Processa Pharmaceuticals to Effect a 1-for-20 Reverse Stock Split
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Insights
The implementation of a reverse stock split by Processa Pharmaceuticals is a strategic financial maneuver aimed at addressing the Nasdaq's minimum bid price requirement. This action is typically employed by companies to elevate their stock price by reducing the number of shares available in the market, thus potentially avoiding delisting. For stakeholders, this is a moment of caution as reverse splits can often be perceived as a sign of distress, potentially leading to a negative sentiment in the short term. However, if the company's fundamentals are sound, this could also be viewed as a corrective measure to maintain its market standing.
From an investment perspective, the reduction of shares from approximately 24.6 million to about 1.2 million will not affect the company's market capitalization but will increase the price per share. It's crucial to monitor the stock's performance post-split to gauge market reaction. Additionally, the adjustment of equity awards and warrants will require careful consideration as it affects the value and incentives of stakeholders involved.
Long-term implications are contingent upon the company's ability to leverage the higher stock price to attract investors, improve liquidity and meet other listing standards. It is worth noting that while the ownership percentage remains nominally unchanged, the rounding up of fractional shares could result in a minimal dilution, potentially impacting small shareholders.
A reverse stock split often reflects a company's strategic shift to realign its stock performance with market expectations. For Processa Pharmaceuticals, the move is aimed at compliance with Nasdaq's listing requirements, which is a fundamental aspect for companies wishing to maintain their visibility and credibility in the market. The market's reception of such a split can vary and it is essential to analyze the historical performance of stocks post-reverse split within the pharmaceutical sector.
Moreover, the company's focus on developing next-generation chemotherapeutic drugs suggests a potential for growth if their pipeline proves successful. Investors should assess the company's R&D progress, as well as the competitive landscape, to understand the potential impact on the company's valuation. The reverse split may also signal to the market that the company is taking proactive steps to improve its financial health, which could be a positive indicator for future growth and investment.
Legally, the reverse stock split is conducted in accordance with shareholder approval and board resolution, ensuring compliance with corporate governance standards. It is important for investors to be aware of the legal implications of such corporate actions. The issuance of a new CUSIP number signifies a change in the identification of the stock, which is a standard procedure in such cases.
Stockholders should pay attention to the details of the transmittal letter from the transfer agent, which will contain specific instructions regarding the exchange of pre-split shares for post-split shares. The legal nuances of handling fractional shares, which in this case are rounded up, must be understood to avoid any confusion or misconceptions about the process. It is also pertinent to note that all adjustments to the company's equity incentive plans and other agreements will need to be scrutinized for compliance with the terms and the impact on the parties involved.
HANOVER, MD, Jan. 18, 2024 (GLOBE NEWSWIRE) -- Processa Pharmaceuticals, Inc. (Nasdaq: PCSA) (“Processa” or the “Company”), a clinical-stage pharmaceutical company focused on developing the next generation of chemotherapeutic drugs to improve the efficacy and safety for patients suffering from cancer, announces that in conjunction with stockholder approval of the reverse stock split on November 14, 2023, the Company’s Board of Directors, on January 8, 2024, determined to fix a split ratio of 1-for-20. The Company’s common stock will begin trading on a reverse stock split-adjusted basis at the opening of the market on Monday, January 22, 2024. Following the reverse stock split, the Company’s common stock will continue to trade on the Nasdaq Capital Market under the symbol “PCSA” with the new CUSIP number 74275C304. The reverse stock split is intended for the Company to regain compliance with the minimum bid price requirement of
At the effective time of the reverse stock split, every twenty (20) issued and outstanding shares of the Company’s common stock will be automatically converted into one (1) share of the Company’s common stock without any change in the par value per share. The Company will not be issuing fractional shares in connection with the reverse stock split. Stockholders who otherwise would be entitled to receive fractional shares, because they hold a number of shares not evenly divisible by the reverse stock split ratio of the reverse stock split, will be entitled, upon surrender of certificate(s) representing these shares, to a number of shares rounded up to the nearest whole number and, accordingly, no money will be paid for a fractional share.
