Sunday, March 26, 2023

Clark Road Worth: Sio Gene Therapies: Small Liquidation

Within the IMRA post comments, I discussed that Sio Gene Therapies (SIOX) (~$30MM market cap) was a probable liquidation candidate.  Sio Gene Therapies is without doubt one of the many pre-revenue biotechnology corporations — this one was initially centered on gene remedy for Parkinson’s illness — that has given up growth and was pursuing strategic options because of poor scientific outcomes and/or robust capital elevating situations.  Usually these damaged biotechnology corporations find yourself doing a reverse merger, however right here the corporate by no means actually had its personal IP, they’d 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 announced the board approved a plan of liquidation (requires shareholder approval).

The steadiness 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 growth program” however it have to be small and sure straightforward to pause.  Along with the above steadiness sheet, they do have a CVR-like fee 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 is likely to 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 reasonably liquid guide worth of $49MM ($0.66/share) as of 9/30, that provides loads of room for G&A and liquidation bills.  My guess (just like a commenter within the IMRA submit) 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 so on.

Disclosure: I personal shares of SIOX

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