A Dubai-based investment firm is making a play for embattled B.C. biotech Zymeworks Inc. (NYSE:ZYME), to the tune of US$773 million.
The Vancouver life sciences company confirmed late Thursday All Blue Falcons FZE (ABF) has made an solicited proposal to buy it out for US$10.50 a share in an all-cash deal.
Zymeworks’ net losses grew to US$211.8 million in 2021 – up from US$171.2 million a year earlier, according to financials released in February.
Shares were surging as of 7:30 a.m. PT, jumping 30.1 per cent since the close of markets Thursday to land at $6.75 a share.
“We believe that the company has suffered from severe value erosion due to a number of serious missteps by an unfocused leadership with no clear strategy for improving performance,” ABF said in a letter to Zymeworks’ board delivered Thursday.
“Over the past 12 months, stockholders have witnessed the company miss a number of important deadlines publicly announced in press releases, endured poorly executed earnings calls and experienced confusing and damaging public messaging, all of which has led to a significant loss of credibility and investor confidence in the company and its management team.”
Zymeworks, best known for developing platforms that help other drugs more accurately identify and target cancerous cells, laid off about 25 per cent of its workforce in January and cut its senior management team in half.
Founding CEO Ali Tehrani also departed the top job at that time, with former board member Kenneth Galbraith taking over as CEO and chairman.
The West Coast firm said its board will review the proposal to see if it’s in the best interest of the company and shareholders.
“The board reminds shareholders that no formal offer has been made by ABF, and as such there is no need for Zymeworks shareholders to take any action at this time,” it said in a statement.
“If a formal offer is made, it will be reviewed by the board with its advisers and a formal recommendation by the board will be made to shareholders in due course.”
Zymeworks went public in 2017, raising nearly US$60 million in its initial public offering.
Shares debuted at US$13 each and rose to a high of US$57 in January 2021.
Amid increasing financial strains, it closed another offering in late January 2022 worth US$107.6 million, selling around 14 million common shares at US$8 each.
“We believe that the board’s decision to pursue this highly dilutive equity offering in current volatile market conditions, in preference to other available alternatives for raising capital, was contrary to the best interests of the company and its stockholders,” ABF said in its letter to Zymeworks.
“As a result of these and other issues, the company’s stock price has plummeted an astounding 87 per cent since July 1, 2021. As a significant investor in the company, we believe that Zymeworks stockholders deserve better than the consistent value destruction they have suffered during this relatively short period of time.”