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Histogen Update


Looks like some good news…

I don’t see this as good news at all.

This is a REVERSE MERGER, also known as a “reverse takeover”, a relatively uncommon securities maneuver where a privately-held startup company acquires or is “merged” into a semi-defunct or inactive publicly-traded “shell” company, so they can float their stock on a public exchange and raise money that way. It’s usually seen as a “Hail Mary Pass” when a startup has come to a dead-end trying to raise money in more traditional ways. Kind of like a “last-ditch effort”. By doing a reverse merger, the more serious startup (in this case, Histogen) is able to avoid the ultra-expensive and lengthy process of a conventional IPO.

Here’s what Wikipedia has to say about reverse takeovers:

“Reverse takeovers always come with some history and some shareholders. Sometimes this history can be bad and manifest itself in the form of currently sloppy records, pending lawsuits and other unforeseen liabilities. Additionally, these shells may sometimes come with angry or deceitful shareholders who are anxious to “dump” their stock at the first chance they get.”

I have seen some very well-publicized reverse mergers in the technology/internet industry completely fail in a laughable way.

In fact, I haven’t seen one reverse merger result in success for the successor company, at least to my knowledge.

On the other hand, I know that all reverse mergers aren’t failures, otherwise no company would use this technique any more.

Usually, I think, the more disparate the sectors of the two companies involved in a reverse merger, the more unreal and desperate it is, and the less likely it will end up in success.

How is a “media” and “entertainment” firm which, if you research it, doesn’t even have an active website, and looks like some small-time film entrepreneur’s home-operated production outfit, with “offices in Los Angeles, California; New York City, New York; Geneva, Switzerland; and Perugia, Italy” (probably all the cities in which the partners and their friends own homes), going to operate a serious biotech company staffed by scientists?

Of course, I could be very wrong. This could be the one reverse-merger that is phenomenally successful. But I really doubt it.

Stratus Media Group’s business was luxury car shows, wine shows, and fight promotion, of all things…

Did a little research and found this:

Their background definitely sounds a little fishy, to put it mildly. And as you mentioned, it’s a really odd pairing. But, i think it’s a good thing that Gale is going to be the CEO - it sounds like she’ll be running the show. So, maybe that is something to be optimistic about.

Have to watch them closely and see if they start moving towards a phase III study.

Well, who knows?

Also from Wikipedia:

“On June 9, 2011, the United States Securities and Exchange Commission issued an investor bulletin cautioning investors about investing in reverse mergers, stating that they may be prone to fr*ud and other abuses.[1] [3]
Reverse mergers may have other drawbacks. Private-company CEOs may be naive and inexperienced in the world of publicly traded companies unless they have past experience as an officer or director of a public company. In addition, reverse merger transactions only introduce liquidity to a previously private stock if there is bona fide public interest in the company. A comprehensive investor relations and investor marketing program may be an indirect cost of a reverse merger.”

I agree with roger. It smells bad.

I give it at least a 50/50 chance that the next time Histogen makes the news it will not be for anything medical.

Roger I would not make any negative or positive statement in relation to this merger because we did not have the chance to have a look at the main terms of the LOI. As you said this could be something negative or just something that will permit Histogen to avoid the IPO costs.

If it’s the second case It does not matter what Stratus Media is doing because Histogen needs the vehicle in order to be listed.

[quote][postedby]Originally Posted by cal[/postedby]
I agree with roger. It smells bad.

I give it at least a 50/50 chance that the next time Histogen makes the news it will not be for anything medical.[/quote]

I am betting on Dr. Naughton, it sounds like she has a history of being able to make things happen, I like the fact that she had brought 4 cell based FDA products to the market already, that s a pretty good track record, I think.

“Prior to founding Histogen in 2007, Dr. Naughton oversaw the design and development of the world’s first up-scaled manufacturing facility for tissue engineered products, was pivotal in raising over $350M from the public market and corporate partnerships, and brought four human cell-based products from concept through FDA approval and market launch as President of Advanced Tissue Sciences.”

Guys, does anyone know e-mail address of forum member Arashi, I need him ASAP

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