Mar. 20, 2026
Comment Letter Subject: SR-NASDAQ-2026-004 SEC Officials, This letter is intended to provide two specific cases illustrating that a rule proposed by NASDAQ to delist small public companies with a market cap below $5 million has possibly already acted as "the blueprint for manipulation" (one of the major complaints raised by the Small Public Company Coalition), thus putting some very promising small public companies in grave danger. Case 1: Ensysce Biosciences (ENSC) As a late-stage biopharma committed to developing innovative solutions for severe pain relief while reducing the potential for opioid abuse and overdose, ENSC is scientifically advanced for its proprietary TAAP (Trypsin-Activated Abuse Resistance) technology platform and MPAR (Multi-Pill Abuse Resistance) technology platform, with two therapies that have been granted the Fast-Track and Breakthrough Designations by the FDA. Its therapy PF614, which yielded highly positive topline results in Phase 2 trial then financially supported by a government grant, is now in the pivotal Phase 3 trial with an interim review coming up very possibly next month (50% enrollment completed in January 2026) and the final topline results coming up well before the end of 2026. ENSC is now definitely very close to an inflection point for great success with a therapy to become ready for NDA (new drug application) this year, with $20 million awarded to its MPAR program, and with the alignment with the FDA regarding manufacturing and a possible commercial launch. However, all these positive trends are now thrusted into a heavy shadow of financial hardship since late January: ENSC stock price has been trending down from about $0.90 to just a little above $0.40 in March, pushing its market cap below $2 million and forcing the management to consider strategic alternatives, after the stock price had moved down from $2.5 in October last year to $1 in January 2026. Obviously, ENSC has been subject to manipulation over the past two months, as demonstrated in the sharply increased trading volumes, in contrast to the usual range mostly between 50,000 and 200,000 shares traded per session in the months preceding February 2026 for a total outstanding share count of about 3.5 million. Over the past two months, the stock trading session volumes have been often above 500,000, with 14 sessions above 1 million, 7 sessions above 3 million, 1 session above 30 million (Feb. 17), and 1 session above 280 million (Feb.27). ENSC successfully conducted a capital raise last year by selling about 1 million shares of its common stock at the price $3. Now facing the new difficulty in raising capital for operation due to its current low stock price, ENSC finds itself in big trouble as a going concern as a result of the NADAQ proposed rule to delist companies with a market cap below $5 million. Of course, both institutions and retail traders are seeing the value of their investment shrinking sharply while ENSC is moving very close to the potential final success. By the way, I am also concerned about Moleculin Biotech (MBRX) in the middle of the pivotal Phase 2b/3 trial of its therapy for relapsed Acute Myeloid Leukemia (AML) as a second-line treatment, after achieving highly positive topline results in Phase 2 trial and being granted the Fast-Track Designation by the FDA, because its current market cap is just around $10 million, appearing as a good target for market manipulation. The specter of being moved to OTC would hurt MBRX financially to the extent of a total pause of operation. Case 2: Paranovus Entertainment Technology Limited (PAVS) On March 16, 2026, PAVS stock took a nose-dive from the previous session close $1.6 to the $0.47 (with a surprisingly high trading volume of 69 million shares for a total outstanding share count of only 3 million, making its market cap just a little above $1 million), without any good reason related to its operation. Just in December last year, the company announced that it achieved 1,800% year-over-year revenue increase ($12 million vs. about $70,000 and a significant turnaround from operating loss to net income (due to phasing out its unprofitable business lines in China and acquiring a profitable online business in America). And also in December last year, PAVS conducted a 1-for-100 reverse stock split to decisively bring up its stock price well above $2, in compliance with the NASDAQ's rule of the minimum bid price above $1. Nevertheless, now it looks like PAVS might have made all these big efforts in vain if its stock was to be removed from NASDAQ and become a ticker on OTC. The two specific cases I have described above serve to corroborate the complaint raised by the SPCC that SR-NASDAQ-2026-004 stands as "the blueprint for manipulation", which could eliminate promising small public companies en masse, in addition to causing severe financial pains for investors believing in the strong fundamentals of a promising business. An acceptable rule requiring a minimum market cap, in my opinion, needs to grant a six-month grace period with extension of another six months, just like the NASDAQ requirement for the minimum bid price above $1 with a grace period. The basic ethics is that a house-owner has the right to ask the invited guests to leave on the condition that no big harm is done. SR-NASDAQ-2026-004 has the flavor of "an unconscionable contract" or "detrimental reliance" if it was deliberated in a class-action lawsuit. Many thanks for your attention. Respectfully, Xin Zuo