Finding stocks trading below a net cash value is very rare, and here are two examples of this. Both of these companies have little revenues and are not profitable, however, at these prices they may hard to ignore.
Spherix (NASDAQ:SPEX) leverages its scientific and technical expertise and experience through its two subsidiaries -- Biospherics and Spherix Consulting. Biospherics is dedicated to developing and licensing/marketing proprietary therapeutic products for treatment of diabetes, metabolic syndrome and atherosclerosis. Biospherics is actively seeking a pharmaceutical partner to continue the development of its Phase 3 compound for the treatment of diabetes, D-tagatose, while exploring new drugs and combinations for treatment of high triglycerides, a risk factor for atherosclerosis, myocardial infarction and stroke. Spherix's Consulting subsidiary provides scientific and strategic support for suppliers, manufacturers, distributors and retailers of conventional foods, biotechnology-derived foods, medical foods, infant formulas, food ingredients, dietary supplements, food contact substances, pharmaceuticals, medical devices, consumer products and industrial chemicals and pesticides.
SPEX was trading at $2.15 per share at the time of this writing. As of the end of Q1, the company had $6.54 million and total liabilities of $819k for a net cash position of $5.72 million or $2.33 a share. The company also had another $850k in other current assets. In its Q1 10-Q, the company said that over the next 12 months, the company expects that it will need to expend between $3 million and $5 million to support its currently planned development operations. This estimate assumes continuing efforts to sell, license, or obtain a partner for the diabetes drug application, no further significant expenditures for developing D-tagatose as a drug for diabetes, continuing development of D-tagatose as a treatment for high triglycerides, ongoing operation of the Health Sciences segment at the current level of activity and that that the company raises additional funds to continue its development efforts beyond this 12-month period.
Estimating that the company uses about $1 million of cash per quarter (midpoint of the company’s estimate), the stock is trading at its liquidation value just based on cash and other current assets. At today’s prices, the whole R&D pipeline is free. The company has invested about $12 million in R&D over the past two fiscal years, so this opportunity may be significant.
Myrexis (OTCPK:MYRX) is a biotech focused on developing and commercializing novel treatments for cancer. The company has leveraged a unique understanding of the genetic causes of human disease to generate a strong pipeline of clinical and preclinical product candidates.
The company's oncology program is comprised of two clinical-stage programs and one pre-clinical stage program. Myrexis' pipeline is led by Azixa (verubulin, MPC-6827), a novel small molecule microtubule destabilizing agent which is targeted to the brain. It is in Phase 2b clinical development for the treatment of glioblastoma multiforme. The company's Hsp90 program is comprised of novel, potent, small molecule oncology compounds including MPC-3100, a fully-synthetic and orally bioavailable inhibitor of Hsp90 in Phase 1 clinical development and MPC-0767, a novel L-alanine ester pro-drug of MPC-3100, with improved aqueous solubility. MPC-9528, currently in IND-enabling studies, is the lead pre-clinical candidate in the Company's Cancer Metabolism Inhibitor program. Myrexis is also evaluating MPI-0485520, an orally bioavailable, potent and selective small molecule inhibitor of type I interferon that is being developed for the treatment of autoimmune diseases.
MYRX was trading at $3.52 at the time of this writing. At the end of Q1, the company had $124 million in cash and $6 million in liabilities for a net cash position of $118 million or $4.61 per share. The company believes that with its existing capital resources, it will have adequate funds to maintain its current and planned operations through at least June 30, 2013, although no assurance can be given that changes will not occur that would consume available capital resources before such time and the company may need or want to raise additional financing within this period of time.
June 30, 2013 was 9 quarters away at the end of Q1, which would calculate for a company forecasted average cash burn of approximately $13 million per quarter and would leave about $105 million or $4.10 in cash per share now. At today’s price the R&D pipeline and all of the rest of the company’s assets are free. The company has invested $46.8 million in R&D over the past 7 quarters.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.