Three otherwise innocuous words -- reverse stock split -- can cause much disappointment and even sow panic in an investor community. Shareholders of clinical-stage biotech (NASDAQ: AGEN) experienced this vividly on Thursday when their company announced its intention to start going down that road. The stock's price fell sharply, by almost 30%, contrasting with the 0.6% gain of the benchmark S 500 index.

In a regulatory filing and a letter to its shareholders, both published Thursday, Agenus revealed that it is seeking a reverse stock split. The proposed ratio is one share of the biotech company's common stock for each 20 currently held. The move is subject to an investor vote, which is to take place at a special shareholder meeting set for April 3.

As is usual in such situations, the key impetus behind Agenus' proposal is the desire to push the company's market price over $1 per share. This is the minimum mandated by the , the exchange on which the stock is currently traded.

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Source Fool.com