The news resulted in a 50 per cent decrease in the value of its stock price by market close on Monday, dropping from $0.01 per share down to $0.005.
In October, PharmaGap announced it was reducing its office space by 25 per cent and giving its employees temporary layoffs ahead of a licensing agreement with Clinical Value Corp.
The firm stated that it was trying to keep expenses down as it prepared to transfer assets to CVC, which is owned by Rod Bryden – president and CEO of cleantech firm Plasco Energy Group Inc. and an investor in PharmaGap.
The two companies have been working with investment advisors for the past six months to secure financing from investment firms and organizations dealing in early-stage biotech companies in North America and Europe. The funding would be used for CVC to implement the licensing transaction with PharmaGap, Mr. Bryden stated in October.
Their efforts, however, have been unsuccessful, according to a company release.
As of Jan. 31, PharmaGap has moved out of its office and lab space on Sussex Drive. Its intellectual property assets are being preserved “in order to maintain the ability to generate future value from the investment made to date,” the release stated.
PharmaGap shareholders approved the licensing of PharmaGap’s cancer drug program to CVC in August 2012.
The board of directors as well as management of PharmaGap are continuing to pursue alternative arrangements to meet or reduce obligations to creditors and employees, and deliver value to shareholders. Those arrangements may include the sale or license of intellectual property and monetization of accumulated tax losses, according to the release.
Trading of the company’s stock was temporarily suspended on the Toronto Stock Exchange after the company update was published Monday morning. The Investment Industry Regulatory Organization of Canada can make a decision to impose a temporary trading suspension of a publicly listed company, usually in anticipation of a news announcement by the company.
The trading halt was in place from 10:46 a.m. to 11:30 a.m. on Monday morning, at which time PharmaGap’s stock value dropped by 50 per cent.
Trading halts mean that all investors have the same timely access to important company information, according to a release from IIROC, which is the national self-regulatory organization overseeing all investment dealers and trading activity on debt and equity marketplaces in Canada.
PharmaGap develops novel peptide therapeutics for the treatment of cancer.
No one from the company was immediately available for comment. Its website has been removed from the Internet.