NKGen Biotech Receives Notifications From Nasdaq Related to Delayed Quarterly Report and Decision of the Nasdaq Hearings Panel

Rhea-AI Summary

NKGen Biotech (Nasdaq: NKGN) received a notice from Nasdaq on November 20, 2024, stating non-compliance with listing rules due to delayed filing of Q3 2024 Form 10-Q. The delay stems from additional time needed for internal derivative securities valuation. Nasdaq granted a temporary exception until January 7, 2025, pending the Seoul Bankruptcy Court's decision on NKMax's rehabilitation and NKGen's proposal to acquire majority interest. The company must submit an updated compliance plan following the court's decision. The notice doesn't immediately affect NKGN's Nasdaq Global Market listing, and the company aims to file the Form 10-Q promptly.

Positive

• Temporary exception granted by Nasdaq until January 7, 2025
• No immediate effect on Nasdaq Global Market listing
• Potential acquisition of majority interest in NKMax pending court decision

Negative

• Non-compliance with Nasdaq listing rules due to delayed Q3 2024 filing
• Risk of potential delisting if compliance plan is not accepted
• Internal control issues requiring additional time for financial reporting
• Potential target company NKMax is under bankruptcy court proceedings

Insights

Legal & Compliance Expert

This regulatory compliance issue raises significant concerns. The delayed 10-Q filing and non-compliance with Nasdaq listing requirements create material risks for NKGN. While Nasdaq has granted a temporary exception until January 7, 2025, the company faces multiple challenges: completing the delayed quarterly report, addressing the minimum market value requirement and finalizing the potential NKMax acquisition through the Seoul Bankruptcy Court.

The internal shift in reporting responsibilities and complex derivative securities valuation suggests potential control weaknesses. The temporary reprieve is contingent on the Court's decision regarding NKMax rehabilitation and NKGN's acquisition proposal. Failure to meet these requirements could lead to delisting, severely impacting shareholder value and market access. The company's decision not to appeal indicates confidence in meeting the January deadline, but investors should monitor this situation closely.

SANTA ANA, Calif., Nov. 26, 2024 (GLOBE NEWSWIRE) -- NKGen Biotech, Inc. (Nasdaq: NKGN) (“NKGen” or the “Company”), today announced it received a notice (the “Notice”) on November 20, 2024 from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) stating that the Company is not in compliance with Nasdaq Listing Rule 5250(c)(1) (the “Rule”) because it had not timely filed its Quarterly Report on Form 10-Q for the period ended September 30, 2024 (the “Form 10-Q”) with the Securities and Exchange Commission (the “SEC”) on or before November 19, 2024, the extended period provided for the filing under Rule 12b-25(b) of the Securities Exchange Act of 1934, as amended. The delay is in part due to the additional time required for valuation and review of various derivative securities as the Company has taken on more reporting responsibility internally. The Notice from Nasdaq has no immediate effect on the listing or trading of the Company’s common stock on the Nasdaq Global Market.

The Company is actively working with its auditors and advisors and intends to file the Form 10-Q as promptly as possible.

On November 20, 2024, subsequent to the Company’s receipt of the Notice, the Company received a letter from Nasdaq (the “Decision Letter”) granting a temporary exception to the Rule and the minimum market value of listed securities requirement in Nasdaq Listing Rule 5450(b)(2)(A) (the “MVLS Rule”) until January 7, 2025. The Seoul Bankruptcy Court (the “Court”) is expected to announce its decision on the rehabilitation of NKMax Co. Ltd (“NKMax”) and the Company’s proposal to acquire a majority interest in NKMax on or before such date. In accordance with the Decision Letter, the Company must advise the Nasdaq Hearings Panel (the “Panel”) of the outcome of the Court’s decision. If the Company is successful in its bid to acquire a majority interest in NKMax, the Company must advise the Panel no later than January 7, 2025, on its plan for regaining compliance with the Rule and MVLS Rule, for the Panel’s further consideration.

The Company may request that the Nasdaq Listing and Hearing Review Council (the “Council”) review the Panel’s determination in the Decision Letter, by written request received by the Council by December 5, 2024. In such event, the Company would be required to submit a fee of $15,000.00 to Nasdaq to cover the cost of the review. The Council may determine to review any Panel decision by January 4, 2025. The Company does not intend to appeal the Decision Letter at this time and intends to deliver an updated plan of compliance to the Panel no later than January 7, 2025.

For additional information regarding the Nasdaq notifications and related terms, please see the Current Report on Form 8-K the Company filed with the SEC on November 26, 2024, which is available at sec.gov. 

Forward-Looking Statements

Statements contained in this press release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may be identified by the use of words such as “anticipate”, “believe”, “could”, “continue”, “expect”, “estimate”, “may”, “plan”, “outlook”, “future” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Because such statements are subject to risks and uncertainties, many of which are outside of the Company’s control, actual results may differ materially from those expressed or implied by such forward-looking statements. Such statements include, but are not limited to, statements regarding the Company’s plans and expected timing for developing SNK01, including the expected timing of completing and announcing further results from its ongoing clinical studies; and the Company’s expected timing for developing its product candidates and potential benefits of its product candidates. Risks that contribute to the uncertain nature of the forward-looking statements include: the Company’s ability to execute its plans and strategies; risks related to performing clinical studies; the risk that initial and interim results of a clinical study do not necessarily predict final results and that one or more of the clinical outcomes may materially change as patient enrollment continues, following more comprehensive reviews of the data, and as more patient data become available; potential delays in the commencement, enrollment and completion of clinical studies and the reporting of data therefrom; the risk that studies will not be completed as planned; the risk that the abstract will not be published as planned including delays in timing, format, or accessibility; and NKGen’s ability to raise additional funding to complete the development of its product candidates. These and other risks and uncertainties are described more fully under the caption “Risk Factors” and elsewhere in the Company’s filings and reports, which may be accessed for free by visiting the Securities and Exchange Commission’s website at www.sec.gov and on the Company’s website under the subheading “Investors—Financial and Filings”. Investors should take such risks into account and should not rely on forward-looking statements when making investment decisions. All forward-looking statements contained in this press release speak only as of the date on which they were made. The Company undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.

Internal Contact:
Denise Chua, MBA, CLS, MT (ASCP)
SVP Corporate Affairs
949-396-6830
dchua@nkgenbiotech.com

External Contacts:
Chris Calabrese
Managing Director
LifeSci Advisors, LLC
ccalabrese@lifesciadvisors.com

Kevin Gardner
Managing Director
LifeSci Advisors, LLC
kgardner@lifesciadvisors.com

FAQ

Why did NKGen Biotech (NKGN) receive a Nasdaq notice on November 20, 2024?

NKGen Biotech received the notice for failing to timely file its Q3 2024 Form 10-Q report, violating Nasdaq Listing Rule 5250(c)(1).

What is the deadline given to NKGN by Nasdaq to resolve compliance issues?

Nasdaq granted NKGN a temporary exception until January 7, 2025, to resolve compliance issues pending the Seoul Bankruptcy Court's decision on NKMax.

What happens to NKGN's Nasdaq listing during this compliance period?

The notice has no immediate effect on NKGN's listing or trading status on the Nasdaq Global Market while the company works to resolve the compliance issues.