Korean pharmas' US partners face Nasdaq delisting threats

Korean pharmaceutical companies are watching anxiously as their American partner firms struggle with critically low share prices that threaten their stock exchange listings.

Two notable cases involve partners of major Korean firms Daewoong Pharmaceutical and Hanmi Pharmaceutical, both implementing reverse stock splits to avoid delisting.

Under NASDAQ regulations, companies must maintain a minimum bid price of $1 per share. If a stock trades below this threshold for 30 consecutive trading days, it triggers potential delisting proceedings.

For biotech companies with volatile valuations, particularly those still in clinical development phases without marketable products, this creates significant challenges. Reverse stock splits are a common maneuver used by struggling companies to meet exchange listing requirements. While it does not change a company’s overall valuation or financial fundamentals, it can help firms meet listing requirements, improve market perception, and reduce volatility.

Aeon Biopharma, the U.S. partner of Daewoong Pharmaceutical, recently announced that its board of directors approved a 72-to-1 reverse stock split. This means that every 72 existing shares will be merged into one, effectively raising the stock’s per-share price while reducing the total number of shares outstanding.

Aeon Biopharma specializes in developing Daewoong’s botulinum toxin (BTX), Nabota (ABP-450 in the U.S.), as a therapeutic alternative to AbbVie’s Botox. However, since falling below $1 per share in late October, the company’s stock has continued to decline, currently trading at just $0.06 as of Monday.

Post-split on Wednesday, the stock opened at $1.66 and ended the trading day at $1.42.

Similarly, Aptose Biosciences, partnered with Hanmi Pharmaceutical, has approved a 30-to-1 reverse stock split.

Aptose is developing tuspetinib, a treatment candidate for acute myeloid leukemia (AML) licensed from Hanmi. Despite reporting promising early data from its TUSCANY trial, Aptose's share price plummeted from around $2 a year ago to between $0.15-0.20 recently.

Following the drop below $1, the Nasdaq issued a delisting warning to Aptose in July 2024, granting it a 180-day compliance period. When the initial deadline passed on Jan. 10, the company requested and received an extension until March 31.

To meet compliance, Aptose must trade above $1 for at least 10 consecutive trading days within this period, or face delisting procedures.

As of Wednesday after the reverse stock split, Aptose's stock closed the Wednesday trading day at $3.64.

A stop-gap measure?

A reverse stock split does not address the root causes of financial struggles, and companies often continue to face challenges unless they achieve substantial business improvements.

For pharmaceutical companies like Aeon Biopharma and Aptose, survival depends on their ability to secure funding, complete clinical trials successfully, and obtain regulatory approvals. While reverse stock splits may temporarily resolve listing concerns, long-term viability hinges on their ability to generate revenue and achieve sustainable growth.

If such issues are not resolved such companies can again face the same risk.

For example, Aptose has been here before. The company previously received a delisting warning in for the same reason in 2023 and successfully used a reverse stock split to maintain its listing.

“Successful clinical trial outcomes remain the most sustainable path to share price recovery,’” an industry expert told Korea Biomedical Review. “‘Positive data can attract institutional investors and potential commercial partners, driving genuine valuation increases rather than mathematical adjustments.’”