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HomeValue InvestingForesite/OrbiMed Potential Supply, Tang Concerned Too

Foresite/OrbiMed Potential Supply, Tang Concerned Too

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Kinnate Biopharma (KNTE) (~$100MM market cap) is a scientific stage oncology firm, whereas not fairly a damaged/busted biotech beneath my normal definition (full white flag on improvement pipeline and announce strategic alternate options), Kinnate did do a restructuring in September which resulted in 70% of their workforce being laid off as KNTE reprioritized their analysis efforts to earlier stage packages.  The corporate not too long ago reported $180.4MM in money and securities as of 9/30, KNTE guided to having sufficient money runway by way of Q2 2026 within the restructuring announcement, implying an ~$18MM/quarter money burn fee going ahead.

Usually this would not be of curiosity to me, however on 11/13, 46.2% joint house owners, Foresite and OrbiMed (who’re additionally teaming collectively on a potential Theseus Prescribed drugs (THRX) bid) indicated that they are exploring buying the remaining shares they do not at the moment personal.  Foresite is a reputable purchaser as they did one thing related with Pardes Biosciences (PRDS), shopping for that damaged biotech for roughly 85% of the web money worth tossing in a CVR for 80% of any proceeds from the sale of the event pipeline.  One thing related right here would end in a ~$2.65 bid right here, or 20% upside and will occur pretty rapidly within the subsequent month or two.

In a enjoyable wrinkle (not less than round right here), Kevin Tang has jumped into the fray right here as properly (he is additionally made a bid for THRX) with 6.3% of the shares.  Within the final 12 months plus, he is been pushing for related low cost of money with a CVR sort offers, as a minority shareholder, guessing he would assist one right here as properly.  Tang’s identified to interact with administration, hopefully the added stress will push the board to simply accept Foresite/OrbiMed’s forthcoming supply.  Draw back right here is extra just like a speculative merger arbitrage scenario (massive), nevertheless, administration has restricted choices as Foresite included the road once more that they are tired of different strategic transactions.

Disclosure: I personal shares of KNTE

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