Eterna Therapeutics: A Race Against Time to Avoid Nasdaq Delisting Amid Cash Burn and Clinical Hopes

Eterna Therapeutics (NASDAQ: ERNA) is at a critical crossroads. The biotech firm faces two imminent Nasdaq delisting notices tied to its plunging stock price and market valuation, while its financial health remains fragile. Yet, the company is fighting back with a reverse stock split, strategic partnerships, and a pipeline of experimental cell therapies. Investors must weigh whether these moves can stabilize the company or if its precarious position will lead to delisting—and potentially its undoing.

The Delisting Deadline Dilemma

As of June 2025, Eterna has two deadlines hanging over its head. First, it must lift its stock price above $1 for at least 10 consecutive days by June 30. Second, its market value of listed securities (MVLS) must climb above $35 million for 10 days by July 7. Failure to meet either could trigger delisting, a fate that would further strain its finances and investor confidence.

To address the bid-price issue, Eterna executed a 1-for-15 reverse stock split on June 12, reducing its shares from over 110 million to around 7.4 million. The move instantly boosted its stock price, though it remains volatile. The question now is whether the reverse split can sustainably lift the share price—or if it merely delays the inevitable as investors await proof of progress.

Financial Fragility: Cash Burn and Liabilities

Eterna's financial reports paint a stark picture. As of June 2024, the company reported a net loss of $12.2 million for the first half of the year, with an accumulated deficit of $199 million. Its current ratio of 0.48 signals liabilities exceeding liquid assets, while free cash flow remains deeply negative. Recent capital raises—such as a $1 million stock buyback and a $1.1 million private placement—have been modest compared to its needs.

The company's debt burden adds to concerns. Convertible notes totaling $8.9 million as of June 2024, along with operating lease liabilities, highlight its reliance on debt financing. With cash reserves dwindling to $2.6 million by mid-2024, Eterna's ability to fund operations beyond 2025 hinges on securing additional financing or generating revenue.

Strategic Moves: Partnerships and Pipeline Progress

To offset its financial struggles, Eterna has leaned on partnerships and its experimental therapies. Key collaborations include:

1. Factor Bioscience License: A 2024 agreement grants Eterna exclusive rights to Factor's cell engineering technologies, enabling the development of cytokine-secreting mesenchymal stem cells (iMSCs). This partnership underpins its lead candidates, ERNA-101 (for ovarian cancer) and ERNA-102 (for autoimmune diseases like rheumatoid arthritis).

2. MD Anderson Collaboration: Research with the cancer center aims to validate ERNA-101's efficacy in ovarian and breast cancer models, a critical step toward IND filings.

3. Scientific Advisory Board Expansion: New advisors like Dr. Jerome Zeldis (ex-Celgene) and Dr. Blythe Sather bolster expertise in oncology and cell engineering, potentially accelerating development.

These efforts signal strategic ambition. However, the therapies are in preclinical stages, with no near-term revenue streams. Success depends on navigating the high-risk, high-cost path to FDA approval—a gauntlet many biotechs fail.

Governance and Leadership Risks

Eterna's governance has seen turnover. In early 2025, board member Dorothy Clarke resigned (remaining as general counsel), while Dr. Elena Ratner, a new independent director, joined. This reshuffle aims to strengthen oversight, but the board's credibility is tested by the CEO's ties to Factor Bioscience. Dr. Matthew Angel, Eterna's CEO, co-founded Factor and holds a 64% stake, raising questions about potential conflicts of interest in licensing deals.

Investment Considerations

Eterna presents a high-risk, high-reward scenario. On the plus side:

• Reverse Split and Governance Changes: The stock price boost and new leadership could attract investors seeking a turnaround.
• Pipeline Potential: If ERNA-101/102 show promise in trials, the company could gain traction—particularly in the growing cell therapy space.

The risks, however, are severe:

• Delisting Threat: Missing the deadlines could force a move to the OTC market, reducing liquidity and investor access.
• Cash Burn: Without additional funding or revenue, Eterna may exhaust cash reserves by late 2025.
• Clinical Uncertainty: Even successful trials face regulatory hurdles and market competition.

Verdict: A Gamble for Speculative Investors

Eterna's survival hinges on three variables: stock price recovery, securing financing, and clinical progress. For now, the reverse split buys time, but without meaningful catalysts—such as positive preclinical data or a major partnership—the delisting clock looms large.

Investors should proceed with caution. The stock's beta of 7.29 signals extreme volatility, and the financials suggest little margin for error. Only risk-tolerant investors with a long-term horizon and a belief in Eterna's science should consider a position. For most, waiting for clearer signs of stability—such as a debt restructuring, positive trial data, or a strategic acquisition—might be prudent.

In the biotech sector, hope often outlasts reality. Eterna's story will test whether its therapies can transcend its financial struggles—or become another cautionary tale of ambition outpacing execution.