Cartesian Therapeutics Announces Approval of Conversion of Series A Convertible Preferred Stock and Plans to Effect Reverse Stock Split
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Insights
The approval of the reverse stock split by Cartesian Therapeutics' shareholders and the subsequent conversion of preferred stock into common stock are strategic financial maneuvers that can influence the company's stock liquidity and market perception. The reverse stock split, in particular, is a move often employed by companies to boost the share price, potentially making it more attractive to investors by maintaining compliance with exchange listing requirements. It's important to note that while the reverse stock split does not inherently change the company's market capitalization, it can sometimes be perceived as a red flag if the underlying motives are to mask a declining share price or if it doesn't align with a broader strategic plan for value creation.
From a financial perspective, the reduction in the number of outstanding shares increases the earnings per share (EPS) metric, a key indicator watched by investors. However, this is purely a mathematical outcome and does not reflect an actual improvement in the company's financial performance. Additionally, the conversion of preferred stock into common stock will dilute the current shareholders' stake, but it also indicates that the company is progressing towards a capital structure that could be more appealing to new investors. The conversion terms and the impact on the exercise or conversion prices of outstanding stock options and warrants are important details that stakeholders should examine closely.
Overall, the implications of these corporate actions must be monitored over time to assess their effectiveness in improving shareholder value and the company's position in the competitive biotechnology sector.
Cartesian Therapeutics' decision to conduct a reverse stock split and convert preferred shares into common stock can have implications for the company's brand perception in the market. Reverse stock splits can be a double-edged sword; they can lead to a more manageable and higher stock price, which may be perceived positively if the market views it as a step towards a more stable financial future. Conversely, it can be seen as a cosmetic change if not accompanied by fundamental improvements in the company's operations and financial health.
Furthermore, the biotechnology sector is highly sensitive to investor sentiment, which can be swayed by such structural changes. Investors and analysts typically look for consistency in a company's growth trajectory and sudden changes in capital structure can prompt a reevaluation of the company's long-term strategy. The timing and nature of these changes will be closely scrutinized, especially considering the industry's reliance on continuous funding for research and development activities.
It is also essential to understand the market's response to the new share structure post-conversion, as it could affect the stock's volatility and trading volume. Monitoring competitor reactions and investor engagement in the weeks following the reverse stock split will provide additional insights into the strategic impact of Cartesian's decisions.
In the context of the biotechnology industry, where research and development timelines are long and capital-intensive, Cartesian Therapeutics' corporate actions reflect a strategic approach to managing its financial resources and investor relations. The conversion of Series A Non-Voting Convertible Preferred Stock into common stock is a notable event, as it suggests a potential preparation for future funding rounds or a simplification of the capital structure to attract investment. This conversion also speaks to the company's confidence in its mRNA cell therapy for autoimmune diseases, signaling progression in its clinical development path that could be nearing key milestones.
It is important to analyze the potential impact of these decisions on the company's ability to raise additional capital, as a streamlined equity structure can be more attractive to institutional investors. Additionally, the reverse stock split could be a strategic move to align the company's share price with peer companies in the biotech sector, which often trade at higher prices per share due to the speculative nature of the industry.
The biotech sector is driven by innovation and the potential for significant returns on successful therapies. Investors will be interested in how these corporate actions align with Cartesian's pipeline progress and any strategic partnerships or collaborations that may be in the works, which could provide additional context to the company's long-term growth prospects.
Proposals approved at Company’s special meeting of stockholders held March 27, 2024
GAITHERSBURG, Md., March 28, 2024 (GLOBE NEWSWIRE) -- Cartesian Therapeutics, Inc. (NASDAQ: RNAC) (the “Company”), a clinical-stage biotechnology company pioneering mRNA cell therapy for autoimmune diseases, today announced results from a special meeting of stockholders held March 27, 2024.
