Jul. 7 at 5:06 AM
$VXRT
Outrageous
1
We’ve seen an epic failure of leadership marked by:
A company with nearly a half-billion-dollar Federal award on the cusp of delisting.
Negative shareholder value
A former Board member admitted insider trading
Lack of transparency and communication
Two failed attempts at a RS
Multiple data points that support the theory of price suppression
Massive mistrust
So how is Finney still with us? It’s outrageous. I can’t imagine a more catastrophic failure of leadership.
The owners of the company have spoken. It’s been three weeks. Just like Yedid, what are they waiting for? Even if they don’t have a replacement, in the eyes of shareholders it would be addition by subtraction.
I’ve been here for five years, and have never seen a plan. Not one. The Board should resign based on this fact alone.
Board options:
1. Go private. Finney’s on six private Boards, and our new CFO has spent 56% of his career in the private sector, including the last three companies.
In my last post, I said, “Going private would require shareholder agreement, so that’s not going to happen.” However, if they tapped their shares and controlled votes, they could vote to go private. To them, this would be the best of all worlds, as they could get rid of retail. After all, we’re nothing but a nuisance to them. It doesn’t matter what they say, it’s all about what they do, and their actions have told us who they are.
Tender offer + merger – A single buyer or PE syndicate offers a cash premium; if 50 %+ 1 shares (or, in Delaware, 90 % for a short form merger) tender, the rest are forced out for the same cash.
2. Reverse/forward split freeze out – Board declares a 1 for 10,000 RS that cashes out anyone below 1 share, immediately followed by a 10,000 for 1 forward split for insiders. If <300 holders remain, Vaxart can deregister under §12(g) of the ’34 Act and “go dark” (no SEC reports)
3. Chapter 11 Reorg to wipe out retail:
Debtor in possession (DIP) loan from an insider friendly fund secured by IP.
Plan of reorganization converts DIP and unsecured claims into nearly all new equity.
Old common shares receive a token warrant or nothing.
4. Noro partnership gets us compliant; partner could receive discounted shares/warrants; headline looks positive but still dilutes float heavily.
5. Vaxart’s blank check preferred stock could be issued by board resolution.
Based on available filings, our Board has the authority to amend or repeal bylaws without shareholder approval. They can (within Delaware law) shrink notice periods, increase quorum, or add information rights hurdles, making future activist campaigns more expensive.
From Vaxart’s bylaws (Article VIII):
“Subject to the Certificate of Incorporation, these Bylaws may be altered, amended, or repealed, or new bylaws adopted, by the Board of Directors or by the stockholders.”
So the Board has the power to unilaterally amend its bylaws, unless a change conflicts with the charter or Delaware law.
If the board wanted to prepare for a merger, acquisition, or take-private maneuver, it could use its bylaw powers to:
• Shorten notice for special meetings
• Tighten rules on activist nominations
• Make it harder for retail shareholders to coordinate actions
*This is often a signal of strategic planning — especially when combined with new executives and rejected reverse splits.
What events indicate price suppression?
• High short interest + persistent FTDs
• Unusual dark pool volume
• Price action disconnect from news/fundamentals
• Lack of insider buying or meaningful PR
• Dilution or reverse splits coinciding with short pressure
Does that sound like us?
Price suppression factors:
Vaxart may rely on ATM offerings or private placements that benefit from a “cozy” relationship with market makers or institutional players.
Lower share price can discourage activist investors or prevent hostile takeovers, allowing management to retain control.
Weak SEC enforcement on FTDs and naked shorting may allow this activity to persist without legal consequences — creating moral hazard.
It’s unlikely that a public company would explicitly conspire with market makers to suppress its own share price.
*HOWEVER, passive cooperation or negligence is more plausible.
Here’s how that could happen:
Lending shares: Vaxart insiders, board members, or large holders might be lending their shares to short sellers or market makers. This provides inventory that enables shorting.
No corporate action: If Vaxart is aware of large FTDs or unusual shorting and fails to act (e.g. issue a press release, dividend, or share recall), it may be passively allowing it.
Reverse splits or ATM offerings dilute share value and can be interpreted as helping shorts cover at lower prices.
Vaxart shows repeated, above threshold fails to deliver and elevated borrow fees at the same time they tap an ongoing ATM program. That combination supplies liquidity to shorts and may explain why large fails persist without triggering immediate buy ins.
