INOVIO Announces Effective Date of 1-for-12 Reverse Stock Split
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Insights
The announcement of INOVIO's 1-for-12 reverse stock split is a strategic move aimed at addressing the company's compliance with Nasdaq's minimum bid price requirement. This is a critical financial maneuver as it directly impacts the company's ability to remain listed on a major stock exchange, which is essential for maintaining investor confidence and access to capital markets. The reduction of outstanding shares from approximately 280.1 million to 23.3 million will inherently increase the stock price, albeit without adding intrinsic value to the company.
It's important to note that while the reverse stock split does not change the company's market capitalization, it can have psychological effects on investors. A higher per-share price might be perceived as more respectable and could potentially attract institutional investors, who might have policies against investing in stocks below a certain price. However, there is also the risk that the market views this move as a sign of distress, particularly if the company's fundamental issues, such as revenue and growth challenges, are not addressed concurrently.
Furthermore, the adjustment to the exercise and conversion prices of the company's outstanding stock options and equity incentive plans is a standard procedure in reverse splits. This ensures that the value and incentives for employees and option holders remain equitable post-split. Investors should monitor how these adjustments are received by the company's internal stakeholders, as their reaction can influence the company's performance and, by extension, investor returns.
The biotechnology sector is known for its volatility and companies like INOVIO often use reverse stock splits to maintain compliance with stock exchange regulations. This move can be seen as a double-edged sword. On one hand, it may prevent delisting and the negative implications associated with it, such as reduced liquidity and access to capital. On the other hand, it does not address underlying business performance and can sometimes be viewed as a cosmetic fix.
From a market perspective, the effectiveness of reverse stock splits in the biotechnology industry has been mixed. While it may temporarily boost share prices, the long-term success of such a strategy is contingent on the company's ability to deliver on its operational goals. For INOVIO, the focus on developing DNA medicines for various diseases places them in a high-potential market, but also one that is highly competitive and research-intensive. Success in clinical trials and eventual product commercialization are far more significant indicators of the company's future performance than the reverse stock split.
Investors should evaluate the broader industry trends, such as the pace of innovation, regulatory environment and competitive landscape, when assessing the potential impact of this news on the company's stock. The company's ability to regain and maintain compliance with Nasdaq's requirements through improved business fundamentals, rather than through reverse stock splits, will be a key factor to watch in the long term.
The legal implications of a reverse stock split involve the alteration of existing share structure in compliance with corporate laws and stock exchange regulations. INOVIO's adherence to the procedural aspects, such as issuing a new CUSIP number and making proportionate adjustments to outstanding stock options, demonstrates due diligence in meeting legal and regulatory standards.
From a legal standpoint, the reverse stock split does not create new value; it is a reconfiguration of the existing equity structure. The company's disclosure that fractional shares will not be issued and that stockholders will receive cash in lieu instead is a standard practice to avoid the complexities fractional shares could introduce. It's imperative that these transactions are handled with transparency to maintain shareholder trust and comply with securities laws.
Moreover, the company must ensure that all communications regarding the reverse stock split are clear and not misleading, to prevent potential legal disputes with shareholders or regulatory bodies. The legal team's role in such a corporate action is to mitigate risk by ensuring that the company's actions are in full compliance with the relevant securities regulations and that shareholders' rights are preserved throughout the process.
The company's common stock will begin trading on a reverse stock split-adjusted basis at the opening of the market on Thursday, January 25, 2024. Following the reverse stock split, the company's common stock will continue to trade on the Nasdaq Capital Market under the symbol "INO" with the new CUSIP number, 45773H 409. The reverse stock split is part of the company's plan to regain compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market.
At the effective time of the reverse split, every 12 issued and outstanding shares of the company's common stock will automatically be combined into one issued and outstanding share of the company's common stock without any change in the par value per share. Fractional shares will not be issued in connection with the reverse stock split. Stockholders who would otherwise be entitled to receive a fractional share will be entitled to receive a cash payment. The reverse stock split will affect all stockholders uniformly and will not alter any stockholder's relative interest in the company's equity securities, except for any adjustments for fractional shares. The reverse stock split will not reduce the number of authorized shares of the company's common stock, which will remain at 600,000,000 shares. In addition, proportionate adjustments will be made to the number of shares underlying, and the exercise or conversion prices of, the company's outstanding stock options, and to the number of shares of common stock issuable under the company's equity incentive plans.
The reverse stock split will reduce the number of issued and outstanding shares of the company's common stock from approximately 280.1 million to approximately 23.3 million.
About INOVIO
INOVIO is a biotechnology company focused on developing and commercializing DNA medicines to help treat and protect people from HPV-related diseases, cancer, and infectious diseases. INOVIO's technology optimizes the design and delivery of innovative DNA medicines that teach the body to manufacture its own disease-fighting tools. For more information, visit www.inovio.com.
INOVIO Forward-Looking Statements
This press release contains certain forward-looking statements relating to INOVIO's business, including those regarding the reverse stock split and the timing thereof, the impact of the reverse stock split on stockholders, including any adjustments that may result from the treatment of fractional shares, and option holders, the potential impact of the reverse stock split on the bid price of the company's common stock, the potential for the company to regain compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market, the expected number of shares of common stock to be issued and outstanding following the reverse stock split, and other statements that are not historical fact. Actual events or results may differ from the expectations set forth herein as a result of a number of factors, including uncertainties inherent in pre-clinical studies, clinical trials, product development programs and commercialization activities and outcomes, the availability of funding to support continuing research and studies in an effort to prove safety and efficacy of electroporation technology as a delivery mechanism or develop viable DNA medicines, INOVIO's ability to support its pipeline of DNA medicine products, the ability of INOVIO's collaborators to attain development and commercial milestones for products INOVIO licenses and product sales that will enable INOVIO to receive future payments and royalties, the adequacy of INOVIO's capital resources, the availability or potential availability of alternative therapies or treatments for the conditions targeted by INOVIO or its collaborators, including alternatives that may be more efficacious or cost effective than any therapy or treatment that INOVIO and its collaborators hope to develop, issues involving product liability, issues involving patents and whether they or licenses to them will provide INOVIO with meaningful protection from others using the covered technologies, whether such proprietary rights are enforceable or defensible or infringe or allegedly infringe on rights of others or can withstand claims of invalidity and whether INOVIO can finance or devote other significant resources that may be necessary to prosecute, protect or defend them, the level of corporate expenditures, assessments of INOVIO's technology by potential corporate or other partners or collaborators, capital market conditions, the impact of government healthcare proposals and other factors set forth in INOVIO's Annual Report on Form 10-K for the year ended December 31, 2022, its Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, and other filings INOVIO makes from time to time with the Securities and Exchange Commission. There can be no assurance that any product candidate in INOVIO's pipeline will be successfully developed, manufactured, or commercialized, that the results of clinical trials will be supportive of regulatory approvals required to market products, or that any of the forward-looking information provided herein will be proven accurate. Forward-looking statements speak only as of the date of this release, and INOVIO undertakes no obligation to update or revise these statements, except as may be required by law.
INOVIO Contacts
Media: Jennie Willson, (267) 429-8567, jennie.willson@inovio.com
Investors: Thomas Hong, (267) 440-4298, thomas.hong@inovio.com
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SOURCE INOVIO Pharmaceuticals, Inc.
FAQ
What is the purpose of INOVIO's reverse stock split?
How many shares will be outstanding after the reverse stock split?
Will fractional shares be issued in connection with the reverse stock split?
What will happen to the number of authorized shares of the company's common stock after the reverse stock split?
