Avalo Therapeutics Announces 1-for-240 Reverse Stock Split
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Insights
A reverse stock split is a significant financial maneuver that directly influences a company's stock profile. Avalo Therapeutics' decision to execute a 1-for-240 reverse split aims to bolster its stock price to maintain compliance with Nasdaq's minimum price requirement. This move is often perceived by the market as a red flag, signaling underlying issues such as potential liquidity problems or a lack of investor confidence.
From an investment perspective, while the reverse split does not inherently change the company's market capitalization, it can lead to a decrease in liquidity and potentially wider bid-ask spreads. Investors should monitor the stock's performance post-split to assess market sentiment. Additionally, the adjustment of option and warrant exercise prices will be a critical detail for derivative holders.
Long-term, the company's ability to maintain the elevated stock price and comply with other listing standards will be crucial for its continued presence on the Nasdaq Capital Market. This action also reflects on the company's strategic choices and may impact future capital raising efforts.
The reverse stock split affects Avalo Therapeutics' market perception, particularly regarding its stock liquidity and investor demographic. Historically, reverse splits have been associated with companies facing market challenges. The reduction in total shares outstanding from approximately 192 million to roughly 801,000 will likely impact the stock's volatility and trading volume.
It is important to evaluate the company's fundamentals and growth prospects post-split, as these factors will be pivotal in maintaining the newly adjusted stock price. The market will also be observing the company's ability to leverage this structural change to attract institutional investors, who typically prefer stocks with higher prices per share.
Additionally, the issuance of whole shares in lieu of fractional shares might result in a minor increase in the company's outstanding shares, which should be factored into valuation models. The market's reaction in the weeks following the split will provide insights into the efficacy of this strategy.
In the context of corporate governance, Avalo Therapeutics' reverse stock split reflects on the board's responsiveness to regulatory compliance and shareholder value. Ensuring compliance with Nasdaq's listing requirements is a proactive measure to avoid delisting, which can severely affect a company's reputation and stock market performance.
The fact that the reverse split does not alter any stockholder's percentage ownership interest, except in cases of fractional shares, is a testament to the company's commitment to equitable treatment of shareholders. However, the effectiveness of such a strategy in the long run hinges on the company's operational performance and strategic initiatives.
Shareholders should consider the implications of the reverse split on future corporate actions, including dividends, voting rights and potential mergers or acquisitions. The governance body's ability to navigate these changes while maintaining transparency and shareholder communication will be critical.
WAYNE, Pa. and ROCKVILLE, Md., Dec. 27, 2023 (GLOBE NEWSWIRE) -- Avalo Therapeutics, Inc. (Nasdaq: AVTX) today announced a 1-for-240 reverse stock split of the Company’s common stock, par value
The Company is implementing the reverse stock split as planned to increase the per share price of its common stock to regain compliance with the listing requirements of the Nasdaq Capital Market. The new CUSIP number following the reverse stock split will be 05338F306.
The reverse stock split will affect all stockholders uniformly and will not alter any stockholder’s percentage ownership interest in the Company, except to the extent that the reverse stock split results in any of the Company’s stockholders owning a fractional share as described below.
The reverse stock split will reduce the number of shares of common stock issued and outstanding from approximately 192,386,419 to approximately 801,611. No fractional shares will be issued in connection with the reverse stock split. Each stockholder who would otherwise be entitled to receive a fraction of a share of the Company’s common stock will instead receive one whole share of common stock.
As of the effective date of the reverse stock split, the number of shares of common stock available for issuance under the Company’s equity incentive plans and issuable upon the exercise of stock options and warrants outstanding immediately prior to the reverse stock split will be proportionately affected by the reverse stock split. The exercise prices of the Company’s outstanding options and warrants will be adjusted in accordance with their respective terms.
There will be no change to the number of authorized shares or the par value per share.
Equiniti, LLC (“EQ”) is acting as the exchange agent for the reverse stock split and will provide instructions to stockholders of record regarding the reverse stock split. EQ will be issuing, automatically and without the need for stockholder action, all of the post-split shares in paperless, “book-entry” form, and EQ will hold the shares in an account set up for the stockholder. Those stockholders holding common stock in “street name” will receive instructions from their brokers.
About Avalo Therapeutics
Avalo Therapeutics is a clinical stage biotechnology company focused on the treatment of immune dysregulation by developing therapies that target the LIGHT-signaling network.
LIGHT and its signaling receptors, HVEM (TNFRSF14), and lymphotoxin β receptor (TNFRSF3), form an immune regulatory network with two co-receptors of herpesvirus entry mediator, checkpoint inhibitor B and T Lymphocyte Attenuator (BTLA), and CD160 (the LIGHT-signaling network). Accumulating evidence points to the dysregulation of the LIGHT network as a disease-driving mechanism in autoimmune and inflammatory reactions in barrier organs. Therefore, we believe reducing LIGHT levels can moderate immune dysregulation in many acute and chronic inflammatory disorders.
Avalo has an experienced leadership team with decades of successful leadership in drug development in the biotech and pharma industry. The team is led by Dr. Garry Neil, MD, Chief Executive Officer and Chairman of the Board, who brings a wealth of experience leading teams who have successfully brought drugs to the market, including serving as Group President, Pharmaceutical R&D and Corporate VP of Science & Technology at Johnson & Johnson. Additionally, Dr. Neil served as Chairman of the Board of Arena Pharmaceuticals Inc., which was acquired by Pfizer Inc. for
For more information about Avalo, please visit www.avalotx.com.
Forward-Looking Statements
This press release may include forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are subject to significant risks and uncertainties that are subject to change based on various factors (many of which are beyond Avalo’s control), which could cause actual results to differ from the forward-looking statements. Such statements may include, without limitation, statements with respect to Avalo’s plans, objectives, projections, expectations and intentions and other statements identified by words such as “projects,” “may,” “might,” “will,” “could,” “would,” “should,” “continue,” “seeks,” “aims,” “predicts,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “potential,” or similar expressions (including their use in the negative), or by discussions of future matters such as: our ability to regain compliance with the listing requirements of the Nasdaq Capital Market; potential financing or other strategic transactions; the future financial and operational outlook; timing and success of trial results and regulatory review; potential attributes and benefits of product candidates; the development of product candidates or products; and other statements that are not historical. These statements are based upon the current beliefs and expectations of Avalo’s management but are subject to significant risks and uncertainties, including: Avalo's cash position and the need for it to raise additional capital in the near future; the results of our clinical and pre-clinical studies; drug development costs, timing and other risks, including reliance on investigators and enrollment of patients in clinical trials, which might be slowed by the COVID-19 pandemic; reliance on key personnel; regulatory risks; general economic and market risks and uncertainties, including those caused by the COVID-19 pandemic and the wars in Ukraine and the Middle East; and those other risks detailed in Avalo’s filings with the SEC. Actual results may differ from those set forth in the forward-looking statements. Except as required by applicable law, Avalo expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Avalo’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.
For media and investor inquiries
Christopher Sullivan, CFO
Avalo Therapeutics, Inc.
ir@avalotx.com
410-803-6793
or
Chris Brinzey
ICR Westwicke
Chris.brinzey@westwicke.com
339-970-2843
FAQ
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