The reverse stock split will reduce the number of shares of the Company’s outstanding common stock from approximately 24.6 million shares to approximately 1.2 million shares. As a result of the anticipated reverse stock split, proportionate adjustments will be made to the number of shares of the Company’s common stock underlying the Company’s outstanding equity awards, warrants, and the number of shares issuable under the Company’s equity incentive plans and other existing agreements, as well as the exercise price, as applicable. The reverse stock split will have no effect on the number of authorized shares or the par value of the Company’s common stock, and the ownership percentage of each stockholder will remain unchanged other than as a result of fractional shares.
The Company’s transfer agent, Continental Stock Transfer & Trust, will serve as the exchange agent for the reverse stock split.
Registered stockholders that hold shares of pre-split common stock in the Company electronically in book-entry form are not required to take any action in order to receive post-split shares of common stock. For stockholders that hold shares of common stock in certificate form, such stockholders will receive a transmittal letter from Continental Stock Transfer & Trust as soon as practical following the effective date containing instructions.
Stockholders that hold their shares of common stock either in a brokerage or in “street name” will have their shares of common stock automatically adjusted to reflect the reverse stock split, subject to compliance with each broker’s particular processes. Such stockholders will not be required to take any separate action in connection with the reverse stock split.
Additional information about the reverse stock split can be found in the Company's definitive proxy statement (the "Proxy Statement") filed with the Securities and Exchange Commission (the "SEC") on October 5, 2023, which is available free of charge at the SEC's website, www.sec.gov.
About Processa Pharmaceuticals, Inc.
Processa is a clinical stage pharmaceutical company focused on developing the Next Generation Chemotherapy (NGC) drugs to improve the safety and efficacy of cancer treatment. By combining Processa’s novel oncology pipeline with proven cancer-killing active molecules and the Processa Regulatory Science Approach as well as experience in defining Optimal Dosage Regimens for FDA approvals, Processa not only will be providing better therapy options to cancer patients but also increase the probability of FDA approval for its Next Generation Chemotherapy (NGC) drugs following an efficient path to approval. Processa’s NGC drugs are modifications of existing FDA-approved oncology drugs resulting in an alteration of the metabolism and/or distribution of these FDA-approved drugs while maintaining the existing mechanisms of killing the cancer cells. The company’s approach to drug development is based on more than 30 years of drug development expertise to efficiently design and conduct clinical trials that demonstrate a positive benefit/risk relationship. The Processa team has a track record of obtaining over 30 approvals for indications across almost every division of FDA. Using its proven Regulatory Science Approach, the Processa Team has experience defining the Optimal Dosage Regimen using the principles of the FDA’s Project Optimus Oncology initiative. The advantages of Processa’s NGCs are expected to include fewer patients experiencing side effects that lead to dose discontinuation, more significant cancer response and a greater number of patients -- in excess of 200,000 for each NGC drug -- who will benefit from each NGC drug. Currently under development are three next generation chemotherapy oncology treatments: Next Generation Capecitabine (PCS6422 and capecitabine to treat metastatic colorectal, gastrointestinal, breast, pancreatic, and other cancers), Next Generation Gemcitabine (PCS3117 to treat pancreatic, lung, ovarian, breast, and other cancers), and Next Generation Irinotecan (PCS11T to treat lung, colorectal, gastrointestinal, pancreatic, and other cancers).
For more information, visit our website at www.processapharma.com.
Forward-Looking Statements
This release contains forward-looking statements. The statements in this press release that are not purely historical are forward-looking statements which involve risks and uncertainties. Actual future performance outcomes and results may differ materially from those expressed in forward-looking statements. Please refer to the documents filed by Processa Pharmaceuticals with the SEC, specifically the most recent reports on Forms 10-K and 10-Q, which identify important risk factors which could cause actual results to differ from those contained in the forward-looking statements.
For More Information:
Investors:
Bret Shapiro
CORE IR
ir@processapharma.com
Company Contact:
Patrick Lin
(925) 683-3218
plin@processapharma.com
FAQ
What is the purpose of Processa Pharmaceuticals, Inc.'s reverse stock split?
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When will the reverse stock split-adjusted trading of Processa Pharmaceuticals, Inc.'s common stock begin?
What will happen to the number of outstanding common stock shares after the reverse stock split?
Under what symbol will Processa Pharmaceuticals, Inc.'s common stock continue to trade after the reverse stock split?
