Special Dividend + Potential Asset Sales
This is an interesting and likely timely situation involving a net-net biopharma that has just announced a liquidation. As part of the wind-down, the company will pay out a special dividend of $4.80/ADS ($528m in total), in line with its current share price. Investors get a free upside on any incremental distributions from the monetization of LIAN’s remaining portfolio of development assets.
The dividend is expected to be paid on March 14 (record date of February 27), shortly after which the company intends to delist from Nasdaq to OTC. ADS cancellation fee of $0.05/share applies.
By my count, LIAN will retain c. $30m in cash, which should be sufficient to cover any operating expenses till full liquidation, but there might also be some left for further distributions. The company expects to substantially complete the wind-down, including laying off most of the remaining workforce, by the end of 2024, while full dissolution is expected by H1’27. I would expect any proceeds from asset sales to come sooner, possibly late-2024 / early 2025.
The strategic review and liquidation have been orchestrated by LIAN’s controlling shareholder Perceptive Advisors, which owns 54% and controls 2/6 board seats. Perceptive is a large biopharma investor with $9.5bn in AUM, run by well-known biotech investor Joseph Edelman. The firm has a solid track record in the space, with annualized returns of 30% between 1999 – 2018 (more info on Perceptive/Edelman is available here, here, and here). The rest of LIAN’s management owns an additional 5%. With Perceptive and management in the same boat as minority shareholders, the incentives seem to be well-aligned – I would expect liquidation and asset monetization to progress smoothly. On top of that, Tang Capital has a 9% stake and had previously made a $4.3/share bid for the company.
A quick overview of LIAN’s more advanced pipeline assets:
- TP-03: The largest part of any incremental upside would likely come from the potential sale of LIAN’s rights to develop and commercialize TP-03 in China. This license was acquired from Tarsus Pharmaceuticals in 2021 at $24.4m ($15m in an upfront payment and $9.4m worth of warrants) with further a $175m in development/commercialization milestones. TP-03 is a treatment for eyelid inflammation caused by Demodex bacteria. It has already been approved by the FDA and is currently undergoing commercialization in the U.S. Tarsus Pharmaceuticals expects the drug to reach $1bn+ in peak global sales. LIAN reported TP-03 phase 3 trial data in Oct’23, and approval from Chinese regulators is pending. Using figures from this VIC pitch, TP-03 China rights might be worth $60m-$240m based on China sales reaching 10% of the drug’s expected global peak sales and a 1x-3x revenue multiple. Such valuation would imply potential proceeds of $0.5-$2.1 per LIAN’s ADS. However, we also need to account for the $175m milestone payments, out of which only $55m have been paid so far – a potential buyer of the TP-03 China rights might be liable to pay the rest of the $120m if TP-03 development/commercialization proves successful. The details of these milestones have not been disclosed, but these are likely to materially reduce any upside from TP-03 monetization.
- Omilancor: A treatment for inflammatory bowel disease. LIAN acquired the rights to develop and commercialize the asset in China and Southeast Asia from Landos BioPharma in 2021 for an upfront payment of $18m + additional payments of up to $200m. NImmune Biopharma, which subsequently acquired omilancor rights from Landos, completed a phase 2 study in 2023.
- LYR-210: A treatment for chronic rhinosinusitis. LIAN acquired the rights to develop and commercialize the asset in China and Southeast Asia from Lyra Therapeutics in 2021 for an upfront payment of $12m and up to $135m in milestone payments. Lyra Therapeutics initiated phase 3 trials in 2023.
- Infigratinib: A treatment for gastric cancer and other fibroblast growth factor receptor-driven tumors. LIAN licensed the rights to develop and commercialize the drug from BridgeBio in 2019. Phase 2a trial data in China were reported in Oct’23. LIAN had also licensed infigratinib for the treatments of first- and second-line cholangiocarcinoma (CCA, second-line treatment was approved in the US). However, LIAN discontinued phase 3 trials in China after BridgeBio discontinued the distribution of the drug for second-line treatment in the US and closed the global clinical trial for first-line treatment.
