Onconova Therapeutics, Inc. (ONTX) stock prices were down by a substantial 21.08% as of the market closing on May 20th, 2021, bringing the price per share down to USD$0.73 at the end of the trading day. Subsequent pre-market fluctuations saw the price skyrocket by a monumental 1235.62%, bringing the price per share up to USD$9.69.
Reverse Stock Split
This development came hot on the heels of the news on May 20th, 2021 that the company was initiating a reverse stock split of its common stock. As of the commencement of the trading day on May 21st, 2021, ONTX would trade on a split-adjusted basis under the same ticker symbol.
Prelude to the Reverse Split
During the annual meeting of stockholders on April 30th, 2021 the Board of Directors was given the green light to amend the 10th Amended and Restated Certificate of Incorporation. This authorization would see the implementation of a reverse stock split in a ratio ranging from one-for-five to one-for-fifteen. The Board went on to approve a maximum reverse stock split ratio of one-for-15.
Aftermath of the Reverse Split
The reverse stock split will see each fifteen shares of ONTX’s common stock reclassified, combined, converted, and changed into one fully paid and non-assessable share of the company’s common stock. The par value of each share before and after the split will have been USD$0.01 per share. With such a steep conversion rate, the reverse stock split will see the number of common shares issued by the company and outstanding go from roughly 236.714 million shares to almost 15.781 million shares.
Details of Reverse Split Logistics
As per the terms of the reverse stock split authorization, the company will not issue fractional shares as a result of the implementation of the one-for-fifteen reverse split. Stockholders who end up being owed a fraction of a share post-split will instead be entitled to a full share of common stock. Furthermore, in the event of a holder of a tradable warrant be entitled to receive a fraction of a share upon the exercise of the warrant, the fractional share will be rounded down to the nearest whole share.
Reduction in Authorized Shares
At the same Special Meeting of Stockholders on April 30th, 2021, ONTX stockholders also authorized a proposal to decrease the number of authorized shares of ONTX capital stock. This amendment will see the number of authorized shares of common stock for from 250 million to 125 million, a decisive 50% reduction.
Future Outlook for ONTX
These developments and decisions taken by owners of ONTX give context to the astronomical surge in ONTX stock prices. Current and potential investors hope this consolidation of the value of ownership of the company’s stock will facilitate a snowball effect that results in significant and sustained increases in shareholder value.