Aspen Bio Pharma

Kurta Law is investigating broker recommendations of Aspen Bio Pharma (APPY). Aspen Bio Pharma is part of a large group of 180+ stocks underwritten by Aegis that may have been overly risky for investors. Brokers have a duty to recommend stocks that are not too risky for their investors, and investors who lost money as a result of broker misconduct may be able to recover their losses via FINRA arbitration. Contact a securities attorney with your concerns: (877) 600-0098.  

Aspen Bio Pharma Stock Offering 

Aspen Bio Pharma conducted an offering of 6,100,000 in 2012. Every company that wishes to issue shares on a public stock exchange must register with the SEC using a document called a prospectus. The Aspen Bio Pharma prospectus includes information about the company’s management, finances, and possible risks for investors.  

Aspen Bio Pharma’s prospectus states that the company is developing medical devices for diagnostic and therapeutic applications. The prospectus identifies a yet-to-be-approved blood test called “APPYScore” that was meant to help physicians rule out appendicitis in children. The company was also working on creating drugs to enhance fertility in animals. Neither product had demonstrated any money-making potential at the time of the prospectus filing. 

Stock Prices and De-Listing 

At the time of the prospectus, the company’s common stock was trading for less than a $1.00, which is NASDAQ’s minimum price. When a company’s stock trades for less than $1.00, the stock is subject to de-listing from the stock exchange. If a stock is de-listed, it may be difficult or impossible for investors to sell their shares.  

Risks Associated with Aspen Bio Pharma Stock 

The risks associated with this stock are clearly outlined in the prospectus. The company was struggling at the time they issued stock, a fact that any brokerage firm that approved this stock for recommendation to their clients would have (or at least should have) known.  

Financial Issues  

The prospectus states: “Due to our continued losses and limited capital resources our independent registered public accounting firm has issued a report that describes an uncertainty related to our ability to continue as a going concern.” This statement is supported by the fact that Aspen Bio Pharma did not generate significant revenue in 2011.  

FDA Clearance 

At the time of filing the prospectus, the company had yet to obtain FDA clearance.   

Clinical Trials 

In order to determine if their products actually worked through clinical trials. Clinical trials are expensive to conduct, and Aspen Bio Pharma could not guarantee that it would be able to complete those in a reasonable timeframe, or what they would be able to complete them at all.  

Competition  

Biotechnology and pharmaceuticals are extremely competitive fields. Since Aspen Bio Pharma was still in the development phase, there was no way it could guarantee that it could bring a unique product to the market before its competitors created something similar.  

Furthermore, the company would have to patent its technology and defend its intellectual property rights, which can be costly.  

Limited Experience 

Aspen Bio Pharma disclosed that it had limited sales and marketing experience and limited sales capabilities. Even if it managed to create a marketable product, there is no guarantee that it would be able to market it effectively.  

Aegis Capital Corp. Underwriting  

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm. 

Kurta Law Can Help  

You should not suffer avoidable losses because of a brokerage firm’s unchecked greed. If you believe Aspen Bio Pharma stock was too high-risk for your portfolio, consider contacting Kurta Law today. Call (877) 600-0098 or email info@kurtalawfirm.com.