Delcath Systems, Inc. (NASDAQ:DCTH)
Delcath Systems, Inc. (NASDAQ:DCTH) stock remains under pressure pending the outcome of a shareholders meeting where the company hopes to get the green light on a proposed reverse stock split. The stock was down by 18.10% in Wednesday’s trading session to end the day at $0.07 a share.
Delcath Systems, Inc. (NASDAQ:DCTH) is a clinical development company, focusing on the development of treatments for liver cancer. The company is currently working on Melphalan hydrochloride for use with the Delcath hepatic delivery system for administering high-dose chemotherapy to the liver.
Cash Burn Concern
The stock has come under pressure ever since it rallied to highs of $0.30 a share in June. The stock appears to be paying the price for rallying on promotional hype rather than fundamental news.
The sudden change in investor sentiments comes on growing concerns about the company’s financial health. Stock dilution and cash burn concerns also continue to rattle investors fuelling the current sell-off wave. Delcath Systems, Inc. (NASDAQ:DCTH) reportedly burns $4million every quarter.
Delcath Systems, Inc. (NASDAQ:DCTH) had 490.2 million shares outstanding as of last month and 9.9 million authorized shares left. The company finds itself in a tight spot given that the remaining shares are not enough for the repayment of certain senior secured convertible notes.
Reverse Stock Split
A reverse stock split has turned out to be the only option out of the current standoff. However, failure of shareholders to approve a proposed reverse stock split leaves the company at the risk of delisting from the NASDAQ. The company also faces the risk of not gaining access to capital in order to continue operating as a going concern.
“[…] We are currently at the threshold of the Authorized Shares limit in our Certificate of Incorporation. Without a sufficient number of authorized shares, we are unable to access the $11.8 million of cash in the restricted account associated with the Convertible Notes issued last year, or to undertake any type of equity fund raise,” Delcath Systems in a regulatory Filling.
According to the board of directors, Delcath Systems, Inc. (NASDAQ:DCTH) must perform a proposed the 1:20 to 1:500 reverses stock split if it is to remain in operation. The board is also hoping to use the split to shore up the share price which continues to trade below the minimum $1 a share NASDAQ bid requirement.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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About the author: Monica has an undergraduate degree in Accounting and an MBA she earned – with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.