One other Damaged Biotech, Scientific Belongings Probably Value One thing


AVROBIO (AVRO) (~$76MM market cap) is the most recent damaged biotech that’s buying and selling under internet money to announce they’re pursuing strategic alternate options.  AVROBIO is a medical stage gene remedy firm that offered one in every of their belongings, AVRO’s cystinosis gene remedy program, to Novartis in Could for $87.5MM in money, whereas retaining their HSC gene remedy for Gaucher program which they’d beforehand introduced intentions to provoke a Part 2/3 trial later this 12 months.  With the strategic alternate options announcement, AVROBIO introduced they have been pausing improvement efforts (and shedding 50% of their workforce), however the remaining IP belongings probably have some constructive worth not like others within the damaged biotech basket.  If any readers have experience on this space or perception into the potential worth, please remark under.

Doing my fast again of the envelope math on what a liquidation situation would really like (to be clear, a liquidation wasn’t talked about as one of many choices they have been contemplating, however I nonetheless discover it useful):

The above is probably going overly punitive on this situation however I needed to be per different related concepts.  As a part of the asset sale, AVROBIO did signal on to offer assist to Novartis for 12 months beneath a Separation Providers Settlement, which is perhaps why they nonetheless have to retain 50% of their workforce.  Once more, their remaining IP probably nonetheless has worth, if they will promote it for $10+ million, then we’re taking a look at nearer to $2.00 per share.  A reverse merger appears to all the time be the primary possibility, with the market rallying, perhaps these come again in vogue as effectively.

Disclosure: I personal shares of AVRO


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