Ideas Elsewhere: AlloVir (ALVR)

Strategic Review

Yet another busted biotech covered by Clark Street Value. AlloVir has recently suspended the development of its key asset, launched a strategic review, and subsequently laid off 95% of the workforce. ALVR is currently trading at a substantial discount to net cash. The outcome of the strategic review is uncertain and might result in a reverse merger, liquidation, or the sale of the company. ALVR’s shares at $0.66/share compared to Clark Street Value’s NAV estimate of $0.87/share after factoring in severance and the projected cash burn in Q4’23 and Q1’24. A potential transaction at 85% of NAV would imply a price target of $0.74/share (6% upside), with potential additional upside coming from ALVR’s three remaining clinical/pre-clinical stage pipeline assets. A reverse merger is a risk given ALVR’s large pile of cash. However, significant management ownership (40%) and the presence of reputable biotech investors (e.g. Gilead Sciences owns 15%) somewhat reduce the chances of the strategic review ending up with a value-destructive reverse merger.

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 might not actively follow the developments of these ideas, so there might be limited updates or follow-ups in the comments section.