Amarantus Biosci Inc (OTCMKTS:AMBS) Implements Reverse Split In Pursuit of Uplisting
Early in the morning on Friday Amarantus Biosci Inc (OTCMKTS:AMBS) announced that a 1-for-150 reverse split has been authorized. The stock will begin trading on a split-adjusted basis upon approval from FINRA. At that time the ticker of the company will become AMBSD for 20 business days indicating that the split has been performed.
The reverse split will have two major consequences – it will reduce the number of outstanding shares from over 1 billion to approximately 7 million and at the same time the share price of the company will be bumped upwards by 150 times. This will help AMBS meet the minimum bid requirement and enable them to attempt an uplisting to a national exchanged by the end of the year.
Understandably investors were not thrilled by the news as reverse splits are viewed rather negatively in the world of pennystocks not to mention the fact that AMBS was already crashing down the chart following the filing of their quarterly report. Still, Friday’s trading wasn’t entirely negative – AMBS opened with a gap down at $0.047 but began clawing its way up. The ticker was even capable of reaching a high of the day of $0.058 and although such prices couldn’t be supported AMBS closed at $0.0501, above its opening price, for a loss of 8%.
As we said AMBS suffered a severe crash last Wednesday. The previous day the financial report covering the first quarter of 2015 was submitted and the numbers contained within left investors quite disappointed:
• $109 thousand cash
• $611 thousand total current assets
• $7.6 million total current liabilities
• ZERO revenues
• $6.58 million net loss
The lack of revenue is a common sight for biotechnology companies that are trying to develop new drugs or treatments but the picture painted by the rest of the financials is still quite grim. In April AMBS boosted their balance sheet by selling 1087 Series G convertible preferred shares for total proceeds of $5 million. If the company continues to burn through its resources at the same rate however even that significant amount of funds won’t last for very long.
Now that the reverse split has been announced what should investors expect? Well, if AMBS is capable of maintaining its post-split share price than most of the concerns about the reverse split will be nullified. And Amaratus do have some serious catalysts approaching that could keep investors excited. The company is on track to begin enrollment and dosing of its 60-patient international, multy-center Phase 2b clinical study of their lead drug candidate, eltoprazine, in the second quarter of the year. They also plan to add another clinical stage orphan candidate upon the successful acquisition of Cutanogen Corporation.
For now though the split could turn the stock into a highly volatile choice. Investors should also keep in mind that AMBS has several series of preferred shares that have a conversion feature. During the first quarter of the year the owners of these preferred shares received millions of shares through such conversions and if they continue do so it could impact the movement of the stock.
