Ideas Elsewhere: Graphite Bio (GRPH)

Strategic Review


Write-up on another busted biopharma Graphite Bio’s (GRPH) recently become public on VIC. The company trades at 40%+ discount to net cash and is exploring strategic alternatives following a recent failure of its lead development candidate and corporate restructuring with 50% reduction in workforce. I think, GRPH shareholders would likely be happy if the strategic review resulted in a company liquidation or a reverse merger/sale.

The catch is that so far GRPH continues to burn cash on the development of its remaining early-stage program. However, this doesn’t necessarily put liquidation or reverse merger/sale options out of the cards. For instance, CYT had also initially followed a similar scenario (failure of its lead candidate, announcement of a strategic review while continuing development of the remaining pipeline) and still ultimately decided to liquidate. There is a chance that GRPH could be another CYT in the making, especially given that, just like CYT, the company has initiated CEO/CFO retention agreements right after commencing the strategic review. However, GRPH’s CFO abruptly resigned just two weeks ago. I’m not sure how to read this move yet and will continue to monitor the stock.

Note: The ‘Ideas Elsewhere’ section is intended to highlight interesting event-driven investment ideas by other authors. These ideas are not my own, and I am simply summarizing them to bring attention of SSI subscribers. I do not intend to actively follow the developments of these ideas, so you should expect limited updates or follow-ups in the comments section.

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