Alis Biosciences Unveils Strategic Exit Route for Struggling Biotechs.

Alis Biosciences has stepped forward with a novel exit plan tailored for publicly listed biotech firms grappling with clinical and commercial setbacks. The London-based investment fund is targeting nearly 300 development-stage companies that are now trading at valuations below the cash they hold on their balance sheets—collectively amounting to more than $30 billion.

With investors increasingly unwilling to fund programs tainted by failure and the market no longer favoring reverse mergers or protracted liquidations, Alis is offering a pragmatic alternative. The fund's proposal involves acquiring these underperforming companies and returning approximately 95% or more of their uncommitted cash to shareholders. The companies would be delisted in the process, enabling an efficient wind-down and freeing investors from the liabilities associated with formal liquidation.

Alis will offer two initial models depending on whether the scientific assets are held by the biotech or its shareholders. In both scenarios, the company will cease trading on public markets, and the majority of the remaining capital will be returned to investors.

A third option, expected to be introduced later, would involve Alis retaining around 40% of a company's cash to continue clinical development efforts—though this model will only be offered following a public market listing by Alis.

This model echoes the strategy employed by Tang Capital Management, a firm known for acquiring distressed biotech companies, quickly returning cash to shareholders, and shutting down operations to avoid the complexities of liquidation.

Founded in 2023, Alis officially emerged from stealth mode only recently. The firm has noticeably shifted its focus in recent months—from revitalizing struggling biotechs dubbed “fallen angels” to now prioritizing the release of trapped capital within publicly traded entities. Among the leadership team is Annalisa Jenkins, former head of R&D at Merck Serono.

The biotech sector has been under mounting pressure in the wake of the pandemic. Rising interest rates have dampened investor appetite for high-risk ventures like drug development. Meanwhile, instability at the FDA has added uncertainty to regulatory timelines, prompting some companies to abandon planned trials. The retreat of foreign investment has further compounded the funding challenges.

With a market saturated with struggling firms and traditional exits growing less viable, Alis’ strategy may offer a timely and efficient path forward for biotechs looking to shut the door on a difficult chapter—and return value to their shareholders in the process.

Source:https://www.fiercebiotech.com/biotech/alis-offers-exit-option-biotechs-tainted-tang-failure-providing-way-return-cash

This is non-financial/medical advice and made using AI so could be wrong.