Reverse split to help avoid delisting, among other supposed benefits:
>>BOSTON--(BUSINESS WIRE)--Dec. 13, 2004--GlycoGenesys, Inc., (Nasdaq: GLGS - News), a biotechnology company focused on carbohydrate-based drug development, announced today that the Company's Board of Directors had approved a 1-for-6 reverse stock split of the Company's common stock. The split affects all stockholders uniformly and will not affect any stockholder's percentage ownership in the Company. To the extent that the split results in a holder becoming entitled to a fractional share, the fractional share will be rounded up to a whole share for the benefit of the shareholder. As a Nevada corporation, a shareholder vote is not required to effect the split of its shares. Shares held as of the close of business on December 20, 2004 will be split and the shares will begin trading on a post-split basis the following day, December 21, 2004. For a period of 20 trading days following the split the Company's common stock will trade under the temporary symbol "GLGS.D" to reflect the occurrence of the split. In addition to reducing the number of shares outstanding, the number of authorized shares available for future issuance will also be reduced by a 1-for-6 ratio. All warrants, options and preferred stock outstanding at the time of the split are also subject to the reverse split formula including customary upward repricing.
Comments From Management
John W. Burns, the Company's Senior Vice President and CFO, stated, "Today's announcement is more than about simply taking steps to retain our Nasdaq listing. This year we have made significant progress operationally, scientifically, and clinically. We believe these achievements have been under recognized by the capital markets due to, among other things, our capital structure, which is uncharacteristic of many biotech companies at our stage of development. As evidenced by the results in our recently announced American Society of Hematology abstracts, GlycoGenesys has the potential for a bright future and it became necessary to change our capital structure to provide the best opportunity, in our opinion, for long-term shareholder value."
Bradley J Carver, the Company's President and CEO, stated, "Along with our shareholders senior management and the Board of Directors together are significant stake-holders in GlycoGenesys and carefully weighed the interest of our shareholders in arriving at this decision to reduce our share count. By reducing the share count, we are taking a step we believe is necessary to improve the potential for our shareholders to benefit from our milestones going forward. 2005 looks to be a milestone intensive year including human clinical data from our solid tumor dose escalation trial, initiating our multiple myeloma study at Dana Farber, expanding our clinical trial program for GCS-100LE and entering into a potential strategic partnership. In addition to clinical milestones, we expect additional research publications on GCS-100LE and plan to keep a high profile at industry and investor conferences."
Potential Benefits of The Reverse Stock Split
The reverse stock split reduces the number of GlycoGenesys' shares outstanding to a level more comparable with those of similar biotechnology companies and more appropriate to the current size, stage and scope of the Company's business. Fewer shares outstanding and a higher stock price may help to generate more interest from fundamental institutional investors among funds that are either precluded by their bylaws from investing in lower-priced stocks or are simply reluctant to do so. In addition, many analyst and brokerage firms are reluctant to recommend lower-priced stocks to either their clients or monitor performance of lower-priced stocks. Moreover, the stock split provides an opportunity to satisfy Nasdaq's $1.00 bid price requirement.
Today's announcement is part of a multi-step process by the Company's management and Board of Directors to increase long-term shareholder value by taking the necessary actions to maintain its Nasdaq listing, attracting new long-term institutional investment through both open market and private transactions, and solidifying its current shareholder base by taking these steps toward creating lasting value.
Example For Shareholders of How the 1-for-6 Split Works
A shareholder having 9,000 shares before the split would have 1,500 shares after the split; similarly, a shareholder with 10,000 shares before, would have 1,667 after (taking into effect rounding up).
The Company's capital structure pre- & post-split is as follows:
Pre-Split Post-Split
(approximate)
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Shares Outstanding 60,504,577 10,084,096
Common
Shares Underlying
Convertible Preferred 10,189,763 1,698,294
Warrants-Shares Issuable 21,571,326 3,595,221
Options-Shares Issuable 1,849,500 308,250
Authorized Shares 200,000,000 33,333,333
Options Available for Issuance
under the Company's Incentive
Plans 2,552,070 425,345<<
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Cheers, Tuck |