During the meeting, Cartesian stockholders approved the issuance of shares of common stock upon conversion of Cartesian’s Series A Non-Voting Convertible Preferred Stock. The conversion of the majority of the shares of Series A Non-Voting Convertible Preferred Stock will occur automatically on April 8, 2024 at 5:00 p.m., Eastern time, and the remaining shares of Series A Non-Voting Convertible Preferred Stock remain subject to beneficial ownership limitations described in Cartesian’s filings with the Securities and Exchange Commission. In addition, stockholders voted to approve a reverse stock split of Cartesian’s issued and outstanding common stock. In conjunction with this approval, a 1-for-30 reverse stock split of Cartesian’s outstanding shares of common stock, par value
Information Regarding Reverse Stock Split
Cartesian’s common stock will begin trading on a reverse stock split-adjusted basis at the opening of market trading on April 5, 2024. Following the reverse stock split, the Company’s common stock will continue to trade on The Nasdaq Global Market under the symbol “RNAC” with the new CUSIP number 816212302.
At the effective time of the reverse split, every 30 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 in lieu of such fractional share. 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. 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 warrants, and to the number of shares of common stock issuable under the Company’s equity incentive plans, and to the conversion ratio of the Company’s Series A Non-Voting Convertible Preferred Stock, par value
The reverse stock split will reduce the number of issued and outstanding shares of the Company’s common stock from approximately 165.5 million shares to approximately 5.5 million shares before the automatic conversion of the Company’s Series A Non-Voting Convertible Preferred Stock into common stock, or approximately 17.8 million shares thereafter. The approximately 166.3 thousand shares of Series A Non-Voting Convertible Preferred Stock that remain subject to beneficial ownership limitations will be convertible into approximately 5.5 million shares of common stock for a total of approximately 23.3 million shares of common stock outstanding once converted.
About Cartesian Therapeutics
Cartesian Therapeutics is a clinical-stage company pioneering mRNA cell therapies for the treatment of autoimmune diseases. The Company’s lead asset, Descartes-08, is a potential first-in-class mRNA CAR-T in Phase 2b clinical development for patients with generalized myasthenia gravis. Additional Phase 2 studies are planned in systemic lupus erythematosus under an allowed IND, as well as basket trials in additional autoimmune indications. The Company’s clinical-stage pipeline also includes Descartes-15, a next-generation, autologous anti-BCMA mRNA CAR-T.
Forward Looking Statements
Any statements in this press release about the future expectations, plans and prospects of the Company, including without limitation, statements regarding the Company’s planned reverse stock split and the timing thereof, the automatic conversion and any future conversions of the Company’s Series A Non-Voting Convertible Preferred Stock into common stock, the impact of the reverse stock split on the Company’s stockholders, including any adjustments that may result from the treatment of fractional shares, the expected number of shares of common stock to be issued and outstanding following the reverse stock split, the potential of Descartes-08 and Descartes-15 and the Company’s other product candidates to treat myasthenia gravis, systemic lupus erythematosus, or any other disease, the anticipated timing or the outcome of the FDA’s review of the Company’s regulatory filings, and other statements containing the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “hypothesize,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would,” and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but not limited to, the following: the uncertainties inherent in the initiation, completion and cost of clinical trials including proof of concept trials, including uncertain outcomes, the availability and timing of data from ongoing and future clinical trials and the results of such trials, whether preliminary results from a particular clinical trial will be predictive of the final results of that trial and whether results of early clinical trials will be indicative of the results of later clinical trials, the ability to predict results of studies performed on human beings based on results of studies performed on non-human subjects, the unproven approach of the Company’s RNA Armory® technology, potential delays in enrollment of patients, undesirable side effects of the Company’s product candidates, its reliance on third parties to conduct its clinical trials, the Company’s inability to maintain its existing or future collaborations, licenses or contractual relationships, its inability to protect its proprietary technology and intellectual property, potential delays in regulatory approvals, the availability of funding sufficient for its foreseeable and unforeseeable operating expenses and capital expenditure requirements, the Company’s recurring losses from operations and negative cash flows, substantial fluctuation in the price of the Company’s common stock, risks related to geopolitical conflicts and pandemics and other important factors discussed in the “Risk Factors” section of the Company’s most recent Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q, and in other filings that the Company makes with the Securities and Exchange Commission. In addition, any forward-looking statements included in this press release represent the Company’s views only as of the date of its publication and should not be relied upon as representing its views as of any subsequent date. The Company specifically disclaims any intention to update any forward-looking statements included in this press release, except as required by law.
Contact Information:
Investor Relations:
Melissa Forst
Argot Partners
cartesian@argotpartners.com
Media:
David Rosen
Argot Partners
cartesian@argotpartners.com
FAQ
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