InVivo Therapeutics Holdings Corp (NVIVQ)

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http://www.invivotherapeutics.com/about-invivo/ceo-perspective/

CEO’s Perspective

Reverse Splits and Uplisting

We view uplisting to NASDAQ — one of our corporate goals for 2015 — as an important and positive step in InVivo’s long-term growth strategy. One of the quantitative requirements for initial listing is that the closing price of our stock must be above $3.00 for 5 days. Properly executing our planned reverse stock split allows us to fulfill this crucial price requirement and reap the benefits of being on NASDAQ.
Ultimately, we believe the uplisting and higher stock price resulting from the reverse stock split will make our stock more attractive to a broader investor base. Currently, many institutional investors cannot invest in our company for a number of restrictive reasons, including our lower stock price, our trading on an OTC market, and related volatility. Furthermore, we will be in a better position to attract Wall Street analysts to cover our company’s progress with a higher stock price. The inherent increase in visibility associated with analyst coverage can also translate to greater liquidity for our shareholders.

Companies execute a reverse stock split for one of two primary reasons. It is important to discuss the distinction and motivation behind the two routes to fully appreciate what drives market perception of this action.

Reverse Stock Split by Companies to Avoid Delisting

Companies already listed on a major national exchange (NASDAQ or NYSE) must abide by a strict set of rules in order to maintain a listing. One such rule is a minimum price requirement; companies that have fallen under the threshold risk losing their listed status. These companies tend to be viewed as underperforming (as evidenced by their low stock price) and execute a reverse stock split simply to maintain their listing. In this case, the split is used to avoid the negative market perception of losing their listing.

Over 50% of reverse stock splits executed between 2010 and 2013 were in response to stock exchange deficiency notices, so it is no surprise that there is generally a negative market perception of a reverse stock split for this purpose.

Reverse Stock Split by Growing Companies to Gain a Listing

In comparison to companies executing a reverse stock split to maintain a listing, companies that execute a reverse stock split in order to uplist often have an upward trajectory. Such companies can often deliver positive stock price performance post-split as they take an important step in their growth. Other key attributes of companies that conduct successful splits and uplistings include having sufficient cash to reach near-term milestones, consistent news flow, and a commitment to transparency in communicating company goals with investors. InVivo intends to follow this trajectory.

In selecting the 1-for-4 reverse stock split ratio, we decided on a target price above
$10, which is an important psychological threshold for stocks. We evaluated previously executed reverse splits associated with an uplisting and found that 1-for-4 reverse splits priced in the $10 range generally performed well post-split.

We look forward to reporting to you on our anticipated success following our reverse stock split and planned uplisting and thank you for your ongoing support and confidence.

Mark Perrin, CEO and Chairman
March 24, 2015