Home Value Investing One other Damaged Biotech, Scientific Property Probably Value One thing

One other Damaged Biotech, Scientific Property Probably Value One thing

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One other Damaged Biotech, Scientific Property Probably Value One thing

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AVROBIO (AVRO) (~$76MM market cap) is the most recent damaged biotech that’s buying and selling under web money to announce they’re pursuing strategic alternate options.  AVROBIO is a medical stage gene remedy firm that offered one in every of their property, AVRO’s cystinosis gene remedy program, to Novartis in Could for $87.5MM in money, whereas retaining their HSC gene remedy for Gaucher program which that they had beforehand introduced intentions to provoke a Section 2/3 trial later this 12 months.  With the strategic alternate options announcement, AVROBIO introduced they have been pausing growth efforts (and shedding 50% of their workforce), however the remaining IP property seemingly have some optimistic worth not like others within the damaged biotech basket.  If any readers have experience on this space or perception into the potential worth, please remark under.

Doing my fast again of the envelope math on what a liquidation state of affairs would love (to be clear, a liquidation wasn’t talked about as one of many choices they have been contemplating, however I nonetheless discover it useful):

The above is probably going overly punitive on this state of affairs however I wished to be according to different comparable concepts.  As a part of the asset sale, AVROBIO did signal on to offer help to Novartis for 12 months below a Separation Companies Settlement, which may be why they nonetheless must retain 50% of their workforce.  Once more, their remaining IP seemingly nonetheless has worth, if they will promote it for $10+ million, then we’re nearer to $2.00 per share.  A reverse merger appears to all the time be the primary choice, with the market rallying, possibly these come again in vogue as nicely.

Disclosure: I personal shares of AVRO

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