Oncternal Therapeutics Announces Reverse Stock Split
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Insights
A reverse stock split is a strategic financial maneuver often utilized by companies to elevate their stock price by reducing the number of outstanding shares. Oncternal Therapeutics' decision to implement a 1-for-20 reverse stock split is a clear initiative to comply with Nasdaq's minimum bid price requirement, which is a crucial factor for maintaining its listing status. This move is likely to be of particular interest to investors and market watchers, as it directly impacts the perceived market value and liquidity of the company's stock.
From a financial perspective, the reverse stock split does not inherently change the company's market capitalization, as it is a cosmetic change that adjusts the stock price and share count without altering the company's underlying value. However, the psychological impact on investors can be significant. A higher per-share price could potentially make the stock more appealing to institutional investors, who may have policies against investing in stocks below a certain price. Additionally, it may reduce the volatility often associated with lower-priced stocks.
For existing shareholders, the reverse split will not change their percentage of ownership, except for the elimination of fractional shares, which will be compensated with a cash payment. This adjustment could be perceived as a neutral to slightly negative event, as it may signal underlying issues with the company's performance or market perception. However, if the reverse split successfully stabilizes the stock price and Oncternal Therapeutics can demonstrate progress in its clinical programs, the long-term impact could be positive.
The biopharmaceutical sector, particularly companies focused on oncology, is highly competitive and subject to rigorous regulatory standards. Oncternal Therapeutics' reverse stock split reflects a broader industry trend where small-cap biotech firms often face pressure to maintain compliance with exchange listing requirements. Investors and analysts typically monitor these events closely, as they can be precursors to future capital raising efforts or strategic pivots.
It is essential to consider the market's reception to reverse stock splits in the biopharmaceutical industry. While intended to improve stock market metrics, these actions can sometimes be interpreted as a lack of organic growth options, leading to skepticism among investors. However, if Oncternal can leverage the reverse split to maintain its Nasdaq listing and subsequently use this position to attract further investment or partnership opportunities, the move could be viewed as a strategic necessity that paves the way for future growth.
Moreover, the adjustment of outstanding stock options, warrants and equity incentive plans is a standard procedure that ensures the equitable treatment of all stakeholders. This reflects a commitment to maintaining fair market practices, which could bolster investor confidence in the company's governance policies.
The reverse stock split process is governed by both corporate bylaws and securities regulations, ensuring that such actions are conducted transparently and with shareholder approval. Oncternal Therapeutics adhered to these legal frameworks by obtaining stockholder consent at its annual meeting and announcing the reverse split with sufficient notice. The legal implications of this process include adjustments to the exercise prices of stock options and warrants, as well as the treatment of fractional shares, which are standard practices compliant with securities law.
Investors should be aware that while the reverse stock split does not alter their proportional ownership, the cash payment in lieu of fractional shares will result in a slight reduction in the total number of shares held by each investor. This is a customary legal resolution to the issue of fractional shares and Computershare's role as the exchange agent will ensure that the process is managed according to the proper legal protocols.
The transparency and adherence to legal standards in executing the reverse stock split could mitigate some investor concerns regarding corporate governance. However, legal experts would advise investors to closely review the terms of any stock options or warrants they hold, as well as the company's future regulatory filings, to fully understand the implications of the reverse stock split.
SAN DIEGO, Jan. 04, 2024 (GLOBE NEWSWIRE) -- Oncternal Therapeutics, Inc. (Nasdaq: ONCT), a clinical-stage biopharmaceutical company focused on the development of novel oncology therapies, today announced that its board of directors (Board) has approved a 1-for-20 reverse stock split of the company's common stock. The reverse stock split will become effective at 12:01 a.m. Eastern time on January 8, 2024. The company's common stock is expected to begin trading on a split-adjusted basis on The Nasdaq Capital Market under the same symbol (ONCT) when the market opens on January 8, 2024 with the new CUSIP number 68236P206.
