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Very nice bounce today - the 5 NASDAQ listings are all bombed out from the general negative sentiment to biotech of the past months..... so it's not that is driving this increase. Arix is under valued relative to its public listed holdings in any case.
https://*********************/newsfeed/article/arix-bioscience-plc-arix-bioscience-co-leads-31-million-series-a-financing-for-new-portfolio-company-sorriso-pharmaceuticals-1330950
£9.8m invested for 26% stake.
Phase 1 Trial ongoing - targeting Inflammatory Bowel Disease
Hi SGD, yes I did use Aura in my calculations. But the reason I included Artius was I got my list from slide 25 of their interim presentation (https://ether-assets.ams3.digitaloceanspaces.com/arix/Arix-Bioscience-Interim-2021-results-Final_2021-08-12-075514_bmzg.pdf)
Artius is listed there as "Nasdaq" but I found they are at Series C investment instead (and that I actually hold it via TFG, IPO and via Arix!)
I had read ST's article but wanted to validate what he was saying before averaging down (i.e. was it too good to be true)
Hi Agricore, thanks for sharing this, I'm always very interested in other peoples detailed calculations. But did you mean "Aura" (recent IPO) rather than "Artius" (Artios is not listed)?
I agree with your general conclusion of course.
IC did a similar updated calculation in November, which doesn't seem to have been posted here yet:
https://www.investorschronicle.co.uk/ideas/2021/11/08/bargain-shares-on-the-m-a-beat/
Hi all, I've been working through the 5 Nasdaq listed holdings and notice 2 things (Harpoon, Artius, Autolus, LogicBio, Imara).
1. All have significantly dropped in the past 6 months. Around a 35% drop. These make up around 66% of the June 30 valuation (of 220p less cash of 108p). So in my estimation (56.5p*0.35) that's a 18.5p drop. So £2.20 down to £2.02. Meaning ceteris paribus that the current discount is around 37.5% (I am assuming no movement to the other 34% unlisted holdings - as who knows, and that cash remains at 108p)
2. If you look at the average analyst 12 month price targets for the 5. These average at around 200% of current prices. So let's say they are only correct on 1 out of 5 - that suggests a (38p*0.2) = 8p uplift by end of 2022. That places ARIX at a (85/210) over a 40% discount - assuming no movement on the unlisted portfolio.
Conclusion: Even being extremely pessimistic/realistic I see deep value here. I think Arix themselves sum it up the best: What we have in our portfolio in numerous holdings at phase 2 trials giving us multiple shots at goal.
@IntrepidInvestor : SP is now 119/121, so nearly time for your next top up ;-)
I'm truly amazed by this price. It's the sort of thing you'd expect if something 'untoward' was happening with the company, but I'm not aware of anything, is anyone else?
The price fall of ARIX this year not so different to BIOG, this gives me hope that it is largely a sector trend and that there is nothing fundamentally wrong with ARIX itself
I am going to dabble via HL as the sp to NAV seems tempting and the management team strengthened by the return of Mark Chin. I also put it into my FT portfolio and noted the forecasts are all up from around this sp, the lowest suggesting 187p by next year.
LONDON, 08 November 2021: Arix Bioscience plc ("Arix", LSE: ARIX), a global venture capital company focused on investing in and building breakthrough biotech companies, notes that its portfolio company Autolus Therapeutics plc (Nasdaq: AUTL) (Autolus), a clinical-stage biopharmaceutical company developing next-generation programmed T cell therapies, has entered into a strategic collaboration and financing agreement with Blackstone (NYSE: BX) under which funds managed by Blackstone Life Sciences ("Blackstone") will provide up to USD250 million in equity and product financing to support Autolus' advancement of its CD19 CAR T cell investigational therapy product candidate, obecabtagene autoleucel (obe-cel), as well as next generation product therapies of obe-cel in B-cell malignancies.
As part of this USD250 million transaction, Blackstone is committing to invest USD150 million in product financing to support obe-cel development and commercialization, with USD50 million payable upon closing of the transaction and the remainder payable based on certain development and regulatory achievements. Blackstone has also agreed to purchase USD100 million of Autolus' American Depositary Shares (ADS) in a private placement, which is subject to customary closing conditions. In connection with the collaboration, Blackstone received the right to nominate a member to Autolus' board of directors.
Arix's existing holding in Autolus is 0.8% and was valued at GBP2.6 million at 30 June 2021.
Buy backs have their place, but agree it seems more sensible for Arix to invest if they have/can find suitable targets. My concern with the buy back was less that it happened and more that the shares are not being cancelled but being held in treasury, so overall share capital isn’t reduced. The temptation for mgt to then allocate those shares as part of share based incentives mean we may only be seeing money spent on future expenses. Anyway, glad it’s stopped and agree that the discount to NAV looks daft IMHO
Intrepid.
Disagree with your general premise on buy backs, can be good or bad depending on the company and management.
I think you really have to put the buy back into context for ARIX.
- they had an absolute tonne of cash from if I remember VeloBio which represented a significant % of market cap. May be hard to deploy such a large amount in the short - medium term.
