Friday, December 15, 2023
HomeValue InvestingPhase 2 Study Misses, Pre-SA Broken Biotech

Phase 2 Study Misses, Pre-SA Broken Biotech

The theme around here continues on — Reneo Pharmaceuticals (RPHM) (~$45MM market cap) is another broken biotech, this week the company announced their Phase 2 study of Mavodelpar in adult patients with mitochondrial myopathies did not meet its primary or secondary efficacy endpoints.  The stock responded by crashing 80+% as this is a one shot on goal biotech without much of a remaining pipeline.  Reneo is now trading well below liquidation value, while the company has yet to announce a strategic review, it doesn’t have many options left, I would expect the official strategic alternatives declaration soon.

This is another fairly clean balance sheet, Reneo disclosed that current cash is approximately $100MM as of yesterday, subtracting out their 9/30 liabilities, severance payments and an estimate of cash burn/liquidation costs (they only have approximately 12 employees following their reduction in workforce), I get an NAV or liquidation value of ~$2/share.  The company did put in place an ATM in November, it doesn’t appear they’ve used it based on current cash and historical burn rate, but the share count above might be worth confirming.  

I could see a little bump in price if and when the company does formally announce strategic alternatives and then a second on some conclusion, whether a deal or liquidation of Reneo.

Disclosure: I own shares of RPHM



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