DARA BioSciences (NASDAQ:DARA) is laying the groundwork for a reverse stock split in an effort to boost the company’s flagging stock price and remain in compliance with listing requirements.
The Raleigh-based pharmaceutical company has sent a letter to shareholders asking for authorization for the board of directors to pursue the reverse stock split.
DARA has spent the past two years transforming from a clinical-stage drug developer with no commercialized products into a company with a small portfolio of cancer care supportive products that are either already approved or are close to reaching the market. The company has made the change via a series of acquisitions.
But the changes have come with growing pains and DARA disclosed in May it had received a delisting notice from the Nasdaq because its stock price had closed below the minimum $1 per share threshold for more than 30 days. The Nasdaq gave DARA until Nov. 11 to regain compliance with the requirement. In November, the exchange granted DARA a 180-day extension. Now DARA wants its shareholders to give the board the authority to pursue a reverse stock split. By reducing the number of outstanding shares, the the value of each share would increase in price. The goal is to boost DARA’s stock price above the Nasdaq’s $1 minimum requirement.
“We believe that challenges lie ahead for DARA and that these must be addressed by DARA management without the distraction of a potential NASDAQ delisting to divert our focus and efforts,” David Drutz, DARA’s CEO and chief medical officer said in a Dec. 24 letter to shareholders. “It is for this reason we believe that a reverse stock split is in the best long-term interests of our investors.”
The reverse stock split would be at a ratio of between one-for-five to one-for-fifteen. The final ratio will be determined by DARA’s board of directors. The vote will be made at a special meeting for stockholders scheduled for Feb. 5 at the company’s corporate headquarters in North Raleigh. Shareholders may also vote online, by mail or by phone.
DARA shares have traded between 45 cents and $1.20 per share over the last year. DARA shares were trading at 54 cents in mid-day trading Thursday, down 2 cents from Tuesday’s closing price.