A quick background on the company and the recent developments. LianBio has been involved in bringing new medicines to China. This included licensing existing drug development programs, pursuing trials/approvals in China, and subsequently either selling or commercializing the drugs. In Oct’23, LIAN sold rights to its then-key phase 3 asset macavamten for net proceeds of $350m and concurrently announced the strategic review. In Dec’23, the company announced departures of CEO and CFO. Shortly after, the company announced the sale of another asset, NBTXR3, for $25m.
Isn’t the trade already done here?
The distribution is $4.75 (after a 5 cent ADS fee) and you can still buy it under $4.80 to get a cheap stub after 30 days for the remaining payouts. Don’t trust my math, but I’m thinking it’s worth at least 20 cents.
Is the distribution treated as return of capital or dividend?
The company is domiciled in the Cayman islands.
The company has $750m in paid-up capital.
In either case the distribution should not be taxed, as far as I know. But I am no tax advisor!
My concern is that if it is called a “special dividend” it will be taxed as a dividend, but if it is called/filed as a “liquidating distribution/return of capital” it will not. I thought the ‘paid-up capital’ test was a uniquely Canadian issue (which I am currently facing with IB).
This seems like an important point. For US investors I thought it hinged on how the company communicates the dividend via the 1099-DIV, where the dividend will be listed/split between ordinary income, qualified dividend income, or return of capital
yup, it’s especially important for non-us investors & issues around taxation. For example if treated as a div, it will be subject to 30% WHT by the broker. If treated as a return of capital, it will be paid gross & investors will pay capital gains at their respective rate (based on domicile etc.) (Again, not tax advise – this is just my understanding based on prior experience)
I am not a tax advisor but I went through a tax audit roughly 10 years ago on the exact same issue and I got taxed roughly 30% + I had to pay a tax advisor so the trade was down a lot… Even though we explained the economics of the trade to the tax advisor.
I was located in Belgium at that time
For US investors the bigger issue is the fact that the company is classified as a PFIC
Good point. I’m new to PFICs but it looks like owning it is a way around the reporting requirements connected with PFICs.
“As a result, for instance, a US person owning stock of a PFIC through an individual retirement account (IRA) described in Section 408(a) will not be treated as the shareholder of the PFIC stock, and in turn, is not subject to the PFIC rules. ”
https://www.lexology.com/library/detail.aspx?g=833d6ea6-ecaa-4210-a9d4-90b1fcf008ff
Thanks for the info.
IRS instructions on filing form 8621 on PFICs
https://www.irs.gov/instructions/i8621
The best part is at the end of that page:
Quote:
Recordkeeping 16 hr., 58 min.
Learning about the law or the form 11 hr., 24 min.
Preparing and sending the form to the IRS 20 hr., 34 min.
I know PFIC is a year to year situation. There were years they were classified as PFIC and years they weren’t, anyone have an idea what 2024 could look like?
The only source I can find is the company’s 2022 10-k which only mentions that it will likely be a PFIC for 2023 but doesn’t mention anything definitive about 2024.
“We believe we were a “passive foreign investment company” (“PFIC”) for U.S. federal income tax purposes for the taxable year ended December 31, 2022, and we believe we will likely be classified as a PFIC in the taxable year ending December 31, 2023. We may or may not be a PFIC in subsequent years. Our actual PFIC status for any taxable year will not be determinable until after the end of such taxable year as our PFIC status is a factual determination made annually after the end of each taxable year. There can be no assurance that the IRS will agree with our determination and that the IRS would not successfully challenge our position in any taxable year.”
https://www.bamsec.com/filing/183128323000041?cik=1831283
The press release says a $4.80 distribution minus the 5 cents ADS-delisting fee and “any applicable taxes.”
Is there any reason to believe there are appreciable “taxes” owed by the company through this delisting-and-dividend process that would reduce the payout below $4.75?
To be clear, I’m not referring to whatever taxes may be owed by the individual investor / dividend recipient.
This is just a standard legal language, also present in all Chinese privatizations involving ADSs (e.g. GTH, BLCT, HLG and many others). It refers to any applicable share transfer taxes or withholding taxes. However, I can’t recall a situation where shareholders were actually required to pay those taxes, nor has it ever resulted in a reduction of the consideration.
