CoCensys Stock’s Trading Halted After $6 Purchase
CoCensys Inc., a struggling Irvine biomedical company, said Friday that the Nasdaq stock market halted trading of its stock apparently because of an unusual $6 trade last week.
CoCensys Chairman F. Richard Nichol said the investigation was triggered March 31, when 100 shares of CoCensys sold at 6 cents apiece. At the time, he said, Nasdaq’s computers showed buyers were willing to pay nearly four times as much, and the company notified Nasdaq of the irregular price.
Trading in CoCensys shares was halted Thursday at 22 cents per share, and the hold continued Friday.
Nasdaq spokesman Wayne Lee said trading was stopped for two reasons: the pending release of material news about the company, and Nasdaq’s request for more information. The electronic stock exchange said trading would not resume until CoCensys “has fully satisfied Nasdaq’s request for additional information.”
CoCensys officials said the company has provided Nasdaq all the information requested. They said they were unaware of any significant news forthcoming from the company or the exchange.
“We intend to cooperate fully with Nasdaq’s review and work to allow trading in our stock to resume without unnecessary delay,” Nichol said.
Company officials said they have no plausible explanation for the sale.
Holders of certain convertible preferred shares in CoCensys conceivably could benefit from a onetime drop in the common stock price, according to CoCensys general counsel Robert R. Holmen. But he said he couldn’t imagine anyone scheming to make money on a rigged sale because any profit would be negligible compared to the risk of criminal prosecution.
CoCensys is facing the possible delisting of its stock because its price has fallen below Nasdaq’s minimum bid of $1. Nasdaq has scheduled an April 29 hearing on the matter. The company said it does not believe that the trading halt is related to the possible delisting.
As share prices of small companies fell last year, some 500 firms were booted off Nasdaq after their prices fell below $1 a share, said Bruce Krogstad, a director of Nasdaq Market Services in Menlo Park.
CoCensys, founded in 1989, has 91 employees. It has spent more than $174 million in a thus-far profitless quest to develop drugs to treat brain and nervous system disorders. Its shares, which traded as high as $3.63 a year ago, fell below $1 in October and have been at 25 cents or less for a month.
The company recently warned investors that it still faces years of losses if its research is to continue, and said it may be forced to shut down if it doesn’t obtain funding.
Jim McCamant, editor of the Medical Technology Stock Letter in Berkeley, said CoCensys is working on promising technology but desperately needs a new financial partner. The company went astray last year by issuing the preferred stock, a deal that has proved costly and depressed the stock price, he said.
