GRI Bio, Inc. Material Event - What Happened: An Investor's Guide

Let's demystify some important news about GRI Bio, Inc. We'll cut through the financial jargon to explain what's happening in plain language, just as if we were discussing it over coffee.

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1. Event Description (What happened)

GRI Bio, Inc., a clinical-stage biotechnology company developing novel immune-modulating therapies, has announced a significant change to its stock structure. The company is implementing a 'reverse stock split' at a ratio of 1-for-28.

This means for every 28 shares of GRI Bio stock you currently own, they will combine into just one new share. For instance, if you owned 280 shares trading at $0.25 per share, you would now own 10 shares, theoretically valued at $7.00 per share. The company primarily makes this move to regain compliance with The Nasdaq Capital Market's minimum bid price requirement.

Companies typically execute a reverse stock split when their stock price has fallen significantly, often below the minimum bid price required to maintain their listing on a major exchange like Nasdaq. GRI Bio's 1-for-28 ratio strongly indicates they faced delisting from Nasdaq, which requires a minimum bid price of $1.00 per share.

While a reverse split directly addresses the share price, it often signals underlying business challenges. For a clinical-stage biotech like GRI Bio, these challenges could stem from:

• Clinical Trial Progress: Delays, unfavorable trial results, or high costs associated with drug development.
• Financial Health: Significant cash burn, limited cash reserves, or difficulty securing additional funding.
• Market Perception: A lack of investor confidence in their pipeline or future prospects.

A higher per-share price can also make the stock more appealing to institutional investors. Many institutions have internal policies preventing them from investing in "penny stocks" (typically defined as stocks trading below $5.00 per share) due to perceived higher risk, lower liquidity, and increased regulatory scrutiny.

2. Event Date/Timeline

GRI Bio filed an official document (a Form 8-K) with the SEC and issued a press release on January 21, 2026, announcing this news. The reverse stock split will officially become effective at 4:01 p.m. Eastern Time on January 23, 2026. Shares will begin trading on a post-split basis on The Nasdaq Capital Market at the open of trading on January 26, 2026, under the existing ticker symbol 'GRI'. The CUSIP number (a unique identifier for the security) will change to 3622AW 502.

3. Impact Assessment (Who/What is affected)

This event carries significant implications:

• For the stock price: Immediately after the split, the price per share will be 28 times higher. If the stock traded at $0.25 before the split, it would theoretically trade at $7.00 afterward. However, you will own 28 times fewer shares, meaning your total investment value remains the same at the moment of the split.
• For the company's listing: This move is crucial for GRI Bio to maintain its listing on The Nasdaq Capital Market. Staying listed is vital for credibility, liquidity, and access to future capital.
• For perception: A higher stock price can sometimes improve market perception, making the company appear more stable and attractive, even if its underlying market capitalization (total value) has not changed.

However, understanding the associated risks is critical:

• Doesn't solve underlying issues: A reverse split offers a cosmetic fix for the share price; it does not address the fundamental business challenges that led to the low price.
• Potential for continued decline: Many companies undergoing reverse splits see their stock price continue to decline post-split if underlying business performance does not improve.
• Negative investor sentiment: The market often views reverse splits negatively, signaling distress and potentially leading to further selling pressure.
• Dilution risk: While not directly dilutive, a higher share price might make it easier for the company to raise capital in the future. This could lead to dilution for existing shareholders if the company issues new shares at lower valuations relative to the post-split price.

Stakeholders Affected:

• Investors: This directly changes the number of shares you own and the price per share. If your share count is not perfectly divisible by 28, you will receive cash for any fractional shares based on the closing price on January 23, 2026.
• Employees: If employees hold stock options or other equity awards, these will adjust proportionally to reflect the new share count and exercise price, preserving their total value.
• The Market: Analysts and potential investors will closely watch GRI Bio's post-split performance and its ability to address core business challenges. The split itself has no direct impact on the company's customers (patients/healthcare providers).

4. Financial Impact

The reverse stock split will proportionally decrease the number of outstanding shares of GRI Bio, Inc. common stock. While the par value per share of the common stock will remain unchanged, the aggregate par value of the common stock will decrease, with the corresponding amount transferring to additional paid-in capital. The company's total market capitalization is not immediately affected by the reverse stock split. Earnings per share (EPS) and other per-share financial metrics will proportionally increase following the split. The number of authorized shares of common stock will also proportionally reduce. This action primarily aims to increase the per-share trading price to regain compliance with Nasdaq's minimum bid price requirement, which is crucial for maintaining the company's listing and access to capital markets.

5. Key Takeaways for Investors

For investors, here's the essential information:

• Value Stays the Same (Initially): A reverse stock split does not change the total value of your investment at the moment it happens. If you owned $100 worth of stock before, you will still own $100 worth of stock immediately after, just in fewer, higher-priced shares.
• Watch for Volatility: Reverse splits can sometimes lead to increased volatility. The market's reaction to the underlying reasons for the split can cause further price movements, often downwards.
• It's a Tool, Not a Solution: View a reverse split as a financial tool to meet listing requirements. It addresses a symptom (low share price) but not the root cause (the company's performance, financial health, or market perception).
• Cash for Fractions: Be aware that if your share count is not perfectly divisible by 28, you will receive cash for any fractional shares.
• Focus on Fundamentals: This event makes your due diligence even more critical. Examine GRI Bio's latest financial reports (10-K, 10-Q), clinical trial updates, and management's strategic plans. Understand their cash position, upcoming clinical milestones, and how they plan to fund future operations.
• Manage Your Risk: A reverse split, especially one of this magnitude, can signal underlying struggles. Proceed with caution and ensure your investment aligns with your risk tolerance.

Keep an eye on the news and how the stock reacts over the next few days. More importantly, track the company's operational and financial progress in the coming months.

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What happens next? (Future Outlook & Strategy)

• Immediately: On January 26, 2026, GRI Bio's stock will begin trading on Nasdaq with the new, higher price per share and fewer shares outstanding. Your brokerage account will reflect these changes.
• Looking ahead: The company's primary focus will be on maintaining its Nasdaq listing and, more importantly, demonstrating tangible business progress. Investors will closely watch for:
  • Clinical Pipeline Updates: Positive data from ongoing trials, advancement of drug candidates, or new regulatory milestones.
  • Financial Management: Evidence of improved cash flow, successful fundraising efforts, or strategic partnerships to extend their cash runway.
  • Strategic Direction: Any announcements regarding their long-term strategy to bring their immune-modulating therapies to market and achieve profitability.