Tyme Technologies: Net-Net Biopharma Exploring Strategic Alternatives

May 26, 2022 11:35 AM ETTyme Technologies, Inc. (TYME)15 Comments2 Likes

Summary

  • Tyme Technologies is a clinical-stage biopharma company trading at a large discount to net cash + marketable securities.
  • After the company discontinued the development of its primary compound, they have announced exploration of strategic alternatives.
  • Board seems to be leaning towards a sale of the company.

Vaccine production in a pharmaceutical factory

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Tyme Technologies, Inc. (NASDAQ:TYME) is a clinical-stage biopharma company developing therapies for a broad range of solid tumors and hematologic cancers. In January 2022, the company discontinued the development of its primary compound, SM-88, for the treatment of metastatic pancreatic cancer. Despite this, TYME continues to work on the possible use of the SM-88 for the treatment of breast cancer with HR+/HER2- diseases and sarcomas. In March 2022, the company announced the exploration of strategic alternatives. TYME currently trades at $0.23/share vs $0.38/share of cash plus ST marketable securities (after deducting all liabilities) if you add LT marketable securities that put us at $0.48/share, a 100% discount.

Balance sheet

TYME 10-K

There are several factors why this setup is intriguing. There is a good chance that the board is leaning towards exploring either a merger or a sale of the company. In April 2022, Board adopted an option agreement with the executive managers. Based on the agreement, the executives received ITM time-based options which are vested in case a change of control occurs. Specifically, if the strategic review is finalized with a sale, liquidation, or a merger, only in such cases these option bonuses could be paid on an accelerated basis, payable within 20 days after the change of control. Moreover, after the announcement of the strategic review, two founders with around a combined 25% stake in the company, have entered into a voting support agreement with the board (see here and here). Basically, accepting any decision a board makes with regards to the strategic review. The fact that they have signed the agreement does show their support for the board and belief that they will not destroy shareholder value. Moreover, that might also indicate a potential sale as both of the founders have limitations on how quickly they can sell their stake in the company, and a change of control is an opportunity to accelerate the processes.

I think, there is one major risk for the whole thesis. If the company is not able to find a buyer, we will be holding a cash-burning speculative biopharma company with a largely unprotected, uncertain downside. However, a decent discount to net cash gives us at least a bit of comfort and time to see this play out. This can go sideways much quicker if the company not only decides to continue with development but also diversify its pipeline by acquiring some other development-stage drugs eroding the discount to net cash.

Business Overview

Tyme Technologies was founded in 2013 by Steven Hoffman (owns 12% of TYME) and Michael Demurjian (owns 13.6% of TYME). The company got listed on Nasdaq in 2017 two years after going public through a reverse merger. From the beginning, the company was focused on the development of cancer metabolism therapies (CMBTs) that are intended to be effective in a broad range of solid tumors and hematologic cancers. The company's lead CMBT compound is SM-88. They have been testing the effectiveness of SM-88 on multiple types of advanced cancers, including pancreatic, prostate, sarcomas, and breast. Recently, TYME tried its luck in developing an oral treatment for COVID-19, but it is still just at the preclinical stage. The SM-88 for the treatment of Sarcomas and breast cancer is still in the Phase 2 development stage. You can see the company's current pipeline below.

Chart Description automatically generated

TYME 10-K

Over the last 3 years, both of the founders have stepped down from their executive positions and left their board seats (No particular reason was mentioned in either case). Demurjian left the company in 2019, since then he has been selling company stock based on the individual trading agreement which limits him to about 20k shares per week. Steven Hoffman was replaced as a CEO in November 2020 but stayed as chairman of the board and Chief Science Officer up until June of 2021, when he decided to leave the company fully. He has also been selling the company stock since then under similar restrictions as Demurjian.

The third-largest shareholder in the company is Eagle Pharmaceuticals (EGRX) (Biopharma with a commercialized product portfolio) with a 6% stake. It has had a strategic collaboration with Tyme Technologies for the development of SM-88 to treat breast cancer (HR+/HER2-) and high-risk metastatic sarcomas since January 2020. The company remains the third-largest shareholder to date. Eagle Pharmaceuticals has not made any comments regarding the ongoing strategic review at TYME.

Conclusion

Support from the two largest shareholders of the board's recommendation on the outcome of the strategic review in combination with the issuance of the ITM options to executive managers makes this net-net Biopharma into an intriguing holding for the next several months to track how are things going to play out.

This article was written by

Private investor focused on event driven trades and special situations. 15+ years of investing and equity research experience globally across various sectors. Always looking for an edge.
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Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in TYME over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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