Category Archives: Healthcare

FibroBiologics goes public in direct listing

FibroBiologics, a biotechnology company based in The Medical Center, has now completed its direct listing of its stock. It’s the second Houston-area company to go public in the past week,  after Autonomix Medical.

The company chose to go public via a direct listing, rather than an Initial Public Offering. In a traditional IPO, a company goes through a lot of due diligence from the investment bank underwriting the IPO.  The bank agrees to support the IPO price with its own capital, if needed. The price of that trust is a time-consuming process and large fees for the underwriters.



In a direct listing, the company does not issue any new shares and doesn’t use an underwriter. It’s cheaper and quicker but the stock can be more volatile because investors have to do their own due diligence. It’s highly unusual for a biotech company to opt to go public via this route.

FibroBiologics was formed in 2021 and is developing treatment therapies that use fibroblasts. Fibroblasts and stem cells are the only two cell types in the human body that can regenerate tissue and organs.

The company believes that fibroblasts are favorable to stem cells in cell therapy treatments as they do not provoke an immune response and can be non-invasively harvested from a variety of skin donors. However, no fibroblast therapy products have yet been approved.

The company is concentrating on treatments for degenerative disc disease, Multiple Sclerosis and wound healing.

Management

Founder and CEO Pete O’Heeron is a Houston-based biopharma inventor with over 300 patents to his name. He also owned a country music record label for 15 years before closing it in 2019 to concentrate on medicine.

Mark Andersen has been the CFO since June 2022. He moved to Houston from Indianapolis where he was the CFO of the Indiana Biosciences Research Institute.

Opening Trading

Ahead of its direct listing, the company set the reference price at $8. The shares actually opened at $30 in mid-afternoon, before closing at $29.10. The company received no cash from the direct listing. [Update 02-02-24 – After three days of trading, the shares are now $15].

As of September 2023, the company had $10.8 million cash on hand, which should see it through September 2024.

S-1 filing – FibroBiologics

 

 

Autonomix Medical completes $11 million IPO

Autonomix Medical, based in The Woodlands, has completed its $11.2 million Initial Public Offering. The shares will begin trading on NASDAQ under the ticker symbol ‘AMIX’.



The company is developing medical devices to treat diseases involving the nervous system. Its first product is a catheter-based microchip sensor that has the ability to detect and differentiate neural signals with far greater sensitivity than current technologies. It will be used to treat pancreatic cancer paid and pancreatitis pain. The company intends to use the technology on other diseases. Human trials have not yet started.

The company was founded in 2014 in Excelsior, Minnesota by Dr. Robert Schwartz and Landy Toth. They now serve as the Chief Medical Officer and Chief Technology Officer respectively.

The rest of the management team are alumni of Soliton, a company that was developing a device that used acoustic shockwaves initially intended to remove tattoos. The company, based in the Galleria, went public in 2019 and was acquired by AbbVie for $550 million in 2021. The device is to marketed to reduce cellulite.

  • Walter Smith (former CEO at Soliton) is the Executive Chairman
  • Lori Bisson (the former CFO) is the CEO
  • Trent Smith (the former Corporate Controller) is the CFO

The company doesn’t have any revenues yet and estimates that it will need to raise of a total of $50 million to bring the product to initial commercial launch.

You can see the complete list of Houston-area public companies here.

https://www.globenewswire.com/news-release/2024/01/26/2818287/0/en/Autonomix-Medical-Inc-Announces-Closing-of-11-2-Million-in-Gross-Proceeds-from-Initial-Public-Offering.html

 

 

Houston-based Aravive to delist and liquidate itself

Aravive, a Houston-based biotech company is to delist from Nasdaq and liquidate itself. Back in August, it announced that its lead drug candidate, Batiraxcept, had failed to meet its primary goal in a Phase 3 trial for patients with platinum-resistant ovarian cancer.



As a result, the company decided to terminate testing for the drug in renal cell carcinoma and pancreatic adenocarcinoma. At a meeting in early October, the shareholders passed a resolution authorizing the directors to liquidate the company if it was unable to raise cash. At that time, the company had about $8 million of cash on hand.

In conjunction with the planned delisting, expected February 8,  the employment of CEO Gail McIntrye and CFO Rudy Howard was terminated, effective January 17. Each will get a severance amounting to one year’s base salary ($510,000 and $395,000 respectively).

Aravive went public in 2018 after it merged with publicly-traded Versartis in a deal that valued Aravive at $39 million. As part of the merger, the company moved its head office from California to Houston.

SEC filing – 8-K – Aravive to delist

Twin sisters charged in $170 million healthcare fraud scheme

Shalondria Simpson, a Houston-based Pharmacist and her twin sister, physician Lashondria Simpson-Camp have been charged for their roles in a multi-million healthcare fraud, kickback and money laundering scheme. The 13-count indictment also charges Shayla Bryant, the business manager for Ms. Simpson.



