HARTFORD: Connecticut Children's Medical Center has made an investment in a small Massachusetts based biotech company Biostage, Inc. [OTCQB: BSTG/BSTGD]. The Center’s investment was part of a $4.2 million private placement. The current company’s market value is approximately $2.5 million. The hospital has reportedly made a $100,000 investment in the placement.
CCMC has several locations in Connecticut and at the Shriners Hospital and Baystate Medical [hospital] in Springfield, Mass.
Biostage says it is developing “bioengineered organ implants to treat cancers and other life-threatening conditions of the esophagus, bronchus and trachea.” According to the company, the Children’s Medical Center was joined by a “group of investors from China.”
In October the company reduced its workforce by 71% [17 employees], in response to problems with another investment that didn’t materialize.
Jim McGorry, CEO of Biostage stated, "We are pleased to have closed this private placement. This timely capital infusion has returned the company to a position of solvency and will advance our pediatric and adult esophageal product candidates. Our new investors see the merit and value of our technology and performed extensive due diligence, including discussions with our key product co-development collaborators, prior to making this investment. The Company's operations going forward will be of a more efficient size and structure, which we expect will allow us to move at a fast pace while reducing our cash burn rate."
Bin Zhao, principal of DST Capital LLC, the lead investor, commented, "We are excited to invest in Biostage at this critical time. We invested for three fundamental reasons. First, based on our due diligence we have great confidence in the company's technology, the management team and key strategic collaborations; second, we see the medical value and economic benefits of bringing the Company's technology to suffering patients, especially children; and third, in addition to the US market we believe that making this technology available in Asian markets, especially China, will greatly expand the number of patients who can be helped."
Mr. McGorry added, "We are also very pleased that Connecticut Children's Medical Center has agreed to invest in Biostage. This is a tremendous endorsement of our co-development work on pediatric esophageal atresia with Dr. Christine Finck and her team at Connecticut Children's."
Christine Finck, M.D., Surgeon in Chief of Connecticut Children's Medical Center, commented, "Our hospital is committed to translating this novel technology to the clinic to address esophageal atresia in children, and our investment reflects that commitment. There is a tremendous unmet medical need for kids suffering with pediatric esophageal atresia in Connecticut and across the world. The research happening at Connecticut using this technology shows promise of one day dramatically improving their care and condition."