The China-based cancer diagnostic firm, AnPac Bio-Medial Science Co. Ltd. (ANPC) while rallying over its success with the Nasdaq market value requirement, is not out of the haze yet. The company has yet to regain compliance with the minimum bid requirement and file its delayed Annual Report on Form 20-F for 2021. While the company has much to do for continued listing on Nasdaq, the market situation is highly unfavorable as the threat of recession looms overhead amid the continued U.S. and China audit dispute that might cause the delisting of Chinese securities from the U.S. exchange.
However, if the company comes out successful in these multiple threats, the future of the oncology diagnostics market is bullish.
Currently, as of May 13, 2022, ANPC stock was trending actively in the green since the company revealed recently that it has regained compliance with Nasdaq’s market value requirement. At the end of the day, the stock was valued at a price of $0.3800 per share after it gained 25.08% in the late trading session. This gain came after an increase of 9.64% in the prior session, which had the stock trading at $0.3038 apiece. Despite the current rally, the stock is down 75% year to date and its one-year loss stands at 92.61%.
ANPC’s Nasdaq Deficiencies Timeline
Last year, after the biotechnology company’s market value of listed securities (MVLS), continued to be below the required US50,000,000 for listing continuation on The Nasdaq Global Market, it was given a grace period of 180 calendar days. For continued listing on The Nasdaq Global Market, ANPC was then required to close ten consecutive business days with MVLS at or above US$50,000,000 before March 23, 2022.
Failing to regain compliance in the given period, on March 24, a Staff Determination Letter dated March 24 revealed the Staff’s determination to delist the company’s securities. By then, ANPC was not only in non-compliance with the MVLS requirement but also with the minimum standard requirements of the closing bid price, stockholder equity, total assets as well as total revenue. Given the multiple deficiencies in continued listing requirements, ANPC was not eligible for receiving an additional 180 days to regain compliance with the MVLS requirement. Thus, on March 31, the company requested an appeal hearing before the Nasdaq Hearings Panel, which was granted and then held on April 28, 2022. The panel granted the company’s request of transferring its American Depository Shares from The Nasdaq Global Market to The Nasdaq Capital Market, which became effective as of May 6 following the completion of the required terms.
The transference helped the company in regaining compliance with the MVLS requirement as The Nasdaq Capital Market has lower listing requirements, while both the capital and global markets are part of The Nasdaq Stock Market. Following the transference, the company was notified on May 9 of its regained compliance with the minimum market value of publicly held shares requirement of $1.000,000. Hence, the matter of the company’s non-compliance with Listing Rule 5550(a)(5) is now closed as ANPC has regained compliance with the said rule.
But ANPC is not out of the Haze Yet
Even though the transference to the Nasdaq Capital Market helped it regain compliance with the minimum market value requirement, ANPC is still in non-compliance with the minimum bid requirement, which will help it overcome all the deficiencies if regained compliance. The company has until September 5, 2022, to regain compliance with the minimum bid price requirement of $1 per share or above. If the company demonstrates stockholder equity of at least $5 million, among other standard requirements, it might be eligible for an extension in case it fails to regain compliance with the minimum bid requirement by the end of the grace period.
Why Regaining Compliance Might Prove Difficult than Anticipated?
Given the current market instability and macroeconomic downfall on top of the looming recession and U.S. China audit dispute, regaining compliance would most probably prove very difficult for the company as equities continue their downtrend.
The U.S. and China have long been in conflict over the audit of Chinese securities listed in the U.S. but the recent stern actions from U.S. regulators pose a serious threat of delisting Chinese equities. More and more Chinese stocks have been added to the list of companies facing possible expulsion with over 80 firms added just last week. While the countries have continued their talks and China is showing some cooperation, the issue still remains unresolved.
On top of this, amid the Russian invasion of Ukraine causing geopolitical instability as inflationary pressure continues to rise and interest rates spikes further, all equities markets and even crypto have been crashing down. The threat of a looming recession is further spiking fear and causing investors to continue the sell-off.
Therefore, with the continued downfall of securities markets amid the vast geopolitical and economic instability, rising bid prices to or above $1 per share would definitely prove challenging for ANPC.
Financial Overview of the Company
A recent filing from the company with the SEC also revealed that ANPC wasn’t able to submit its Annual Report on Form 20-F for the year 2021. According to the filing, the company plans to submit the annual report by the fifteenth calendar day following the prescribed filing date, which was May 2, 2022. Thus, the company might disclose the annual report this week (May 16-20).
As per the company’s previous financial report, in the nine months which ended on September 30, 2021, ANPC generated RMB13.7 million (S2.1 million) in revenue, which marked an increase of 55.3% YOY. The gross profit went up by 8.8% to 59.3%, and non-GAAP net loss shrunk to RMB55.0 million. The comparable figures were 50.5% in gross profit and RMB59.1 million in the same period of 2020. At the end of the period, the company’s cash and cash equivalents totaled RMB5.5 million.
While the cash balance at the end of September last year was very meager, the company has recently managed to secure a new investor, Hunan Weitou Technology Co. Ltd. for an equity investment of $15 million over the next 30 months.
While the current situation is challenging, ANPC still has to regain compliance with Nasdaq’s minimum bid requirement amid the downfall of equities and the U.S.-China audit dispute. Although its earlier financial results weren’t impressive, if the company succeeds in regaining compliance in these tumulus times, the market is full of opportunities for its growth with the global cancer diagnostic market expected to reach $258.54 billion by 2030 with a CAGR of 8.4% between 2022 to 2030.