Shares of Inovio Pharmaceuticals Inc(NYSEMKT:INO) are down around 6% this morning following an announcement that the company plans to initiate a 1 for 4 reverse split. According to the press release, the move was approved by both a majority of shareholders and Inovio’s Board, with an effective date to be announced at a later time.
What’s important to understand is that this split is being announced only a few weeks ahead of the planned top line data readout for VGX-3100, Inovio’s experimental cervical cancer vaccine. Logistically, a split and a higher share price would probably do wonders in regards to institutional investment for this small-cap biotech, if the top line data are positive. Presently, institutions hold only 15% of Inovio’s outstanding shares, which has probably played a big role in the tremendous volatility in the company’s share price over the last year.
On the flip side, a negative result for VGX-3100 would give the company room to raise funds for additional trials, without having to worry about potential delisting issues. In short, this is a smart move for the company, but its long-term consequences for shareholders won’t be known until VGX-3100′s data hit the Street.
I understand the hyperbole in this and do not think it deserves an ignore. With the indefinite date, we are still getting raked over the coals. I presume a PR tomorrow ( yes, closed) to announce date so we can begin the long climb out of this deep hole. Bashing those who have suffered by younger or richer LT investors is very unseemly by other, more well-off stalwarts from this board. A lot of unnecessary pain has been inflicted here by this seemingly indifferent, slow paced, drawn out RS.