Novan, Inc. (NOVN) stock prices were up by 7.69% as of the market closing on May 24th, 2021, bringing the price per share up to USD$1.40 at the end of the trading day. Subsequent current market fluctuations have seen the stick plummet by 33.43%, bringing the price per share down to USD$0.93.
Reverse Stock Split
May 25th, 2021 saw the company announce the filing of a Certificate of Amendment to the Restated Certificate of Incorporation of the company. This proceeding will see the implementation of a one-for-ten reverse split of the company’s issued and outstanding stock. The reverse stock split is expected to become effective as of 5:00 pm Eastern Time on May 25th, 2021, with NOVN common stock expected to begin trading on a split-adjusted basis as of the market commencing on May 26th, 2021.
2020 Annual Stockholder Meeting
The Annual Meeting of NOVN Stockholders on July 28th, 2020 saw the company’s stockholders approve the amendment to the Restated Certificate of Incorporation of the Company in regard to the reverse stock split of the company’s common stock. The allowable range of the ratio of the reverse split was between one-for-two and one-for-fifteen, with the decided range not being less than the lower limit and not exceeding the upper limit.
Details of Reverse Stock Split
The decided ratio and the implementation and timing of the reverse stock split was to be determined by the Board of Directors of NOVN at its sole discretion. Ultimately, the Board of Directors approved the implementation of a one-for-ten reverse split, effective May 25th 2021.
Purpose of Reverse Stock Split
The company holds firm that the reverse stock split is a crucial step for NOVN and its stockholders to consolidate their position as the company works to execute strategic initiatives across all fronts. Both the management team and the Board of Directors believe the reverse stock split is in the best interests of both the shareholders and the company as it allowed for the preparation for success with forecasted upcoming milestones.
Logistics of Reverse Stock Split
The reverse stock split will increase the number of available authorized but unissued shares, affording NOVN the opportunity to pursue additional financing activities. Other strategic transactions will also be made viable to facilitate the supporting of the development and potential commercialization of NOVN product candidates. The company is hopeful that the reverse stock split will help the company maintain compliance with the USD$1.00 minimum bid requirement set by Nasdaq and make its stock more appealing to a wider range of investors.
Future Outlook for NOVN
With the reverse stock split scheduled to be effective at the start of tomorrow’s trading day, the company is excited for the prospects of its common stock. Current and potential investors are hopeful that this plummeting stock price is temporary and will pave the way for significant and sustained future increases in shareholder value.