Histogenics (HSGX) Stock: Don’t Get Too Excited

Histogenics Corp (NASDAQ: HSGX) is flying early on in the market today. However, the company hasn’t issued any news that would be a clear cause for the run. Moreover, after digging through financial media and message boards, there’s no catalyst to pin down.

Nonetheless, there’s a lot to talk about, and it is strongly suggested that investors be careful here. Today, we’ll talk about:

  • Why we believe that HSGX stock is headed up and why you should be careful;
  • what we’re seeing from the stock; and
  • what we’ll be watching for ahead.

What’s Going On With HSGX Stock 

As mentioned above, Histogenics stock is making a run for the top in the market this morning, with no clear fundamental reason for the gains. We believe that the gains are the result of technical traders seeing a stock at support and looking for an opportunity.

However, in the long run, you should be very careful with HSGX stock. The company has been facing serious struggles ever since it announced that it would halt the development of its NeoCart product.

Since then, the stock has seen some dramatic declines. Perhaps more importantly, it has laid off the majority of its team. Shortly after the announcement of the halted development program, HSGX announced that it would be laying off more than 60% of its work force.

Last week, things went from bad to worse when the company announced that it would be laying off ALL BUT ONE emplyee. These layoffs include the company’s CEO, Adam Gridley and COO Stephen Kenndey.

Moving forward, Gridley and Kennedy will act as consultants, looking for strategic alternatives for the company. The severance and related expenses of this restructuring move are expected to add up to $2.2 million by the end of the first quarter.

So, what we have here is a struggling biotechnology company that is laying just about all of its employees off, incurring further expenses, and hoping for the best in terms of strategic alternatives. I would say that there are red flags all over this one, but the truth is that all it is is one BIG RED FLAG! I would strongly suggest staying away at this point.

What We’re Seeing From The Stock 

As technical traders take hold of Histogenics, the stock is making a strong run for the top. However, we do not expect that this run will last for any substantial period of time.

As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:05), HSGX is trading at $0.17 per share after a gain of $0.052 per share or 43.35% thus far today.

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What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will continue to keep a close eye on HSGX. In particular, we’re interested in seeing if the company makes a miracle happen and digs out of the hole that it’s in with just one employee on board. Nonetheless, we’ll keep a close eye on the news and bring it to you as it breaks!

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