Repare Therapeutics (RPTX) ($60MM market cap) is a clinical-stage oncology company which through a series of press releases this year announced a 75% reduction-in-force, reprioritization of their pipeline, a plan to pursue partnerships for their most advanced assets, CEO resigned (with the CFO taking over), CMO exited and most recently the out licensing of their discovery platform.
While they haven't formally ceased development efforts and raised the white flag, that's essentially where they're at now. Repare might be a bit of a hidden strategic alternatives name, they haven't announced a process cleanly in one press release. In their 3/3 press release disclosing their year-end results, they included the line:
Exploring partnerships across portfolio, including for Lunre+Camo
In their 3/31 press release announcing the resignation of their CEO and founder, the language changed to:
The Company is also exploring strategic alternatives and partnerships across its portfolio, including for lunresertib and camonsertib.
Then its tweaked slightly again in their 5/1 press release announcing the sale of their discovery platform:
“We look forward to reporting initial data from our two ongoing Phase 1 clinical trials in the second half of 2025, and continue to evaluate partnering and strategic alternatives across our portfolio assets.”
It's possible that I'm reading too much into that strategic alternatives language and that it's only directly tied to the pursuing partnerships objective, but this biotech trades at a significant discount to my estimate of a liquidation value with no value assigned to their IP (which they've used puffy language like "progress is particularly promising" and "potentially best in class" in prior statements).
So we've got a caretaker CEO, skeleton staff, strategic alternatives / partnership discussions, sold discovery platform, it seems to me that this one is for sale. BVF Partners is the anchor investor here with a 24% stake. I bought a few shares and added it to my broken biotech basket.
Disclosure: I own shares of RPTX
Which busted biotechs do you like best?
ReplyDeleteIt's also worth noting that there were some new risk factors in the 2024 10-K, including:
ReplyDelete"Litigation is usually expensive and diverts management’s attention and resources, which could adversely affect our business and cash resources and our ability to consummate a potential strategic transaction or the ultimate value our shareholders receive in any such transaction."
"Our ability to successfully complete a strategic transaction depends in part on our ability to retain certain of our remaining personnel. If we are unable to successfully retain our remaining personnel, we are at risk of a disruption to our exploration and consummation of a strategic alternative as well as business operations."
There was some even more peculiar stuff in the 2025 proxy statement. This very specific statement was added about the performance-based awards given to the former CEO in February '25:
"Mr. Segal’s performance-based award would have vested as to 100% of the shares subject to such award upon the consummation of a strategic transaction whereby 100% of the voting securities of the Company and/or substantially all of the Company’s assets are acquired by a major pharmaceutical company, as determined and certified by the board of directors, subject to Mr. Segal’s continuous service."
However, after he left:
"The performance-based option award that Mr. Segal received in February 2025 was forfeited in its entirety. In the event of a change in control within 90 days from April 11, 2025, Mr. Segal will be entitled to receive the enhanced severance benefits set forth in Section 5.7 of his June 2020 employment agreement."
Also, the Chief Medical Officer left the company and there's some new, very specific language there as well:
"In addition, in the event of a change in control within three months following the expiration of her consulting term, in lieu of the foregoing separation benefits, Dr. Koehler will be entitled to receive the severance benefits she would otherwise be entitled to under her employment agreement upon a change in control, as described above under “Potential Payments and Benefits upon Termination or Change in Control;” provided, however, that if the Company enters into a definitive agreement during the three month period after the expiration of the consulting term that would result in a change in control after the expiration of that three month period, the three month period will automatically be extended to until the change in control occurs."
And Steve Forte was promoted to CEO, there's also a lot of specific language there about what happens in case of a change in control that wasn't there before (see page 36).
Especially the text about performance awards that vest when Repare is taken over by a 'major pharmaceutical" seems odd. Not sure what to make of the CEO leaving a few weeks later and forfeiting these options. Did a deal break down? Did he simply want to do something else (the amount was not that material)? Not sure.
Also not sure how the out-licensing of its discovery platform fits into all of this. Was a potential buyer only interested in the phase 1 assets and not in the platform / employees? Or did a potential deal break down?
It's always difficult to judge how much value you should ascribe to 'reading the tea leaves' but I think all these snippets suggest that the company has some concrete ideas, more than they disclose in their press releases.
Today's 10-Q includes the amended employment agreement from the new CEO:
Delete(b) The Executive will receive a cash bonus opportunity in connection with the completion of a Change in Control or other restructuring transaction (the “Deal Bonus”). The Executive and the Company shall negotiate in good faith the amount and the other terms and conditions of the Deal Bonus to be established by the Compensation Committee in its discretion, and such amount and the other terms and conditions of the Deal Bonus shall be memorialized by no later than execution of a definitive agreement for such Change in Control or other restructuring transaction (the “Deal Execution Date”), and the Deal Bonus would be payable upon closing thereof (the “Deal Closing Date”).
I have looked at this one, but decided to skip it, mostly due to this:
ReplyDelete"related to employee severance payments and related costs, which are expected to be incurred through the fourth quarter of 2025" - seems like RIF program will be a rather slow one if at least part of the charges will be incurred in Q4. So my guess is that your estimate for the next 2 quarters of cash-burn might be too low.
bit of a pre-mortem, but I like PMVP. Trading at a stupid net cash/market cap. Readout soon. If it's positive great, if it's terrible it will rip on a potential strategic alt. Of course there's always a risk of meh data and they continue to burn. But lots of margin of safety imo. Same thing for VYNE - either it's a 3X on data or they announce strat alt
ReplyDeletePMPV looks interesting, thanks.
DeleteVYNE, not as sure, with the pre-funded warrants, I'm seeing it trading at a premium to cash?