This is helpful thanks. I think the issue would be not that a “shareholder” would be required to pay the taxes, but that the company would owe Chinese taxes on any such distribution. If you pull up last year’s K and search for “withholding” you can see the discussion of that possibility.
Specifically, the company warns that it could owe a 10% or 20% withholding tax on a dividend distribution if it “is deemed to be a Chinese resident enterprise under the EIT Law.”
But I haven’t the foggiest idea if that issue has been previously determined/adjudicated by Chinese tax authorities, if it hasn’t come up because the company has yet to pay a div and is thus a live TBD issue — or if it’s a non-issue for _____ reasons.
Educational question – what is the relevance of the record date with a large dividend when ex-dividend is usually the day after payment date?
https://investors.lianbio.com/news-releases/news-release-details/lianbio-announces-completion-strategic-review
The special dividend is payable to holders of record of the Company’s ordinary shares and ADSs as of the close of business on February 27, 2024.
The ex-dividend date for the ADSs for the special dividend will be the first trading day following the payment date. Holders of record of ADSs on the record date who sell their ADSs prior to the ex-dividend date will not receive the special dividend.
If I got it correctly in this case is:
February 27 record day
March 14 Payment day for ADS
March 15 ex dividend
—> would mean, if you buy between February 27 and March 14 you would not be entitled to get the dividend(?) and if you sell between these two dates you will also dont get payed.
Happy to get corrected if wrong!:)
Not exactly – correct on if you sell between these dates, you would not get paid. But if you buy between these dates, you will get paid. For large divs the ex-div is after the payment date, so all you have to do to get the div is buy before the payment date – if I’m not mistaken.
This case is special for stocks with large dividends. Where ex-div is not the day after record date, and instead it is the date after payment date. Hence the question on what the point of the record date is.
If you read this there is more detail on this specific case:
https://investors.lianbio.com/news-releases/news-release-details/lianbio-announces-completion-strategic-review
I was wondering that too, and some quick research turned up this article (en.wikipedia.org/wiki/Special_dividend) which suggests a post-Feb 27 buyer *should* get the dividend through a due bill process. I assume that’s why price hasn’t fallen.
The $4.8/share dividend (less $0.05 ADS fees) hit the accounts yesterday. Ex-dividend shares are spiking upwards +90% this morning.
At least at the moment, this distribution seems to be treated as a return of capital rather than dividends. I am not in a position to comment on any potential PFIC-related issues and whether this might have any impact on the return.
I think it is safe to say this pitch has played out. The market currently attaches $40m value to the potential (and uncertain) monetization of the remaining assets + $30m of retained cash, most of which will probably be spent on operating/liquidating expenses.
So you sold out? I’m not sure if I’m being rational but since I found it really hard to know what this basket of assets might be worth I really liked this idea for a chance of getting a lottery ticket for $0.03 and letting it play out. But you might have a better idea of these assets. And many of these assets were bought in a market that was hotter for biotechs than now. So maybe taking the $38m now would indeed be better.
$4.80 a month ago creeped up to $4.99 yesterday (or $0.19 ex-dividend today). Today started about $0.24 premarket, and jumped to around $0.35 in ten minutes after open. Surprisingly big increase.
Anyone still involved here? Would think we got some sort of news re distribution soon as they were guiding to substantial wind down by end of the year. Tp03 sold months ago, and remaining clinicals seem to have all been wound down.
Are you seeing/receiving any communications from the company at all? I can only find discussion of the TP-03 sale through the Tarsus 10Q and the GrandPharma announcement. It seems LIAN got $15M and some royalty/milestone rights. Any clue what the latter might be? That’s presumably where any remaining money is.
But at the same time, those milestone rights may make it difficult to wind-up the company. How do you wrap things up if there’s a long tail of potential receivables? In the U.S. I guess you’d set up a liquidating trust mechanism, but maybe that’s harder to do with a cross-border company like LIAN.
The other weird thing is how incredible range-bound the stock has been for an opaque company. I was initially hoping to add to my post-payout position at like 20 cents or so, but it’s been just sitting at 30-32 cents the whole time. When it’s #2 candidate LYR-210 blew up on the tarmac for it’s US sponsor on May 6 (LYRA down 90%), I was certain LIAN would tumble a bit as well — efficient markets and all — but nope, just sat there at 30 cents. Weird.
