Securities Investigation: CollabRX Inc.(NASDAQ: CLRX)

The White Law Group is investigating potential claims involving broker dealers who may have unsuitably recommended CollabRX Inc. to investors.

Background on CollabRX Inc.

CollabRX, Inc. (NASDAQ: CLRX) is a private company that uses information technology to provide personalized cancer treatment planning services to cancer patients.  In February 2015, CollabRX Inc. offered shares of its common stock for sale to investors. As of February 28, 2024, the average post offering return was –100%. The company’s common stock was traded on the Nasdaq Capital Market, or NASDAQ, under the symbol “CLRX.”

The company reportedly merged with Medytox Solutions, became subsidiary of Rennova Health in Nov 2015.

Risks of Investing in Biotech Investments

Regulatory Risk: The biotech industry is heavily regulated, and the success of a company often hinges on obtaining approval from regulatory bodies like the FDA. The approval process is rigorous, and a failure to gain approval can lead to substantial financial losses. This risk is crucial because it directly impacts a company’s ability to bring products to market.

Clinical Trial Risk: Clinical trials are essential for proving a biotech product’s safety and efficacy, but they are also unpredictable. Negative or inconclusive trial results can lead to significant setbacks, including the possibility of abandoning a product altogether. Given that much of a biotech company’s value can be tied to a single product, this risk is paramount.

Market Adoption Risk: Even after clearing regulatory hurdles and succeeding in clinical trials, a product’s success is not guaranteed. Market adoption risk involves the uncertainty of how well a new product will be received by healthcare providers, patients, and insurers. If a product fails to gain traction in the market, the company’s revenue and stock price can suffer, making this a critical factor to consider.

Unsuitable Investment Recommendations

Broker due diligence is a process undertaken by brokerage firms to ensure they are recommending and selling investment products appropriate for their clients. This process protects the interests of the brokerage firm and its clients by ensuring that the investments offered are suitable for the client’s investment objectives, risk tolerance, and financial situation.

If a broker or brokerage firm makes an unsuitable investment recommendation or fails to disclose the associated risks adequately, they may be found liable for investment losses in a FINRA arbitration claim. Fortunately, FINRA provides an arbitration forum for investors to resolve such disputes.

Class Action vs. Individual FINRA Arbitration Lawsuit

You may wonder whether a large class action lawsuit is a better litigation option than an individual FINRA arbitration case.  The answer depends on many factors, but typically if the loss sustained is large (say larger than $100,000), an individual arbitration claim is likely a better option.  Class actions as a recovery option are more appropriate for grouping large numbers of individuals who have small claims – too small to generally pursue individually.

Free Consultation with Securities Attorneys

If you have suffered investment losses in CollabRX Inc., you may have recovery options. The securities attorneys at The White Law Group offer free consultations and can be reached at 1-888-637-5510.

About The White Law Group 

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington. The firm represents investors across the country in claims against their brokerage firms.