StemCells Inc (NASDAQ:STEM) recently announced that its CEO and CFO, Ian Massey and Gregory Schiffman, respectively, have resigned from their posts. This was soon followed by the resignation of three directors from the company’s board as well. The news surfaced when STEM made a filing with the SEC, for a planned merger with Microbot Medical. The filing stated that the resignations were not a result of any disagreements, between the representatives and the company.
As part of their contracts, the CEO and CFO received one-time payments from the company, in excess of $216,600 and $187,000 respectively. Kenneth Stratton has been appointed the interim president of StemCells, in light of current events. It should be noted here that the series of resignations has left a total of three directors, on the board.
Although the news of the reverse-merger with Microbot helped the company’s stock surge in the market, it is important to note that a merger is also an abrupt deviation from STEM’s original plans to wind down the company. STEM had announced that it had limited financial resources available, but under the reverse merger agreement, Microbot and its investors would provide $4 million as incentives to StemCells. The company believes that this amount would be sufficient to fund operations for the next 1.5 years.
Previously, StemCells had been involved in the development of stem cell platform technology, for the treatment of CNS diseases. However, after closing a clinical trial in May, the company announced that it was running out of resources and would be shuttering down. It had also been highlighted that employees would start losing their jobs in August. Despite all the red flags, STEM shares jumped more than six folds, following the merger news. The two companies now plan on developing robotics based medical devices, targeted at cerebrospinal and gastrointestinal disorders.
StemCells Inc (NASDAQ:STEM) had a trade volume of just 68,224 during the August 22 trading session and closed 43.55% higher than the day before, at $1.78 per share.