Friday, November 14, 2008

Pro-Pharmaceuticals warned of delisting, offers shareholder rights

By Mass High Tech Staff

On the same day it received a delisting notice from the NYSE Alternext US, Pro-Pharmaceuticals Inc. also announced that it plans to offer non-tradeable rights for stock and warrants to its shareholders.

The delisting notice follows the company’s non-compliance with NYSE Alternext US rules surrounding stockholder equity loss, loss in continuing operations and net losses in recent years. Pro-Pharmaceuticals (AMEX: PRW) has said it appealed the decision to begin delisting its stock. NYSE and AMEX merged recently, leading to Pro-Pharmaceuticals needing to comply with NYSE listing rules, despite having an AMEX ticker symbol.

To offset the ruling, Pro-Pharmaceuticals has announced its plans to offer its shareholders basic and over-subscription rights to buy one share and one warrant, pending successful registration with the U.S. Securities and Exchange Commission. Company officials said proceeds from the rights offering will go toward the development and marketing of its colorectal cancer treatment, Davanat.

In September, the company submitted a 505(b) New Drug Application to be approved by the U.S. Food and Drug Administration for Davanat, which would being generating revenue for the company in late 2009.

The company has taken steps to reduce operating expenses by reducing management compensation and non-core expenses; lowering research, development and clinical trials expenses; and reducing consulting fees and legal and accounting costs.

Pro-Pharmaceuticals reported a net loss of $2 million for the first quarter of 2008 on no revenue, following a net loss of $9.4 million of zero revenue in 2007. Most recently, however, the company reported that it made $214,000 in Q3 2008, up from a loss of $2.58 million in Q3 2007.