Durham biotech firm Novan declares reverse stock split; shares plunge

DURHAM – Investors reacted negatively to news of a reverse 10-for-1 split in biotech company Novan’s stock early Tuesday.

Shares (nasdaq: NOVN) plunged more than 30% to 47 cents from Monday’s close of 94% after the company published the split news.

Its shares have fallen from a 52-week high of $2.59 in February.

The reverse split takes effect at 5 p.m. Tuesday. Stockholders approved a reverse stock move in July 2020.

“We believe that the Reverse Stock Split is an important step for the Company and its stockholders to optimize our position as we work to execute strategic initiatives across all fronts. Our management team and Board of Directors believe that it is in the best interest of our stockholders and the Company to implement the Reverse Stock Split in order to enable us to be prepared for success with our anticipated upcoming milestones,” said Paula Brown Stafford, Novan’s CEO. “Implementing the Reverse Stock Split will make available an increased number of authorized but unissued shares allowing us to pursue additional financing activities and/or other strategic transactions to support the development and potential commercialization of our product candidates, and we believe it will also help us maintain compliance with Nasdaq’s $1.00 minimum bid price requirement and potentially make our stock more attractive to a broader range of institutional and other investors.”