Biostage Inc (NASDAQ:BSTG) has recently been delisted and is now trading on the OTC. BSTG was trading below the dollar mark and below the $2.5M equity threshold. BSTG’s woes are not unusual for biotechs, but BTSG does have a unique gripe – more on that below.

BSTG, on the delisting announcement, took a tumble. The stock is at $0.119 as of writing and is holding steady in that range.  BSTG would have liked to have stayed on the NASDAQ, but it can now offer some discounted value on the OTC. There is notable risk for every OTC biotech, of course, but if the company is bought out, we should see a significant premium on the current market capitalization of just $4 million, given that the technology on which its pipeline is based is a stem cell organ implant system that is being used right now to treat previously untreatable and life-threatening conditions of the esophagus, bronchus or trachea.

Biostage Inc (NASDAQ:BSTG) is a biotechnology company that is focused on developing bioengineered organ implants. They are focused around implementing their new Cellframe technology which uses a patient’s own stem cells in addition to their proprietary biocompatible scaffold allowing them to create Cellspan organ implants. These Cellspan implants are being developed to treat a variety of life threatening conditions of the esophagus, bronchus or trachea with the initial focus being treatment of the esophagus.

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BSTG sailed into rough waters this year on a deal with an entity called Pecos. The company entered into a financing arrangement with Pecos that would see the latter pick up shares of Biostage in return for an aggregate sum of little over $3 million. This would have expanded the company’s runway through till mid-2018 and would’ve allowed it to, with any luck, regain compliance pretty quickly.

As it turned out, Pecos kept adding demands to the deal and – as of this week – hasn’t delivered the cash to Biostage. Basically, then, the deal is off, but Biostage believes that the delisting is Pecos’ fault. This is an arrangement that goes back to August, so if Pecos hadn’t strung the company along, Biostage might have been able to secure an alternative resolution.

Here is a quote from the company’s last press release about the deal gone wrong:

“On October 5, 2017, the Company delivered a notice to Pecos and its manager, Leon “Chip” Greenblatt III, stating that Pecos is in breach of the Purchase Agreement as a result of its failure to deliver the Purchase Price to the Company following satisfaction of all closing conditions in the Purchase Agreement. None of the shares of common stock, shares of preferred stock or warrants that the Company would have issued under the Agreement were issued to Pecos, and the previously-reported appointment of Leon Greenblatt III of Pecos and Saverio La Francesca, MD, the Company’s President and Chief Medical Officer, to the Company’s Board of Directors did not become effective, as their appointment was conditioned upon consummation of the private placement pursuant to the Purchase Agreement.”

Biostage Inc (NASDAQ:BSTG) is now trading at a $4.56M market cap with 38.93M shares out. The company will see some volatility as it settles into the OTC but the company’s tech could make it a strong buyout candidate. We are going to continue to watch this one and will be coming back with updates soon. For continuing coverage on shares of BSTG stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $BSTG, either long or short, and we have not been compensated for this article.