

In 2007, Ballard Power sold its automotive fuel cell business to Daimler AG and Ford. Today, it gets no business from those automotive companies or any automotive companies except for Volkswagen. Once Volkswagen’s contract expires, it will also likely part ways with Ballard, which is why it purchased the fuel cell patents.

In 2010, Ballard sold its head office building for $19.4M, and is now leasing that same property.

In 2013, Ballard sold its US Materials Products division, a non-core asset unrelated to fuel cells.

Ballard even sold its tax loss carry forward in 2011.

Why Ballard Power Will Likely Report A Lousy Quarter on February 25th

On 2/17, Ballard reported that it expects to supply 10 fuel cell modules to buses for two projects that were already awarded funding by the US Federal Transit Administration (FTA). These projects were already awarded funding and investors already expected Ballard to supply the fuel cells. There’s no reason for Ballard to announce details of this deal a week before earnings because it’s an old contract.

It’s likely the reasons why this PR was released is to soften the blow from a disappointing upcoming earnings report on 2/25/15. First, the PR says that the orders and revenues are expected in the second half of 2015. Therefore, if Ballard misses on earnings, it’s telling investors that they have revenues to look forward to later in the year.

Second, the PR was released to make investors excited and keep the share price up after the stock rallied on the Volkswagen deal news. Otherwise, why not just let investors know the details during the conference call? Ballard has confused some investors into thinking that it’s a newly awarded contract.

Today, Aeropostale (ARO) announced higher than expected earnings. But it’s not what it looks like. The following developments indicate that ARO is on its way to bankruptcy.

1. In a PR today, ARO said the forecasted earnings don’t include asset impairments. This likely includes inventory right downs. That will show up in the GAAP earnings statment.

2. Bigger decline in same store sales than expected. Aeropostale said the holiday quarter same-store sales fell 9% after a 15% decrease a year earlier. Analysts surveyed by Retail Metrics were looking for an 8.8% decline.

3. They have hired a CFO replacement, David Dick, who was the former CFO of bankrupt Delia’s, another teenage clothing retailer like ARO. This is a sign the company is getting ready for bankruptcy.

4. Once a certain style goes out of fashion, it doesn’t go back. Aeropostale will likely be the next in a line of bankrupt fashion clothing retailers.

  • Before today (1/30/15), Global Resources (GURE), a likely Chinese fraud, was trading at around half of net cash since September, 2014. Glaucus Research has reported that GURE is a fraud, and worth 0.
  • Today, GURE flew as much as 140% as it announced that it found natural gas underneath its oil well, but not how much.
  • Investors misunderstood it to read that it found 440.4 billion cubic meters, but actually that applies to a different company nearby.
  • We don’t know if there is any natural gas in GURE’s well from what’s said in the PR.
  • It even says in the PR: “Gulf does not know,” Mr. Liu added, “if this project will be commercially viable.”

– With the differences between GURE and GENE (yesterday’s high flier), expect a large fade today for GURE.

Global Resources (GURE) is a junky Chinese microcap stock that sells specialty chemicals. It might even be worth 0 according to a Glaucus Research report. It since changed its symbol from GFRE to now GURE. Evidence is pretty strong that GURE is a Chinese fraud. Looking at the historical share prices of GURE, it has been trading below $1.50 per share since September, 2014. This is a company that has net cash of $2.20 per share, and claims to make a profit every quarter. That’s a strong indication that the company is fraudulent. Legitimate companies would get bought up, at the very least by Chinese businessmen who know the company.

GURE announced a PR today, which was for the sole purpose of pumping the stock and without substance, yet in this crazy market, the stock flew to as high as a 140% gain.  The PR says there were signs of natural gas beneath its oil well. We don’t even know if there is any significant amounts of natural gas there, but GURE said that a nearby company found a large amount of natural gas. Furthermore, natural gas prices are at lows, and it’s unlikely it will be commercially viable for GURE to start a natural gas well, even if it is there. But the story is not about natural gas, or even the facts in the PR. The stock’s uptrend today is simply momentum of a microcap stock, like what happened to Genetic Technologies (GENE) yesterday, which was up over 200% at one point.

However, GURE is different from GENE, so White Diamond Research doesn’t expect this rally to last today.

