GlobeImmune Inc. (NASDAQ: GBIM) is in the process of voluntarily delisting its stock from the NASDAQ stock exchange. It is called voluntary delisting because it is the company that has now decided to lead the process of pulling out of NASDAQ. However, Nasdaq had warned the company that its listing on the exchange was at risk after its stockholder equity fell below the required minimum.
When GlobeImmune Inc. (NASDAQ: GBIM) announced that its board had decided not to fight to retain listing on NASDAQ and that the company would seek to deregister and delist from the exchange, its shares plunged. Investors didn’t seem to favor the move and a selloff ensued.
But sometimes it is easy to see things clearly once the dust settled. If you listen carefully to what GlobeImmune is saying, you get to understand that the board didn’t simply wake up one morning and decided that leaving Nasdaq was the solution. It took time and effort to explore strategic alternatives for the company.
After the year-long strategic review, the board determined that delisting from NASDAQ would actually help GlobeImmune save cost. While not every door has been closed for the company to regain compliance and retain its NASDAQ listing, attempting to do so would take time and consume money that would otherwise be funneled to more productive courses. That is the point where the board said that leaving NASDAQ was in the best interest of shareholders in the company.
Where did the rain start beating GlobeImmune?
GlobeImmune Inc. (NASDAQ: GBIM)’s shrinking stockholder equity jeopardized its listing on NASDAQ. A company must maintain stockholder equity of at least $2.5 million to stay in compliance with NASDAQ’s listing requirements. But GlobeImmune’s stockholder equity had fallen far below that minimum level.
What happens next for GlobeImmune Inc. (NASDAQ: GBIM)?
Shares of GlobeImmune are set to start trading on the OTC pink sheet after the company completes its delisting from NASDAQ. But things won’t remain the same because the smaller OTC exchange will limit the company’s exposure to investors, which could in turn hamper its ability to raise capital.
GlobeImmune Inc. (NASDAQ: GBIM) logged EPS loss of $0.15 in 1Q2016. The company had cash and equivalents totaling $8.7 million at the end of that quarter and said it would only be enough to keep its wheels turning through the middle of next year.