Home Value Investing Buying and selling Nicely Under Money, Strategic Alternate options

Buying and selling Nicely Under Money, Strategic Alternate options

Buying and selling Nicely Under Money, Strategic Alternate options

This can be a comparatively fast one, thanks to Writser for pointing me on this path.

Magenta Therapeutics (MGTA) (~$47MM market cap) is one other addition to my rising basket of failed biotechnology firms which can be pursuing strategic alternate options like a reverse merger or liquidation.  Magenta is a scientific stage biotech centered on bettering stem cell transplantation.  Their main product, MGTA-117, initially had constructive information readouts in December for his or her ongoing Section 1/2 trial, however shortly after, sufferers utilizing increased doses began experiencing antagonistic results, culminating with the demise of 1 trial participant and the next shutdown of the MGTA-117 scientific trial.  Then yesterday afternoon, Magenta introduced they had been going to discover strategic alternate options, the press launch is relatively obscure and generic.  However just like SESN and others, I anticipate Magenta first attempting to discover a buzzy reverse merger with a extra promising biotech, if that does not work, pursue a liquidation.

Magenta’s stability sheet is pretty easy, that they had $128.3MM in money and treasuries as of 9/30, no debt aside from subleased house in a Cambridge, MA workplace/lab complicated.

Since we’re getting near half method by Q1, I annualized the Q3 burn price for 2 quarters.  The corporate hasn’t given any preliminary indication of eliminating their workforce (as of the final 10-Okay, that they had 75 folks), however I anticipate that to observe shortly, together with breaking their lease.  Cambridge is a biotech scorching spot, Magenta or the first lessee should not have an excessive amount of bother discovering a brand new tenant.  Be happy to make your individual assumptions, however I give you MGTA buying and selling at a couple of 40% low cost to proforma internet money even after spiking on the information at this time.  When it comes to different belongings, Magenta does have $247.2MM in NOLs and two different early stage product candidates (one has a Section 2 trial ongoing), however as at all times, tough to place a worth on these.

The first danger right here might be the corporate deciding to double down on their two different early stage merchandise, however the low cost is huge sufficient right here to warrant an add to the basket.

Disclosure: I personal shares of MGTA