NEW YORK – Interpace Biosciences said on Wednesday that it has received a delisting notice from the Nasdaq due to the firm's extended period of non-compliance with the minimum $2.5 million stockholder's equity requirement for continued listing and the firm's failure to timely execute on its plan to comply.
In addition, in a letter to shareholders, Interpace Bio CEO and President Thomas Burnell announced a "restructuring and reprioritization plan" following an evaluation of its product portfolio, business model, capital allocation strategy, customer base, and future opportunities.
The Nasdaq initially notified Interpace Bio on Oct. 21, 2020 that it was not in compliance with the rule requiring a minimum of $2.5 million in stockholders' equity for continued listing. According to Interpace Bio's Q2 2020 Form 10-Q, the firm's stockholder's equity was $1.69 million.Â
Up until the filing of the Form 10-Q for Q2 2020, Interpace Bio reported a compliant stockholders' equity number in its periodic reports. However, on Jan. 19, 2021, Interpace Bio submitted amended filings reporting stockholders' deficits of about $10.9 million and $16.1 million for its second and third quarters, respectively. The firm reported stockholders' deficit of approximately $4.5 million for FY 2019.
The Nasdaq therefore decided that Interpace Bio has failed to comply with the continued listing requirements for about a year. While Interpace Bio submitted a plan of compliance to regain compliance, the firm was not in a position to complete the plan by Feb. 15. Therefore, trading of the company's stock will be suspended on Feb. 25, barring a company appeal, and Interpace has applied to have its common stock qualified to trade on the PTCQX Best Market.
Burnell said that the firm will embark on several initiatives to strengthen its profile and "enhance shareholder value" with hopes of saving approximately $7.2 million annually and realizing between $4.5 million and $4.9 million in cost savings by the end of 2021, net of investments.
Cost-savings initiatives will include reducing infrastructure costs, streamlining management, consolidating duplicative functions across both business units, and adapting to a remote work environment for non-laboratory personnel, which reduces the need for traditional office structures.
Because $47 million in preferred stock investments by Interpace Bio's private equity investors did not qualify to be accounted for as stockholders' equity, and due to COVID-19's adverse impact, the firm expects that its current stockholders' equity deficit in order to remain compliant through 2021 to be nearly $43 million.
Burnell said that Interpace considered various alternatives to remediate the stockholders' equity shortfall but decided that none were in the best interests of Interpace Bio's and its stockholders "primarily due to their dilutive impact to our common stockholders."
While Burnell acknowledged that the firm's potential move to the OTCQX may be disappointing, he highlighted that the transition would allow the firm to focus on visibility, lower cash spend, and the prioritization of usage of capital "in a strategic manner".
"Our restructuring and reprioritization plan is firmly rooted in this foundation and is designed to significantly improve Interpace's growth and financial performance," Burnell said. "With our refined focus on providing cutting-edge diagnosis and customized assay solutions, we are confident that implementing a strategic, reprioritization plan across our platform will enhance value for patients, physicians, and shareholders alike."
During early morning trading on the Nasdaq, shares of Interpace Bio were down about 30 percent at $4.05.