LianBio to shut down, return cash to investors
14 Feb 2024
AcquisitionExecutive ChangeIPO
Dive Brief:
Biotechnology company LianBio will shut down, announcing Tuesday plans to end operations, cut staff and delist from the Nasdaq stock exchange.
The decision follows a strategic review LianBio’s board of directors began in October. They “unanimously decided that winding down operations is the way to realize maximum shareholder value in the current biotech market,” according to the company.
LianBio plans to sell remaining assets and lay off 50 employees initially, with further cuts to follow. Additionally, the company will return $528 million to investors via a special cash dividend of $4.80 per share, and distribute profits from any divestments.
Dive Insight:
LianBio had a busy end to 2023. In October, the biotech sold its marketing rights to the heart medicine mavacamten in Asian countries to Bristol Myers Squibb for $350 million.
Not long after, the company received an unsolicited bid from Tang Capital’s Concentra Biosciences, which was attracted to LianBio’s cash influx and search for strategic alternatives. Concentra offered $4.30 per share, as well as a contingent value right, in its takeover proposal.
LianBio’s board turned down the offer several days later, stating the proposal undervalued the company.
Two weeks later, LianBio’s top leadership left, with both the company’s CEO and CFO departing. LianBio then transferred its rights to an experimental cancer drug to Johnson & Johnson for $25 million.
All of these actions came against the backdrop of a stock price that remained stubbornly below the value of LianBio’s cash on hand, Jefferies analyst Michael Yee wrote in a research note. However, the company’s choice to wind down, rather than seek a reverse merger or other alternative, is unusual, he added.
It’s a sudden end for a company that launched less than four years ago with plans to acquire rights to medicines and market them in China and other Asian countries. Investment firm Perceptive Advisors backed the company, which it aimed to build into a drugmaker of “scale and significance.”
In an SEC filing, LianBio said it expects to meet its ongoing operational costs with leftover funds after the special cash dividend. Prior to its two asset sales in October and December, the biotech had $252 million on hand as of Sept. 30.
The 50 employees to be laid off represent about half of LianBio’s workforce. More reductions are set to follow throughout the year, while a “core group” of workers will stay on to complete the shut down.
LianBio expects its last day of trading on Nasdaq to be on or around March 18.
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