Regen Biopharma IPO: Buyer Beware
Around 6 months ago we published an article titled “Big Red Flags from Bio-Matrix and Regen Biopharma“. Any investor who would have sold their shares in Bio-Matrix (OTCMKTS:BMSN) the Monday after our article was published would have been fortunate. Those who did not sell their shares would have lost -61% of their investment as of today. Investors who held BMSN over the past 5 years would have lost -98% of their investment. This should come as no surprise given that the CEO, David Koos, has a track record of destroying shareholder value as discussed in our previous article. Just this past week, another vehicle has emerged that will undoubtedly destroy shareholder value over time. This week saw the IPO of the Bio-Matrix subsidiary, Regen Biopharma (OTCBB:RGBP). At the helm of this venture is none other than David Koos.
In May of 2012, Regen unveiled their ambitious plan for “value optimization” which concluded with the following statement:
Month 18-24: Exit. It is intended that technologies “incubated” by Regen will be spun off either as separate companies, or sold to Large Pharma companies seeking to enhance their therapeutic pipeline.
Those dates have come and gone. What progress did the company actually make since then? The following statement was made in a press release issued by Regen in November of 2012 regarding their lead drug candidate HemaXellerate:
Regen intends to file an IND Application in the fourth quarter of 2012 and conduct Phase I/II clinical trials during 2013 and 2014.
Regen missed the mark completely. The IND application was filed in Q1 2013 where it currently sits today. No clinical trials have begun because they would first require the IND application to be approved as a prerequisite to beginning Phase 1 trials. Below is the definition of an IND application:
Current Federal law requires that a drug be the subject of an approved marketing application before it is transported or distributed across state lines. Because a sponsor will probably want to ship the investigational drug to clinical investigators in many states, it must seek an exemption from that legal requirement. The IND is the means through which the sponsor technically obtains this exemption from the FDA.
In May 2014, Regen issued a press release stating that they submitted additional information to the FDA for their IND application. The FDA responded by requesting additional information on animal safety studies. No update on the IND application has been provided since then.
Even if the IND application is approved and Mr. Koos can then transport vials of HemaXellerate across state lines, with what funds will the company use to finance Phase 1 trials? The $49 thousand in cash that currently sits on the company’s books? Speculators who buy or hold shares in Regen (OTCBB:RGBP) can continue to drink the Koos Kool-Aid, but it is unlikely that they will ever reap the rewards they seek, and more likely than not will continue to endure share price erosion accompanied by more broken promises.