- Seems okayish - all drugs are on standstill, the contingent liability has unwound, BUT saying "we'll continue the Discovery platform".
- Re-iteration too is that Neal is a "interim CEO" with no timeline on a permanent replacement
- Neal has the option to buy 497k shares at $1.20 - big incentive to get the SP up (also has 142k RSU's). Both vest equally over the N15M with a CoC and BoD award discretionary clause
Note - Neal Walker, the Chair and interim CEO (and co-founder) has a track record of founding and selling businesses - bio here:
Dr. Walker co-founded Aclaris and has served as Aclaris’ Interim Chief Executive Officer and President since January 2024, and Chair of Aclaris’ board of directors since January 2023. Dr. Walker previously served as Aclaris’ Chief Executive Officer until December 2022 and has served as a member of the board of directors since its inception in July 2012. He is a board-certified dermatologist and serial entrepreneur with over 20 years of experience in the life science industry. He began his pharmaceutical industry career at Johnson & Johnson. Dr. Walker co-founded NeXeption, LLC, a biopharmaceutical assets management company, in 2012, and its affiliated companies. Prior to Aclaris, he co-founded and served as President and Chief Executive Officer and a member of the board of directors of Vicept Therapeutics, Inc., a dermatology-focused specialty pharmaceutical company, from 2009 until its acquisition by Allergan, Inc. in 2011. Previously, Dr. Walker co-founded and led a number of life science companies, including Octagon Research Solutions, Inc., a software and services provider to biopharmaceutical companies (acquired by Accenture plc); Trigenesis Therapeutics, Inc., a specialty dermatology company, where he served as Chief Medical Officer (acquired by Dr. Reddy's Laboratories Inc.); and Cutix Inc., a commercial dermatology company. He also co-founded and previously served on the boards of the Dermatology Summit, Dermatology Innovation Forum, and Advancing Innovation in Dermatology. Dr. Walker is on the board of directors of Aldeyra Therapeutics, Inc., a publicly held biotechnology company, as well as several private companies. In 2016, Dr. Walker was awarded the Frank Baldino Bioscience CEO of the Year award and the Ernst & Young Entrepreneur of the Year Greater Philadelphia award. He is a Fellow of the American Academy of Dermatology. He received a Master of Business Administration from The Wharton School of the University of Pennsylvania, a Doctor of Osteopathic Medicine from the Philadelphia College of Osteopathic Medicine, and a Bachelor of Arts in biology from Lehigh University.
Sorry for the delay in responding here, Substack locked me out of my account the last month!
As the discussion in the comments mostly already covered, the end result is going to be driven by whether the board liquidates/sells, or reaches for the glittery prize of a reverse merger. I will say I think odds are in our favor here for a couple of reasons.
First the SEC just issued updated SPAC guidance that requires significantly more work and doesn't allow them to use such optimistic forecasts AND they specifically applied them to reverse mergers, making them more expensive and less attractive.
Secondly, while Foresite sold out after three years of holding (maybe for a year end tax benefit), and Tang reduced his stake (after making a 50% gain in three months), the shareholding percentage of large shareholders I consider Activists (such as BML, Tang) has stayed roughly the same (around 21-22%). But the percentage of shareholders i consider passives or biotechs that might vote for a reverse merger has declined from 45% to 24%. And share turnover since November has been so huge that I have to think most of the shareholder base is going to be liquidation oriented and voting against a reverse merger.
Historically, Tang offers a percentage of Net Cash - meaning net of liabilities, severance, etc. He does not offer a percentage of gross cash.
The real downside scenario is a reverse merger. See NLTX for an example of a company that was taken over at a value of roughly 50% of cash (by an affiliate of majority shareholder, so a bit different here). Not sure but I think AVRO is in the same bucket.
I saw you mentioned on March 14 that mgmt said the review would be concluded by the end of April - did you get a sense the direction is towards liquidation, rev merger, nothing?
