Shares of T2 Biosystems (NASDAQ:TTOO) stock are rising higher after the medical diagnostics company disclosed that the Nasdaq Hearings Panel had provided it with an extension to regain compliance.
T2 will have until May 20 to maintain a closing market capitalization of at least $35 million for at least 10 consecutive trading days. The company noted that it may take action to achieve this, such as converting $15 million of debt held by CRG into equity. That signals dilution for shareholders.
T2 entered into a Securities Purchase Agreement with CRG on Feb. 15. The agreement states that within 10 days of receiving shareholder approval, CRG is eligible to cancel its debt in exchange for $15 million of TTOO stock. T2 has scheduled a special meeting of stockholders on April 11 to approve this measure.
“Listing on the Nasdaq Stock Market maintains liquidity for stockholders, helps attract and retain key employees, broadens its access to capital, and better positions the Company for potential mergers and acquisitions,” said T2.
TTOO Stock: Market Capitalization Compliance Deadline Set to May 20
Back in July, CRG agreed to cancel $10 million of debt in exchange for 483,457 shares of TTOO stock and 93,297 shares of Series B convertible preferred stock. In October, CRG’s interest-only period and maturity date was extended to Dec. 31, 2025 from Dec. 30, 2024. The minimum liquidity covenant was also lowered to $500,000 from $5 million.
As stated earlier, shareholders may not like the debt-to-equity conversions since it causes dilution. However, CEO and Chairman John Sperzel believes it is necessary to support the company as it targets international expansion, U.S. Food and Drug Administration (FDA) approvals and double-digit revenue growth for 2024.
T2 released its preliminary fourth-quarter and full-year results last month. For 2023, revenue tallied in at $7.2 million, of which sepsis and related product revenue totaled $6.8 million. The company has guided for 2024 sepsis and related product revenue between $10 million and $11 million, signaling yearly growth between 49% and 64%. As of Dec. 31, T2 had $15.7 million in cash and cash equivalents.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
