Ritter Pharmaceuticals

Kurta Law is investigating broker recommendations of Ritter Pharmaceuticals (RTTR). The company disclosed significant risks in its prospectus that brokerage firms should have disclosed to their customers before recommending Ritter Pharmaceuticals.

Brokers have an obligation to recommend stocks that are not too risky for their clients, and investors who suffer losses due to broker misconduct may be able to recover their funds through FINRA arbitration. Contact a securities attorney with your concerns: (877) 600-0098.

What is Ritter Pharmaceuticals?

According to the prospectus, Ritter Pharmaceuticals, Inc. (RTTR) developed therapeutics designed to treat gastrointestinal diseases by manipulating the microbiome of the human gut. Its primary product candidate, RP-G28, is designed to assist in the digestion of lactose by stimulating the reproduction of lactose-metabolizing bacteria.

On May 22, 2020, Ritter Pharmaceuticals closed its merger with Qualigen, Inc., becoming Qualigen Therapeutics, Inc. (QLGN).

What are the Risks Associated with Ritter Pharmaceuticals?

Ritter Pharmaceuticals discloses three major risks in its prospectus, but investors should be aware that this isn’t an exhaustive list. Other risks may have emerged since the release of the prospectus.

Use of Proceeds

Ritter Pharmaceuticals states that its management will have “broad discretion” in the use of the net proceeds of its stock offering and that investors may not agree with these spending decisions. For example, management may choose to use the proceeds for purposes not considered or disclosed in this prospectus, and that may not benefit the company’s market value.

Dilution of Share Value

The prospectus warns that investors will experience “immediate and substantial dilution” if the public offering price of the company’s stock is significantly higher than its net tangible book value per share.

The prospectus states the expected offering price as $2.35, with a dilution of $1.18 per share.

Potential Future Dilution

According to the prospectus, Ritter Pharmaceuticals had a stock purchase agreement with Aspire Capital Fund which allows the company to sell up to $10 million in shares to the fund. As of September 30, 2016, the company had 888,835 shares still available for sale under this agreement.

The sale of a large quantity of shares, either by Ritter Pharmaceuticals or by investors, could lead to a drop in stock price.

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 Ritter Pharmaceuticals, consider reaching out to a Kurta Law securities attorney for a consultation. Our securities attorneys regularly take on cases of unsuitable investment recommendations and can help you win a fair settlement through FINRA arbitration. Call (877) 600-0098 or email info@kurtalawfirm.com.