Nant has not wasted any time in exerting its 30+% influence in Benitec (BNTC). In an announcement today, the company outlined the resignations of the CEO and the Chief Scientific Officer as well as new roles for Nant’s man at the top and one of the existing Directors. While this stamp of Nant’s authority is not unexpected, it does still leave investors wandering about Nant’s intentions for the company.
Nant’s interest in Benitec seems to follow a pattern where a small interest soon turns into control of the company for, what some would argue, is less than a fair price. This is certainly one possible outcome, maybe even the most likely outcome, but, if we take the emotion out of any analysis, then it is possible to see a more positive future for shareholders.
Benitec is a publicly listed company working in the leading, and now popular, field of gene therapy. So, the question is, does Nant want Benitec to remain a public company, or does it want 100% ownership? Gene therapy is has potential prestige associated with it, but it is also high risk. There is a possibility that Benitec being a public company will work best for Nant in the balance of prestige versus risk. If this is the case, long term shareholders could profit from Nant’s involvement.
It is possible that Nant will turn Benitec into an oncology gene therapy company. With its greater market reach (greater than Benitec’s previous reach) Nant may seek to sell-off Benitec’s OPMD program and use the capital to invest in additional oncology programs. This would give Nant both the capital and the knowhow to pursue the use of Benitec’s ddRNAi technology to treat cancer. It is also possible that Nant will retain the OPMD program and simply absorb Benitec through a merger rather than a complete takeover. In this case, Benitec shareholders would be offered shares in the merged company.
A merger would make sense as it would allow Nant to consolidate gene therapy assets into a single entity. As these assets appreciate, a public company could leverage them to raise further research and development capital in the marketplace. Should Benitec’s ddRNAi technology prove to be successful in the treatment of cancer, then, under a merger arrangement, existing Benitec shareholders could still end up profiting from their investment. Such a merger would also broaden the exposure that shareholders would have to technologies other than ddRNAi and this could be a bonus for them .
So, while it is possible that Benitec will follow in the footsteps of Altor and CytRx (CYTR), with little benefit for existing Benitec shareholders, it is also possible that Nant will provide the strategies, energy and focus that Benitec has lacked to-date. Thus the latest changes, in due course, could prove to be the positive share price catalyst that weary shareholders have been waiting many years for. Time will tell.
Disclosure: I am/we are long BNTC.
Additional disclosure: This article is not intended to be investment advice. Readers should do their own research.