The following are the differences:

– GENE’s market cap was below $8M yesterday,  GURE’s market cap is above $50M, so GENE is easier to move higher with a smaller market cap.
– Natural gas isn’t a hot sector right now, and has declined huge from its highs, like oil. Whereas with GENE, which sells breast cancer testing machines, cancer is a hot sector right now.
– In GURE’s PR, the CEO himself says he doesn’t know if the project will be commercially viable, whereas GENE plans on opening more centers.
– GURE is a Chinese company so has fraud risk, whereaas GENE is based in Australia.
– Long term investors are skeptical of GURE, because since it’s like a fraud from the historical share price and Glaucus Research’s report, the stock will likely sell off again at some point once the news goes stale.

– MD Anderson (MDA) has a lockup period of four months before it can sell its $115M of ZIOP and XON stock it received for selling them the license to its CAR-T cancer therapy, Sleeping Beauty.
– MDA’s Ex-VP of Research, Leonard Zwelling, wrote about a conflict of interest arising from the deal, in which it’s against MDA’s interest to report any negative findings of Sleeping Beauty and risk ZIOP and XON falling as a result.
– MDA’s engaging in this questionable deal likely means Sleeping Beauty will turn out to be an ineffective therapy.
– XON and ZIOP will likely do an equity raise ASAP while the hype is still fresh.

“False. It (MD Anderson) didn’t pick them (ZIOP and XON) over the others, the others are already partnered. Classic $ZIOP and $XON pump.”

– Tweeted Skeptical PhD on 1/18/15

As explained in White Diamond Research’s previous article on Intrexon (XON), XON aggressively promoted its stock at the JPM Healthcare conference on 1/14/15. XON announced that along with its partner, cancer biotech Ziopharm (ZIOP), they purchased the license of MD Anderson’s CAR-T cancer therapy called Sleeping Beauty, for a total of $100M in stock. XON wanted to get involved with the CAR-T hype and pitch it to investors at the conference so much, that it and ZIOP paid an extra $15M worth of stock, on top of the $100M, in order to expedite the deal to get it done in time for the conference.

Since then, a new revelation has come to light. MDA’s ex-VP of Research, Leonard Zwelling, blogged about how there’s a conflict of interest with the MDA deal. MDA was paid $115M, all in stock, half in ZIOP and half in XON, and MDA can’t sell its shares until four months from now. Since the cancer therapy was purchased very cheap ($115M), it’s a longshot for the therapy to be successful. Therefore, MDA will likely not do any intensive, revealing studies in the four months before its lockup period ends, because if any negative discoveries come to light about the therapy, that will make XON and ZIOP stock go down, which MDA is now heavily invested in.

From MDA’s Wikipedia page:

Being part of The University of Texas System, MD Anderson Cancer Center is managed under a nonprofit structure; however, for-profit agreements have caused some to question the motives of the center.

MDA wanted that $115M, which is a small sum for a cancer therapy. The fact that MDA is willing to risk tarnishing its reputation over this deal shows that Sleeping Beauty is likely not an effective therapy. If MDA was sitting on something of great value, it likely would have passed on this questionable deal with XON and ZIOP, and waited to do the deal with a bigger pharma company.

Now is the time for XON and ZIOP to strike with an equity raise. XON investors are now very exuberant after the JPM Healthcare Conference, and the lockup period for MDA is a long ways away. XON won’t be able to promote its stock as well as it did at the conference from now until MDA’s lockup period expiry. At this point, the longer XON and ZIOP wait to do an equity raise, the lower the price they’ll have to sell their stock. For these reasons, it’s in both companies best interest to do an equity raise ASAP.

– Intrexon (XON) licensed a cancer therapy from MD Andersen which cost them $50M in stock.

– Intrexon paid an extra $7.5M to get the deal done quickly so they could present it at the JPM Healthcare Conference and hype up the stock.

– Intrexon might have joined the cancer immunotherapy party too late.

– That’s too bad, because the company is almost out of cash and likely about to have a huge equity raise.

Connecting The Dots…Short Intrexon

“Cancer immunotherapy has been a rising market. We have more cards to turn over in the coming days and weeks.”

– Randal Kirk, Intrexon’s CEO at the JPM Healthcare Conference

With the selloff of cancer immunotherapy stocks today, what if Mr. Kirk is wrong and the MD Anderson deal was a mistake?