The scheme allegedly ran between 2016 and 2022 and involved prescriptions for injured federal United States Postal Services (‘USPS’) workers. Simpson owned two pharmacies in Houston, Advance Pharmacy and TruCare Phamacy. She allegedly submitted test claims to determine reimbursements for a given drug. After learning the rates, Simpson reversed the test claims and submitted fraudulent claims instead.

Simpson sent pre-printed prescription pads to her sister, based in Allen, TX and to a medical clinic based in Saint Rose, Louisiana. Simpson and Bryant paid kickbacks to her sister and the owner of the Saint Rose clinic in exchange for referral of prescriptions. In fact, the indictment alleges Simpson paid her sister $1.65 million in kickbacks to allow Simpson-Camp to buy a medical clinic in Richardson, TX and refer more claims in furtherance of the scheme.

Between in or around January 2016, and May 2022, Advance and TruCare billed FECA approximately $170 million for prescription drugs. FECA paid Advance and TruCare approximately $53 million on those claims.

The court has notified the defendants that the following property is subject to forfeiture;

  • $53.8 million in criminal proceeds
  • 7 properties, 6 in the Houston-area, one in New Orleans
  • 6 vehicles
  • 9 accounts with financial institutions.

If convicted, Simpson, Simpson-Camp and Bryant each face a maximum penalty of five years in prison for conspiracy to defraud the United States and pay and receive health care kickbacks as well as 10 years in prison for conspiracy to commit healthcare fraud. Simpson and Bryant each face a maximum penalty of 10 years in prison for each count of paying health care kickbacks. Simpson faces a maximum penalty of 20 years in prison for conspiracy to launder money instruments and 10 years for each count of money laundering.

https://www.justice.gov/usao-sdtx/pr/physician-and-two-pharmacists-charged-170m-fraud-scheme

Coya Therapeutics completes $15 million IPO

Coya Therapeutics, a biotechnology company with its head office in the Galleria area, has completed its $15 million initial public offering (IPO). It will have a fully diluted market capitalization of $50 million.

The company is developing proprietary new therapies to enhance the function of regulatory T cells (‘Tregs’).  Tregs are a subpopulation of T cells (a type of white blood cell) that modulate the immune system. Tregs were first discovered in 1995. Coya is initially focused on therapies for neurodegenerative, autoimmune and metabolic diseases where Treg dysfunction has been identified as an important pathophysiological component of the disease.

The company’s leading prospect is for the treatment of amyotrophic lateral sclerosis, or ALS (sometimes called Lou Gehrig’s disease). Clinical trials are expected in the first half of 2024.

Coya was formed in November 2020 by Dr. Howard Berman. Prior to this, Dr. Berman worked at AbbVie Inc, Eli Lily and Novartis. He began his career at MD Anderson in the technology transfer division where he was responsible for assessing the market, patent and scientific merits of numerous oncology-based technologies.

The CFO/COO of the company is David Snyder, based in Austin. He joined in March 2022. COYA is the fourth biotechnology business he has brought to market as CFO.

The company has an exclusive license and sponsored research agreement with The Methodist Hospital.

The stock is listed on Nasdaq under the symbol COYA.

Coya is the 7th Houston-area company to complete an IPO in 2022. You can see the complete list of Houston-area public companies here.

Coya Therapeutics – S-1 filing

Sysco CFO resigns to take the same role at Cardinal Health

Aaron Alt, the CFO of Sysco, the food distributor, has resigned to become the CFO of Cardinal Health, based in Dublin, Ohio.

Mr. Alt had been the CFO at Sysco (market cap $40 billion) for just over two years. Prior to that, he was CFO at Dallas-based Sally Beauty Holdings and also worked for Target and Sara Lee Corporation. He holds an M.B.A. from J.L. Kellogg School of Management at Northwestern University.



At Cardinal (market cap $20 billion), Mr Alt will receive a base salary of $825,000. That’s a small increase on his base at Sysco ($791,000). He will also receive a cash sign-on bonus of $1 million and a lump sum payment of $250,000 for his intended relocation. Mr. Alt will also be eligible for annual long-term stock incentives with a target value of $3.5 million. That’s about a $1 million higher than his annual target at Sysco.

In August, the Cardinal CEO Mike Kaufmann resigned, to be replaced by CFO Jason Hollar. The following week, activist shareholder Elliott Management took a large stake in the business. Cardinal has sinced agreed to appoint an Elliott representative to the board and appoint four other new independent directors.

Cardinal has under-performed its competitors in the past few years and, according to the Wall Street Journal, Elliott will likely push for the sale of the medical supplies business.

Sysco appointed Neil Russell, Senior VP of Corporate Affairs and Chief Communications Officer, as its interim CFO. The company has commenced a search for Mr. Alt’s successor.

