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Tempest Therapeutics, Inc. (TPST), a pharmaceutical company with a market capitalization of $27.93 million, has announced a reverse stock split of its shares at a ratio of 1-for-13, effective from the close of business on Monday. The announcement comes as the company’s stock trades near its 52-week low of $0.60, having declined over 83% in the past year. According to InvestingPro analysis, the stock appears undervalued at current levels, with technical indicators suggesting oversold conditions. This strategic move was authorized by the company’s shareholders during the Special Meeting held on December 3, 2024, and is aimed at consolidating shares to potentially increase the market price of Tempest Therapeutics’ common stock. InvestingPro data reveals the company maintains a healthy current ratio of 2.21, indicating sufficient liquid assets to meet short-term obligations. Subscribers can access 12 additional ProTips and comprehensive financial metrics to better understand the company’s position.
According to the details of the reverse stock split, every 13 shares of issued and outstanding common stock will be automatically converted into one share, without any alteration to the par value per share. Consequently, adjustments will be made to the per share exercise price and the number of shares issuable upon the exercise or vesting of all outstanding stock options and warrants. This will result in a proportional decrease in the number of shares reserved for issuance upon exercise of these instruments and a proportional increase in their exercise price.
The company has also stated that the number of shares reserved for issuance under its 2023 Equity Incentive Plan, 2023 Inducement Plan, and 2019 Employee Stock Purchase Plan will be proportionately reduced. In cases where stockholders would be entitled to fractional shares due to the reverse stock split, they will instead receive a cash payment.
Tempest Therapeutics’ common stock is set to begin trading on a split-adjusted basis on The Nasdaq Capital Market from Tuesday morning, with a new CUSIP number of 87978U207. Prior to the reverse stock split, there were 45,764,184 shares of common stock outstanding. Post-split, it is expected that approximately 3,520,321 shares of common stock will be outstanding, subject to adjustments for fractional shares.
The company’s decision to implement a reverse stock split is a common financial strategy used by public companies to consolidate shares and potentially increase the stock price, improve liquidity, or meet stock exchange listing requirements. While the company holds more cash than debt on its balance sheet, InvestingPro analysis indicates it’s quickly burning through cash reserves. For detailed insights into the company’s financial health and future prospects, including analyst price targets and comprehensive valuation metrics, investors can explore InvestingPro’s advanced analytics platform.
The information regarding this corporate action is based on a press release statement and the details filed with the SEC in a recent 8-K filing.
In other recent news, Tempest Therapeutics reported financial results that fell short of expectations, with an earnings per share (EPS) of ($0.34) for the fourth quarter and ($1.50) for the full year 2024. These figures were below both the estimates from H.C. Wainwright and consensus projections. As a result, H.C. Wainwright reduced its price target for Tempest Therapeutics from $47.00 to $16.00, though it maintained a Buy rating. Additionally, Tempest Therapeutics received FDA authorization to advance a Phase 2 clinical trial for TPST-1495, aimed at treating Familial Adenomatous Polyposis (FAP). The trial will be conducted with support from the National Cancer Institute’s Division of Cancer Prevention. The company is also preparing for a Phase 3 study of its lead program, amezalpat, in combination with atezolizumab/bevacizumab, following a successful End of Phase 2 meeting with the FDA. Roche will supply atezolizumab for this study, providing significant cost savings. These developments highlight Tempest’s ongoing efforts in cancer treatment and prevention.
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