Event-Driven Investment Opportunities, Special Situation Investments

Dalius Tauraitis

Event-Driven Investment Opportunities

Special Situation Investments

Focus on event-driven trades and low risk arbitrage opportunities with short term catalysts

Event-Driven

<ul><li>HilleVax trades at a 46% discount to net cash, with potential upside from strategic review outcomes like liquidation or sale.</li><li>Frazier Life Sciences and Takeda Pharmaceutical hold significant stakes, with Frazier controlling four of nine board seats.</li><li>HilleVax raised $108m in September 2023 at $12.50/share, despite poor trial results and subsequent stock price drop.</li></ul>

HilleVax trades at a 46% discount to net cash, with potential upside from strategic review outcomes like liquidation or sale.Frazier Life Sciences and Takeda Pharmaceutical hold significant stakes, with Frazier controlling four of nine board seats.HilleVax raised $108m in September 2023 at $12.50/share, despite poor trial results and subsequent stock price drop.

HilleVax Strategic Review: Cash Position, Workforce Reductions, and Potential Strategic Alternatives

<ul><li>Kronos Bio (KRON) undergoes strategic review with 83% workforce reduction and CEO resignation, trading below net cash value.</li><li>Equity Commonwealth (EQC) in late-stage liquidation, with final distribution expected between $1-$2/share in Q1'25.</li><li>Marlowe (MRL:L) trades at 7.6x FY25 adjusted EBITDA, with potential upside if re-rated to 10-12x EBITDA.</li></ul>

Kronos Bio (KRON) undergoes strategic review with 83% workforce reduction and CEO resignation, trading below net cash value.Equity Commonwealth (EQC) in late-stage liquidation, with final distribution expected between $1-$2/share in Q1'25.Marlowe (MRL:L) trades at 7.6x FY25 adjusted EBITDA, with potential upside if re-rated to 10-12x EBITDA.

Strategic Reviews, Liquidations, and Buybacks: Key Financial Developments in Biopharma, Real Estate

<ul>
<li>Essa Pharma (EPIX) halted pipeline development, launched strategic review, offering 21% upside to NAV/liquidation value by mid-2025.</li>
<li>DMC Global (BOOM) Q3 earnings weak, management ruled out divestitures, trading at 5x 2024E EBITDA guidance, facing macro headwinds.</li>
<li>Delek US (DK) reported weak Q3 results, refining margins low, management plans to deconsolidate DKL, trades below DKL stake value.</li>
</ul>


Essa Pharma (EPIX) halted pipeline development, launched strategic review, offering 21% upside to NAV/liquidation value by mid-2025.
DMC Global (BOOM) Q3 earnings weak, management ruled out divestitures, trading at 5x 2024E EBITDA guidance, facing macro headwinds.
Delek US (DK) reported weak Q3 results, refining margins low, management plans to deconsolidate DKL, trades below DKL stake value.


Key Updates on EPIX, HLVX, PRKR, BOOM, VZIO, WOW, AVAP:L, LOGC, LFCR, DK

Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul><li>We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&amp;A.</li><li>Morphic Holding, Inc. (MORF) agreed to be acquired by Eli Lilly and Co. (LLY) for $3.2 billion or $57/share in cash, with value primarily driven by lead drug MORF-057, an oral α4β7 integrin inhibitor, in Phase 2s for inflammatory bowel disease (IBD). MORF-057 looks to compete against injectable biologics in the large UC and Crohn’s markets, aiming for similar efficacy, better safety, and oral convenience.</li><li>Morphic’s novel drug shares the same target as Takeda’s Entyvio, a successful anti-α4β7 antibody. MORF was up 75% last Monday.</li></ul>

We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&amp;A.Morphic Holding, Inc. (MORF) agreed to be acquired by Eli Lilly and Co. (LLY) for $3.2 billion or $57/share in cash, with value primarily driven by lead drug MORF-057, an oral α4β7 integrin inhibitor, in Phase 2s for inflammatory bowel disease (IBD). MORF-057 looks to compete against injectable biologics in the large UC and Crohn’s markets, aiming for similar efficacy, better safety, and oral convenience.Morphic’s novel drug shares the same target as Takeda’s Entyvio, a successful anti-α4β7 antibody. MORF was up 75% last Monday.

Global Healthcare Analyst

Tina Banerjee

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hillevax-inc" target="_blank" data-smartkarma-citation="entities:35844:1" rel="noopener">HilleVax (HLVX US)</a>, a novel vaccine developer intends to raise $100 million through an IPO. Its lead program HIL-214, intended to prevent norovirus infection is in phase 2 clinical trial.</li>
<li>The number of shares to be offered and the price range are yet to be disclosed. Post listing, the company will trade under the ticker HLVX on the Nasdaq.</li>
<li>HIL-214’s large addressable market, with huge unmet need, HilleVax’s earlier fund-raising history, and Takeda’s backing are some of the positives of this new offering.  </li>
</ul>



HilleVax (HLVX US), a novel vaccine developer intends to raise $100 million through an IPO. Its lead program HIL-214, intended to prevent norovirus infection is in phase 2 clinical trial.
The number of shares to be offered and the price range are yet to be disclosed. Post listing, the company will trade under the ticker HLVX on the Nasdaq.
HIL-214’s large addressable market, with huge unmet need, HilleVax’s earlier fund-raising history, and Takeda’s backing are some of the positives of this new offering.  


HilleVax Pre-IPO: Lead Candidate Has Potential to Become First Approved Vaccine for Norovirus

United States

HilleVax, Inc. is a clinical-stage biopharmaceutical company. The Company focuses on the development and commercialization of novel vaccines. HilleVax operates in the United States.

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HilleVax (HLVX US)

HilleVax Strategic Review: Cash Position, Workforce Reductions, and Potential Strategic Alternatives

HilleVax trades at a 46% discount to net cash, with potential upside from strategic review outcomes like liquidation or sale.

Special Situation Investments

Strategic Reviews, Liquidations, and Buybacks: Key Financial Developments in Biopharma, Real Estate

Kronos Bio (KRON) undergoes strategic review with 83% workforce reduction and CEO resignation, trading below net cash value.

Special Situation Investments

Key Updates on EPIX, HLVX, PRKR, BOOM, VZIO, WOW, AVAP:L, LOGC, LFCR, DK

Essa Pharma (EPIX) halted pipeline development, launched strategic review, offering 21% upside to NAV/liquidation value by mid-2025.

Special Situation Investments

Biopharma Week in Review - July 15, 2024

We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&A.

Water Tower Research

HilleVax Pre-IPO: Lead Candidate Has Potential to Become First Approved Vaccine for Norovirus

Norovirus vaccine developer, Hillevax, formed by Takeda Pharmaceutical and PE firm Frazier Healthcare Partners, is seeking to raise up to $100...

Tina Banerjee

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