Outlook Therapeutics stock undergoes 1-for-20 reverse stock split

(image Credit: AdobeStock/Golden House Images)

Shareholders in Outlook Therapeutics may have noticed a change in their standings on March 14, 2024 when the market opened, as a 1-for-20 reverse stock split took place. The stock will continue to trade under the symbol “OTLK” but will be under a new CUSIP number 69012T 305.

Outlook Therapeutics shared in a press release that the reverse stock split is “part of the Company’s plan to regain compliance with the minimum bid price requirement for continued listing on The Nasdaq Capital Market.”¹ A minimum bid price of $4 per share is required at baseline for continued listing on the Nasdaq Capital Market.²

At the time of the split on March 14, every 20 issued and outstanding shares of Outlook common stock will automatically be combined into 1 issued and outstanding share of common stock without any change in the par value per share. Fractional shares were not issued in connection with the reverse stock split.

According to Outlook, “the number of authorized shares of the Company’s common stock will be proportionately reduced at the same ratio as the reverse stock split, for a total of 60,000,000 authorized shares of common stock following the reverse split.” The reverse stock split will reduce the number of outstanding shares of OTLK from approximately 260.3 million to approximately 13 million.¹

Back in August 2023, the FDA issued a CRL for the company’s ONS-5010 for the treatment of wet age-related macular degeneration (AMD). After this the company’s stock fell nearly 80% with over 7 million trades and has since struggled to recover.³

In January 2024, Outlook Therapeutics announced that it received written agreement on the NORSE EIGHT trial protocol from the FDA under a SPA for NORSE EIGHT.3 According to Outlook, the SPA confirms that if the NORSE EIGHT trial is successful, it would satisfy the FDA’s requirement for a second adequate and well-controlled clinical trial to fully address the clinical deficiency identified in the CRL issued in August 2023. The company also stated it has identified the approaches needed to resolve the Chemistry, Manufacturing and Controls (CMC) comments in the CRL and is working to address open CMC items in the CRL and expects to resolve these items prior to completion of NORSE EIGHT.³

NORSE EIGHT is a randomized, controlled, parallel-group, masked, non-inferiority study of approximately 400 newly diagnosed, wet AMD subjects randomized in a 1:1 ratio to receive 1.25 mg ONS-5010 or 0.5 mg ranibizumab intravitreal injections.³

Completion of NORSE EIGHT in the US is expected to conclude in the US in 2024, while resubmission of the ONS-5010 BLA expected by the end of calendar year 2024.³

At the end of market on March 13, 2024, OTLK was trading at ~$0.34 a share. Prior to the FDA CRL the stock was trading at ~$1.40 a share. After the reverse stock split, OTLK opened the market on March 14 at $6.41 a share.⁴

Stock value of OTLK from April '23 to March '24.

What is a reverse stock split?

A reverse stock split happens when a company wants to reduce the amount of its outstanding shares without affecting the underlying value of the company. A company divides the number of shares investors are holding by a certain amount, in this case 1 share for every 20 owned, which causes the company’s stock price to increase accordingly. This positive increase in a company’s stock price after the fact is not reflective on performance.⁵

References:

1. Outlook Therapeutics® Announces Effective Date for 1-for-20 Reverse Stock Split. Press release; March 12, 2024. Accessed March 14, 2024. https://www.globenewswire.com/news-release/2024/03/12/2844498/0/en/Outlook-Therapeutics-Announces-Effective-Date-for-1-for-20-Reverse-Stock-Split.html

2. Nasdaq Capital Market Rules. Nasdaq. Accessed March 14, 2024. https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/nasdaq-5500-series

3. Outlook Therapeutics® Reports Financial Results for First Quarter Fiscal Year 2024 and Provides Corporate Update. Press release. Outlook Therapeutics. Released February 14, 2024. Accessed March 14, 2024. https://ir.outlooktherapeutics.com/news-releases/news-release-details/outlook-therapeuticsr-reports-financial-results-first-quarter-0

4. OTLK advanced charting. Nasdaq Capital Market. Accessed March 14, 2024. https://www.nasdaq.com/market-activity/stocks/otlk/advanced-charting

5. What is a Reverse Stock Split? Nerdwallet. Accessed March 14, 2024. https://www.nerdwallet.com/article/investing/reverse-stock-splits