Reverse Split Salvages Nasdaq Listing for Auris Medical

Auris Medical

At the end of April, Auris Medical Holding (NASDAQ: EARS) said that it was performing a 1-for-20 reverse split of its stock, effective at the start of this month.   The share consolidation was underpinned by warnings from Nasdaq that the Switzerland-based company was facing delisting because its stock price was below the minimum bid threshold per Nasdaq Global Market continued listing guidelines.

The reverse split took the number of outstanding shares of EARS from 38.1 million to only about 1.9 million.  Upon the execution of the split, shares moved from about 28 cents to approximately $5.60 each.  

As often happens, the reverse split was not well received by Wall Street, especially when Auris came right behind the split by adding more shares to the market to raise capital. Last week, Auris closed a public offering (raising about $8 million) where it would more than triple its outstanding share count if all warrants are exercised.

Trader’s attention has been glued to the dilution rather than Auris recently acquiring two U.S. patents related to the use of the small molecule betahistine for treating depression and attention deficit/hyperactivity disorder (ADHD).

Auris specializes in betahistine, a drug that is approved for vertigo and Meniere’s disease in over 100 countries, but not the U.S.  The company is working to complete early stage work in its development of intranasal betahistine to improve known bioavailability limitations as a new drug for vertigo (AM-125) and for the prevention of antipsychotic-induced weight gain and somnolence (AM-201).

A phase 1b clinical trial of AM-201 being conducted in Europe for the prevention of antipsychotic-induced weight gain and somnolence reached its enrollment midpoint this month with the 25thpatient entering the dose-escalation study. Top-line data from the trial is expected next quarter.

Elsewhere in the pipeline, Auris has phase 3 studies going for Sonsuvi (AM-111) for acute inner ear hearing loss and Keyzilen (AM-101) for acute inner ear tinnitus, indications that explain the company’s ticker symbol.

Shares hit an all-time low last week at $3.00.  To put that in perspective, shares of EARS (on a split-adjusted basis) were around $190 as recently as November 2017 and even near $1,600 at the start of 2016. The stock gapped up to start trading on Monday, opening at $3.42 after closing Friday at $3.12 on news that Nasdaq has officially recognized Auris has regained compliance with its minimum bid requirement thanks to the reverse split.

An hour into the session, however, shares have slipped into the red to print $3.06 for a loss of 1.9%.

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Published by Benjamin Roussey

Benjamin Roussey is from Sacramento, California. He has two master’s degrees and served four years in the U.S. Navy. His bachelor’s degree is from CSUS (1999) where he was on a baseball pitching scholarship. His second master’s degree is an MBA in Global Management from the University of Phoenix (2006). He has worked for small businesses, public agencies, and large corporations. He has lived in Korea and Saudi Arabia where he was an ESL instructor. Benjamin spends his time in between Northern California and Cabo San Lucas, Mexico, committing himself to his craft of freelance and website writing.