Galecto, Inc. (NASDAQ:GLTO), a pharmaceutical company, announced a reverse stock split of its common stock, effective after market close on August 29, 2024. The Boston-based company, specializing in pharmaceutical preparations, stated that the split was approved by stockholders during the Annual Meeting on June 20, 2024, and subsequently filed with the Secretary of State of Delaware.
The reverse stock split, executed at a 1-for-25 ratio, means that every 25 shares of issued and outstanding common stock were automatically combined into one share. Despite the consolidation, the par value per share remains unchanged.
This adjustment extends to the exercise price and number of shares concerning outstanding stock options, along with the shares issued and issuable under the company's stock incentive plans. Stockholders holding fractional shares as a result of the split will have their shares rounded up to the nearest whole number.
Following the reverse stock split, Galecto's common stock continues to be listed on The Nasdaq Capital Market under the ticker symbol "GLTO," but with a new CUSIP number: 36322Q 206. This move is part of the company's efforts to adjust its capital structure.
In other recent news, Galecto has made significant strides in its operations. The biotech firm announced a 1-for-25 reverse stock split, approved at its Annual Meeting on June 20, 2024, to align with Nasdaq's minimum bid price requirement. This strategic move will reduce the number of outstanding common shares from approximately 27.1 million to around 1.1 million.
The company's shareholders also elected Anne Prener, M.D., as a Class I director to the Board of Directors and ratified EY Godkendt Revisionspartnerselskab as the independent auditor for the fiscal year ending December 31, 2024. In addition, Oppenheimer adjusted its price target for Galecto from $10.00 to $9.00 following the company's Q1 2024 financial results, which reported operating expenses of $5.7 million and a cash balance of $27.2 million.
Despite setbacks with its Phase 2b GALACTIC-1 study of GB0139 for idiopathic pulmonary fibrosis, Galecto remains committed to exploring strategic options, including potential mergers, acquisitions, and partnerships, while continuing to advance other clinical programs.
InvestingPro Insights
As Galecto, Inc. (NASDAQ:GLTO) navigates through its capital structure adjustment with the recent reverse stock split, it's worth noting some financial metrics and analyst insights that could influence investor perception. With a market capitalization of $12.63 million, the company's financial position reflects a Price to Book ratio of 0.54 as of the last twelve months leading up to Q2 2024, suggesting that the stock may be undervalued relative to its assets.
However, the company's challenges are evident in its profitability metrics. Galecto's operating income stands at a negative $22.16 million for the same period, aligning with an InvestingPro Tip which indicates that analysts do not expect the company to be profitable this year. Moreover, with an EBITDA growth of 57.65%, there's a sign of operational improvement, although it is from a low base given the negative EBITDA of $21.91 million.
InvestingPro Tips also highlight that Galecto holds more cash than debt, which is a positive sign for financial stability, and that its liquid assets exceed short-term obligations, providing some cushion for near-term financial challenges. However, investors should be aware that the company does not pay dividends, which may affect its attractiveness to income-focused investors. For those interested in a deeper analysis, there are additional InvestingPro Tips available that provide further insights into Galecto's financial health and prospects.
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