Scimitar Equity Blog

SVFC had received a warning letter, dated 3/13/12, from the FDA related to an inspection of SVFC conducted between 11/8 - 12/12/11.

 

 

Dr. Steven Victor, Chairman of IntelliCell Biosciences stated, “The FDA Warning Letter is an opportunity for the Company to discuss the observations of the Company’s facilities relating to current good manufacturing practices (cGMP’s) with the FDA.  The FDA also raised questions regarding the regulatory category that the cells produced by the Company’s technology fall into, which the Company also intends to discuss with the FDA. The Company is moving to a new, commercial facility in late April 2012, and believes that the new facility will address the cGMP issues.  The Company has also hired consultants and counsel who have extensive experience with applicable FDA regulations, as well as with the requirements of bringing the new facilities on line and in compliance with the FDA’s requirements.  The Company will be providing comprehensive response to FDA on April 3 that will thoroughly address all of the FDA’s observations.”

 

 

The Bottom Line: My Opinion: The question continues to be is this … the first .. “opportunity to discuss the observations … with the FDA. Referencing their … three (3) … extensions requests …  was money raised (February and March) under the cloud of these issues … should they have been disclosed?

 

Understand these are just … an objective journalist/analyst views of the events… and/or … we have all known to be wrong …! We … all … would apreciate a response.

 

• Referencing our 1^st posted article … http://www.scimitarequity.com/blog/2012/03/27/intellicell-biosciences-otc-qb-svfc-fda-warning-letter-over-stem-cell-process-about-time

 

• Intellicell Biosciences … could … appear to be an example of how even SEC Rule 10b-5 couldn’t put a damper on … “the best party … in the history of parties. “  It’s also yet another lesson for investors contemplating over-the-counter stocks or stem cell companies making claims to good to be true.

 

• In 1942, the SEC enacted rule 10b-5 to prevent insiders from misleading investors, including by means of omitting relevant information. Specifically, rule 10b-5 (b) it shall be unlawful for any person…of any facility of any national securities exchange to make any untrue … to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.  Translation – if you have something important to say that investors need to know, you better say it.

 

• So the question for Intellicell Biosciences is … what was known and when? It has come to light that the FDA investigated SVFC’s labs starting early November and informed management of several deficiencies, at least 16 (?) in fact, on 12/12, the last day of the inspection.

 

• Alarmingly for investors between Dec. 12 and Marc 27, the day Bloomberg reported an FDA warning letter had been sent, the company entered into … 3 … stock sale agreements. This would otherwise be okay if it weren’t for that … darn Rule 10b-5 (b).

 

In a review of IntelliCell public disclosures, investor presentation, press releases, and SEC filings, there is … NO …  mention of the FDA warning … that it does … NOT …  meet the standards required to provide their supposed cell therapy to patients. In fact, just the opposite occurred. During this time Dr. Victor, the CEO, publically stated on several occasions, March 15 being the most recent, that they are available for use in the US under an exemption known as Section 361 in the US Food and Drug act. Apparently the FDA didn’t agree … in their warning letter the FDA states IntelliCell product “does not meet all the criteria.” 

 

• Investors should ask management why this was omitted. Would they have invested in the Company knowing their manufacturing wasn’t up to snuff or that clinical trials would be required and the company was no in fact exempt?

 

• A quick Google search reveals that while they may skip over disclosure details, no detail is overlooked while throwing a launch party to woo investors. The b-list celebrities attending the event even conceded Intellicell was hosting “the best party in the history of parties.” http://www.youtube.com/watch?v=5QWRS-egalQ.  This might be true, but perhaps Intellicell should have instead been seeking the best regulatory advisors in the history of regulatory advisors. Instead, they … might or … are most likely now going to be seeking “the best securities legal protection party”?

 

Let’s just hope no patients have been hurt along the way.

 

 

Timeline <probable> of Events:

 

• 11/8 – 12/12/11    Inspection by FDA

 

• 1212/11               FDA issued 16 observations describing “objectionable conditions” relating to the compliance with  good   manufacturing and good tissue practices at close of inspection

 

• 12/13/11              Issued release of collaboration and investment from Numoda, a CRO

 

• 12/16/11              Quarterly report (no mention of FDA, regulatory risks, or a cGMP review)

 

• 1/3/12                     Request by SVFC for extension until Jan 30

 

• 1/5/12                     SVFC presentation at Biotech Showcase (no mention of FDA investigation)

 

• 1/13/12                  FDA grants extension

 

• 1/30/12                  2nd request by SVFC for extension

 

• 2/21/12                  Issues release touting “full recovery” for “star basketball player”

 

• 2/23/12                  Private placement

 

• 3/9/12                     3^rd request by SVC for extension

 

• 3/12/12                  Private placement

 

• 3/13/12                  Formal warning Letter from FDA

 

• 3/14/12                  Presented at ROTH Conference (no mention of FDA letter from prior day)

 

• 3/15/12                  Issued press release announcing Ray Dirks paid-for equity research

 

• 3/27/12                  Bloomberg reports on FDA warning letter

 

• 3/28/12                  SVFC issued release stating they will address FDA warning letter