Evaxion Announces Completion of ADS Ratio Change
- The change in the ratio of ADSs to ordinary shares is aimed at supporting liquidity and regaining compliance with the Nasdaq minimum bid price requirement.
- The change became effective on January 22, 2024, and affects all shareholders uniformly without altering their percentage interest in the company’s equity.
- No assurance has been given regarding the proportionate increase in the ADS trading price after the change.
Insights
A reverse stock split, such as the one executed by Evaxion Biotech, is a strategic financial maneuver aimed at boosting the perceived value of a company's stock and ensuring compliance with exchange listing requirements. In this case, the adjustment from a 1:1 to a 1:10 ADS-to-share ratio effectively multiplies the market price of the ADS by ten, while reducing the number of shares by the same factor. This move is often interpreted by the market as a signal of potential issues, such as trying to avoid delisting due to a low share price. However, it can also be seen as a proactive step towards stabilizing the stock's value.
Investors should monitor the liquidity and market reception following the reverse split. While the company aims to enhance liquidity, the actual impact can be nuanced. A higher price per share might deter small investors due to the higher cost of entry, but it may also attract institutional investors who prefer stocks with higher prices and lower volatility. The short-term market reaction can be volatile and the long-term success of such a move largely depends on the company's fundamental performance post-split.
It is important for shareholders to understand the implications of no fractional ADSs being issued. The sale of fractional entitlements and distribution of net cash proceeds is a common practice, but it effectively forces a sale of these fractions at a potentially inopportune time, which could be a minor drawback for some investors.
The reverse stock split by Evaxion Biotech should be contextualized within the biotechnology sector and the broader stock market trends. Biotech firms often face significant capital requirements for research and development and maintaining a favorable stock price is crucial for raising capital through equity offerings. The reverse split may be an attempt to make the stock more appealing to investors who are generally cautious about investing in companies with stock prices perceived as too low, as it can be associated with higher risk profiles.
Analysts in this sector will be keen to observe if the reverse split will lead to a sustainable increase in stock price and whether it will help the company meet the Nasdaq's minimum bid price requirement over the long term. Historically, reverse splits have had mixed outcomes, with success largely depending on the underlying company's operational strength and market conditions. Evaxion's future performance in its AI-Immunology™ powered vaccine development will be crucial in determining the effectiveness of this financial strategy.
From a legal standpoint, the execution of a reverse stock split must be in compliance with both corporate governance regulations and the rules of the stock exchange. Evaxion Biotech's adherence to the Nasdaq minimum bid price requirement is a clear demonstration of regulatory compliance. Shareholders' percentage interests in the company remain unchanged, except in cases of fractional ADSs, which are handled as per the standard legal protocols.
Investors should be aware of their rights during such corporate actions, including the mandatory surrender of certificated shares and the automatic exchange for holders of uncertificated shares. The legal framework ensures that all shareholders are treated equitably during the process. The company's transparent communication regarding the reverse split and the potential effects on the stock's trading price and liquidity is also in line with the disclosure requirements set forth by securities regulation.
COPENHAGEN, Denmark, Jan. 22, 2024 (GLOBE NEWSWIRE) -- Evaxion Biotech A/S (NASDAQ: EVAX) (“Evaxion” or the “Company”), a clinical-stage TechBio company specializing in developing AI-Immunology™ powered vaccines, today announced that the Company’s previously disclosed change to its ratio of its American Depositary Shares (“ADSs”) to its ordinary shares, DKK 1 nominal value (the “ADS Ratio”), has been made effective. The ratio has changed from one (1) ADS representing one (1) ordinary share to a new ADS Ratio of one (1) ADS representing ten (10) ordinary shares (the “ADS Ratio Change”). The ADS Ratio Change became effective on January 22, 2024 (the “Effective Date”).
