Buying and selling Smartly Underneath Money, Strategic Choices






This will probably be a rather fast one, thanks to Writser for pointing me on this course.

Magenta Therapeutics (MGTA) (~$47MM marketplace cap) is any other addition to my rising basket of failed biotechnology firms which can be pursuing strategic possible choices like a opposite merger or liquidation.  Magenta is a scientific level biotech all for making improvements to stem cellular transplantation.  Their number one product, MGTA-117, first of all had certain information readouts in December for his or her ongoing Section 1/2 trial, however in a while after, sufferers the usage of upper doses began experiencing hostile results, culminating with the demise of 1 trial player and the next shutdown of the MGTA-117 scientific trial.  Then the day before today afternoon, Magenta introduced they have been going to discover strategic possible choices, the press liberate is quite obscure and generic.  However very similar to SESN and others, I await Magenta first looking to discover a buzzy opposite merger with a extra promising biotech, if that does not paintings, pursue a liquidation.

Magenta’s steadiness sheet is moderately easy, that they had $128.3MM in money and treasuries as of 9/30, no debt rather then subleased area in a Cambridge, MA place of job/lab advanced.

Since we are getting as regards to part manner via Q1, I annualized the Q3 burn charge for 2 quarters.  The corporate hasn’t given any preliminary indication of getting rid of their staff (as of the final 10-Ok, that they had 75 other people), however I be expecting that to practice in a while, at the side of breaking their hire.  Cambridge is a biotech scorching spot, Magenta or the principle lessee would not have an excessive amount of hassle discovering a brand new tenant.  Be at liberty to make your individual assumptions, however I get a hold of MGTA buying and selling at a few 40% cut price to proforma internet money even after spiking at the information these days.  In relation to different property, Magenta does have $247.2MM in NOLs and two different early level product applicants (one has a Section 2 trial ongoing), however as all the time, tough to position a worth on the ones.

The principle chance right here might be the corporate deciding to double down on their two different early level merchandise, however the cut price is extensive sufficient right here to warrant an upload to the basket.

Disclosure: I personal stocks of MGTA

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