Discovery Labs Announces Reverse Stock Split
December 27 2010 - 5:00PM
Discovery Laboratories, Inc. (Nasdaq:DSCO) today announced that it
has filed a Certificate of Amendment to its Amended and Restated
Certificate of Incorporation (the "Amendment") to effect a 1-for-15
share consolidation, or reverse stock split ("reverse split"),
effective at 12:01 a.m. on December 28, 2010 (the "Effective
Time"). In addition, the Amendment reduces the number of shares of
common stock, par value $0.001 per share, authorized under the
Certificate of Incorporation from 380 million to 50 million.
Because the Amendment does not reduce the number of authorized
shares of common stock in the same proportion as the reverse split,
the effect of the Amendment is to increase the number of shares of
common stock available for issuance relative to the number of
shares issued and outstanding. The stockholders of Discovery
Labs approved proposals authorizing the Board of Directors, in its
discretion, to implement the reverse split and reduce the number of
authorized shares of common stock at the Annual Meeting of
Stockholders held on December 21, 2010.
The Board of Directors of Discovery Labs has determined to
implement the reverse split at this time to enable the market price
per-share of its common stock to close above $1.00, which is a
continued listing requirement of The NASDAQ Capital Market®
("Nasdaq"). On November 30, 2010, Discovery Labs received a
Staff Determination letter from Nasdaq indicating that it had not
established compliance with Nasdaq Listing Rule 5550(a)(2)
("Minimum Bid Price Rule") because its common stock had not closed
above $1.00 per share over a period of 10 consecutive business days
ending on or prior to November 29, 2010, and that its stock is
subject to delisting. Discovery Labs has requested a hearing
with Nasdaq to review the Staff Determination and believes that
implementation of the reverse split will support its continued
listing on Nasdaq. Discovery Labs believes that continued
listing on Nasdaq, combined with the increase in shares available
for issuance, will enhance its ability to secure necessary capital
from potential strategic partners and prospective investors to
achieve its key business objectives, including potentially gaining
U.S. Food and Drug Administration (FDA) approval for its lead
product, Surfaxin®, for the prevention of respiratory distress
syndrome (RDS) in premature infants.
Details of the Reverse Split
At the Effective Time, immediately and without further action by
Discovery Labs' stockholders, every 15 shares of Discovery Labs'
pre-split common stock, par value $0.001 per share, will
automatically be converted into one share of post-split common
stock, par value $0.001 per share. In lieu of fractional
shares, stockholders will receive cash in an amount equal to the
product obtained by multiplying (i) the closing sale price per
share on the business day immediately preceding the Effective Time
as reported on Nasdaq by (ii) the number of shares of common
stock held by the stockholder that would otherwise have been
exchanged for the fractional share interest.
The immediate effect of the reverse split will be to reduce the
number of shares of Discovery Labs' common stock that are issued
and outstanding to approximately 13.8 million shares (excluding
shares reserved for stock options and unexercised warrants),
adjusted for fractional interests. The reverse split will
affect all stockholders uniformly and will have no effect on the
proportionate holdings of any individual stockholder, with the
exception of adjustments related to fractional shares. There
will be no change in the number of stockholders of record as a
result of the reverse split. Following the reverse split, all
shares will remain fully paid and non-assessable.
To inform the market of the reverse split, Discovery Labs
expects that Nasdaq will append a suffix character, "D," to the
Company's trading symbol (DSCO) for approximately 20 days
after the Effective Time. After the ~20 trading-day period,
the ticker symbol will revert to "DSCO". In addition,
Discovery Labs' common stock will also trade under a new CUSIP
number beginning on December 28, 2010.
Additional information can be found in Discovery Labs'
definitive proxy statement, which was filed with the SEC on
November 15, 2010 and is available on the Company's website at
www.Discoverylabs.com.
About Discovery Labs
Discovery Laboratories, Inc. is a biotechnology company
developing surfactant therapies for respiratory diseases.
Surfactants are produced naturally in the lungs and are essential
for breathing. Discovery Labs' novel proprietary KL4 surfactant
technology produces a synthetic, peptide-containing surfactant that
is structurally similar to pulmonary surfactant and is being
developed in liquid, aerosol or lyophilized formulations. In
addition, Discovery Labs' proprietary capillary aerosolization
technology produces a dense aerosol, with a defined particle size
that is capable of potentially delivering aerosolized KL4
surfactant to the lung without the complications currently
associated with liquid surfactant administration. Discovery Labs
believes that its proprietary technology platform makes it
possible, for the first time, to develop a significant pipeline of
surfactant products to address a variety of respiratory diseases
for which there frequently are few or no approved therapies. For
more information, please visit our website at
www.Discoverylabs.com.
Forward-Looking Statements
To the extent that statements in this press release are not
strictly historical, all such statements are forward-looking, and
are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These
forward-looking statements, including with respect to the potential
continued listing of the Company's common stock on the Nasdaq
Capital Market, the potential approval in the United States of
Surfaxin for the prevention of RDS in premature infants, and the
ability of the Company to fund its activities through strategic and
financing transactions or otherwise, are subject to certain risks
and uncertainties that could cause actual results to differ
materially from the statements made. Examples of such risks
and uncertainties are described in the Company's filings with the
Securities and Exchange Commission including the Company's proxy
statement on Schedule 14A and the most recent reports on Forms
10-K, 10-Q and 8-K, and any amendments thereto.
CONTACT: Discovery Laboratories, Inc.
Investor relations:
John G. Cooper, President and Chief Financial Officer
215-488-9490
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