EnteroMedics Declares 1-For-70 Reverse Stock Split
EnteroMedics Inc. said it would attempt to regain compliance with the NASDAQ exchange by declaring a 1-for-70 reverse stock split.
The Roseville-based medical device company has not maintained the minimum $1 per share listing price since late March. EnteroMedics said the move would push it back into compliance, as the value of 70 shares would combine into one.
“Any fractional shares of common stock resulting from the reverse stock split will be rounded up to the nearest whole share,” the company added.
When EnteroMedics announced its plan last Friday, company stock had been trading at 5 cents apiece.
EnteroMedics makes the vBloc System, a pacemaker-shaped implant used to treat obesity. The neurostimulation device uses high-frequency impulses to block messages between the brain and gut, which decrease a patient’s hunger level and drive to eat more at mealtime.
In addition to the reverse stock split, the company said it would convert the nearly $18.8 million it had in senior amortizing convertible notes to common stock. EnteroMedics had raised those funds over the past couple years from four investors as part of a securities purchase agreement. The company said the net proceeds from this offering had been used to “continue commercialization efforts for [its vBloc Neurometabolic Therapy obesity program], clinical and product development activities, and for other working capital and general corporate purposes.”
“Completion of the reverse stock split is a crucial step in our strategy to maintain the company’s listing on the NASDAQ Capital Market and to enable the company to continue its diligent work in highlighting vBloc Therapy’s role in the ongoing battle against obesity,” said EnteroMedics CEO Dan Gladney in a statement.
In an SEC filing, the company stated the reverse stock split would occur on Wednesday, December 28. Gladney added that the company expects to convert or redeem all of its outstanding convertible notes before the end of the year.