I got in through my retirement accounts at the equivalent of 7-8 cents on the stub, so I’m happy to let it just play out — but it’s an incredibly odd-behaving stock at this point.
You’ve conveyed my thoughts to a near tee. I’ve attempted to speak to co/IR several times , but have not gotten a response. I was hoping for a distro by eoy 2024 with some smaller near 0 distro into 2027. But yes the receivables definitely complicate it a bit, hopefully they are somewhat near dated. What is sort of annoying here is that there is an ADS fee per div, which at $4.8 was sort of negligible but becomes a bigger issue if there are multiple sub $1 distros. At least Perceptive is motivated to probably clean this up vs dragging it out.
Looks like the #3 drug omilancor was just sold off, though no details on $$$ or terms. I don’t think anything is really left at this point in terms of assets.
https://www.businesswire.com/news/home/20241023953586/en/NImmune-Biopharma-Acquires-Development-and-Commercialization-Rights-to-Omilancor-in-Asian-Markets
Great catch, Lian paid 18mm upfront with 200mm in milestones payments for this one. Hopefully this is the last piece and there is a payment or some mkt communication by year end.
Nice. $18M is stellar for where this drug was in their line-up. But where’d you find these numbers? And still the stock doesn’t move. Just bizarre.
Apologies, should have worded it better, meant that is what Lian paid for it few years back.
Anyone have insight on LIANY’s potential payout as it trades down to 25c? I recall potential payout was $1+ and late 2024 early 2025 being mentioned.
I wanted to start a discussion on this—maybe there’s some obvious value here that I’ve missed, but after a quick glance, I don’t see much/see too many uncertainties.
The financials are almost a year old (FY23), and there’s a general lack of disclosures. After deducting expected Q1 cash burn and the special dividend, there’s roughly $20m in net cash remaining as of Q1 2024(!), most of which would likely be spent on cash burn or other expenses. Current MCAP is $27m, so most of the upside depends on the asset value.
Regarding the assets and their status:
1) TP-03: LianBio exited the TP-03 agreement in March for a total of $2.9m ($2.5m upfront payment + $0.4m in deferred payments) and does not retain any future upside. JESQ, are you sure about your $15m number and future royalty/milestone rights? The Tarsus 10-Q explicitly states that future milestone payments and royalties are now owed to Tarsus, not LianBio.
2) Omilancor: Sold in October, but no price was disclosed (at least I wasn’t able to find one). If the price wasn’t mentioned, it might indicate a small sum—just a guess.
3) LYR-210: There’s no information available on whether this asset has been sold. Its value is likely minimal, as its U.S. sponsor, Lyra, dropped 90% in May 2024 after poor results for LYR-210.
4) Infigratinib: No details are available on its current status or whether it has been sold.
In summary:
– The main asset was essentially sold for very little (unless I’m wrong on the interpretation).
– The second asset was sold, but the value remains undisclosed (likely a small amount).
– The third asset failed and is likely worth very little, with no clarity on its sale status.
– The fourth asset is in a similar uncertain situation.
– Additionally, the timeline for any value realization might extend to 2027, and the stock appears to be highly illiquid.
Hi, Lukas, With the FY24 AR out, what’s your updated estimate of net cash for end Q2 2025?
Hmmm, I’m trying to back-out where I got that $15M number, but with a quick look all I can see is this graf from a GrandPharma press release:
“After the relevant conditions are met, the Group will acquire the exclusive development, production and commercialization rights in Greater China Region (Mainland China, Hong Kong Special Administrative Region of China, Macau Special Administrative Region of China, and Taiwan Region) for TP-03, a global innovative ophthalmic preparation for the potential treatment of Demodex blepharitis and Meibomian Gland Disease (MGD) in patients with Demodex mites with an upfront payment of USD15 million and a certain amount of registration milestone fees.”
