Zalicus Inc (ZLCS)

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Thank you for your interest in Zalicus. A Q&A document related to the reverse stock split can be found on the investor relations tab of the Zalicus website http://phx.corporate-ir.net/phoenix.zhtml?c=148036&p=irol-irhome, which I have excerpted below to respond to your inquiry:
While the reverse stock split had no direct impact on the equity market capitalization of Zalicus, we believed that the reverse stock split would provide benefits to the company and our stockholders in a number of ways, including:
• Allowing Zalicus to maintain the listing of its common stock on the Nasdaq Capital Market. Until September 30, 2013, Zalicus’ common stock had not had a closing bid price above the $1.00 per share required for continued listing on Nasdaq since September 7, 2012, and, as a result, was at risk of being delisted from the Nasdaq Capital Market for failure to maintain a $1.00 minimum bid price. Even with recent closing prices above $1.00 per share, the risk remained given the October 21, 2013 deadline for compliance. Zalicus believes that maintaining the listing of its common stock on the Nasdaq Capital Market is valuable to the company and its stockholders by providing a liquid market for its common stock which also facilitates potential future fundraising efforts. Zalicus expects that completing the reverse stock split will allow us to regain compliance with the $1.00 minimum bid price requirement and maintain our listing on the Nasdaq Capital Market.
• Providing a sufficient level of authorized shares of common stock available for future issuance. We require available authorized shares of common stock to provide for any potential future stock issuances to raise capital, effect acquisitions and/or provide equity incentives to our employees. Prior to the reverse stock split, only approximately 19% of the authorized shares of common stock under our Certificate of Incorporation remained available for issuance. The reverse split had the effect of increasing the number of shares of common stock available for issuance, by reducing the number of shares of our common stock outstanding, while not changing the number of shares of common stock authorized under our Certificate of Incorporation.
• Stock Price Volatility. We have been advised by certain institutional investors, as well as by our financial advisors, that a higher stock price might increase the acceptability of our common stock to a number of long-term investors who may not find our shares attractive at their pre-split price due to the trading volatility often associated with stocks below certain prices.
• Stock Price Requirements. Many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers or by restricting or limiting the ability to purchase such stocks on margin.
• Transaction Costs. Investors also may be dissuaded from purchasing stock below certain prices because the brokerage commissions, as a percentage of the total transaction value, tend to be higher for such low-priced stocks.