Hidenburg just came out with follow up report:
Update: After 96 Hours, Predictive’s ‘Response’ Fails to Address a Single Point from Our Detailed Report
Published on July 15, 2019
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Predictive Technology Group (the “Company”) barely responded this morning to our 10,000 plus word report that we released last Thursday, which had prompted shares to reprice more than 40% lower.
Our report documented extensive executive red flags, signs of insider self-dealing relating to the Company’s acquisitions, and issues with the Company’s procurement and marketing of its stem cell products, among other issues. It included over 190 source links, firsthand evidence, photos, and video to support its conclusions.
Given that a full 96 hours had elapsed since our report was published, we were expecting a thorough, detailed response from the Company.
Instead, the Company’s release this morning failed to address a single element of our report, claiming that it “will not dignify the opinion piece with a point-by-point response.” It bizarrely claimed that we are anonymous authors (we are not) and then quoted sections of our standard legal disclaimer, as if that somehow undermines our strong, well-founded views.
The Company’s lack of response just furthers our suspicions. Any time a company fails to address the facts lodged against it on a point by point basis it suggests, to us, that the facts are not on its side.
We believe it is of utmost importance to note what management has not said with today’s non-response. This is just a partial list of our findings, but should be an obvious starting point on items that shareholders deserve to know:
1. We showed Predictive’s Chairman and then director (up until recently) had settled earlier SEC fraud charges.
The Company’s response: none.
2. We showed (here, here and here) that Predictive’s 3 key original holders, who represented almost 90% of the original shareholder base, had previously been charged with securities fraud by federal or state regulators, including allegations of pump and dumps, boiler room sales, and false press releases.
The Company’s response: none.
3. We showed that the Company receives its donated birthing tissue from new moms who are often completely unaware that their ‘donations’ go to for-profit causes.
The Company’s response: none.
4. We showed that Predictive’s distributors use dubious sales tactics and aggressive claims to sell its products to elderly patients suffering from chronic pain, and provided multiple examples.
The Company’s response: none.
5. We showed that 4 out of 7 of Predictive’s acquisitions were entities based out of their own address before they were acquired, and that the acquisitions displayed hallmark signs of insider self-dealing. (Source documents: 1,2,3,4)
The Company’s response: none.
6. In one example, we showed that Renovo Biotech was formed less than 2 months earlier at Predictive’s own address before being acquired for $14 over million, largely for “trade secrets”.
The Company’s response: none.
7. In another example, we showed that Predictive CEO Bradley Robinson was listed as a manager/managing member of LifeCode Genetics just prior to its acquisition by Predictive, yet we found no Predictive filing disclosing any stake held by Robinson in the entity. We questioned whether Robinson had an undisclosed stake in this acquisition.
The Company’s response: none.
8. We showed that 90% of the purchase price for Predictive’s InceptionDX acquisition went to unnamed individuals in the Caymans and asked whether these individuals were arms-length.
The Company’s response: none.
9. We showed other examples of irregularities relating to the Company’s acquisitions and specifically encouraged the Company to provide the investing public with details of the shareholders of its acquisitions, as such information could easily clarify whether any related party dealings took place in these transactions.
The Company’s response: none.
10. We showed that the Company had seemingly altered a lab report to include conclusions about the number of viable cells in the product that were never in the original report, then used the altered report to market its products.
The Company’s response: none.
11. We expressed doubts about whether the Company’s products had any live stem cells or could legally make claims to have any live stem cells.
The Company’s response: none.
12. We showed that Predictive’s CEO had previously been sued and apparently settled lawsuits involving allegations of securities fraud and non-compliant marketing of a medical product.
The Company’s response: none.
13. We showed that Predictive’s CEO had originally reverse-merged an FDA-rejected medical technology into the entity that ultimately became Predictive.
The Company’s response: none.
14. We showed that top organizations studying endometriosis research expressed serious doubts about the Company’s diagnostics test and the ability to diagnose endometriosis via diagnostics alone.
The Company’s response: none.
15. We showed that the Company has historically missed its own near-term commercialization timelines for its diagnostic tests and expressed concerns that they may again miss their own timelines.
The Company’s response: none.
We believe shareholders deserve full transparency from management and today’s response brings them further from that goal, instead of closer to it.
Contrary to the Company’s statements, we stand by our research 100%. We haven’t covered one single share of our short position. In fact, we increased our short position this morning after the Company’s response and will look to increase it further.
Disclosure: We are (still) short shares of Predictive. See our original report for our full disclaimer and for the complete set of findings that management failed to address today
