Strategic review is ongoing, potential upside could range between 30%-60%
It’s not a new name in the land of busted biopharmas, but after dropping 22% last week for no obvious reason, it’s starting to look interesting.
The setup is fairly standard. In March, the company discontinued its lead program after disappointing Phase 1 results, cut 70% of its workforce, and launched a strategic review.
There are multiple positive aspects that suggest the strategic review could lead to a favorable outcome for shareholders at the current price. Two prominent activists own 20% combined. One of them bought the stake at current price levels and has already written a letter to the board.
I think things could move fairly quickly from here. Management has made one interesting hint in the latest Q1 update that suggests the strategic review won’t be prolonged.
My liquidation value calculations suggest 30%-60% upside. Results should be similar in a sale scenario.
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