Bind Therapeutics (NASDAQ:BIND)
On July 1, 2016 Bind Therapeutics announced that it had agreed to a stalking horse bid from Pfizer. The company said that it had filed a motion in court for a purchase agreement whereby Pfizer would acquire Bind’s assets. Investors greatly cheered this news and the stock nearly doubled to 0.78 cents per share in after-hours trade. The stock soared as high as 110% in after-hours after the news was announced, which was a huge surprise to many investors alike.
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What’s even more surprising is that Pfizer offered up to $20 million to acquire all of Bind’s assets. This is the reason why Bind’s stock soared the day of the announcement because $20 million in cash is a lot for a small-cap biotech company not making any money. Pfizer is in a win-win scenario, because even if the assets it acquires don’t produce anything, then losing $20 million isn’t gonna cripple Pfizer. Pfizer is a multi-billion big pharma company, so the amount of money it is offering is pocket change in comparison.
The reason for bind having to perform such an auction for its assets is because it has failed to produce any substantial results with its Accurins platform over the last 10 years. Bind has made many deals over the years to see if it could produce good results using its platform. It did so in the way that it could observe if its Accurins platform could be combined with another big pharma’s technology and improve upon results. Some of the Companies, Bind made deals with over the years with big pharma are: Merck, Roche, and AstraZeneca.
There was another deal made with Amgen back in 2014, but that was one which did not work out at all. During that year, combining both Bind’s Accurins platform together with Amgen’s drug did not improve efficacy in cancer patients. With these terrible results, Amgen went ahead and cancelled the partnership deal with Bind. Since then Bind has been in a rough spot, not being able to get its platform off the ground.
After multiple attempts at trying to create shareholder value, bind has not been able to create a product in which investors would be happy about. With years of failures and a diminishing share price things were looking very grim. This is especially true because the stock had been in a decline, cratering into new lows. Finally, in May of this year Bind filed for voluntary Chapter 11 Bankruptcy protection.
It is no surprise that the company had to file for bankruptcy protection. First of all its a small-cap biotechnology company so it has no revenue of income to speak of. But even then most of these biotechnology companies seek either private funding or public funding through a dilution. It is quite possible that Bind attempted to find a public dilution option, but it seems that no entity wanted to give the company any funding. This more than likely led to the problem where Bind probably had to file for voluntary bankruptcy protection.
It makes logical sense that Pfizer bid $20 million for the Accurins platform, and it seems that they will likely be the final bidder. That is because Pfizer was no stranger to making an initial deal with Bind like the other big pharma companies noted above. Except Pfizer was the only one that was willing to shell out a potential $200 million in milestone payments. Meaning that as positive results were achieved Bind would be afforded with additional capital over time.
Bind had set the court to allow for potential bidders to place their bids by July 25, 2016. The company will select the highest bidder, and that is who will retain all of Bind’s assets including the Accurins platform. Pfizer is the main bidder, but if there are no other bids to be made then Bind expects the transaction to complete by the third quarter of 2016. This may be good as a trade for that catalysts date, but it wouldn’t be a good idea to go all in on something so risky.
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[Image Courtesy of Wikimedia]