Leading BioSciences, Inc. is seeking a merger target and it looks like Seneca Biopharma (NASDAQ:SNCA) might be a pick. Independent adviser Institutional Shareholders Inc. has officially recommended SNCA for the deal. Now, shareholders have to vote on the matter, which is set to take place on March 24.
In response, SNCA stock is soaring. The stock gained 16.77 percent in after-hours and pre-market trading alone. This is after a 15.67 percent rise from the market open on March 12. However, the short interest is waning and it doesn't seem big enough for a squeeze.
What Seneca Biopharma does
Seneca Biopharma is a clinical-stage biopharmaceutical operation that focuses on diseases that impact the CNS (central nervous system). The diseases include multiple sclerosis, ALS (amyotrophic lateral sclerosis), Alzheimer's, Huntington's, Parkinson's, and more.
This type of company isn't profitable because it focuses on research and not production. However, early investors hope that they'll catch the tailwind as discoveries present themselves.
About the proposed SNCA merger
If shareholders approve the merger, two forces will officially join together to expand their footprint in the bio sector. Whiles Seneca focuses on CNS conditions, Leading BioSciences, Inc. focuses more on the gastrointestinal mucosal barrier. This means GI function in general, both in terms of post-operational recovery and various health conditions.
SNCA stock responds
SNCA's short interest is low at 2.96 percent. This is down from January when the percentage of float shorted was at 6.7 percent.
A lot of investors are particularly interested in the merger because Leading BioSciences has a phase 3 drug with FDA fast-track designation. They seem to be seeking capital to propel this drug into the market. For some WallStreetBets Reddit users, that's enough of a sign to push shares up like they know how to do.
SNCA stock after the merger
Existing SNCA investors will want to read through any SEC documentation before the date of the shareholder vote. You can search for the ticker symbols on the Edgar search tool to get access to the latest releases.
Those considering dipping into SNCA should know that share weighting might change after the merger is finalized. The public doesn't have access to details of the deal yet, but that will likely come out after the company receives approval from investors to proceed. However, we do know to expect a reverse stock split, which can be a red flag depending on the circumstances.
SNCA stock is a bet through and through
As of the market open, SNCA stock has already dipped 7.24 percent. This is a volatile moment for the stock due to fresh sentiment. Despite the dip, Seneca is still up 160.94 percent since December 1, 2020. coming above $1 from a penny stock worth mere cents.
This isn't the company's only bull run. Since its inception, the shares have lost 99 percent of their value on a fluctuating basis. Perhaps new investors dipping in now at $1.68 per share have much less to lose than those who bought in at IPO for $205.37.