JERUSALEM - Scinai Immunotherapeutics Ltd. (NASDAQ:SCNI), a biopharmaceutical company, announced today that it has implemented a strategic change to its share structure in an attempt to comply with Nasdaq's minimum bid price requirement. The company's Board of Directors has approved a ratio change of the American Depositary Shares (ADSs) to its non-traded ordinary shares. This adjustment increases the number of ordinary shares that each ADS represents from 400 to 4,000, effectively executing a reverse stock split at a ratio of 1 for 10.
This corporate action follows a notification received by Scinai from Nasdaq on April 30, 2024, indicating that the company's ADSs were at risk of delisting due to a failure to maintain the minimum required bid price of $1.00 over a sustained period. In response, Scinai has appealed the delisting determination and requested a hearing before an independent Nasdaq Hearings Panel, which has stayed any suspension or delisting action pending the outcome of the hearing.
Scinai's ratio change is scheduled to take effect on May 21, 2024, and is designed to address the non-compliance issue by potentially increasing the per-share trading price of the ADSs. The company believes that this corrective measure, if successful prior to the hearing date, could render the scheduled hearing unnecessary. However, Scinai acknowledges that there is no guarantee the ratio change will achieve the desired compliance in time, and in such a case, it may seek an extension or propose an additional ratio change.
Holders of the ADSs are not required to take any action to effectuate the ratio change, and no fractional ADSs will be issued. Any fractional entitlements will be sold, and the net proceeds will be distributed to the applicable ADS holders.
Scinai specializes in developing biological products for inflammation and immunology, as well as offering Contract Development and Manufacturing Organization (CDMO) services through its Scinai Bioservices unit. The company's shares will continue to trade on Nasdaq pending the hearing and any decisions that follow.
The information for this article is based on a press release statement from Scinai Immunotherapeutics Ltd.
InvestingPro Insights
In light of Scinai Immunotherapeutics Ltd.'s strategic share structure change, it is pertinent to consider the company's financial health and market performance, as indicated by real-time data from InvestingPro. Scinai, with a market capitalization of just $2.03 million, operates under significant financial pressure, as evidenced by an adjusted P/E ratio for the last twelve months as of Q3 2023 of -0.22, underscoring the company's lack of profitability during this period.
InvestingPro Tips suggest that Scinai is quickly burning through cash and suffers from weak gross profit margins, which could be contributing factors to the stock's volatility and the substantial decline in its price over the past year, with a 75.97% drop in one-year price total return. Despite this, the company's liquid assets do exceed its short-term obligations, providing a degree of financial flexibility.
For investors seeking a deeper dive into Scinai's financial metrics and strategic outlook, there are additional InvestingPro Tips available. These include an analysis of the company's significant debt burden, valuation implications on poor free cash flow yield, and the fact that Scinai does not pay a dividend to shareholders. Access to these insights can be found at InvestingPro, with a total of 10 tips currently listed that could help investors make more informed decisions.
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