PRINCETON, N.J. - Sonnet BioTherapeutics Holdings, Inc. (NASDAQ: NASDAQ:SONN), a biopharmaceutical company specializing in the development of targeted biologic drugs, announced it will implement a 1-for-8 reverse stock split of its common stock as trading begins on Monday. This corporate action aims to elevate the company's per share trading price to comply with the Nasdaq Capital Market's minimum bid price requirement.
The reverse stock split, approved by Sonnet's stockholders on September 12, 2024, and ratified by the board of directors on September 23, 2024, will consolidate every eight existing shares of common stock into one new share. Despite the consolidation, the par value will remain at $0.0001 per share, and there will be no change to the authorized share count of the company.
The adjustment is set to reduce the number of shares from approximately 5.2 million to about 650,300. It will be applied uniformly across all shareholders, with the exception that fractional shares will not be issued. Instead, shareholders entitled to fractions will receive a cash payment based on the average closing price of Sonnet's common stock on the five consecutive days preceding the effective date.
The change will also extend to the common stock issuable upon the exercise of outstanding warrants and stock options, with a corresponding adjustment to the exercise prices, and under the company's equity incentive plans. Securities Transfer Corporation has been appointed as the exchange and transfer agent for the reverse stock split.
Shareholders holding their shares in electronic form or through a brokerage account are not required to take any action. Those with physical share certificates will be contacted with instructions on the exchange process. The company's common stock will continue trading on the Nasdaq Capital Market under the ticker symbol SONN, but with a new CUSIP number, 83548R402.
This strategic move by Sonnet is based on a press release statement and is designed to maintain its listing status on the Nasdaq exchange, reflecting a common practice among public companies to meet exchange listing requirements.
In other recent news, Sonnet BioTherapeutics shareholders have approved significant proposals including a potential reverse stock split and the issuance of more than 20% of the company's outstanding common stock under the ChEF Purchase Agreement with Chardan Capital Markets. The company has also been granted an extension until October 15, 2024, to execute a reverse stock split to meet the Nasdaq's minimum bid price requirement. In addition, Sonnet BioTherapeutics has advanced its immunotherapeutic for metastatic pancreatic cancer, SON-1210, and reported positive results from its Phase 1b clinical trial of SON-080, a treatment candidate for chemotherapy-induced peripheral neuropathy. The company has also entered an agreement for the immediate exercise of warrants allowing the purchase of up to 2,828,500 shares of common stock at a reduced price, and plans to issue new unregistered warrants for the purchase of up to 5,657,000 shares. The anticipated gross proceeds from these actions are projected to be around $3.4 million, which Sonnet intends to allocate towards research and development efforts. These are recent developments in the company's ongoing endeavors.
InvestingPro Insights
As Sonnet BioTherapeutics Holdings, Inc. (NASDAQ: SONN) embarks on a reverse stock split to meet Nasdaq's minimum bid price requirement, investors may consider the company's financial health and market performance. According to InvestingPro data, Sonnet's market capitalization stands at a modest $4.69 million, reflecting the size and scale of the biopharmaceutical company within the industry.
InvestingPro Tips highlight that Sonnet has more cash than debt on its balance sheet, which could offer some financial flexibility in its operations. However, the company's stock has experienced a significant decline over the past week, and analysts do not expect Sonnet to be profitable this year. These factors are critical for investors to weigh, especially in light of the recent corporate action.
Additional metrics from InvestingPro show a negative revenue growth of -67.76% for the last twelve months as of Q3 2024, and a gross profit margin standing at an alarming -11318.9%. These figures indicate substantial challenges in the company's ability to generate profitable sales. Moreover, the price of Sonnet's stock has fallen considerably over the last year, with a 1 Year Price Total Return of -70.2%.
For investors seeking a deeper dive into Sonnet's financials and market performance, InvestingPro provides a broader array of tips and data. Currently, there are 12 additional InvestingPro Tips available, which can offer more comprehensive insights into Sonnet's position in the biopharmaceutical industry. Interested readers can find these tips at https://www.investing.com/pro/SONN.
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