DEF 14A: Exicure Seeks Stockholder Approval for Reverse Stock Split to Maintain Nasdaq Listing

Exicure, Inc. is seeking stockholder approval for a reverse stock split at its special meeting on August 15, 2024, to maintain compliance with Nasdaq's minimum bid price requirement.

Summary

• Exicure, Inc. is holding a special meeting of stockholders on August 15, 2024, to vote on a proposal to amend the company's Amended and Restated Certificate of Incorporation to effect a reverse stock split.
• The proposed reverse stock split would be in a ratio ranging from 1-for-2 to 1-for-15, with the specific ratio to be determined by the Board of Directors.
• The primary purpose of the reverse stock split is to increase the market price of Exicure's common stock to meet the minimum bid price requirement for continued listing on The Nasdaq Capital Market.
• If the reverse stock split is approved, the Board of Directors will have the discretion to determine whether and when to implement it, based on factors such as market conditions and the trading price of the common stock.
• The company's common stock has been trading below the $1.00 minimum bid price required by Nasdaq, and the company has received notification from Nasdaq regarding non-compliance.
• As of July 26, 2024, there were 8,651,148 shares of common stock outstanding and entitled to vote at the Special Meeting.
• The Board of Directors recommends that stockholders vote FOR the Reverse Split Proposal.

Sentiment

Score: 4

Explanation: The document is primarily factual and procedural, but the need for a reverse stock split and the company's financial challenges suggest a negative outlook. The company's future is uncertain, and the success of the reverse stock split is not guaranteed.

Positives

• The reverse stock split aims to maintain the company's listing on Nasdaq, which could provide a broader market for its common stock.
• A higher share price could generate more interest from investors.
• The Board of Directors has the flexibility to determine the optimal reverse split ratio based on market conditions.

Negatives

• The effect of the reverse split on the market price of the common stock is uncertain.
• The market price per share after the reverse split may not rise proportionally to the reduction in the number of outstanding shares.
• The company's stock price previously declined substantially after a reverse stock split in June 2022.
• The reverse stock split may result in some stockholders owning odd-lots of less than 100 shares, which can incur higher transaction costs.
• The increase in authorized but unissued shares of common stock may have a potential anti-takeover effect.

Risks

• The company may not be able to maintain compliance with Nasdaq's minimum bid price requirement even after the reverse stock split.
• The market price of the common stock may be based on factors unrelated to the number of shares outstanding, such as the company's performance and financial condition.
• The company has a substantial need for additional funding in the near term, which could impact its stock price.
• Future issuances of authorized but unissued shares could dilute the percentage of stock ownership and voting rights of current stockholders.

Future Outlook

The company's future depends on regaining compliance with Nasdaq listing requirements and securing additional funding.

Management Comments

• Our Board of Directors believes that stockholder approval of amendments granting our Board of Directors this discretion, rather than approval of a specified exchange ratio, provides our Board of Directors with maximum flexibility to react to then-current market conditions and, therefore, is in our best interests and the best interests of our stockholders.
• Although our stockholders may approve the reverse stock split, we will not effect the reverse stock split if our Board of Directors does not deem it to be in our best interests and the best interests of our stockholders.

Industry Context

Reverse stock splits are a common strategy for companies facing delisting from exchanges due to low stock prices. The success of a reverse stock split depends on various factors, including the company's underlying financial health and market conditions.

Comparison to Industry Standards

• Many biotechnology companies facing similar challenges have implemented reverse stock splits to maintain exchange listings.
• The effectiveness of a reverse stock split varies widely, with some companies experiencing sustained price improvement while others see only a temporary effect.
• Companies like Delcath Systems and Bioblast Pharma have used reverse stock splits to regain compliance, but their long-term success has been mixed.
• Compared to these companies, Exicure's limited operations and substantial need for additional funding may make it more challenging to achieve a sustained increase in stock price following the reverse split.

Stakeholder Impact

• The reverse stock split will reduce the number of shares held by existing stockholders.
• The reverse stock split may affect the trading price and liquidity of the company's common stock.
• The company's ability to maintain its Nasdaq listing could impact investor confidence and access to capital.
• The potential issuance of additional shares could dilute the ownership and voting rights of existing stockholders.

Next Steps

• Stockholders will vote on the reverse stock split proposal at the Special Meeting on August 15, 2024.
• The Board of Directors will determine whether and when to implement the reverse stock split based on market conditions and the stock's trading price.
• The company will file an amendment to its Certificate of Incorporation with the Secretary of State of Delaware if the reverse stock split is approved and implemented.
• The company will continue to seek ways to regain compliance with Nasdaq listing requirements.
• The company will file a current report on Form 8-K with the SEC to announce the final voting results of the Special Meeting.

Key Dates

Keywords

reverse stock split, Nasdaq, minimum bid price, stockholders meeting, common stock, compliance, delisting