Clark Avenue Worth: Cyteir Therapeutics: Liquidation Introduced

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Cyteir Therapeutics (CYT) ($92MM market cap) is one other damaged biotech, in contrast to others, this one is forgoing a reverse merger and introduced in the present day they have been merely liquidating:

Deliberate Liquidation and Dissolution

 

Because of the deliberate discontinuation of CYT-0851 growth, and the beforehand introduced discontinuation of Cyteir’s discovery pipeline, the Firm’s Board of Administrators intends to approve a Plan of Liquidation and Dissolution (“Plan of Dissolution”) that may, topic to shareholder approval, embrace the distribution of remaining money to shareholders following an orderly wind down of the Firm’s operations, together with the proceeds, if any, from the sale of its property. Previous to winding down operations, the Firm intends to finish regulatory and affected person obligations from the continuing scientific trial. The Firm will interact impartial advisors, who’re skilled within the dissolution and liquidation of corporations, to help within the Firm’s dissolution and liquidation. The Firm additionally intends to name a particular assembly of its shareholders within the second half of 2023 to hunt approval of the Plan of Dissolution and can file proxy supplies referring to the particular assembly with the Securities and Alternate Fee (the “SEC”). If the Firm’s shareholders approve the Plan of Dissolution, the Firm would then file a certificates of dissolution, delist its shares of frequent inventory from The Nasdaq World Choose Market, fulfill or resolve its remaining liabilities, obligations and prices related to the dissolution and liquidation, make affordable provisions for unknown claims and liabilities, try and convert all of its remaining property into money or money equivalents, together with by way of a possible sale of CYT-0851, and return remaining money to its shareholders. The Firm will present an estimate of any such quantity that could be distributed to shareholders within the proxy supplies to be filed with the SEC. Nonetheless, the quantity of money truly distributable to shareholders might range considerably from any estimate supplied by the Firm primarily based on quite a lot of components.

The corporate is not going to place out an estimate till they file their proxy, however let’s try and make a conservative guess on how a lot they might distribute to shareholders.  Cyteir did layoff roughly 70% of their workers in January and incurred severance funds in Q1, so their expense run charge might be considerably decrease in Q2 and past given this announcement.  I’ve no clue methods to worth CYT-0851, however it does not sound like a complete zero, there is likely to be some extra worth right here.

This is my fast, possible unsuitable, swag at a liquidation state of affairs:

I am estimating $20MM of money burn, which is likely to be too excessive, particularly throughout a interval the place cash market funds are returning 5%, serving to to offset some G&A.  I am assuming a yr finish preliminary distribution of 90% of the money, after which simply 30% of the holdback quantity in 3 years when the liquidating belief winds down.

Disclosure: I personal shares of CYT

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