I may have interpreted the USD15 million as going to LianBio (especially given the use of the word ‘upfront;’), but studying the garbled syntax of that paragraph further, I believe it’s all modified by the opening clause “after the relevant conditions are met,” and thus may instead refer to a FUTURE reconfigured $15M milestone payment from GrandPharma to Tarsus, as referenced in the last sentence of the first paragraph of this Tarsus 10Q excerpt:
***
In February 2024, LianBio announced its plan to wind down its operations and in March 2024 made a special cash dividend payment to the Company of $0.7 million (equivalent to $4.80 per share – see Note 3). In March 2024, the Company executed the Novation Agreement and upon execution of the Novation Agreement, the China Out-License agreement with LianBio was assigned to GrandPharma and a one-time payment of $2.5 million (the “Termination Payment”) was made to the Company from LianBio in April 2024. This Termination Payment was recorded as license fees and collaboration revenue in the Condensed Statements of Operations and Comprehensive Loss for the six months ended June 30, 2024. The Novation Agreement amended the $15.0 million future development milestone payable on China regulatory approval of the China Out-License agreement with a combined condition of patent issuance related to TP-03 in China.
Simultaneous with the execution of the Novation Agreement, the Company entered into the Warrant Termination Agreement for a total cancellation payment of $0.4 million (the “Warrant Cancellation Payment”). This Warrant Cancellation Payment was recorded as license fees and collaboration revenue in the Condensed Statements of Operations and Comprehensive Loss for the six months ended June 30, 2024 and cash and cash equivalents in the Condensed Balance Sheets as of June 30, 2024.
Through June 30, 2024, the Company received aggregate payments from LianBio totaling $86.1 million, comprised of (i) initial consideration of $15.0 million, (ii) $67.5 million for the achievement of specified milestones, (iii) $2.5 million upon execution of the Novation Agreement, (iv) $0.4 million upon execution of the Warrant Termination Agreement, and (v) $0.7 million related to a special cash dividend.
***
A couple things to note further:
(1) LianBio paid $2.9M TO TARSUS as part of exiting the agreement and cancelling the warrants. Lukas, is that what you’re referring to when you write, “TP-03: LianBio exited the TP-03 agreement in March for a total of $2.9m ($2.5m upfront payment + $0.4m in deferred payments) and does not retain any future upside.” That’s money from LianBio to Tarsus.
(2) Ok then but: LianBio must have received SOMETHING from GrandPharma for those development rights! I mean, pretty please? LianBio sunk $86.1M into the drug just in payments to Tarus alone. And the product must be at least somewhat viable or GrandPharma wouldn’t be doing this deal.
So I would assume there must be some economics to LianBio on all this, but it doesn’t look like they can be backed out from either the GrandPharma PR or the Tarsus Qs. So I dunno. Lukas did you find anything else on what they may be?
Otherwise great re-summary of where we are, thanks for writing it up.
re Grand Pharma you can see #s in LIANY’s last Annual Report on OTC.
Great news and great find. I had what I thought was a comprehensive set of ticklers on LianBio news and reports (including from the company itself!) but somehow missed this OTC report — I assume Lukas did too. Lesson learned, I guess, about these f***** dark companies. I wonder if we’ll get a new report in the spring for FY24.
I would assume approval triggers the final milestone and full 40mm. Grand pharma submitted it this week, and from what I gather average approval is about 6 months. I assume some tax selling into eoy, and people just getting sick and tired of waiting with no defined timeline/$ figures. My thought is that some payment is received between now and first half of 2025 vs just one in 2027. I just hope they are adr fee efficient, because that would be my main bear case here. Div fees for smaller divs could be sub .05, as low as .01 so potentially mitigated. My bull case is that Perceptive is very motivated here as top holder, and there is 0 incentive to not maximize payout/make it timely. With tp03 payment you’ve more than covered current market cap and time value for next 2 years with tons of additional upside in hidden value with a smart and motivated liquidator.
The original Tarsus / LianBio agreement featured “clinical, regulatory, and sales milestones”. Tarsus effectively said in their June call that they agreed to ‘assign the collaboration to Grand Pharma’. And the LianBio 10K mentions “25 million in contingent milestone payments”. Note the ‘s’: plural. I haven’t dug in much deeper but I don’t think LianBio will receive the full $25m upon approval. The structure is probably something like $10m for approval, $5m for $100m sales, $10m for $200m sales. Maybe the deal structure (or the Tarsus / LianBio deal structure) is in some filing somewhere.
