On January 22, 2020 Sierra Oncology, Inc. (SRRA), a late-stage drug development company focused on the development and commercialization of momelotinib, a JAK1, JAK2 & ACVR1 inhibitor with a potentially differentiated therapeutic profile for the treatment of myelofibrosis, reported that its board of directors has approved a reverse stock split of its shares of common stock at a ratio of 1-for-40 (Press release, Sierra Oncology, JAN 22, 2020, View Source [SID1234553398]). The reverse stock split will be effective today at 4:30 p.m. Eastern Time. At the market open on January 23, 2020, the Company’s common stock will continue to trade on The Nasdaq Global Market under the symbol "SRRA," but will be assigned a new CUSIP number (82640U404) and will trade on a split-adjusted basis.
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At the effective time of the reverse stock split, every 40 shares of the Company’s issued and outstanding common stock will be automatically combined and reclassified into one issued and outstanding share of common stock. The reverse stock split will not affect any stockholder’s ownership percentage of the Company’s common stock, alter the par value of the Company’s common stock, have any direct impact on the market capitalization of the Company, or modify any voting rights or other terms of the common stock.
The reverse stock split was approved by Sierra Oncology stockholders on January 21, 2020. Additional information regarding the reverse stock split, other matters voted upon, and the certified voting results will be filed on Form 8-K with the U.S. Securities and Exchange Commission.
As previously announced, shortly following the reverse stock split:
The Series A convertible voting preferred stock issued in the recently completed $103.0 million financing (gross proceeds) will be converted into shares of common stock, subject to the applicable beneficial ownership limitation.
Gilead Sciences, Inc. (Gilead) will be issued approximately 725,000 shares of common stock (on a post-split basis) and a warrant to purchase an equivalent amount of common stock, in consideration for amending the royalty rates and milestones in an Asset Purchase Agreement with Gilead for momelotinib.
Following the reverse stock split, assuming the conversion of all outstanding Series A convertible preferred voting shares to common stock, and the issuance of common stock to Gilead, there are expected to be approximately 10,394,600 total shares of common stock outstanding and warrants to purchase approximately 11,104,000 total shares of common stock outstanding on a post-split basis. Of these warrants, warrants to purchase approximately 2,574,700 shares of common stock (the Series B warrants) may only be exercised by paying the exercise price in cash, and will expire on the 75th day anniversary following the announcement of top-line data from Sierra Oncology’s ongoing Phase 3 clinical trial of momelotinib. If Series B warrants were fully exercised, the company would receive approximately $34.0 million in proceeds.
Sierra Oncology previously reported its cash and cash equivalents totaled $67.7 million as of September 30, 2019, and that subsequently it had closed an underwritten public offering with gross proceeds to Sierra Oncology of $103.0 million. Prior to the end of 2019, a term loan of $5.0 million was repaid to Silicon Valley Bank.