SEC filing – 8-K Cardinal Health CFO

Carriage Services CFO to depart by end of year

Ben Brink, the CFO of Carriage Services Inc, has announced he will be leaving at the end of the year to pursue other opportunities. The company has begun a search for a new CFO. Mr. Brink will assist the new CFO in a consulting capacity for the first six months of 2023.



Carriage Services is a leading provider of funeral and cemetery services and merchandise in the United States. Carriage operates 169 funeral homes in 26 states and 31 cemeteries in 11 states. The company has a market capitalization of $473 million.

Mr. Brink, who is 41, began his career at International Paper. He joined Carriage in 2009 as a Cash Manager and was promoted to CFO in 2015.

Chairman and CEO Mel Payne issued a very effusive press release praising Mr. Brink’s contributions to the company’s recent development. In the press release, the CEO stated that he offered Mr. Brink a severance payment of $1 million in cash or 30,000 shares (worth $965,000 at Friday’s close). Mr. Brink chose to take the shares.

SEC filing – 8-K Carriage CFO

Ex-wife indicted in $600,000 Medicaid fraud

Kay Le Farmer, who lives in Katy, has been indicted for defrauding Medicaid of more than $600,000.

Her ex-husband is a licensed professional counselor, who operated a practice in West Houston from 2009 to 2013. Ms. Farmer and the counselor were married from 2000 to 2014. They separated in 2013 and divorced the following year.



From 2012 until 2013, Ms. Farmer was the office manager for the practice and had access to patient information as well as the practice’s billing records. In June 2013, it is alleged she began billing Medicaid for services not provided by her now ex-husband. She channeled the funds received to a newly-opened bank account that she controlled.

The fraud continued even after Ms. Farmer began employment as an office manager with a Pediatrician in Katy. Between November 2017 and March 2018, she submitted claims for 25 patients associated with the Pediatrician for psychotherapy services purportedly provided by her ex-husband.

In total, from June 2013 until June 2018 Ms. Farmer billed Medicaid $617,000. She was paid about $475,000, which she then transferred to her personal accounts.

In 2018, when one of the insurance companies requested records from Ms. Farmer regarding services billed, she requested a records extension and falsely claimed her ex-husband had suffered a massive stroke and was in hospital.

If convicted, Farmer faces up to 10 years in federal prison and a possible $250,000 maximum fine for each count of health care fraud. She was indicted on 22 counts (each count represents a specific fraudulent claim made in 2017 or 2018).

https://www.justice.gov/usao-sdtx/pr/therapist-s-ex-wife-charged-defrauding-medicaid-and-stealing-patient-information

Houston biopharma company replaces its CFO

Aravive, a Houston biopharmaceutical company, has replaced its CFO. Vinay Shah, who has been CFO since 2010, has resigned and Rudy Howard appointed in his place.

The company is conducting clinical trials on a protein that inhibits the signals produced by the AXL protein. These signals help proliferate tumors and cause the body to suppress its immune system. The trials are being conducted on patients with ovarian, kidney or pancreatic cancers.

Aravive went public in October 2018 via a reverse takeover of Versartis, a biopharma company based in California. The transaction valued the company at $39 million. Currently, the company has a similar market cap with its share price being $1.21. A year ago, its share price was around around $5-$6.

Mr Shah will receive a severance payment of $286,443 (nine months, paid monthly) and will enter into a consulting contract for four months with a monthly payment of $44,557.

Mr. Howard will receive a base salary of $395,000. He also received stock options on 290,000 units that will vest over four years.

Mr. Howard was previously the CFO of vTv Therapeutics, a struggling biopharma company, based in North Carolina. He resigned in December 2021, receiving a one year severance payment of $325,000. At that time, the company let go 16 of its 25 employees.

SEC filing – Aravive CFO

Dental clinic operator indicted for not paying $1.7 million in taxes

Jonathan Louis Lepow, a dental clinic operator, has been indicted for failing to pay $1.7 million in employment taxes to the IRS.

Lepow operated the business side of his father’s dental practice, Kenneth A Lepow, DDS, Inc (‘Lepow DDS’) between 2005 and 2017. The practice is based in NW Houston.

According to the indictment, around 2012, Lepow stopped paying employment taxes to the IRS. The IRS assigned a Revenue Officer in 2014, who began contacting Lepow to bring the business into compliance. The outstanding tax obligation for 2012-2016 was $1.7 million.

Instead, Lepow allegedly deposited funds from Lepow DDS into the bank accounts of the Texas Center for Continuing Education. Beginning in 2016, he also allegedly deposited funds into the bank accounts for the benefit of Top Tree Agency Corp, a marijuana marketing business in Seattle.

If convicted, Lepow faces up to 10 years of imprisonment and a possible $250,000 maximum fine.

Lepow DDS filed for Chapter 7 bankruptcy in 2017.

https://www.justice.gov/usao-sdtx/pr/dental-clinic-operator-arrested-failing-pay-17-million-taxes