As a result, the proportion of the company owned by Generex shareholders will likely fall relative to the total number of company shares outstanding.
Generex says the company is maintaining its treasury share count at 750 million to "facilitate our ability to raise additional capital to support our operations," according to the company's proxy statement.
"That's like a reverse stock split with management's fingers crossed behind their backs," said StockSplits.net's Johnson. "Management retains control of a lot of stock, which is not the kind of control investors may want management to have" because of the increased dilution risk, Johnson added.
Recent efforts by other drugs companies to enact reverse stock splits have not convinced investors to start buying.Shares of Adventrx Pharmaceuticals (ANX), Marshall Edwards (MSHL), Aastrom BioSciences (ASTM), GTC Biotherapeutics (GTCB.OB) and Epicept (EPCT) are all trading lower today despite enacting recent reverse stock splits to boost the price of their stock. -- Reported by Adam Feuerstein in Boston. Follow Adam Feuerstein on Twitter.