Thanks for the write-up. Why do you think the likeliest outcome is a company sale? As you point out in your write up, the language in the press release points towards further development or possible M&A. The involvement of Tang and BML is a positive, however it is unclear how much influence they have in this situation as ACRS has a staggered board with 10 directors. They still have around 50 employees, so it's clear the plan isn't to shut up shop. Clearly it would work out very well in a liquidation/sale scenario, but I wouldn't assume that as my base case based on the available facts.
Regarding a company sale, I'm just making that judgement based on recent precedents in the space. As highlighted, many (less clean) similar situations were bid on either by Tang / Foresite / other parties. Two of those parties are currently present on this register.
On the chance they do M&A, I'd assume if something was announced and the share price does not react favorably to it, the new shareholder register would likely vote it down.
IMO, we probably see another quarter of ACRS seeking commercialisation partners for ATI-1777, Discovery and ATI-2138, but given the data reported was not overly promising here, I think we see them through in the towel when this does not eventuate.
Don't see that much of a difference between this and your $THRX pitch, except this is smaller (more easily digestable) and trading at a larger discount to cash. I guess the language in the $THRX strategic review was more oriented towards maximising shareholder value vs. continuing the status quo, although I think it is a matter of time before $ACRS follows suit.
I think THRX was a clearer cut case — they effectively put up a "for sale" sign, which hasn't happened here. It seems pretty clear to me that the board of ACRS has made a decision to look for partnerships and continue developing assets. (If the plan was to liquidate or sell the company, why wouldn't they just announce that instead?) Don't get me wrong, this could work out very well — but I would like to see more evidence supporting a sale/liquidation scenario myself.
I think that's the current decision of the BoD, but IMO time passing will catalyse an alternate route. If they announced a clear-cut "for-sale", it wouldn't trade at a >50% discount to net cash.
Here we are in January 25 and this certainly seems to have gone well for those who might have got on board in Feb 24. Just curious... with the recent pullback (after the 11/24 spike), do you see an entry point here for those who missed the boat? Or has this run it's course?
Summary from the 4Q23 10-K (released 27/02/2024):
- Seems okayish - all drugs are on standstill, the contingent liability has unwound, BUT saying "we'll continue the Discovery platform".
- Re-iteration too is that Neal is a "interim CEO" with no timeline on a permanent replacement
- Neal has the option to buy 497k shares at $1.20 - big incentive to get the SP up (also has 142k RSU's). Both vest equally over the N15M with a CoC and BoD award discretionary clause
Foresite has sold it's stake as of 14/02/2024 - not great.
BML has gone to 13% as of 08/02/2024.
Note - Neal Walker, the Chair and interim CEO (and co-founder) has a track record of founding and selling businesses - bio here:
Dr. Walker co-founded Aclaris and has served as Aclaris’ Interim Chief Executive Officer and President since January 2024, and Chair of Aclaris’ board of directors since January 2023. Dr. Walker previously served as Aclaris’ Chief Executive Officer until December 2022 and has served as a member of the board of directors since its inception in July 2012. He is a board-certified dermatologist and serial entrepreneur with over 20 years of experience in the life science industry. He began his pharmaceutical industry career at Johnson & Johnson. Dr. Walker co-founded NeXeption, LLC, a biopharmaceutical assets management company, in 2012, and its affiliated companies. Prior to Aclaris, he co-founded and served as President and Chief Executive Officer and a member of the board of directors of Vicept Therapeutics, Inc., a dermatology-focused specialty pharmaceutical company, from 2009 until its acquisition by Allergan, Inc. in 2011. Previously, Dr. Walker co-founded and led a number of life science companies, including Octagon Research Solutions, Inc., a software and services provider to biopharmaceutical companies (acquired by Accenture plc); Trigenesis Therapeutics, Inc., a specialty dermatology company, where he served as Chief Medical Officer (acquired by Dr. Reddy's Laboratories Inc.); and Cutix Inc., a commercial dermatology company. He also co-founded and previously served on the boards of the Dermatology Summit, Dermatology Innovation Forum, and Advancing Innovation in Dermatology. Dr. Walker is on the board of directors of Aldeyra Therapeutics, Inc., a publicly held biotechnology company, as well as several private companies. In 2016, Dr. Walker was awarded the Frank Baldino Bioscience CEO of the Year award and the Ernst & Young Entrepreneur of the Year Greater Philadelphia award. He is a Fellow of the American Academy of Dermatology. He received a Master of Business Administration from The Wharton School of the University of Pennsylvania, a Doctor of Osteopathic Medicine from the Philadelphia College of Osteopathic Medicine, and a Bachelor of Arts in biology from Lehigh University.
