Tuesday, April 16, 2024

Clark Avenue Worth: Sio Gene Therapies: Small Liquidation


Within the IMRA publish feedback, I discussed that Sio Gene Therapies (SIOX) (~$30MM market cap) was a possible liquidation candidate.  Sio Gene Therapies is among the many pre-revenue biotechnology firms — this one was initially targeted on gene remedy for Parkinson’s illness — that has given up improvement and was pursuing strategic options because of poor medical outcomes and/or powerful capital elevating situations.  Usually these damaged biotechnology firms find yourself doing a reverse merger, however right here the corporate by no means actually had its personal IP, that they had licensed the IP from third events and their NOLs are primarily domiciled in Switzerland the place company taxes are low, thus limiting their worth.  Aside from a public shell, which is not in a lot demand as of late when SPACs are all liquidating and the IPO market is pretty quiet, SIOX has little worth remaining outdoors of its money.  This week, SIOX introduced the board accepted a plan of liquidation (requires shareholder approval).

The stability sheet is pretty easy at this level (9/30 10-Q):

They’ve already laid off most of their workers and gotten out of their workplace leases (no non-current liabilities are remaining), this must be a reasonably straight ahead liquidation.  The remaining money burn must be restricted to some remaining G&A and liquidation prices.  They do point out in the identical 10-Q that “we proceed to conduct one pre-clinical analysis and improvement program” nevertheless it should be small and certain straightforward to pause.  Along with the above stability sheet, they do have a CVR-like cost of as much as $7MM after their sale of Arvelle Therapeutics, whereas that is a pleasant lotto ticket, it additionally means the longer term liquidating belief may be round some time (unclear to me how lengthy these milestone funds prolong) which might decrease the potential IRR.

The present market cap is about $30MM, versus a fairly liquid guide worth of $49MM ($0.66/share) as of 9/30, that offers loads of room for G&A and liquidation bills.  My guess (much like a commenter within the IMRA publish) is that we find yourself with ~$0.55/share, a lot of that returned early as there’s actually not a enterprise right here remaining.  I personal a smallish/tracker place, could attempt to add extra if it falls on a delisting, and many others.

Disclosure: I personal shares of SIOX

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