Image source: Pulmatrix
Lexington, Massachusetts-based Pulmatrix PULM announced Thursday that a 1-for-20 reverse common stock split would take effect on Monday, February 28, 2022, at 4:05 pm ET. Shares will trade on a split-adjusted basis on Tuesday morning, March 1, 2022.
Shareholders approved the Board's proposal to go forward with the reverse split at a special meeting on Feb. 10, 2022.
The split will reduce the number of common shares outstanding from 65,965,730 shares to 3,298,301 million shares.
Given where the pre-split shares have been trading, the company was in serious danger of being delisted from The Nasdaq Capital Market without the reverse split.
Pulmonary disease therapeutic pipeline
Pulmatrix is developing inhaled therapies to treat serious pulmonary and non-pulmonary disease.
The company's pipeline is based on a proprietary platform it calls iSPERSE, which comprises small, dense particles designed for efficient respiratory delivery.
Investment thesis
Long-suffering investors in Pulmatrix have had few reasons to cheer since the company went public in 2014 to much fanfare.
The stock has already reverse split twice, a 4-for-10 in 2015 and a 1-for-10 in 2019. After the latest split, it's fair to question how many more times the company will be able to go back to the well.
As a general rule, we're not fond of reverse splits, as they can often prolong investors' misery. This 1-for-20 split will keep the company on Nasdaq, however, and that listing has value.
At the current market cap of $21 million, the stock represents an opportunity only for those investors who are willing to take on significant risk over an extended time horizon.
- The markets for Pulmatrix's therapies in development are multibillion-dollar ones, with 16 million people in the US suffering from chronic obstructive pulmonary disease (COPD) alone.
- The company has shown an ability to raise capital with a declining stock price – no easy feat. Pulmatrix raised $47 million in gross proceeds in 2021 while the stock went from $1.19 to $0.44 per share.
- The next key milestone for the company will be the release of top line data from its Phase 1 trial of PUR1800 for acute exacerbation of chronic obstructive pulmonary disease (AECOPD).
- Positive data from that trial could lead to a Phase 2 study as well as broad partnership opportunities with deeper-pocketed pharmaceutical companies.
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Source: Equities News
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