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Interesting theories about the tender offer. I’m undecided on what to do on whether to allocate some shares or not and the %. It’s my biggest holding by a mile. 250p is very undervalued but it’s debating whether the market will clock onto the value.
Oldbutnowisa - I can’t see them taking many or any of the entities the full way to commercialisation alone. I’ve been reading the annual report and they have mentioned partnership scenarios if LYT-100 is successful in Q4 and moves forwards to Phase 3. Gallop will shortly follow in the footsteps of Seaport with a financing round. That won’t leave any wholly owned entities which I’m happy with as I like the model from a risk / reward perspective. Unfortunately it’s not one which the market appreciates.
One thing holding the sp back is the lack of clarity on NAV as none of the significant founded entities are listed. If Vedanta or Seaport were to list, we’d have a reference point for a valuation.
Agreed Scooby. I thought that the results would lead to a sharp move to close in on the 250p mark. Now I’m hoping the outcome of the tender offer will move it there.
The new management have a tall order on their hands to change the minds of the market.
Nothing particularly of note to add from the webcast. Again, the reaction of the SP is very Puretech. The tender offer will at least remove 36 million more shares and the mechanics of this should squeeze the SP.
The new CEO said he is committed to unlocking value for the company. When pressed on this, he repeated part of the presentation.
$575 million in cash before the Seaport financing ($32 million) and tender offer ($100 million) so the company will have around $440 million.
I’m guessing next week we will have the information for the tender offer.
CEO Chowrira has highlighted that the market hasn’t fully recognised the value on offer.
Annual report and presentation later today which I will be watching.
The new management certainly need a better way to communicate the value held within the company. The management have said previously that the company is chronically undervalued but that hasn't improved the situation. We will know by tomorrow if they have been effective with this communication.
There are so many biotechs that are on the knees due to lack of funding and market conditions and Puretech could really exploit this in their favour. They will have almost $500 million in the bank (with more coming in by September) so why not pick up some assets or take positions in companies before sentiment in the sector turns up.
We are all missing something Doff! When the share price was 400p (£1.1 billion valuation), they had $480 million cash. That is likely to be an additional $100 million and a pipeline which is much farther advanced. I appreciate the markets were toppy back in early 2021 when Puretech were at 400p but they have progressed a long way since then and I think that 400-500p would be a much fairer valuation.
I can see either a takeover coming, a structural change to the company or change in strategy very soon if the market performance doesn’t turn around soon.
Let’s assume they have $575 million (pre tender) in the bank and the market cap is $690 million. For $115 million, you are getting $400 million in KAR-XT royalty payments ($50-100 million due in the near term), 100% ownership of Gallop and LYT-100, significant stakes in Seaport and Vedanta of which Puretech’s stake is worth north of $100 million in each based on the last fundraises.
The results will be interesting to read on Thursday. Let’s see if they address the disconnect between market performance and company performance.
Everyone will be able to tender at least 14% of their holding regardless. Invesco hold 24% of the company. I don’t see them tendering any shares and I think other big holders will follow suit. If you tender all of your shares, you’ll have most of them taken for 250p.
Once 14% of the shares are off the market, the share price will move up towards that figure and possibly beyond.
There is no love for the company. The hub and spoke model and company strategy significantly derisks them as a biotech but it doesn’t seem to attract the appetite of many investors.
Many mid cap biotechs are one or two trial results from being boom or bust. Had Puretech kept a significant % of Karuna and it failed P3, they would have been left with very little but in hindsight we can look and say that they could have had another couple more billion if they held a higher % for longer.
I see four valuable assets in Puretech now. We have Seaport, Gallop, Vedanta and LYT-100. I’d expect the first two to list on the NASDAQ at some point as Karuna did and more value unlocked as they progress through clinical trials.
I don’t know what the answer is to unlocking the true valuation but here is hoping that our new CEO does. The share price is dire for what is on offer. The company is sitting on $600+ million (pre tender offer) and the valuation just under $750 million. So you have the above mentioned for $150 million and the remaining royalties and milestone payments from KAR-XT still to come.
She will become the CEO of Seaport which will be integral to the valuation of Puretech and given her holding in Puretech is nearly 5%, she has incentive to deliver. I'd imagine that Zohar is privy to the levels of interest in Seaport and having seen the meteoric rise of Karuna, she wants to be the lead face of the company rather than essentially the lead of a biotech portfolio in Puretech.
We have $600 million in cash with $100 million payout, further payments due at the end of the year from Karuna and now a share in Seaport worth $150 million. That's before adding in value to LYT-100, Vedanta and Gallop where I would expect a similar route to Seaport.
Give Seaport 12-18 months and I think they will list on the NASDAQ. Valuation will only increase for Puretech on it from here.
Clearly investors believe in the team behind Karuna and have confidence that success can be repeated. $100 million raised leaving Puretech with 61.5% that values our stake $160 million. As if the valuation of Puretech didn’t get crazier!!
Some big A trades going through today. Let’s hope it’s close to £2.50 before the tender closing date. Any chance they would revise it nearer the time to £2.80 or £3. Is that possible or would the special dividend just be paid?
If the markets improve further and we continue with further good news, the SP may sit above the tender offer by the end of April in which case the $100 million will be paid as a special dividend to shareholders instead.
Still with $500 million in the bank and possibly more with approval milestone and potential deal on the royalties with BMS. I’d expect any further monies related to the Karuna deal to be distributed out to shareholders via tender offer towards the end of the year.
Karuna now moved pre market to buyout price of $330 following the HSR waiting period. Close of deal cited as early as next Monday (18th).
https://seekingalpha.com/news/4079400-karuna-therapeutics-gains-as-hsr-waiting-period-for-bristol-myers-deal-expires