It’s unlikely that Vaxart is explicitly colluding — but it may be turning a blind eye, relying on short-term financing, or caught in a toxic relationship with firms that profit from suppressing biotech stocks. For example (as of last week):
The June 12 13 spike breached 600-900 K shares—well above the SEC’s “threshold” definition of 10K. Persistent clusters like this are what regulators look for when probing chronic naked shorting.
Days to cover: 19.7 unusually high for a biotech this size.
Off exchange SHORT volume (FINRA): regularly > 40 % of total volume the last two weeks.
Borrow fee: surged into 10–13 % APR range in late June before easing to ~6–7 % on July 4.
Looks like darkpool trading is worse on OTCQX:
Lit exchange volume: Often only 5–20% of all trading.
Dark/off-exchange/wholesale market volume: 80–95%.
Much of the OTCQX trading is internalized by market makers, or occurs through wholesale liquidity providers (Citadel, Virtu, G1 Execution, etc.), with very little posted to a public order book that’s FINRA-regulated.
Why is Lit exchange volume so low on OTCQX?
• OTCQX stocks don’t benefit from Regulation NMS protections like best-execution routing to lit venues.
• Lower visibility: Less analyst and retail attention.
• Wider spreads: Market makers profit more by internalizing rather than showing bids/asks publicly.
• Retail brokers often route OTC orders directly to market makers or internalize them.
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Maybe this was posted in May, I don’t know. I just discovered that Philip Lee resigned on May 12, even though it was announced the following day.
May 12 just happened to be the same day that our original RS proposal hit.
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From @timlimb: “I saw a video once (can't find the source anymore) where a hedge fund manager explains that it ''only'' costs <25 million to keep a company’s stock pinned down. I'm not saying this happens, but a competitor who makes billions a year could keep the stock from a small biotech company down to prevent them from raising more cash at good share prices. Or bring them to bankruptcy or get their valuation lower for a better BO deal.”
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I’ve been quiet since the failed RS, even though one of our shareholders has been blaming, shaming, and guilt-tripping shareholders who disagreed with him on the vote, even after he’s stated on multiple occasions that he respects all voters no matter how they voted. But since he recently went after @Solddapopinsky, that was the last straw.
His statements:
1. “So if the company proposes a 1:20 with a/s reduced in line with the split ratio, are you ready to cross over to the dark side and do what’s right rather than allow us to be delisted?
JJ: It takes considerable arrogance to say “to do what’s right,” thus implicitly accusing everyone who voted NO they were wrong.
2. “So many no voters spoke authoritatively saying that once the r/s was off the table, we would absolutely fly over
$1. Well… here we sit at
$0.43 and dropping every day. And we can’t blame lack of PRs this time.”
JJ: Again, blaming shareholders.
“And I haven’t heard a single person who loudly said the share price would fly step up to the plate and acknowledge how wrong they were. Not one single person.”
JJ: Nobody is wrong, because the RS is not off-the-table. I can’t believe I have to explain this.
3. “If we are given an opportunity to remain listed, but have to vote on a new all-in-one proposal of 1:20 with proportional reduction of a/s in order for Nasdaq to approve it, how are you voting?
JJ: Why does he care so much?
4. “What I’m most guilty of is asking people to talk to a professional before committing shareholder suicide.”
JJ: The arrogance of assuming voting down a RS is financial suicide.
5. “It’s the shareholders who killed off our last chance of avoiding delisting even when there was a reasonable deal on the table.”
JJ: Blaming shareholders again. And a "reasonable deal" in his book is when retail forfeits up to 95% of our shares.
6. “And to those of you forced out via margin calls, platform restrictions, etc… I’m truly sorry for you. Say a big thank you to your fellow retail investors who voted for a delisting.”
JJ: Yeah, yeah, we know, it’s all our fault. He’s made that clear. Now he’s shaming shareholders for voting the way they did.
7. “This message board is literally nothing but crying. At least mine is grounded in reality.”
JJ: A sweet-talking CEO convinced him to vote against the vast majority of retail, then he argued for the RS, then tried cozying up to longs once it was defeated, and now he keeps telling us we made a mistake. He can’t let it go. So who’s crying now? Look in the mirror.