Sorry for the delay in responding here, Substack locked me out of my account the last month!
As the discussion in the comments mostly already covered, the end result is going to be driven by whether the board liquidates/sells, or reaches for the glittery prize of a reverse merger. I will say I think odds are in our favor here for a couple of reasons.
First the SEC just issued updated SPAC guidance that requires significantly more work and doesn't allow them to use such optimistic forecasts AND they specifically applied them to reverse mergers, making them more expensive and less attractive.
Secondly, while Foresite sold out after three years of holding (maybe for a year end tax benefit), and Tang reduced his stake (after making a 50% gain in three months), the shareholding percentage of large shareholders I consider Activists (such as BML, Tang) has stayed roughly the same (around 21-22%). But the percentage of shareholders i consider passives or biotechs that might vote for a reverse merger has declined from 45% to 24%. And share turnover since November has been so huge that I have to think most of the shareholder base is going to be liquidation oriented and voting against a reverse merger.
Historically, Tang offers a percentage of Net Cash - meaning net of liabilities, severance, etc. He does not offer a percentage of gross cash.
The real downside scenario is a reverse merger. See NLTX for an example of a company that was taken over at a value of roughly 50% of cash (by an affiliate of majority shareholder, so a bit different here). Not sure but I think AVRO is in the same bucket.
I saw you mentioned on March 14 that mgmt said the review would be concluded by the end of April - did you get a sense the direction is towards liquidation, rev merger, nothing?
No particular direction
Thanks for the write-up. Why do you think the likeliest outcome is a company sale? As you point out in your write up, the language in the press release points towards further development or possible M&A. The involvement of Tang and BML is a positive, however it is unclear how much influence they have in this situation as ACRS has a staggered board with 10 directors. They still have around 50 employees, so it's clear the plan isn't to shut up shop. Clearly it would work out very well in a liquidation/sale scenario, but I wouldn't assume that as my base case based on the available facts.
Thank you for reading.
Regarding a company sale, I'm just making that judgement based on recent precedents in the space. As highlighted, many (less clean) similar situations were bid on either by Tang / Foresite / other parties. Two of those parties are currently present on this register.
On the chance they do M&A, I'd assume if something was announced and the share price does not react favorably to it, the new shareholder register would likely vote it down.
IMO, we probably see another quarter of ACRS seeking commercialisation partners for ATI-1777, Discovery and ATI-2138, but given the data reported was not overly promising here, I think we see them through in the towel when this does not eventuate.
Don't see that much of a difference between this and your $THRX pitch, except this is smaller (more easily digestable) and trading at a larger discount to cash. I guess the language in the $THRX strategic review was more oriented towards maximising shareholder value vs. continuing the status quo, although I think it is a matter of time before $ACRS follows suit.
I think THRX was a clearer cut case — they effectively put up a "for sale" sign, which hasn't happened here. It seems pretty clear to me that the board of ACRS has made a decision to look for partnerships and continue developing assets. (If the plan was to liquidate or sell the company, why wouldn't they just announce that instead?) Don't get me wrong, this could work out very well — but I would like to see more evidence supporting a sale/liquidation scenario myself.
I think the Change of Control RSU vesting clause on the new interim CEO's compensation agreement was instructive too.
I think that's the current decision of the BoD, but IMO time passing will catalyse an alternate route. If they announced a clear-cut "for-sale", it wouldn't trade at a >50% discount to net cash.
Here we are in January 25 and this certainly seems to have gone well for those who might have got on board in Feb 24. Just curious... with the recent pullback (after the 11/24 spike), do you see an entry point here for those who missed the boat? Or has this run it's course?
No view
Wouldn't get through a shareholder vote