Delcath Systems, Inc. (NASDAQ: DCTH) is having a relatively rough day in the market today as a new poll suggests that a reverse stock split is imminent. Of course, reverse splits always lead to fear in the minds of investors, and that’s the case here. Nonetheless, a reverse split isn’t a bad thing for this company. Before we get into why, I’d like to extend a thank you to our partners at Trade Ideas for bringing today’s movement to our attention. Currently (10:13), DCTH is trading at $0.098 per share after a loss of $0.002 per share (2.40%) thus far today.
DCTH RS Seems Imminent
As mentioned above, Delcath Systems is having a rough day as a poll suggests that a reverse stock split will take place. The poll, available at Poll-Maker.com currently, suggests that investors are voting on a reverse split with 77% saying yes to the option (at the time of writing this, the poll was very early on; since writing this, the poll is a 77% no vote, big swings, plenty of time left). While this may be scary to some, the reality is that a reverse split isn’t necessarily a bad thing.
At the end of the day, DCTH is doing incredible things. However, in order to keep doing incredible things, they need access to funding. Unfortunately, they simply don’t have that at the moment. However, a reverse split would open the doors to funding that would hold the company over until their next big catalyst on the clinical side of the coin. So, if this reverse split does come through, it will likely prove to be a savior for the company.
Life After The Split
If the poll mentioned above is correct – and I surely hope that it is – there’s plenty of life for DCTH after the reverse split. The reality is that the company’s CHEMOSAT is already saving lives in Europe and is likely to start doing so in the United States relatively soon.
With such a strong asset, there are two ways this could go. Either DCTH moves to commercialization and brings CHEMOSAT to the market, which would be a positive catalyst, or a larger biotech company focused on the oncology space makes an offer and buys them out, also a good thing. So, while the reverse split may seem like a damned if you do, damned if you don’t situation, the company is in a perfect place to capitalize after the split!
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will be keeping a close eye on DCTH. In particular, we’re interested in following the ongoing debate surrounding the reverse split and excited to see the results of the vote. We’re also excited for the future of the company following the split. We’ll continue to follow the story closely and bring the news to you as it breaks!
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