Humanigen (NASDAQ: HGEN) is going where all companies eventually go - into euthanasia and to be cut up for bits. At least that's the way we think this is going to turn out. It's also the way that Humanigen itself thinks this is going to turn out, absent some Hail Mary pass from somewhere.
It's possible to take a different view, of course it is. Not that many people had Humanigen on their list of likely failures - the short position was under 3%. But then came the announcement and the HGEN stock price dropped 70%. So, it's possible to think that anything that falls that hard is going to bounce - even dead cats do if you drop them from high enough after all.
But the actual announcement from Humanigen: “The Company's negotiations with a privately held biopharmaceutical company relating to a proposed business combination, as disclosed in the Company's Quarterly Report on Form 10-Q filed on May 15, 2023, have ended without execution of a definitive agreement. In addition, the Company has been unsuccessful in its attempt to identify and complete another strategic or equity financing transaction in the first half of 2023 on terms sufficient to enable the Company to regain compliance with applicable Nasdaq listing requirements within the extended compliance period of August 21, 2023. The Company further has been unsuccessful in raising debt or equity financing in sufficient amounts and with acceptable terms to fund the Company's operations going forward.”
They couldn't sell themselves (or, perhaps, even just the listing as a shell), can't raise any debt, can't sell stock and don't have much money either.
Humanigen stock price from NASDAQ
The outcome of all of that is that they're not going to be able to keep the NASDAQ listing. Sure, they could have a reverse stock split and meet the $1 minimum bid price but they also need to get over the $35 million minimum market capitalisation. Not going to happen without a deal, investors or at least some debt financing.
So, off to the OTC it is then. But that's where it's even more difficult to raise finance. So, as they go on to say: “ In light of the above, and the Company's limited cash and cash equivalents, the Company anticipates that it will not be able to continue as a going concern and is exploring all restructuring options, which may include commencing a bankruptcy or other insolvency proceeding sometime in the third quarter of 2023. In that regard, the Company is evaluating term sheets relating to potential sales of assets in a bankruptcy proceeding. Given the Company's lack of liquidity, any such bankruptcy filing may result in a complete or substantial loss of value for holders of our common stock.”
Which we read as unless you're looking for a loss to lay against your tax bill there's no point in trying to trade in Humanigen stock.
Hey, sometimes it happens but this story, we would say, is over.