Description

NOTE: This is currently a very hard to borrow stock but I expect the borrow to improve as it has in other similar situations. The stock may continue to squeeze higher but should soon crash hard.

Blue Water Vaccines (BWV) now has a market cap of $600 million, not bad for a money losing company that received a going concern in its last audit.  Since the company was running out of cash and presumably couldn’t raise any money from the flush vc community or an industry participant, in February BWV did an IPO at $9 (midpoint of the range).  The stock subsequently shot up to as high as $90 before settling in at its current price of $54.  The float is very limited with 2.2 million shares in the float and 11 million shares outstanding.  This limited float (and perhaps some “games”) has lead to the stock price appreciation. There has been no corporate developments that would account for the stock surge.

The IPO was sole managed by Boustead Securities, a firm with a questionable track record (see below) and a number of employees with Finra issues.    In addition to the 8% underwriting fee, Boustead received warrants to buy 111k shares at $10.35 which are currently exercisable so if Boustead is selling at these prices they are making a nice profit. 

BWV’s CEO, Joseph Hernandez was also the Chairman/CEO of Blue Water Acquisition , a spac that went public in Dec 2020 at $10.  In Sept 2021, the spac acquired a company and it now trades at $2 under ticker CRXT, Clarus Therapueutics. 

At BWV, pre-ipo investors cost basis is 81c a share and people who bought in the ipo have obviously also done well very well.

The CEO’s new employment contract pays him $600k base and bonus of up to 50% of that amount.  The new CFO’s contract pays him $435k base and bonus of up to 50% of that amount.

Pro forma for the IPO the company has $20 million of cash which the company claims will be enough to last them for a year.  However, they will need to raise additional capital prior to commencing pivotal trials for any of their vaccines.   Given the company’s overvaluation, I would expect the company to raise equity as soon as possible.

Pro forma the offering, the stock has 2 large holders:

1)      Cincinnati Cornerstone – AKA Joseph Hernandez               (CEO)                   30%

2)      CincyTech fund –                                                                                                 7%

CincyTech fund is a public-private seed state investor which invested $1mm in 2019.

Below is an analysis of some of Boustead’s other recent IPOs and their performance.  It appears to us their IPOs often skyrocket before come crashing down.

Lock-Up Agreements

We and our directors, officers and our existing stockholders as of the effective date of the Registration Statement which this prospectus forms a part of (and all holders of securities exercisable for or convertible into shares of our common stock) have entered into customary “lock-up” agreements in favor of Boustead pursuant to which such persons and entities have agreed, for a period of twelve (12) months in the case of the Company and six (6) months, in the case of directors, officers and stockholders, after the effective date of the registration statement related to this offering, that they shall neither offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any securities of the Company without Boustead’s prior written consent, except for issuance of securities under any equity plans, including the issuance of shares of common stock upon the exercise of currently outstanding options.

Business Description:

a biotechnology company focused on the research and development of transformational vaccines to prevent infectious diseases worldwide. Our versatile vaccine platform has unique molecular properties that enables delivery of various antigens, which can be utilized to develop singular or multi -targeted vaccines. Our lead influenza (flu) vaccine program uses proprietary technology to identify specific epitopes, or proteins, with cross -reactive properties that enables the potential development of a universal flu vaccine. We are focused on developing novel vaccines that induce durable and long -term immunity. We believe that our pipeline and vaccine platform are synergistic for developing next generation preventive vaccines to improve both health outcomes and quality of life globally.

Our pipeline includes novel vaccine candidates exclusively licensed from renowned research institutions. We seek to develop vaccines that provide long -lasting immunity to harmful viral and bacterial pathogens that cause infections in patient populations with high unmet needs. Our exclusive license agreements include patented influenza epitopes of limited variability, or ELV, identified through a proprietary computational research and discovery process, discovered by Dr. Sunetra Gupta and her team at the University of Oxford. Our collaborators are pioneers in vaccine discovery and development. We are exploring the development of these influenza ELV’s utilizing our Norovirus shell and protrusion (S&P) nanoparticle vaccine platform licensed from Cincinnati Children’s Hospital Medical Center, or CHMC. We are also utilizing our platform to develop a vaccine for the prevention of gastroenteritis cause by both norovirus and rotavirus. Our exclusively licensed S. pneumoniae vaccine candidate is from St. Jude Children’s Research Hospital. 

Catalyst

Adverse publicity

equity offering

sellers taking profit