A biopharma in Georgia tied to an unusual FBI story is watching its stock tumble this morning following news that the company is launching an investigation into its own practices.
The company, called MiMedx $MDXG, has been involved in a nasty relationship with short sellers that recently took a turn for the worse. Now, the company’s internal investigation is delaying the release of its financial results, including its annual statement that would detail last year’s performance.
Investors aren’t happy. The stock has fallen more than 31% as of press time Tuesday morning.
This is the kind of activity that will likely make short sellers cheer. An interesting development considering the company’s recent history.
Just days ago, news broke that a California short seller named Marc Cohodes had received a visit from FBI agents at his home in Sonoma County. Cohodes has laid out his criticism of MiMedx all over the web, including hundreds of tweets that tear down MiMedx and the company’s CEO, Parker “Pete” Petit. What did these tweets look like? “I will bury the little fella in a shoe box,” one says from October.
The FBI showed up at Cohodes’ home with a printout of some ugly tweets made months earlier, including the one above. In short, the agents told the short seller he should stop sending threatening tweets about the CEO, or else.
That’s according to a story from Bloomberg, which notes that Petit, the lambasted CEO, happens to be a top Republican fundraiser in the state of Georgia. The request to dispatch FBI agents came from the Atlanta office. Cohodes’ lawyer called that into question in a January 12 complaint letter to the Justice Department.
“As part of your investigation, you should determine how Mr. Petit was able to influence the FBI to take action designed to stifle one of his company’s critics,” attorney David Shapiro wrote.
This is not the first time MiMedx has drawn the ire of others. The company, which makes tissue grafts used to treat burns and soft tissue wounds, has faced lawsuits brought by ex-employees who allege the company has fraudulently boosted its sales. It’s spent several years challenging the FDA, which says its grafts don’t meet regulatory standards.
Now, MiMedx is addressing those concerns head on. The company’s audit committee has hired legal and accounting advisers to conduct an internal investigation of the allegations relating to sales and distribution. Executives are also reviewing the accounting treatment of certain distributor contracts, among other items.
“The company believes, based on information available to date, that the outcome of such investigation should not have a material impact on revenue guidance for 2018,” reads a statement.
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