For the Company's ADS holders, the change in the ADS Ratio has the same effect as a one-for-ten reverse ADS split and is intended to further support the liquidity in the Company’s ADSs and to enable the Company to regain compliance with the Nasdaq minimum bid price requirement. The exchange of one (1) new ADS for every ten (10) then-held (existing) ADSs occurred automatically on the Effective Date, with the then-held ADSs being cancelled and new ADSs being issued by The Bank of New York Mellon, the depositary bank (the “Depositary”). Registered holders of the Company’s ADSs held in certificated form were required on a mandatory basis to surrender their certificated ADSs to the Depositary for cancellation and received one (1) new ADS in exchange for every ten (10) existing ADSs then-held. Holders of uncertificated ADSs in the Direct Registration System (DRS) and The Depository Trust Company (DTC) had their ADSs cancelled and automatically exchanged, receiving one (1) new ADS for every ten (10) existing ADS then-held. The Company’s ADSs continue to be traded on The Nasdaq Capital Market under the ticker symbol “EVAX”.
The ADS Ratio Change affects all shareholders uniformly and will not alter any shareholder’s percentage interest in the Company’s equity, except to the extent that the ratio change would have resulted in a shareholder owning fractional ADSs. No fractional new ADSs were issued in connection with the change in the ADS Ratio. Instead, fractional entitlements to new ADSs will be aggregated and sold by the Depositary, and the net cash proceeds from the sale of the fractional ADS entitlements (after deduction of fees, taxes and expenses) will be distributed to the applicable ADS holders by the Depositary.
As a result of the ADS Ratio Change, the ADS trading price is expected to increase proportionally, although the Company can give no assurance that the ADS trading price after the ADS Ratio Change will be proportionally equal to or greater than the previous ADS trading price prior to the change or that the Ratio Change will have any effect on the liquidity in the Company’s ADSs.
About EVAXION
Evaxion Biotech A/S is a pioneering TechBio company based upon its AI platform, AI-Immunology™. Evaxion’s proprietary and scalable AI prediction models harness the power of artificial intelligence to decode the human immune system and develop novel immunotherapies for cancer, bacterial diseases and viral infections. Based upon AI-Immunology™, Evaxion has developed a clinical-stage oncology pipeline of novel personalized vaccines and a preclinical infectious disease pipeline in bacterial and viral diseases with high unmet medical needs. Evaxion is committed to transforming patients’ lives by providing innovative and targeted treatment options. For more information about Evaxion and its groundbreaking AI-Immunology™ platform and vaccine pipeline, please visit our website.
Forward-Looking Statement
This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “target,” “believe,” “expect,” “hope,” “aim,” “intend,” “may,” “might,” “anticipate,” “contemplate,” “continue,” “estimate,” “plan,” “potential,” “predict,” “project,” “will,” “can have,” “likely,” “should,” “would,” “could,” and other words and terms of similar meaning identify forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various factors, including, but not limited to, risks related to: our financial condition and need for additional capital; our development work; cost and success of our product development activities and preclinical and clinical trials; commercializing any approved pharmaceutical product developed using our AI platform technology, including the rate and degree of market acceptance of our product candidates; our dependence on third parties including for conduct of clinical testing and product manufacture; our inability to enter into partnerships; government regulation; protection of our intellectual property rights; employee matters and managing growth; our ADSs and ordinary shares, the impact of international economic, political, legal, compliance, social and business factors, including inflation, and the effects on our business from the worldwide ongoing COVID-19 pandemic and the ongoing conflict in the region surrounding Ukraine and Russia and the Middle East; and other uncertainties affecting our business operations and financial condition. For a further discussion of these risks, please refer to the risk factors included in our most recent Annual Report on Form 20-F and other filings with the U.S. Securities and Exchange Commission (SEC), which are available at www.sec.gov. We do not assume any obligation to update any forward-looking statements except as required by law.
FAQ
What is the new ratio of Evaxion's ADSs to ordinary shares?
When did the ADS Ratio Change become effective?
What is the purpose of the ADS Ratio Change?
How will the ADS Ratio Change affect shareholders?
Will the ADS trading price increase after the ADS Ratio Change?