The way i read the initial pr “ in patients with Demodex mites with an upfront payment of USD15 million and a certain amount of registration milestone fees. Was that all milestone feeds were just related to registering/ approval. re milestone payments i think those liabilities were just transferred from lian to grand pharma.
Yeah, the Grand Pharma PR reads that way indeed.
@v5015 when you say the tp03 payment will more than cover the current market cap and 2 years of time value, do you use $40m as the tp03 payment number?
Total consideration is $40m, but I believe $15m upfront has been received, so we’re expecting up to only $25m (or $0.23/share) more in contingency payments vs current market cap of $28m.
Yes i mean total tp03 payments ie what has been received + what is to be received from what i believe is submission + approval.
Isn’t the $15m (upfront payment already received early this year) already included in the current estimate of $20 million net cash (most of which will be spent on cash burn)?
The grand pharma deal was announced 2 days before the end of the q, not sure if that cash was received/factored.
I assume we will be in an information vacuum until early April, when the 2024 Annual Report is expected to be posted to the OTC website.
Agreed 100 pct re vaccum. But i think thats the opportunity now as a black box. Again i think incentives are there, perceptive sharp operator and i dont think theyd burn all that cash to shut down to return even less cash.
Anyone know if the “expected FY24 annual report to be posted in spring 2025” is simply custom and practice, or an actual OTC requirement for a dark company like LianBio? I feel like I’ve seen companies go dark for years and the OTC simply shows a warning / red flag / skull-and-crossbones on the OTC site, without the company having to post anything at all.
LIANY’s OTC category (Pink Limited) requires posting of financial info within six months (i.e., posting of 2024 Annual Report by 06/30/2025).
However, if they don’t file by that deadline, LIANY will just be downgraded to the Pink category, and there’re no other punishments.
Last year they posted 2023 Annual Report to the OTC website in early April. So I expect to see the 2024 report come out any time now.
FY24 Annual Report has been posted to the OTC website. Stock price up 70%.
It seems that they’ve received the first milestone payment of $5m from Grand Pharma.
“Total consideration for the sale was up to $40 million, including a $15 million upfront payment and $25 million in contingent milestone payments. On February 27, 2024, the Company received $5 million milestone payment from Grand Pharma. “
Is this $40mm the only consideration for remaining equity value?
https://www.otcmarkets.com/stock/LIANY/overview
In addition to this $40mm potential consideration is $50mm in cash and $10mm in receivables for a total of close to $1/share. Less than $1mm in liabilities.
Closing costs can’t be more than a couple mil – @30c looks like some real value. What am I missing though, must be a lot? I have a 15yr old expired CFA and aspiring CFP circa 2028.
$50mm in cash + $15mm upfront payment seem like a good margin of safety given this statement:
The Company is subject to claims and assessments from time to time in the ordinary course of business. The Company will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. As of December 31, 2024, and December 31, 2023, there have been no such matters identified. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within the range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The Company is not currently party to any material legal proceedings.
Ongoing cash burn can be significant. There were R&D of $10m and G&A of $28m in 2024.
Not sure what the current rate of cash burn is. Waiting for @Lucas’s update.
And I believe the $52m cash at the end of 2024 already includes the $15m upfront payment received during 2024.
And I am also suspecting that the 2024 in the following sentence from the AR is a typo for 2025 “On February 27, 2024, the Company received $5 million milestone payment from Grand Pharma. “
The agreement was signed in March 2024, and it would be very strange for the milestone payment to have been received one month prior.
So I think it’s possible that only $20m remains for the $40m consideration ($40m – $15m upfront – $5m milestone).
There is also this https://www.businesswire.com/news/home/20241023953586/en/NImmune-Biopharma-Acquires-Development-and-Commercialization-Rights-to-Omilancor-in-Asian-Markets
LIANY dipping to 20c – anyone have opinion of r/r here?
