TransCode Therapeutics Announces 1-for-40 Reverse Stock Split
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Insights
The implementation of a 1-for-40 reverse stock split by TransCode Therapeutics is a strategic move aimed at bolstering the company's stock price to maintain compliance with Nasdaq's minimum bid price requirement. This is a common tactic employed by public companies to avoid delisting, which can significantly affect a stock's liquidity and appeal to institutional investors. The immediate effect of such an action is an artificial increase in the share price, which may make the stock more attractive to certain investors.
However, it is crucial to assess the underlying financial health of the company. If the reverse split is not accompanied by fundamental improvements in the company's operations, the benefits may be short-lived. Investors should scrutinize TransCode's financials, pipeline progress and market potential of its RNA therapeutics to determine if the reverse split could serve as a catalyst for genuine value creation or if it's merely a cosmetic change.
Furthermore, the substantial reduction in outstanding shares from approximately 25 million to around 627,448 will concentrate the equity, potentially increasing volatility. Proportional adjustments to stock options and warrants could also influence the investment decisions of stakeholders and option holders. These factors should be examined carefully when considering the long-term implications of the reverse stock split on shareholder value.
TransCode's decision to undergo a reverse stock split reflects not only a tactical response to stock exchange requirements but also signals to the market its intent to stabilize and potentially enhance its investment profile. Market perception following a reverse split can vary; some investors view such actions as a red flag indicating distress, while others interpret it as a company taking proactive steps to improve its stock's marketability.
Analysis of historical data suggests that the market reaction to reverse stock splits is mixed, with outcomes heavily dependent on the subsequent operational performance of the company. It will be important to monitor investor sentiment and trading volume post-split to gauge the market's reception of this move. Additionally, changes in the stock's liquidity post-split could influence the ability of investors to enter or exit positions in TransCode's stock, affecting its attractiveness to both retail and institutional investors.
Given the competitive landscape of biotech firms specializing in RNA therapeutics, TransCode's strategic maneuvers, including this reverse stock split, should be evaluated in the context of industry trends and the performance of peer companies. Any competitive advantages or advancements in their RNA oncology research could play a crucial role in determining the long-term success of this corporate action.
From a legal standpoint, the reverse stock split executed by TransCode is a maneuver that requires careful adherence to both corporate governance and securities regulations. The fact that the split was approved by stockholders indicates due process in obtaining shareholder consent, which is a critical component of such corporate actions. The company must also ensure accurate and timely communication with shareholders, especially regarding the details of the exchange process and the adjustment of fractional shares.
The change in CUSIP number is a technical but essential aspect of the reverse split, as it ensures proper identification of the new share structure in trading and settlement systems. It's important for the company to manage this transition seamlessly to avoid any trading disruptions. Additionally, the proportional adjustments to stock options and warrants necessitate precise recalculations to maintain equitable terms for option and warrant holders, which is a matter of both legal and financial fairness.
TransCode's legal team must also ensure compliance with Nasdaq's continued listing requirements post-split. Failure to maintain the necessary bid price or comply with other listing standards could result in further legal and financial complications. The legal implications of this reverse stock split, while often overshadowed by financial considerations, are fundamental to its execution and long-term impact on the company's governance structure.
BOSTON, Jan. 11, 2024 (GLOBE NEWSWIRE) -- TransCode Therapeutics, Inc. (NASDAQ: RNAZ) (“TransCode” or the “Company”), the RNA Oncology Company™ committed to more effectively treating cancer using RNA therapeutics, today announced that its Board of Directors has approved a 1-for-40 reverse stock split, to be effective at 12:01 a.m. Eastern Standard Time Tuesday, January 16, 2024. TransCode common stock is expected to begin trading on a split-adjusted basis on the Nasdaq Capital Market on Tuesday, January 16, 2024, under the current trading symbol, “RNAZ.” The reverse stock split was approved by TransCode’s stockholders on January 8, 2024, and is intended to increase the per share trading price of the Company's common stock to enable the Company to satisfy the minimum bid price requirement for continued listing on the Nasdaq Capital Market.
The 1-for-40 reverse stock split will automatically convert forty current shares of TransCode’s common stock into one new share of common stock. No fractional shares will be issued in connection with the reverse stock split. In lieu of issuing fractional shares, stockholders of record who otherwise would be entitled to receive fractional shares will be entitled to rounding up of the fractional share to the nearest whole number. The reverse split will reduce the number of shares of outstanding common stock from approximately 25,097,596 shares to approximately 627,448 shares. Proportional adjustments also will be made to the exercise prices of TransCode’s outstanding stock options and warrants, and to the number of shares issued and issuable under TransCode’s stock incentive plans.
Vstock Transfer LLC will act as the exchange agent for the reverse stock split. Stockholders of record are not required to take any action to receive post-split shares in book-entry. Stockholders owning shares through a bank, broker, custodian or other nominee will have their positions automatically adjusted to reflect the reverse stock split, subject to the holding entity’s particular processes; such stockholders will not be required to take any action in connection with the reverse stock split. However, these banks, brokers, custodians or other nominees may have different procedures than registered stockholders for processing the reverse stock split. If a stockholder holds shares of common stock with a bank, broker, custodian or other nominee and has any questions in this regard, stockholders are encouraged to contact their bank, broker, custodian or other nominee for more information.
In connection with the reverse stock split, the Company's CUSIP number will change to 89357L 303 as of 12:01 a.m. Eastern Standard Time on Tuesday, January 16, 2024.
About TransCode Therapeutics
TransCode is an RNA oncology company created on the belief that cancer can be more effectively treated using RNA therapeutics. Using its proprietary iron oxide nanoparticle delivery platform, the company has created a portfolio of drug candidates designed to target a variety of tumor types with the objective of significantly improving patient outcomes. The company’s lead therapeutic candidate, TTX-MC138, is focused on treating metastatic cancer, which is believed to cause approximately
Forward-Looking Statements
This press release contains “forward-looking statements” that are subject to substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this press release are forward-looking statements. Forward-looking statements contained in this press release may be identified by the use of words such as “anticipate,” “believe,” “contemplate,” “could,” “estimate,” “expect,” “intend,” “seek,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “target,” “aim,” “should,” “will,” “would,” or the negative of these words or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements are based on the Company’s current expectations and are subject to inherent uncertainties, risks and assumptions that are difficult to predict. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate, including the Company’s expectations regarding the effect of the reverse stock split and its continued listing on Nasdaq. These and other risks and uncertainties are described more fully in the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in the Company’s Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission. Forward-looking statements contained in this announcement are made as of this date, and the Company undertakes no duty to update such information except as required under applicable law.
For more information, please contact:
TransCode Therapeutics, Inc.
Tom Fitzgerald, CFO
tom.fitzgerald@transcodetherapeutics.com
FAQ
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