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April 30, 2019 Bioscience Notebook

Faced with Nasdaq delisting, Precipio implements reverse stock split

PHOTO | Precipio Inc. Precipio CEO Ilan Danieli
By Natalie Missakian

Cancer diagnostics firm Precipio Inc. has implemented a 1-for-15 reverse stock split, a move that will allow it to keep trading on the Nasdaq exchange.

The New Haven company had asked stockholders to pre-approve the reverse split late last year as a worst-case-scenario option to reclaim compliance with Nasdaq regulations.

Nasdaq notified Precipio earlier this spring that it planned to delist the stock, which dipped below Nasdaq’s $1-per-share minimum threshold in March 2018 and never recovered.

The company, which develops diagnostic technology to reduce disease misdiagnosis, announced a flurry of new initiatives in recent weeks that it hoped would drive up the price, including hiring a chief strategy officer and launching a global expansion plan.

And while the price of its shares did go up (trading at around 50 cents last week compared to 13 cents at the start of the month) the increase wasn’t enough to bring it back into compliance with the Nasdaq requirements.

“[T]herefore, the company decided to effectuate the reverse split,” Precipio said in announcing the move on Friday.

Shares of the company’s common stock began trading on a split-adjusted basis on Monday, opening at $5.99 a share. It was trading at $4.81 as of mid-morning Tuesday.

A reverse split raises the company’s price per share by reducing the overall number of shares. While it doesn’t change the total value of a shareholder’s equity in the company, such a move is typically viewed negatively by the stock market.

Precipio officials sought to reassure shareholders in announcing the move, saying that “ultimately, value is created through positive results and revenue growth.”

The 15:1 ratio was aimed at broadening the company’s potential investor pool, since many individual and institutional investors are prohibited from trading shares below $2 (and some below $5), the company said.

Officials said the higher price will also insulate the company from “the fluctuations and volatility experienced with a lower-priced stock.”

“Over the course of the past couple of weeks, we have seen a recognition of the company’s promise in the form of substantial share-price appreciation,” said CEO Ilan Danieli. “My team and I are neither satisfied nor content with where we have reached, and are confident that this is just the beginning.”

Danieli thanked the “many shareholders who sent in emails showing their support for the company.”

“I echo your sentiment — our team and I believe in the value we are creating both for patients and for our shareholders, and we will continue to build this company,” he continued. “We have an exciting future ahead of us, and now that we have taken the required steps to address the Nasdaq’s continued listing requirements, we can focus on continued growth.”

On Monday, the company said it signed its first international service contract with an unnamed health-care management group serving “several major hospitals” in Cairo, Egypt. It expects the contract will generate more than $1.5 million in revenue annually.

The contract follows the company’s announcement last week that it was diversifying its business model by offering expert oncology pathology services to hospitals and health-care providers outside the U.S.

Under the new service, clinicians can submit biopsies physically or digitally to Precipio for expert review and diagnosis. They would also have access to Precipio’s proprietary diagnostic tools, such as its liquid biopsy technology, which tests blood samples for DNA from tumor cells.

Target countries include China, India and Malaysia as well as some in Europe and the Middle East.

Based in Science Park, Precipio has 42 employees. Its research partners include the Yale School of Medicine and the Dana Farber Cancer Institute.

* * *

The Connecticut Academy of Science & Engineering has awarded Yale School of Medicine professor Pasko Rakic its 2019 Connecticut Medal of Science, the state’s highest honor for scientific achievement.

Rakic was chosen for his “contributions as a transformative neuroscientist credited with establishing fundamental molecular and cellular mechanisms for the development of the cerebral cortex,” the academy said.

Credited with identifying processes of neuronal production, migration and synaptic connections in the developing brain, Rakic has helped advance the understanding of disorders such as schizophrenia, dementia, epilepsy and autism.

The professor of neuroscience and neurology will accept the award at the academy’s 44th annual meeting and dinner May 28 at the Red Lion Hotel in Cromwell.

Modeled after the National Medal of Science, the award is given in alternate years with the Connecticut Medal of Technology.

Contact Natalie Missakian at news@newhavenbiz.com

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