Fun little liquidation puzzle, but I’m out for now. There’s not quite enough info, a lot of assumptions have to be made, and in the end it’s a coinflip based on regulatory drug approval. Here’s how I broke it down. Feel free to correct:
– Cash + receivables = $62m (as of Dec 31, 2024). That includes the $5m milestone already received from TP-03 + another $5m+ in “other receivables” (undisclosed, but I’m taking the full $10.1m at face value).
– Less total liabilities = $1m
– Less severance = $5m. Large part of the wind-down was completed last year. Operations were handed to a liquidator late 2024. Very few employees remain. I assume ~$5m remains outstanding.
– Less forward cash burn = $20m. Modeled 2.5 years until dissolution (end of H1 2027). 2024 SG&A was $28.2m. Adjusting for ~$12.2m in one-off wind-down expenses, that leaves ~$16m. Halving that going forward feels fair. $8m/year × 2.5 years = $20m.
– Plus interest income = ~$5m. They earned $4m in 2024. I haircut by ~30% and exclude 3 months (since the massive $528m dividend went out in March). Rounded to $5m going forward for 2.5 years in total.
– Less misc wind-down buffer = $5m. Catch-all for anything I might be wrong about (legal, OTC filings, ADR admin costs, etc.)
This leaves $36m, or $0.33 per share, for shareholder distributions. After ADS cancellation, it drops to $0.28/share vs $0.37/share current price.
The wildcard is TP-03 milestone.
This seems to be the only remaining upside lever and there’s a lot of interpretation:
– Grand Pharma submitted TP-03’s NDA to the NMPA in Dec 2024, and it was accepted shortly after.
– In their sale PR, it mentions a $25m milestone as “a certain amount of registration milestone fees” on top of the $15m upfront.
– LianBio received $5m on Feb 27, 2025. I have a hunch this was tied to NDA acceptance (NDA is the final stage before approval).
– That suggests another milestone ($20m) could be paid upon NMPA approval (though this might be just my speculation).
What’s the timeline? For innovative drugs, according to China Daily, NMPA typically takes 6-9 months after submission – puts approval decision in June–Sept 2025, maybe Q4 at the latest. Since TP-03 is already FDA-approved and there are supposedly no similar drugs approved in China, it might even qualify for a priority review (cutting review to 130 or even 70 working days). However, that’s probably an overly bullish assumption.
So:
– Base case, which assumes no further milestone payments, results in $0.28/share distributions (after ADS fee) and -24% downside.
– Bull case, which assumes another $20m in TP-03 milestone, results in $0.47/share after ADS fee, and that would be 26% upside.
Good summary but think your burn/severance/windown is still too high, assets sold and deals negotiated, id think less than 1mm a qtr. re approval grand pharmas pr’s mention 2027 as the date, but maybe thats a worst case scenario.
https://www.otcmarkets.com/stock/LIANY/news/LianBio-Declares-Special-Cash-Dividend?id=483425
Is there anything left after this distribution? If so, would it get wiped out by the 0.05 fee?
If my understanding is correct, the $0.43 dividend will be reduced by the $0.05 ADS fee, so an investor would get back roughly 88% of their capital, assuming a purchase at the current price. This means another distribution of at least $0.09 (before fees) is needed to break even. Factoring in the $0.02 annual ADS fee, the required distribution rises to at least $0.13, assuming the wind-down concludes by mid-2027. Given that the stub isn’t free and can get impaired from both sides – first, an extended timeline could allow annual fees to consume the remaining value, and second, the final stub value is questionable – the situation doesn’t seem very exciting.
I thought the fee comes out in Nov, not from dividend. But unsure if anyone knows better?
.02 Comes out every Nov as ADS fee, but some chance for reduced amount since stub will be .05-.10 or so at best. I’ve reached out to depo on this but they refuse to really comment on it, maybe someone else has better interaction. Also some of chance of final dividend cost not being .05, but to be fair I was surprised this one wasn’t less than .05.
https://www.businesswire.com/news/home/20260716287767/en/LianMedical-Formerly-Known-as-LianBio-Announces-Completion-of-Merger-Between-LianBio-and-LianMedical
Not sure if anyone here still but r/m into shell