Last week, Capstone Therapeutics Corp. (PINK:CAPS) broke up a series of losses. After a period of negative price changes, on Friday 
the stock suddenly soared 12%, on the phenomenal trading volume of over 3 million shares. But what has caused the massive trade is yet not clear.
Historical data shows that Capstone has not released any news on its business since the beginning of this month, apart from its financial results. So, no one is familiar with the company’s current activities. Still, last week there was a piece of information reporting that insiders were trading CAPS and the stock was listed number one among the top ten open-market purchases.
Following CAPS fillings with the SEC, the information was correct. According to the forms filed by the company, over the past two weeks BVF PARTNERS have bought 252.600 shares of CAPS common stock in total. The documents state that the shares are directly beneficially owned by BVF Investments, pursuant to an operating agreement with the company. Though, it appeared that CAPS has other problems to solve.
On July 19, this year the company has received a letter from the NASDAQ notifying CAPS that its common shares will be delisted effective at the open of business on July 21, 2011. Upon delisting, trading may continue to be conducted in the over the counter market, including on the OTC Bulletin Board and the OTC Link System, to the extent that one or more registered broker-dealers elect to publish quotations. The delisting will not affect the company’s status as a public reporting company, including the requirement to file financial and other information with the SEC. However, at this point CAPS remains a pink-sheet company.[BANNER]
At the same time, the financial condition of CAPS looks quite contradictory. According to its 10-Q report, as of 31 March, this year the company has incurred a net loss of $3.2 million, as well as substantial expenses related to its business. Though, CAPS has received some net proceeds from the exercise of stock options during its development stage period and its cash and cash equivalents totaled $21.6 million.
The management anticipate that their funds will be sufficient to meet the projected capital requirements for the next year. However, to complete the clinical trials and supporting production efforts necessary to obtain FDA approval for their product candidates would require additional capital. In this case, CAPS may need to obtain it through the sales of debt or equity securities that might have adverse impact on its existing stockholders’ interests.