- they are on a the most stupid discount to nav, and even more stupid if you take cash out. Buying in the market should uplift the share price, but hasnt done so here yet.
Still have issues with Acacia, anyone who is still talking to Woodford needs questioning
Hi IntrepidInvestor, interesting thoughts, and let's hope things are finally turning. If the SP does "drift to below 120p" then the non-cash holdings will be valued at almost zero!
I think there are times when a buyback is justified, e.g. as a tax-efficient alternative to paying a dividend, but I agree that it doesn't seem to have worked very well in this case.
Now here's an intriguing coincidence. They bought back 6,429,853 shares in total before halting today. If they had just bought another 13,250 then it would have pushed Acacia's holding over 20%, and triggered a TR1 RNS. That's assuming Acacia haven't sold any (and that my maths is correct).
Just a coincidence, or perhaps not wanting to give Acacia another reason to claim a greater presence on the BOD?
Hi all.
Not posted on this co’s BB before. I’ve been invested for several months and have just topped up, and will do so again if these drift to below 120p.
I almost sold out when the BoD announced the share buy-back. Buy-backs are usually a terrible idea, usually motivated by the BoDs need to hit EPS or SP targets for their own bonuses. A co entering a buy-back is basically saying they cannot think of anything better to do with the money; given they are in business, this is an admission of a lack of leadership; this is particularly true if the co happens to be an investment vehicle, as is the case here. So it’s an encouraging RNS that the BoD have changed tack.
I suspect that either the new board member insisted the policy be abandoned or the BoD realised they were wasting money and had actually made their bonuses smaller (having paid an average 179p and the SP is now 140p means they are showing a loss of c. £2.5m or 22%.
Hopefully they realise the folly/absurdity of an investment vehicle buying its own shares and what that signals to the market and they don’t attempt to do that again.
All the best
Intrepid.
I was struggling to make sense of the numbers in the first Pyxis RNS, and now they've issued a correction :
https://www.investegate.co.uk/arix-bioscience-plc--arix-/eqs/pyxis-oncology-prices-nasdaq-ipo---update/20211008101031EPDGF/
So if I now understand correctly, on paper NAV/share should be up 4.7p today.
Thanks Bazzaman, it does seem insanely cheap now, doesn't it?! I'm 20% down on my existing investment, but added a couple of days ago and again today.
the last part
Factoring in investments made in the second half, Arix’s proforma net cash of £150.7m (115p a share) and its £47.3m (36p a share) listed portfolio back up 92 per cent of the company’s market capitalisation of £215m. This means that Arix’s unlisted portfolio is in the price for £17m, or 75 per cent below its carrying value of £67.5m (51.6p a share), even though the Artios stake is in Arix's books at £25.3m (19.4p a share) and analysts at Jefferies value it at more than double that sum.
Importantly, Arix’s new management team has been boosted by the return of Mark Chin as managing director following a shareholder led boardroom clear out. Chin was Arix’s investment director from 2016 to 2020 during which time he sourced and led deals in key portfolio companies, including: VelosBio (acquired by Merck for $2.75bn), and Amplyx Pharmaceuticals (acquired by Pfizer). The team highlights no fewer than eight anticipated milestones across Arix’s portfolio in the second half of this year including:
Harpoon Therapeutics (NSQ: HARP) is expected to report interim data from ongoing Phase 1/2 clinical trials in ovarian and pancreatic cancer, multiple myeloma and small cell lung cancer.
Artios is set to initiate a Phase 1 clinical study for its Pol-theta inhibitor for the treatment of PARP resistant cancers.
LogicBio (NMQ: LOGC) expects to report interim data from its Phase 1/2 clinical study for the treatment of methylmalonic acidemia in paediatric patients.
Potential for further valuation upside from unlisted holdings and likely positive newsflow from well-funded listed holdings is not only being materially under-rated, but expect Chin to recycle the cash pile wisely while Arix’s ongoing £25m NAV accretive share buy-back programme – £8m shares were repurchased in the first half – is also supportive. Buy.
part one
Arix Bioscience (ARIX:165p) is the laggard in my 2021 Bargain Shares Portfolio after the share price pulled back below my 168p advised buy in price following interim results from the venture capital company. Arix holds a diversified portfolio of unlisted and listed investments in early stage biotechnology businesses targeting cutting edge advances in life sciences.
Share price weakness in four of its Nasdaq quoted investee companies, the decision to close-down another company after reviewing initial pre-clinical work, and adverse foreign currency movements accounted for £28m, £7.5m and £2.5m valuation reversals, respectively, in the first half of 2021. The negative impact was partly offset by £5.5m net gains on other investee companies, but closing net asset value (NAV) of £281m (214p a share) was still well shy of Peel Hunt’s forecast range (£300m to £310m).
