Riley McCormack co-owns a small hedge fund here in NYC called Tracer Capital Management. He already owned 2,000,000 shares of ABIO when on 2/4/14 he reported purchasing another 1,000,000 shares on the open market at an average price of $1.70. So he now owns 3,000,000 shares. This was not a hedge fund purchase, as he did it through a personal trust. SEC filings also show he purchased 250,000 warrants with an exercise price of $2.15.
Back in 1996, Dr. Michael Bristow, the current CEO of ARCA, was one of the original founders of Myogen. Myogen is considered one of the great biotech success stories of the past 20 years. The company developed a drug called ambrisentan for the treatment of pulmonary arterial hypertension. In 2006, after two successful Phase III trials, but before ambrisentan was submitted to the FDA for approval, Myogen was bought by Gilead Sciences for $2.5 billion.
Myogen was originally funded by the venture capital firm Sequel Ventures. Sequel Ventures was founded by none other than Dan Mitchell, the man who was just appointed to ARCA’s Board of Directors. Mitchell sat on the board of Myogen until it was acquired by Gilead and was instrumental in helping set the company up for the eventual buyout.
After the Myogen sale, Mitchell continued on with Sequel while Dr. Bristow focused on his new venture, Arca Biopharma. My best guess tells me the plan is to repeat at ARCA what worked at Myogen, namely, get Gencaro to a late stage of development and then sell the entire company to one of the majors. The unique, adaptive design of the upcoming trial may allow for that to occur sooner than many anticipate.
Has anyone dug into the ugly reverse merger background of this stock? There’s dozens of investor lawsuits pending, a federal investigation of illegal sale’s practices, a former insider suing the company for fraud. How did this stock go up 400% and how is it not collapsing?