Echo Therapeutics

Kurta Law is investigating recommendations of Echo Therapeutics (NASDAQ: ECTE), a risky investment that may not have been suitable for many investors. FINRA Rule 2111 defines suitable investments as investments that fit an investor’s profile, which contains information on the investor’s age, risk tolerance, and financial goals. Kurta Law regularly handles investor disputes alleging a broker recommended an unsuitable investment. If you have questions for our securities attorneys, call (877) 600-0098 or email info@kurtalawfirm.com.  

The Stock Offering 

Echo Therapeutics announced an offering of 4,025,000 shares of common stock on June 13, 2013. At the time of the prospectus filing, the last reported sale price of ECTE common stock was $5.35 per share.  

In 2016, Echo Therapeutics was de-listed from the stock exchange after it failed to meet the required $1 per share minimum.  

What is Echo Therapeutics?  

According to the prospectus, Echo Therapeutics is a medical device company. In 2013, the prospectus states that the company was developing a non-invasive, wireless continuous glucose monitoring system for use in hospital critical care units and for people with diabetes. Echo Therapeutics also claimed to have a skin prep system that allowed for enhanced skin permeation and needle-free drug delivery.  

Risks Associated with an Echo Therapeutics Investment  

There is a long list of risks for investors listed in the prospectus. The following is just a sample of some of the risks that investors should have known about before investing. If these risks were not disclosed to you, you may have a case for a securities attorney.  

History of Operating Losses and Doubts Concerning Profitability  

The first risk listed on the prospectus states, “We have a history of operating losses and expect our operating losses to continue for the foreseeable future. According to the prospectus, for the quarter ending on March 31, 2013, Echo Therapeutics endured a net loss of approximately $6,988,000. 

The prospectus further states, “If we are not able to commercialize our product candidates, we may never generate sufficient revenue to achieve profitability.”  

Capital Needs 

Since Echo Therapeutics was still in the development stage, it needed “substantial amounts of capital,” without which it may be unable to develop or commercialize its product candidates. 

Uncertainty Regarding Global Economic Conditions 

Any global economic downturn could make it difficult for potential customers to afford Echo Therapeutics’ products.  

Third-Party Relationship Uncertainty  

Echo Therapeutics needed third-party relationships to develop and commercialize certain product candidates. Furthermore, Echo Therapeutics relies on clinical sites to enroll patients in clinical trials and other third parties to manage the trial and perform related data collection analysis. Without enough test subjects, the company would be unable to complete necessary clinical trials.  

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  

Kurta Law offers free case evaluations and does not collect a fee unless our investment fraud attorney wins your case. If you have any questions regarding possible recovery for your shares of Echo Therapeutics, contact us today: (877) 600-0098 or info@kurtalawfirm.com.