Post the half year-end, Arix’s listed portfolio has suffered further paper losses of £12.7m and currently has a value of £47.3m (36p a share) after factoring in the follow-on US$8m (£5.8m) investment in Nasdaq-quoted drug development company Imara (NSQ: IMRA). Later this year, Imara is expected to announce interim results from its ongoing Phase 2b clinical studies for IMR-687 in sickle cell disease and beta-thalassemia.
Arix has also spent a further £1m on share buy-backs in the second half, and invested £6.3m in portfolio company Artios Pharma’s recent oversubscribed US$153m (£110m) Series C financing round. Artios is a leading DNA Damage Response (DDR) company that is developing a pipeline of precision medicines for the treatment of cancer. In April, Artios entered a research collaboration with drug giant Novartis to discover and validate next-generation DDR targets to enhance Novartis' Radioligand Therapies. I have great hopes for Artios (‘Five investment company bargains’ 8 April 2021) and note some smart investors are backing the company’s management who previously played key roles in AstraZeneca’s discovery of Lynparza, a treatment for advanced ovarian cancer.
And someone bought 100k yesterday. If it looks like a fish and smells like a fish....
There's a new Simon Thompson piece on ARIX at Investors Chronicle, if you fellas have access.
With the slide in the share price, off the back of the slide in value of Autolus (in the last year), Harpoon (since May), etc., i thought the news was already in the price of ARIX. For me, today's action is sticker shock at seeing the NAV decline in B&W.
Off the back of ARIX being a long term investment, cash on hand, the share buyback, excellent management, and granularity of the RNS I've been buying. (Of course, as an existing shareholder, perhaps i'm in denial.)
Many reasons. Some of their listed investments (Autolus and Harpoon) have been performing poorly. Many holdings are private and thus usually discounted as illiquid and difficult to value. Management churn and trying to redefine and articulate a strategy based on pressure from Acacia.
Sp = 174p; NAV (Jun 2021) = 242p/s; discount = 28%. Seems unduly pessimistic, any thoughts as to why?
Using available information from end of year , Simon Thomson , and Broker Jefferies estimate on cash and cash deposits long term , also the latest prices for the ownership of the 4 Nasdaq Companies they have shares in.
https://ether-assets.ams3.digitaloceanspaces.com/arix/Arix_Final_Annual-Report-2020.pdf?
CASH ( broker Jefferies estimate IC Simon T ) 185,000,000
NASDAQ STOCK IMRA , AUTL , HARP and LOGC prices as at 06/07/2021 54,000,000
Other Investments
ARTIOS ( broker Jefferies est IC Simon T ) 49,000,000
Amplyx 5,200,000
Quench Bio 8,900,000
STipe Therapeutics 2,100,000
Legacy Assets 6,800,000
Atox Bio 6,600,000
Aura 9,000,000
NAV Estimate 326,600,000
MARKET CAP 233,000,000
IC - April 21 - interesting article
Artios Pharma, a company backed by venture capital company Arix Bioscience (ARIX:190p), has entered into a three-year research collaboration with drug giant Novartis to discover and validate next-generation DNA Damage Response (DDR) targets to enhance Novartis' Radioligand Therapies (RLT). Artios is a leading DDR company that is developing a pipeline of precision medicines for the treatment of cancer.
In return for an upfront payment of $20m and near-term research funding to support the collaboration, Novartis gains the rights to select up to three exclusive DDR targets, and receive worldwide rights to be utilised with its RLTs. Artios will be eligible to receive discovery, development, regulatory and sales-based milestones of up to US$1.3bn, in addition to royalty payments on net sales of products commercialised by Novartis. The collaboration does not include Artios' lead programmes, ART0380, which is in clinical development, and ART4215, a first-in-class Pol Theta inhibitor.
In December, Artios entered a three-year collaboration with drug giant Merck to discover and develop multiple precision oncology drugs. Artios received US$30m in upfront and near-term payments, and Merck has the right to opt into exclusive development of compounds on up to eight targets. If Merck exercises the option, Artios will be eligible to receive up to US$860m per target, in addition to double-digit royalty payments on net sales of each product commercialised by Merck.
Artios management played key roles in AstraZeneca’s discovery of Lynparza, a treatment for advanced ovarian cancer, another reason why both Merck and Novartis are backing them. Moreover, the collaborations strongly suggest that Arix has backed another major winner for its shareholders, having previously realised US$185m (£139m) for its 6.8 per cent stake in Velos Bio, a company that was acquired by Merck for US$2.75bn at the end of 2020.
Arix invested £13.8m for a 12.4 per cent fully diluted stake in Artios and the holding has a modest carrying value of £19m. However, investment bank Jefferies valued the Artios stake at £49m after the Merck announcement, but before news of the Novartis collaboration. Jefferies' NAV estimate of £339m (250p a share) includes cash of £185m (136p a share), so effectively Arix’s investment portfolio of listed and unquoted companies is in the price for half book value. That’s a harsh valuation given that Artios is only one of several portfolio companies that are approaching key milestones over the next 12 months.
I suggested buying Arix shares, at 168p, in my market-beating 2021 Bargain Shares Portfolio, and the news from Artios adds further weight to the investment case. Buy.