Precipio

Kurta Law is investigating potentially unsuitable recommendations of Precipio stock to investors. When companies conduct a stock offering, they must file a type of disclosure with the SEC called a prospectus. This document contains information about a company’s financial history, business strategy, and the risks potential investors should know about.

If you have concerns about your investment in Precipio, reach out to a securities attorney today by contacting our team at (877) 600-0098 or emailing info@kurtalawfirm.com for a no-cost case evaluation.

What is Precipio?

According to the prospectus, Precipio, Inc. (PRPO) is a company that provides products and services focused on cancer diagnostics. The company operates several facilities, including a diagnostic laboratory and a research and development facility for its patented technology ICE-COLD-PCR (ICP).

As described in the company’s prospectus, ICP “enables the detection of genetic mutations in liquid biopsies, such as blood samples.” This allows physicians to determine which therapies are likely to be more effective given the genetic makeup of a patient’s tumor. Precipio licenses this technology in an exclusive agreement with the Dana-Farber Cancer Institute.

What are the Risks Associated with Precipio?

Precipio describes many notable risks in its prospectus. Like other companies providing medical products and services, Precipio must also maintain compliance with many state and federal healthcare laws, as well as laws concerning the use and storage of patient information. Failure to do so can open the company up to fines and litigation.

Uncertain Path to Profitability

The prospectus states that Precipio has incurred losses every year since its founding and expects its losses to continue. As of June 30, 2017, the company had incurred an accumulated deficit of approximately $15.3 million and a net loss attributable to common shareholders of approximately $9.7 million.

These significant losses are attributed to Precipio’s development costs, and the company projects that it will need additional capital in the future to commercialize its products, once completed.

Ultimately, the company’s ability to achieve profitability will depend on the success of its products. This is fundamentally uncertain, especially at the development stage.

Acceptance by Third-Party Payors

Precipio notes that it may run into issues with third-party payors, e.g., Medicare and Medicaid programs, private health insurance providers, and other organizations. Since “physicians and patients may not order [its] products unless commercial third-party payors and government payors authorize such ordering and pay for all, or a substantial portion, of the list price,” Precipio may struggle to commercialize its products.

Potential FDA Regulation of LDTs

The prospectus states that “the FDA does not currently regulate most laboratory-developed tests, or LDTs.” However, it also describes recent FDA publications that propose potential regulation of LDTs and that increased FDA oversight of LDTs is possible in the future.

Receiving FDA approval for its tests is typically a time-consuming process and it could harm Precipio’s business. For example, the company may be required to conduct additional clinical trials to prove the safety and reliability of its products.

Share Price Fluctuations

Precipio states that its stock price “may be highly volatile and could be subject to wide fluctuations in response to various factors,” including:

• Failure to meet financial projections
• Disputes and litigation concerning intellectual property
• Release of competing products
• Announcements of acquisitions, partnerships, and other collaborations by Precipio or its competitors

Extreme fluctuations in stock price can make it difficult for investors to sell their shares at their desired price or at all. Precipio also notes that its stock does not have an active trading market, which limits investors’ liquidity further.

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.  

What Can I Do If I Suffered Losses?

If you lost money on your investment in Precipio, our experienced securities attorneys may be able to help you get a fair settlement. Kurta Law attorneys have 5-star reviews on Google and regularly handle cases of unsuitable investment recommendations. Call (877) 600-0098 or email info@kurtalawfirm.com.