Onconetix Shares Collapse 19% as Merger Uncertainties Collide with Legal Risks

• Onconetix (ONCO) stock plummets 18.7% to $3.68 after announcing a merger with Ocuvex
• Halper Sadeh LLC launches investigation into merger fairness for shareholders
• Stock undergoes 1-for-85 reverse split to meet Nasdaq’s $1 minimum bid price requirement
• Daily range spans $3.16 to $4.21, marking a 90% YTD decline from 52-week highs

Onconetix’s stock nosedived on merger-related volatility, fueled by regulatory hurdles and investor skepticism. The proposed Ocuvex acquisition—structuring Ocuvex shareholders to own 90% of the combined entity—has sparked legal scrutiny, while technicals show extreme volatility amid liquidity challenges.

Merger Fairness Probe and Structural Risks Ignite Sell-Off
Onconetix’s 18.7% intraday collapse stems directly from two catalysts: the controversial Ocuvex merger structure and a newly announced legal investigation. Halper Sadeh LLC’s scrutiny over whether Onconetix shareholders are receiving fair value for their 10% stake post-merger amplifies governance concerns. Simultaneously, the company’s precarious financials—including a debt-to-equity ratio of 2.27 and negative EBITDA—heighten execution risks for integrating Ocuvex’s FDA-approved Omlonti asset. Investors are pricing in the possibility of regulatory delays or shareholder rejection, compounded by a 680% turnover rate signaling panic selling.

Technical Sell Signal Amid Merger Uncertainty – Focus Inverse ETFs
Bullish Technicals:
• RSI: 55.51 (Neutral)
• 200-Day MA: $1.46 (Far Below)
• Bollinger Bands: Current price near lower band ($3.85) suggests oversold conditions

Despite oversold readings, the merger’s dependency on fourth-quarter approvals and legal challenges create a high-risk environment. Aggressive traders could use inverse ETFs like the ProShares UltraShort Healthcare (HAH) to capitalize on sector-wide uncertainty. For Onconetix-specific plays, consider:

Option 1: Near-term puts with 45+ days until expiry. Example: ONCO July 2025 $3.50 Put (OVM 0.03 theta, 0.009 gamma) offers 140%+ leverage if the stock drops to $2.80 by expiration. Risk: Narrow volatility range could limit gains.

Option 2: Out-of-the-money puts like the $3.00 Strike (20% ITM) with 0.05 theta and 0.012 gamma. Potential 230% return if the reverse split fails to stabilize the stock below $3.16. Caution: Requires a significant price collapse.

Action Alert: Short-term traders should avoid calls entirely. HAH ETFs provide safer leverage against sector-wide headwinds.

Backtest Onconetix Stock Performance
The ONCO ETF experienced a significant intraday plunge of -19% on July 16, 2020. Following this event, the 3-day win rate was 38.86%, the 10-day win rate was 43.67%, and the 30-day win rate was 35.81%. Despite the negative return during the immediate 3 days after the plunge (-0.89%), the ETF managed to recover slightly over the longer term, with a 1.14% return over 10 days and a 0.79% return over 30 days. The maximum return during the backtested period was 1.43%, which occurred on day 37 after the plunge.

Hold for Merger Milestones or Exit to Sideline Volatility?
Onconetix’s fate hinges on Ocuvex merger approvals and shareholder votes, with Halper Sadeh’s investigation adding daily pressure. The stock’s 18% drop on $3.14M volume signals weak liquidity—avoid marginal trades below $3.16. Watch Pfizer (PFE +0.5%)’s gene therapy setbacks for sector sentiment, but prioritize Onconetix’s Q4 regulatory updates. Until governance clarity emerges, maintain a cautious stance—exit longs below $3.50 or hedge with puts. This is a merger story, not a fundamental turnaround play.