CollabRx

Kurta Law is investigating potentially unsuitable recommendations of CollabRx stock. Brokers have an obligation to recommend investments that match the level of risk described in an investor’s profile under FINRA Rule 2111 and Regulation Best Interest.

If you have suffered losses due to broker fraud or misconduct, a securities attorney can help you recover financially via FINRA arbitration. Investors are usually required by their brokerage firms to pursue arbitration rather than suing in a civil court. Contact (877) 600-0098 or email info@kurtalawfirm.com to speak to a securities attorney at no cost today.

What is CollabRx?

According to the prospectus, CollabRx, Inc. (CLRX) develops an extensive knowledge base consisting of information aggregated from publicly available medical databases. It adds annotations and draws connections between biomarkers (indications of disease) and “therapeutic strategies, drugs and clinical trials,” and provides physicians with direct access to the studies and clinical trials it draws from.

The prospectus states that CollabRx’s knowledge base focuses on precision oncology, or the use of genomics to develop cancer treatments. This knowledge base forms the foundation of CollabRx’s products and services:

• Genetic Variant Application (GVA), a service analyzing laboratory genomic test results.
• Therapy Finders, a series of web-based applications designed to assist physicians in determining therapeutic strategies for cancer patients and to serve as an educational resource for patients.

As CollabRx states in its prospectus, its knowledge base has the potential to be applied to other fields of medicine. However, investing in the company came with substantial risks.

What are the Risks Associated with CollabRx?

In its prospectus, CollabRx describes its financial situation and potential for profitability, the steep competition in the healthcare industry, and other risks that investors should take into account.

History of Losses

CollabRx states that it had “net losses of $3.3 million and $3.9 million for the years ended March 31, 2014 and 2013, respectively,” and identified an immediate need to raise additional funds. Its quarterly revenue and operating results “continue to fluctuate significantly” and the company may not become profitable in the future.

Competition in Healthcare Market

The prospectus states that CollabRx operates in “highly competitive markets,” and it expects this competition to increase between both existing competitors and newcomers. This may place further strain on CollabRx’s financial condition, as competing in this environment means introducing and marketing new products and services.

At the time of the prospectus, the company had “not yet established broad market awareness of [its] products and services.”

Additionally, the company relies on its current and potential genomics-based family of products for its revenue, and difficulties in marketing these products could also have negative effects on its prospects.

Intellectual Property Disputes

Because CollabRx’s business relies heavily on intellectual property rights, it may need to defend those rights in the future. CollabRx may be the subject of claims that its products infringe on a third party’s intellectual property, or it may need to pursue claims against other companies. In particular, it may need to defend itself against competitors reverse-engineering its technology.

The outcome of any intellectual property litigation is uncertain, and unfavorable outcomes may substantially influence the company’s future.

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. 

Do You Have Concerns About Your Shares of CollabRx?

If you have concerns about your investment in CollabRx, consider reaching out to a Kurta Law securities attorney for a consultation.  Kurta Law attorneys have 5-star reviews on Google and have experience navigating FINRA arbitration. Call (877) 600-0098 or email info@kurtalawfirm.com.