MyMD Pharmaceuticals Announces Reverse Stock Split to Maintain Nasdaq Listing
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Insights
A reverse stock split is a significant financial maneuver that consolidates the number of existing shares of a company's stock into fewer, proportionally more valuable shares. In the case of MyMD Pharmaceuticals, the 1-for-30 reverse stock split will drastically reduce the number of shares from approximately 62.7 million to about 2.1 million. This action often aims to boost the stock's market price, making it more attractive to institutional investors and maintaining compliance with exchange listing requirements.
The immediate effect of such a reverse split is typically a proportional increase in the share price, reflecting the consolidation of shares. However, it's important to note that this does not change the company's market capitalization. For investors, the key takeaway is that while the number of shares they own will decrease, their total equity stake in the company remains unchanged, barring the rounding up of fractional shares, which could result in a minor increase in their holding percentage.
Long-term implications can be mixed. While a higher share price can indeed attract new investors, it can also be perceived as a cosmetic change if not accompanied by fundamental improvements in the company's financial health or growth prospects. Investors should monitor the company's performance closely following the reverse split to assess the effectiveness of this strategy.
From a market perspective, reverse stock splits can be a double-edged sword. They often occur in the context of a company facing delisting threats due to low share prices. By consolidating shares, MyMD Pharmaceuticals may be aiming to present a more robust financial image. The market's reception to this news can vary, with some investors viewing it as a sign of distress, while others may interpret it as a strategic step towards stabilization.
Historical data suggests that the long-term success of reverse stock splits is mixed, with outcomes heavily dependent on the underlying fundamentals of the company. For MyMD Pharmaceuticals, which operates in the highly volatile biopharmaceutical sector, the reverse stock split could be a precursor to future strategic moves, such as attracting potential partnerships, funding, or improving the stock's liquidity for investors.
It's also noteworthy that the reverse stock split coincides with a reduction in the authorized shares of the company. This could indicate a move towards tighter control of equity dilution, potentially making existing shares more valuable if the company's market performance improves.
From a legal standpoint, the execution of a reverse stock split is governed by corporate law and the company's charter. Shareholders' rights are typically protected in such events, with the company ensuring that the proportionate ownership of the shareholders remains intact. MyMD Pharmaceuticals' decision to round up fractional shares to the nearest whole number is a shareholder-friendly move, preventing the loss of equity due to the split.
Additionally, the reverse stock split does not require shareholders with certificated shares to exchange their existing stock certificates, reducing the administrative burden on them. However, shareholders should be aware of the potential tax implications of such corporate actions, particularly if the rounding up of fractional shares results in the receipt of additional whole shares, which might be considered a taxable event.
It is also crucial to understand that the reverse stock split does not inherently change the company's fundamental value, but it can have implications for future corporate actions, including mergers and acquisitions, equity financing and stock option plans, all of which could be affected by the newly adjusted share price and share count.
Common Stock Will Begin Trading on Split-Adjusted Basis on February 15, 2024
At the effective time of the reverse stock split, every 30 shares of MyMD’s issued and outstanding common stock will be converted automatically into one issued and outstanding share of common stock without any change in the par value per share. Simultaneously therewith, the number of shares of common stock that the Company shall have authority to issue will be reduced by a factor of 30 from 500,000,000 shares to 16,666,666 shares. Stockholders holding shares through a brokerage account will have their shares automatically adjusted to reflect the 1‑for-30 reverse stock split. It is not necessary for stockholders holding shares of the Company’s common stock in certificated form to exchange their existing stock certificates for new stock certificates of the Company in connection with the reverse stock split, although stockholders may do so if they wish.
The reverse stock split will affect all stockholders uniformly and will not alter any stockholder’s percentage interest in the Company’s equity, except to the extent that the reverse stock split would result in a stockholder owning a fractional share. Any fractional share of a stockholder resulting from the reverse stock split will be rounded up to the nearest whole number of shares. The reverse stock split will reduce the number of shares of MyMD’s common stock outstanding from 62,749,125 shares to approximately 2,091,638 shares, subject to adjustment for the rounding up of fractional shares. Proportional adjustments will be made to the number of shares of MyMD’s common stock issuable upon exercise or conversion of MyMD’s equity awards, convertible preferred stock and warrants, as well as the applicable exercise or conversion price. Stockholders with shares in brokerage accounts should direct any questions concerning the reverse stock split to their broker; all other stockholders may direct questions to the Company’s transfer agent, Securities Transfer Corporation, via email at issuerservices@stctransfer.com or phone at (469) 633-0101.
About MyMD Pharmaceuticals, Inc.
MyMD Pharmaceuticals, Inc. (Nasdaq: MYMD), a clinical stage pharmaceutical company committed to extending healthy lifespan, is focused on developing two novel therapeutic platforms that treat the causes of disease rather than only addressing the symptoms. MYMD-1 is a drug platform based on a clinical stage small molecule that regulates the immune system to control TNF-α, which drives chronic inflammation, and other pro-inflammatory cell signaling cytokines. MYMD-1 is being developed to delay aging, increase longevity, and treat autoimmune diseases. The Company’s second drug platform, Supera-CBD, is being developed to treat chronic pain, addiction and epilepsy. Supera-CBD is a novel synthetic derivative of cannabidiol (CBD) and is being developed to address and improve upon the rapidly growing CBD market, which includes both FDA approved drugs and CBD products not currently regulated as drugs. For more information, visit www.mymd.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release may contain forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any expected future results, performance, or achievements. Forward-looking statements speak only as of the date they are made and none of MyMD nor its affiliates assume any duty to update forward-looking statements. Words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “may,” “plan,” “will,” “would’’ and other similar expressions are intended to identify these forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, without limitation: the effect that the reverse stock split may have on the price of MyMD’s common stock; MyMD’s ability to regain and maintain compliance with the Nasdaq Stock Market’s listing standards; the timing of, and MyMD’s ability to, obtain and maintain regulatory approvals for clinical trials of MyMD’s pharmaceutical candidates; the timing and results of MyMD’s planned clinical trials for its pharmaceutical candidates; the amount of funds MyMD requires for its pharmaceutical candidates; increased levels of competition; changes in political, economic or regulatory conditions generally and in the markets in which MyMD operates; MyMD’s ability to retain and attract senior management and other key employees; MyMD’s ability to quickly and effectively respond to new technological developments; MyMD’s ability to protect its trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others and prevent others from infringing on MyMD’s proprietary rights; and the impact of the ongoing COVID-19 pandemic on MyMD’s results of operations, business plan and the global economy. A discussion of these and other factors with respect to MyMD is set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed by MyMD on March 31, 2023. Forward-looking statements speak only as of the date they are made and MyMD disclaims any intention or obligation to revise any forward-looking statements, whether as a result of new information, future events or otherwise.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240213384915/en/
Investor Contact:
Robert Schatz
(646) 421-9523
rschatz@mymd.com
www.mymd.com
Media Contact:
media@mymd.com
Source: MyMD Pharmaceuticals, Inc.
FAQ
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