January 09, 2020 - 10:12pm EST by
2020 2021
Price: 1.88 EPS 0 0
Shares Out. (in M): 69 P/E 0 0
Market Cap (in $M): 129 P/FCF 0 0
Net Debt (in $M): 0 EBIT 0 0
TEV ($): -89 TEV/EBIT 0 0

Sign up for free guest access to view investment idea with a 45 days delay.


Cymabay or CBAY is a cash-rich once-pharmaceutical company that has cash of $3 per share in comparison to a stock price of $1.88.  

On 11/25/2019, CBAY announced that due to severe side effects, it would halt Phase 2B study of seladelpar in patients with non-alcoholic steatohepatitis (NASH), Phase 2 study for primary sclerosing cholangitis (PSC), and Phase 3 study of the same drug for primary biliary cholangitis (PBC). Seladelpar is the only material asset owned by CBAY.  


After the news that of the trial stoppage, the stock price declined from $5.55 to $1.33, far below the $3.20 in cash per share as of the most recent balance sheet. 


The company has a market capitalization of $129 million versus $219 million in cash.  I estimate that the company spent an additional $20 million in the quarter and am still working to determine the current cash burn (but I expect it to be significantly lower than $20 million per quarter). 


On 12/12/2019, the highly regarded Engine Capital filed 13D disclosing 5.9% stake. On 12/13/2019, Newtyn Capital filed 13G disclosing 5.4% stake. 


On 12/19/2019, CBAY announced 60% workforce reduction as it explores options.


On 12/20/2019, Citadel disclosed a 4.5% position.

At a 35% discount to cash on the balance sheet and a reduced cash burn, like some of the other recent filers in the company who have voted with their wallets, I think the company is currently trading at an attractive price.  


I am hopeful that management does not squander the cash, but this is not a certainty as they are biotechnology people.  Interests are not perfectly aligned as insiders own approximately 0.6% of shares outstanding and have a large quantity of significantly out of the money options and remember when the stock was once over $10 not too long ago.  However, back then, seladelpar had a future and today it does not.

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise hold a material investment in the issuer's securities.


Catalysts include the possibility of shareholder activism, management deciding to liquidate the company, or the announcement of a compelling acquisition.  

    show   sort by    
      Back to top