The ContraFect Corp (NASDAQ: CFRX) stock price rose 37.6% on the hope that the biotech firm would not be delisted from the Nasdaq exchange. In an update about its potential delisting from the Nasdaq Capital Market, the company said it had up to today to file an appeal.
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ContraFect (CFRX) stock was scheduled for delisting today, which did not happen, indicating that the company had filed an appeal of the Nasdaq staff decision. The appeal will buy the company time until the hearing date, after which the Nasdaq’s hearings committee will decide whether to allow CFRX stock to remain listed.
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There are two reasons why ContraFect is out of compliance with Nasdaq’s listing rules. One is that its share price has been trading below $1.0 for an extended period, and the second is the lack of shareholder equity, given that the company has a market capitalisation of $2.62 million.
While it might be easy for ContraFect to boost its share price to trade above the $1.00 mark via a reverse stock split, the issue of shareholder equity is much harder to resolve. ContraFect requires a minimum shareholders equity of $5 million depending on which standards it is listed under.
In addition, the company has a history of destroying shareholder value, given that it raised $7 million via a registered direct offering in December 2022 via an agreement with a single institutional investor. Yet, its shares are now worth slightly over $2.6 million.
However, the agreement is yet to be fully implemented as it requires the company’s shareholders to approve a reverse stock split or a change in its articles of incorporation to increase the number of its authorised common stock.
Today’s announcement was driven primarily by positive investor sentiment towards ContraFect. Still, the company’s future remains uncertain, and I would stay away from it since there are better companies out there.
*This is not investment advice.
ContraFect (CFRX) stock price.
The ContraFect (CFRX) stock price rose 37.62% to trade at $0.084, from Thursday’s closing price of $0.061.
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