Borislav Tonev

Regen BioPharma Inc (OTCBB:RGBP) Goes Up on FDA News

by Borislav Tonev December 16, 2015

Regen BioPharma Inc (OTCBB:RGBP, RGBP message board) announced yesterday that the US Food and Drug Administration has given the company the green light to initiate Phase I clinical trials on their HemaXellerate aplastic anemia treatment. As a result, investors went absolutely mad for the stock.

In a matter of six and a half hours, they managed to push the dollar volume up to $140 thousand and they also lifted the share price by about 17% which means that currently RGBP is sitting at a little over $0.19. Some people reckon that this is just the beginning. They are using the message boards and an excessive amount of capital letters and dollar signs to urge you to lock your shares up in order to stop those pesky market makers and those nasty short sellers.

Other people, however, aren't so sure if this is such a great idea. They have done some research on RGBP and they know that it's a majority owned subsidiary of Bio Matrix Scientific Group Inc (OTCMKTS:BMSN) – a highly controversial penny stock that's been scraping the bottom of the triple-zero range for quite a while now. They also know that David Koos, the person behind BMSN and RGBP, is also in charge of Entest BioMedical Inc. (OTCMKTS:ENTB) – another OTC ticker that hasn't really been a gold mine for investors.

Even if you disregard Mr. Koos' curriculum vitae, you mustn't forget that clinical trials often take quite a lot of time. They're also jolly expensive and the figures in the latest 10-Q don't really suggest that RGBP is in a position to cover all the costs. Here's a summary of the financials:

  • cash: $209 thousand
  • current assets: $228 thousand
  • current liabilities: $145 thousand
  • NO revenue
  • quarterly net loss: $1.6 million

The company seems to be losing money hand over fist and that means that its cash position isn't exactly rock solid. The management team had to resort to financing the operations with the help of convertible notes. The results of this are now in and they're quite disturbing.

During the first three months of 2015, RGBP issued $883 thousand worth of convertible notes and it later turned that amount into nearly 32 million shares of common stock which works out at a conversion rate of less than $0.03 per share. During the second calendar quarter, a further 3.2 millions shares saw the light of day at roughly the same rate in order to satisfy $90 thousand worth of debt.

More recently, the company has abandoned the convertible notes and has resorted instead to selling shares directly to investors. Once again, however, the pricing is peculiar at best. Between September 18 and November 20, when the market price hovered between $0.14 and $0.21, RGBP sold a grand total of 6.2 million shares for $255 thousand. This means an average rate of just over $0.04 per share.

That's a pretty considerable discount and one that raises quite a lot of question marks around RGBP's future performance. Make sure you tread carefully.

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