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Posted On: 08/25/2022 6:17:16 PM
Post# of 148878
There is another explanation. I have seen it happen, and I have written about it ad nauseam. So if you are sick of hearing about the ONTY debacle, skip ahead to the next post.
ONTY was a small biotech with one very promising drug. They had bad management which incurred a lot of debt, but the new management was well on the way to righting the ship. They were almost done with their Phase 3 clinical trial, after promising results in Phases 1 and 2.
3 days before the results were to be announced, a certain "journalist" (short) tweeted, which I will paraphrase because I don't remember the exact wording, "I have advance information that ONTY's Phase 3 failed, and failed badly."
Needless to say, the stock was cut in half as individuals bailed out.
3 days later, the actual clinical trial results came out, and they were stellar.
The stock price did NOT recover, because the individual investors had incurred large losses by selling at fire-sale prices, and did not re-buy because of the wash sale rule.
The company was unable to raise money because of the incredible dilution that the torpedoed stock price would force them to accept. Their other option was to accept an extreme low-ball offer to be bought out by....drumroll.... a Big Pharma.
Guess which they chose?
Shareholders, of course, got killed because the Big Pharma was able to buy the company so cheaply.
There are two European Big Pharmas which were absolutely implicated in shorting stocks of small biotechs, using hedge funds as their proxies. This was documented in a lawsuit that was settled before trial, with payments to shareholders, about 10-15 years ago.
So, when people say "that's just a conspiracy theory, these well-known tweeters would never be involved in something like this, and neither would the Big Pharma companies that profit from it...."
I call BS. I've SEEN it happen.
Oh yeah, the punch line?
Magically, the tweet claiming advance knowledge disappeared - though some of us had screen shots of it. A dozen of us reported him to the SEC anyway, with screen shots. The SEC declined to investigate. In fact, they did not even acknowledge receipt of the complaints of most of us, which they are required to do.
ONTY was a small biotech with one very promising drug. They had bad management which incurred a lot of debt, but the new management was well on the way to righting the ship. They were almost done with their Phase 3 clinical trial, after promising results in Phases 1 and 2.
3 days before the results were to be announced, a certain "journalist" (short) tweeted, which I will paraphrase because I don't remember the exact wording, "I have advance information that ONTY's Phase 3 failed, and failed badly."
Needless to say, the stock was cut in half as individuals bailed out.
3 days later, the actual clinical trial results came out, and they were stellar.
The stock price did NOT recover, because the individual investors had incurred large losses by selling at fire-sale prices, and did not re-buy because of the wash sale rule.
The company was unable to raise money because of the incredible dilution that the torpedoed stock price would force them to accept. Their other option was to accept an extreme low-ball offer to be bought out by....drumroll.... a Big Pharma.
Guess which they chose?
Shareholders, of course, got killed because the Big Pharma was able to buy the company so cheaply.
There are two European Big Pharmas which were absolutely implicated in shorting stocks of small biotechs, using hedge funds as their proxies. This was documented in a lawsuit that was settled before trial, with payments to shareholders, about 10-15 years ago.
So, when people say "that's just a conspiracy theory, these well-known tweeters would never be involved in something like this, and neither would the Big Pharma companies that profit from it...."
I call BS. I've SEEN it happen.
Oh yeah, the punch line?
Magically, the tweet claiming advance knowledge disappeared - though some of us had screen shots of it. A dozen of us reported him to the SEC anyway, with screen shots. The SEC declined to investigate. In fact, they did not even acknowledge receipt of the complaints of most of us, which they are required to do.
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