It’s an unusual day for Adamis Pharmaceuticals (NASDAQ:ADMP) stock traders, to say the least. That’s because the company recently announced its intent to acquire DMK Pharmaceuticals. Adamis’ shareholders are now apparently in a tug-of-war between the buyers and sellers — and it appears that the sellers may win today.
Adamis is a biopharmaceutical company that develops products to treat “opioid overdose, allergy, respiratory and inflammatory disease.” The U.S. Food and Drug Administration (FDA) has already approved the company’s ZIMHI (naloxone) injection for the treatment of opioid overdose. The FDA has also green-lighted Adamis’ SYMJEPI (epinephrine) injection for certain acute allergic reactions.
Meanwhile, DMK Pharmaceuticals develops therapies for opioid use disorder (OUD) and other neuro-based conditions. Along with a diversified clinical pipeline, DMK brings a “library of high value, first-in-class compounds” to the table.
So, it’s major news that Adamis Pharmaceuticals just entered into an “Agreement and Plan of Merger and Reorganization” with DMK. By acquiring the company, Adamis stands to receive its “library of approximately 750 small molecule neuropeptide analogues and on-going government funding for its development programs.”
What’s Happening With ADMP Stock?
ADMP stock started up by about 12% when the opening bell rang on Wall Street. However, shares soon dropped to as low as 21 cents. As of this writing, the penny stock trades at around 23 cents, down almost 13% for the day.
Why did the sellers take control of the price action so quickly? Possibly, that’s because there are a couple of details to consider in the press release.
For one thing, the merger isn’t finalized and is conditional upon the approval of shareholders. Additionally, Adamis announced that it will “consummate” a reverse split of its common stock prior to the merger. Some traders may be skeptical of the proposed reverse split, as the press release didn’t specify the share-split ratio.
So, there could be some synergistic benefits as Adamis seeks to acquire DMK Pharmaceuticals and its assets. However, not all traders may be happy about the details of the proposed merger. As a result, the immediate effect might be a sizable pop-and-drop today in ADMP stock.
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On the date of publication, David Moadel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.