The reverse stock split was approved by the company's stockholders at its 2023 annual meeting, held on June 28, 2023, to be effected at the Board’s discretion with a ratio within the range of not less than 1-for-5 and not more than 1-for-30. As a result of the reverse stock split, every 20 shares of the company's common stock issued and outstanding will be automatically converted into one share of common stock, with no change in the
The reverse stock split is primarily intended to bring the company into compliance with Nasdaq’s minimum bid price requirement. To regain compliance, the bid price of the company’s common stock must close at
All outstanding stock options, warrants, and equity incentive plans will be proportionately affected. The exercise prices of the outstanding stock options, warrants, and equity incentive plans will be adjusted in accordance with their respective terms. The reverse stock split will affect all stockholders uniformly and will not affect any stockholder's ownership percentage of the company's shares other than rounding down any fractional shares, which shall be paid cash in lieu of such fractional shares.
Computershare Trust Company, N.A. (“Computershare”), the company's transfer agent, will act as the exchange agent for the reverse stock split. Computershare will provide instructions to any stockholders with physical certificates regarding the process for exchanging their certificates for split-adjusted shares into “book-entry form” and receiving cash in lieu of fractional shares, if any. Those stockholders with common stock in “street name” will receive instructions from their brokers.
About Oncternal Therapeutics
Oncternal Therapeutics is a clinical-stage biopharmaceutical company focused on the development of novel oncology therapies for the treatment of patients with cancers that have critical unmet medical need. Oncternal pursues drug development targeting promising, yet untapped biological pathways implicated in cancer generation or progression, focusing on hematological malignancies and prostate cancer. ONCT-534 is an investigational dual-action androgen receptor inhibitor (DAARI) with preclinical activity in prostate cancer models against both unmutated androgen receptor (AR), and against multiple forms of AR aberration. It is a potential treatment for patients with mCRPC with unmet medical need because of resistance to androgen receptor inhibitors, including those with AR amplification, mutations in the AR ligand binding domain (LBD), or splice variants with loss of the AR LBD. Oncternal has initiated Study ONCT-534-101 (NCT05917470), which is open and enrolling patients for treatment with mCRPC. ONCT-808 is an investigational autologous chimeric antigen receptor T (CAR T) cell therapy that targets Receptor Tyrosine Kinase-Like Orphan Receptor 1 (ROR1) using the binding domain from zilovertamab. ONCT-808 has demonstrated activity in preclinical models against multiple hematological malignancies and solid tumors and has been shown to be specific for cancer cells expressing ROR1. Oncternal has developed a robust and reproducible manufacturing process that has the potential to reduce the time patients must wait for their individual CAR T therapy to be produced, compared with currently approved CAR T products. Oncternal has dosed patients under Study ONCT-808-101 (NCT05588440) with relapsed or refractory aggressive B-cell lymphoma, including patients who have failed previous CD19 CAR T treatment. Zilovertamab is an investigational monoclonal antibody designed to inhibit the function of ROR1. Zilovertamab has been evaluated in a Phase 1/2 Study CIRM-0001 (NCT03088878) in combination with ibrutinib for the treatment of patients with mantle cell lymphoma (MCL), chronic lymphocytic leukemia (CLL) and marginal zone lymphoma (MZL), which resulted in
Forward-Looking Information
Oncternal cautions you that statements included in this press release that are not a description of historical facts are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negatives of these terms or other similar expressions. These statements are based on Oncternal’s current beliefs and expectations. Forward-looking statements include statements regarding the timing of the reverse stock split; and Oncternal’s ability to regain compliance with the Nasdaq minimum bid price requirement. Forward-looking statements are subject to risks and uncertainties, including Oncternal’s ability to regain compliance with the minimum bid price requirement and maintain its listing on Nasdaq, the trading price of Oncternal’s common stock may be volatile, as well as inherent in Oncternal’s business, including risks associated with the clinical development and process for obtaining regulatory approval of Oncternal’s product candidates, such as potential delays in the commencement, enrollment and completion of clinical trials; the risk that interim results of a clinical trial do not 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, as follow-up on the outcome of any particular patient continues, and as more patient data become available; and other risks described in Oncternal’s filings with the U.S. Securities and Exchange Commission. All forward-looking statements in this press release are current only as of the date hereof and, except as required by applicable law, Oncternal undertakes no obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements are qualified in their entirety by this cautionary statement. This caution is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Contact Information:
Investors
Richard Vincent
858-434-1113
rvincent@oncternal.com
Media
Corey Davis, Ph.D.
LifeSci Advisors
212-915-2577
cdavis@lifesciadvisors.com
FAQ
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