Axcella Health (NASDAQ: AXLA) stock is up 80% or so. AXLA stock moving up is nice for shareholders, of course it is, but we would hope that there’s an actual reason for it. Which is isn’t quite what we find. As far as there is any news it’s simply that the company will sort out the nominal - note, nominal, not real - stock price so as to keep the NASDAQ quote. Which really isn’t something that we think is 80% value additive. Oh, sure, being on NASDAQ is worth doing, the price would definitely slump on the OTC. But given how simple it is to deal with this problem no, we don’t see that 80% uptick as being justified.
As to what’s done at Axcella: “Axcella Health Inc. operates as a clinical-stage biotechnology company in the United States. The company treats complex diseases using endogenous metabolic modulators. Its product pipeline includes AXA1125 that is in Phase 2a clinical trial for long COVID therapy for patients, as well as Phase 2b clinical trial for treating non-alcoholic steatohepatitis; and AXA1665, which is in Phase 2 clinical trial for the reduction in risk of overt hepatic encephalopathy recurrence.”
It’s worth noting that it’s not been doing this very well which is why the stock price is down 90% and change over the past 12 months.
Axcella Health stock price from Google Finance
The only news that we can see is about the upcoming AGM. Which includes this: “Our board of directors has approved and, subject to stockholder approval, adopted a resolution (1) declaring advisable, and recommending to our stockholders for their approval, amendment to the Certificate of Incorporation (the “Reverse Stock Split Amendment”), to give our board of directors discretionary authority to effect a reverse stock split of all of the outstanding shares of our Common Stock at a ratio ranging from any whole number between 1-for-2 and 1-for-25 (“Reverse Stock Split”), with the exact ratio within such range to be determined by the board of directors at its discretion, subject to the board of directors’ authority to determine when to file the amendment and to abandon the other amendments notwithstanding prior stockholder approval of such amendments”
And, well, yes, that’s clearly necessary in order to keep the NASDAQ quotation. They’re well below the $1 minimum bid price and given that they will need more capital soon enough they’d be well advised to stay on NASDAQ where it’s easier to raise capital.
But a reverse stock split is a pretty normal thing to do. It’s an obvious thing to do as well. So it’s not really 80% value additive. Especially as we very strongly suspect that seen after such a reverse split there would be another capital raise.
So, no, we don’t see this. An 80% rise in Axcella stock, we see that as much too much.
