October 25, 2020

The Niche

Knoepfler lab stem cell blog

Clinic biz US Stem Cell reports SEC subpoena, adding to uncertainty on its future

The last few years for the publicly-traded stem cell clinic biz, US Stem Cell, Inc., which goes by the ticker $USRM, have seemed like a rollercoaster to me as an observer.US Stem Cell Clinic

I can see four main areas of news that to me make the future seem uncertain for this firm.

First, the US Stem was linked to the alleged blinding of some of its customers in 2016, faced two lawsuits (now settled) on that front, and now has to deal with a third lawsuit.

Second, probably in part because of the above, the company was visited by the FDA last year. Following the inspection, it received a warning letter (to its direct-to-consumer clinic business US Stem Cell Clinic) from the agency detailing a number of observations (FDA-speak for issues it sees after a visit as needing to be addressed). The uncertainty from this letter is still kind of hanging out there. US Stem Cell has some important philosophical differences with the FDA on certain points such as whether fat stem cells are a drug requiring pre-market approval.

Third, USRM was prominently mentioned in a letter a few days ago from powerful U.S. Senator Chuck Grassley addressed to the Dept. of HHS and to the FDA. The letter asked 7 probing questions in part related to the issues raised by the first two points I mentioned above in this post. The deadline that Grassley asked for a response is in less than a week so this adds more acute uncertainty.

Fourth, the company reported in its recent corporate filing that it recently received a subpoena from the SEC:

“On or about March 1, 2018, the U.S. Securities and Exchange Commission (“Commission”), Miami Regional Office (“Commission Staff”), served a subpoena upon U.S. Stem Cell, Inc., which seeks production of certain documents and communications including, among other things, minutes and other documents relating to the Company’s board and audit committee meetings, financial statements, and press releases. The Commission Staff is conducting a formal non-public, fact-finding inquiry of U.S. Stem Cell, Inc.  This investigation is neither an allegation of wrongdoing nor a finding that any violation of law has occurred.  The Company is cooperating with the Commission Staff and has provided, and will continue to provide, information and documents to the Commission Staff.
At this juncture, the Company is not able to predict the duration, scope, results, or consequences of the Commission Staff’s investigation.  There can be no assurance that this inquiry will be resolved in a manner that is not adverse to the Company.”

It’s hard to say without more information what the deal is with this SEC subpoena. Anyone know concretely what is going on with this?

Also, in the bigger picture what do these 4 recent events mean?

We’ll probably have a better sense in the next 3-6 months about the company’s future.

Disclosure: I have no financial stake in USRM or any of its competitors. 

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