Fresh Tracks leaders doubt they have support for liquidation

BOULDER — Management with embattled drug maker Fresh Tracks Therapeutics Inc. (Nasdaq: FRTX), who have spent weeks trying to drum up support for a plan that would see the company dissolved and liquidated, now say they don’t think they have enough shareholder backing for that plan.

The company, which said this week that it has the support of only 46.91% of voting shareholders, intends to seek judicial dissolution, a rare process sometimes called the “corporate death penalty” in which a court forces a company out of business. 

“After conducting an aggressive stockholder outreach strategy over four different special meeting dates, we have concluded that Fresh Tracks is unlikely to secure enough stockholder participation to approve the dissolution and plan of dissolution at the current special meeting because of how many shares of common stock have traded since the record date,” Fresh Tracks CEO Albert Marchio said in a prepared statement. “As a result, the board of directors of Fresh Tracks has decided to hold a new special meeting on Feb. 15, 2024 for all stockholders of record as of Jan. 11, 2024. We will provide additional information regarding the planned special meeting over the coming weeks.”

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Fresh Tracks, which laid off nearly all its workers this fall and was later booted from the Nasdaq stock exchange, has been in cost-cutting mode for months as management urged shareholders to approve its dissolution plan.

Last year the drug developer rebranded from Brickell Biotech and sold off rights to its excessive-sweating drug to Botanix Pharmaceuticals Ltd. The company, which has seen its stock price tank in recent years, then began exploring the possibility of a merger or other strategic options for boosting shareholder value, elevated a new CEO and paused research and development.

The company contacted about 125 potential merger partners and investors, resulting in four “unsuccessful attempts” to consummate a deal, due, Fresh Tracks said, to “the potential acquirer’s inability to secure its own necessary financing and/or inability to offer adequate value.”

Management estimates that dissolution would result in $5 million to $7 million returned to those shareholders. That figure, the company said, will likely be lower if shareholders don’t approve the liquidation plan.