Post by luxetvox on Dec 22, 2023 21:54:20 GMT
Today BMY announced an all-cash buyout of Karuna Therapeutics (KRTX). The price is $14 billion, which is $330/share.
A brief glance at the KRTX pipeline appears to show one molecule is Phase 3 studies, the most advanced stage for Schizophrenia and earlier Phase 3 for Alzheimer's related psychosis.
KRTX has nothing in market yet, so revenues are essentially zero.
But they've got some potentially transformative medicines for people with psychiatric and neurological conditions.
KRTX is helmed by a prominent neuroscientist, Dr Steven Paul; and Bill Meury, an ex-Exec VP/Chief Commercial Officer at Allergan.
The BOD has these two folks, plus representatives from a robust list of healthcare venture investors, whose firms have large positions in the stock. Investors like PureTech Health (itself a public company out of the UK), and Soffinova Investments. Also on the BOD are folks from Sage Therapeutics, a former ExecVP at Pfizer, and a former Chief Strategy Officer at JNJ. Sadly there appears to be no one on Karen's board with the sartorial splendor of Prem Lachman, the Coffee Delivery expertise of Steve Rubin, the articulate persona of Jane Hsiao, the non sequitur resume of John Paganelli, or the abysmal business records of Dr Richard Krasno or Richard Pfenniger.
Among the top 10 holders of KRTX stock, while there are two passive indexers, Blackrock and Vanguard, most are active managers. Fidelity, T Rowe, Capital Group, and Wellington each own stock in several of their actively managed funds. Then there's the aforementioned PureTech Health and Soffinova. Arch Venture Group is also a large investor; Arch Venture being the company whose partner, Steve Gillis, is also COB of VBIV.
The COB of KRTX is the ex-CFO of the measly little company Tyco International, which was bought by the minor league industrial enterprise Johnson Controls. How crazy is it that the board chair of a pharma company would be someone with an encyclopedic knowledge of public company capital structure. To wit:
KRTX management and BOD were stupid enough to go public, not through a reverse merger, but through an IPO. That was in June 2019, when they sold just 6.41 million shares at $16, through a few bucket shops....Goldman Sachs, Citibank, and Wells Fargo. Interesting too is that the company sold just 6.4 million shares to the public, since the post IPO cap table was 26.1 million shares. That is, the company owners were stingy. Four secondary offerings followed:
11/19 2.6 million shares at $96 (after a nice 5 month run post IPO)
3/21 2.4 million shares at $120 (feed the fish a little)
8/22 4.01 million shares at $215 (selling when they CAN, not when they're desperate, and MUST)
3/23 2.85 million shares at $161
So, this research heavy company, tracing its origins back to 2009 has less than 38 million shares outstanding, with 31.6 million in the float. You can bet that the de facto Lead Independent Director, who is also the COB, was shepherding this process of prudently adding capital.
With more than TWENTY TIMES as many shares outstanding as KRTX, Opko, courtesy of the chief stock cloner Phil Frost, has an uphill climb, to put it mildly, to report even remotely meaningful EPS. An uphill climb tantamount to El Capitan. And then there's the buyout possibilities, or not. The hard reality of the math is the following: even if Opko is basically debt free and 170 million shares leaner after a sale of BRLI and a call of the 4.5% convert, and some drunk suitor comes along and wants to pay $1 billion for a) the Ngenla and Rayaldee gross profit streams, and $2 billion for the ModeX portfolio (nearly 7x the purchase price), that equates not to $330/share, but $5.
And before someone says something foolish like "that's 3x today's price", it's worth mentioning that it would be $0.25 BELOW the price on 12/28/21.
Thanks Phil!
A brief glance at the KRTX pipeline appears to show one molecule is Phase 3 studies, the most advanced stage for Schizophrenia and earlier Phase 3 for Alzheimer's related psychosis.
KRTX has nothing in market yet, so revenues are essentially zero.
But they've got some potentially transformative medicines for people with psychiatric and neurological conditions.
KRTX is helmed by a prominent neuroscientist, Dr Steven Paul; and Bill Meury, an ex-Exec VP/Chief Commercial Officer at Allergan.
The BOD has these two folks, plus representatives from a robust list of healthcare venture investors, whose firms have large positions in the stock. Investors like PureTech Health (itself a public company out of the UK), and Soffinova Investments. Also on the BOD are folks from Sage Therapeutics, a former ExecVP at Pfizer, and a former Chief Strategy Officer at JNJ. Sadly there appears to be no one on Karen's board with the sartorial splendor of Prem Lachman, the Coffee Delivery expertise of Steve Rubin, the articulate persona of Jane Hsiao, the non sequitur resume of John Paganelli, or the abysmal business records of Dr Richard Krasno or Richard Pfenniger.
Among the top 10 holders of KRTX stock, while there are two passive indexers, Blackrock and Vanguard, most are active managers. Fidelity, T Rowe, Capital Group, and Wellington each own stock in several of their actively managed funds. Then there's the aforementioned PureTech Health and Soffinova. Arch Venture Group is also a large investor; Arch Venture being the company whose partner, Steve Gillis, is also COB of VBIV.
The COB of KRTX is the ex-CFO of the measly little company Tyco International, which was bought by the minor league industrial enterprise Johnson Controls. How crazy is it that the board chair of a pharma company would be someone with an encyclopedic knowledge of public company capital structure. To wit:
KRTX management and BOD were stupid enough to go public, not through a reverse merger, but through an IPO. That was in June 2019, when they sold just 6.41 million shares at $16, through a few bucket shops....Goldman Sachs, Citibank, and Wells Fargo. Interesting too is that the company sold just 6.4 million shares to the public, since the post IPO cap table was 26.1 million shares. That is, the company owners were stingy. Four secondary offerings followed:
11/19 2.6 million shares at $96 (after a nice 5 month run post IPO)
3/21 2.4 million shares at $120 (feed the fish a little)
8/22 4.01 million shares at $215 (selling when they CAN, not when they're desperate, and MUST)
3/23 2.85 million shares at $161
So, this research heavy company, tracing its origins back to 2009 has less than 38 million shares outstanding, with 31.6 million in the float. You can bet that the de facto Lead Independent Director, who is also the COB, was shepherding this process of prudently adding capital.
With more than TWENTY TIMES as many shares outstanding as KRTX, Opko, courtesy of the chief stock cloner Phil Frost, has an uphill climb, to put it mildly, to report even remotely meaningful EPS. An uphill climb tantamount to El Capitan. And then there's the buyout possibilities, or not. The hard reality of the math is the following: even if Opko is basically debt free and 170 million shares leaner after a sale of BRLI and a call of the 4.5% convert, and some drunk suitor comes along and wants to pay $1 billion for a) the Ngenla and Rayaldee gross profit streams, and $2 billion for the ModeX portfolio (nearly 7x the purchase price), that equates not to $330/share, but $5.
And before someone says something foolish like "that's 3x today's price", it's worth mentioning that it would be $0.25 BELOW the price on 12/28/21.
Thanks Phil!