Intrexon (XON) is a biotechnology company that operates in the synthetic biology field. It designs, builds, and regulates gene programs. It’s one of those companies with supposedly a “breakthrough technology” that never quite gets there. It has collaborations with many different small cap biotechnology firms, which ends up being very costly for XON.

The Hail Mary Pass – Licensing A Cancer Therapy From MD Anderson That Nobody Has Shown Interest In

XON caused a huge short squeeze on 1/14/15 and gained 30%. This happened because it announced a collaboration agreement with MD Anderson to license its CAR-T Cell cancer therapy called Sleeping Beauty. Here is an intelligent, bearish analysis on the deal by EP Vantage biotech journalist Jacob Plieth. Jacob Plieth previously wrote an article on December 9th, comparing the different CAR-T therapies shown at ASH.

Sleeping Beauty showed the least amount of efficacy.

CAR -T is a hot market right now, and that might be the only reason why XON did the deal. It appears that this particular CAR-T therapy isn’t very good from Plieth’s analysis and what we’ve heard from other biotech analysts.

All XON had to pay was $50M worth of its stock, and its market cap shot up $900M. According to biotech expert Adam Feuerstein, the therapy is similar to that of Bellicum Pharma (BLCM). XON rose more on 1/14 than the entire market cap of BLCM. The collaboration was also with Intrexon’s partner, Ziopharm (ZIOP) which also paid $50M worth of stock in the deal. Ziopharm rose about 50% on 1/14/15. So both companies gained a combined $1.2 billion in market cap from just spending $100M on the license agreement for the drug. MD Anderson has a 120 day lockup period before it can sell the shares.

Ziopharm is a cancer biotech that has repeatedly disappointed investors and hasn’t had any success with its drug candidates yet.

MD Anderson has collaborations with many different big pharma companies. It knows what its research is worth. If it had a promising cancer therapy, it wouldn’t have sold it for only $100M in stock with a lockup period. As the above analysis mentions, MD Anderson’s Sleeping Beauty CAR-T studies have been presented for the past two years at ASH conferences. MD Anderson had plenty of time to offer to license it to its other collaborative partners. MD Anderson has cancer immunotherapy collaborations with Amgen, Pfizer, Bristol-Myers Squibb and GlaxoSmithKline. If they were interested, one of them would have licensed Sleeping Beauty before XON and ZIOP did.

The Pump

In order for XON and ZIOP to announce the deal at the JPM conference on 1/14 to pump up the stock, they paid MD Anderson an extra $15M in stock to rush through the process and get the deal done by then. This filing describes it. That is over 10% the price of the therapy, just in order to pump it at the JPM conference. That alone shows the amount of hype that went into this run-up, and the little value of the cancer therapy. MD Anderson has a 120 day lockup period on these shares as well.

At their JPM presentation, Randal Kirk, XON’s CEO, made many pumpish comments. This is a $3B+ company, too big to stay pumped off of promotional comments.

Some of his comments and my analysis of them:

“Cancer immunotherapy has been a rising market. We have more cards to turn over in the coming days and weeks.”

A CEO shouldn’t be saying this. Investors should figure it out on their own.

Sleeping Beauty “impressive” and highly complementary to Intrexon’s tech, creating a leading platform and capability in the industry.

If Sleeping Beauty were “impressive” then MD Anderson wouldn’t have sold it for only $100M.

“The MD Anderson deal is a wonderful alignment of the stars.”

You don’t pay $100M and have a guaranteed blockbuster cancer therapy. It doesn’t work like that, but the way Mr. Kirk talks it seems like he thinks it’s a sure bet.

High Cash Burn, Increasing Short Interest

Intrexon’s (XON) back has been against the wall. On December 15, 1.4 million more XON shares were reported to have been shorted over the previous month for an 11.26% increase in short shares. Why has the amount of short shares increased so much in one month? There could be a negative catalyst up ahead, I’m not sure.

What we do know is Intrexon has been performing badly the past couple quarters. For each of the last two quarters it had about $52M in losses. It also burned through about $40M in cash each quarter. With only $122M of cash and short term investments reported on September 30, 2014, Intrexon only has one or two more quarters to go before it needs to raise money again, and might do it sooner than you think.