TransCode Therapeutics' High-Stakes Gamble: Can a 1-for-28 Reverse Stock Split Save Its Nasdaq Listing?

TransCode Therapeutics (NASDAQ: RNAZ) is taking a dramatic step to avoid delisting from Nasdaq: a 1-for-28 reverse stock split. With its stock price plummeting 97% over the past year to $0.51—a level that threatens its compliance with Nasdaq’s $1 minimum bid requirement—the biotech firm is consolidating shares to boost its per-share price. But can this move stave off delisting, or is it a desperate bid to delay the inevitable?

The Reverse Split: A Desperate Tactic or Necessary Evil?

A reverse stock split reduces the number of outstanding shares while proportionally increasing their value. For TransCode, this means converting every 28 shares into one, reducing its float from 23.3 million to approximately 833,620 shares. The goal is clear: push the stock price above $1 to meet Nasdaq’s listing criteria. However, the company’s stock has languished below this threshold for months, and its current market cap of $12 million underscores its precarious financial state.

The split also carries risks. While it avoids immediate delisting, it doesn’t address the root cause of TransCode’s struggles: rapid cash burn and a lack of near-term revenue. The company warns that its current cash reserves may only last until late 2025 without additional funding.

Clinical Progress: A Silver Lining?

Amid the financial turmoil, TransCode’s lead candidate, TTX-MC138—a RNA therapeutic targeting metastatic tumors overexpressing microRNA-10b—offers a potential lifeline. In its Phase 1 trial, 13 patients have been enrolled across four cohorts, with no significant safety issues reported. Two patients achieved stable disease for at least seven months after seven doses, a promising signal for a drug targeting hard-to-treat cancers.

The trial’s dose-escalation phase has advanced to Cohort 4, with plans to expand into a dose-response evaluation. A Safety Review Committee has even approved additional enrollments in Cohort 3 to strengthen safety data. If TTX-MC138’s early results hold, they could attract partnerships or grants—crucial for funding future trials.

The Clock is Ticking

The reverse split’s success hinges on timing. Nasdaq requires TransCode to meet the $1 bid price requirement by May 5, 2025, or face a formal delisting notice. While the split’s effective date remains unspecified, the company has pledged to announce it at least two business days prior, leaving investors in limbo.

A post-split price above $1 is no guarantee of long-term stability. The stock’s historical volatility—plunging from over $18 in early 2024 to $0.51 today—suggests that investor confidence is fragile. Moreover, the split could reduce liquidity, as fewer shares trade hands, potentially widening bid-ask spreads.

Risks and Rewards

Investors weighing TransCode’s stock post-split must consider several factors:
1. Delisting Risk: Even if the split boosts the stock temporarily, sustaining the $1 price requires positive clinical data or partnership news.
2. Cash Burn: With $18 million raised in recent financings and a $2 million NIH grant, the company’s runway may extend to Q4 2025, but further dilution is likely.
3. Clinical Milestones: Data from TTX-MC138’s Phase 1 trial—expected to expand in 2025—could be a catalyst, but delays or negative results could sink the stock again.

Conclusion: A Short-Term Fix, but Long-Term Uncertainty

TransCode’s reverse stock split is a necessary, albeit risky, move to avoid delisting. By consolidating shares, it buys time to prove TTX-MC138’s clinical value and secure additional funding. However, the split alone cannot resolve its cash burn or the challenges of developing an RNA therapy in a competitive oncology space.

Investors should note that 97% of the company’s market value has already evaporated, and the split does nothing to address the underlying financial strain. Success hinges on:
- Clinical Validation: Positive data from the Phase 1 expansion could attract partnerships or grants.
- Capital Raising: The company must secure funding before late 2025 to avoid a liquidity crisis.
- Market Confidence: A post-split price sustained above $1 requires consistent updates on TTX-MC138’s progress.

In the end, TransCode’s survival depends less on the mechanics of a reverse split and more on whether its RNA platform can deliver on its promise—a gamble with high stakes for all involved.

Disclosure: This article is for informational purposes only and should not be construed as financial advice. Always conduct thorough due diligence before investing.