NexImmune (NASDAQ: NEXI) stock should jump 2,500% at the open today. This 25x rise in NEXI stock is not because they’re suddenly found the cure for HPV related cancers - the thing they’re working on. Rather, this is a purely technical issue, meant to solve a purely technical problem. It’s also purely a move in the nominal price of the stock, not in the real price of it. This is one of those things we’ve always got to be careful about, distinguishing between nominal and real price movements.
As to what’s done at the company: “NexImmune, Inc., a clinical-stage biotechnology company, engages in developing therapies with curative potential for patients with cancer and other life-threatening immune-mediated diseases. It develops approaches to T cell immunotherapies based on its proprietary Artificial Immune Modulation, a nanoparticle technology platform.” A reasonable line of inquiry and they’ve gained FDA permission for at least Phase I testing and so on.
Sadly, they rather seem to be running out of money. Last accounts indicated perhaps 2 quarters of runway. And revenue is still zero as they’ve not been able to progress anything to approval and therefore sale.
NexIummune stock price from Google Finance
This lack of success so far means they’ll be looking for more capital soon enough. But that requires being on one of the major stock markets - as they are already. That means they need to stay on Nasdaq. However, that market has a $1 minimum bid price. It’s not that all penny stocks are dodgy, it’s that if there’s dodginess to be had then it’s probably in a penny stock. So, you cannot be long term a penny stock and also remain on Nasdaq.
There’s an easy solution to this. Simply declare that 25 old shares are now one new one - a one for 25 reverse stock split: “the Company approved a 1-for-25 reverse stock split of the Company’s common stock at a special meeting of the Company held on October 17, 2023. The reverse stock split will take effect after the close of trading on The Nasdaq Capital Market at 5:00 p.m. Eastern Time, on Wednesday, October 18, 2023. The Company’s common stock will open for trading under a new CUSIP number 65344D 208 on The Nasdaq Capital Market on October 19,”
This doesn’t change the market capitalisation of the company but does change the number of shares in issue. Therefore the stock price reacts mechanically, rising 25 times, or 2,500%.
This then neatly solves that technical problem and the Nasdaq listing. The other problems, of FDA approval, drug discovery and capital raising still remain of course.
