Biopharmaceutical Cytokinetics (NASDAQ: CYTK ) announced yesterday that it will be effecting a 1-for-6 reverse stock split to reduce the number of outstanding shares from approximately 163.6 million to approximately 27.3 million shares.
In April, the biopharmaceutical had said there were four reasons for the reverse split: to make its stock more attractive to institutional investors, to decrease its volatility, to reduce transaction costs, and, most importantly, to give it the chance to raise capital if necessary.
Cytokinetics was authorized to issue 245 million shares of its stock, and as of Feb. 28, it had issued 244.5 million, or 99.8% of the total allowed. Should the need for a capital raise arise, it would be unable to do so. By reducing the outstanding shares, the biopharma gives itself more wiggle room, though it says it currently has no plans to issue new shares.
Its lead drug candidate, omecamtiv mecarbil, is in phase 2 clinical development for the potential treatment of heart failure, for which Amgen holds an exclusive license worldwide to develop and commercialize. A second treatment also in mid-stage trials, tirasemtiv, is being developed independently and has been granted orphan drug designation and fast-track status by the FDA.
The reverse was effected yesterday, and the biopharma's stock closed down today 2% at $12.05 per share.