Description
We’re big believers in following insiders. With that in mind, we present Myovant Sciences, MYOV, a healthcare company focused on developing innovative treatments for women’s health and prostate cancer. We can’t assess how good the technology may be, but we believe recent moves by insiders suggest the stock is very undervalued.
The company is 50% owned by Sumitomo Dainippon Pharma out of Japan. Sumitomo has been filing 13ds indicating continued purchases of stock. Importantly, they filed an interesting plan buried in a 13d filed on March 18. The plan allows for the purchase of up to another $40 mm of stock, but at significantly higher prices to where stock is now. (the plan allows for purchase at up to $15 per share and the stock is at $8 now). This may tell you something about what Sumitomo thinks the stock is worth.
In addition, earlier this year Sumitomo gave Myovant a low interest (3-month LIBOR plus 3%) revolving loan facility of up to $400 million. This financing seems incredibly cheap for a money losing pharma company and again appears to be very bullish for equity holders. The revolver will be used to repay expensive debt and fund growth. There were no equity kickers, warrants, etc attached to the loan.
Some commentary from the latest earnings call reflect part of the bullish case.
The next six months promise to be an inflection point for Myovant as we expect to submit NDAs for prostate cancer and uterine fibroids in the U.S. and announce data from two Phase 3 studies in endometriosis,” said Lynn Seely, M.D., CEO of Myovant. “We are preparing to potentially bring two distinct one pill, once-a-day treatments to the many women and men who suffer from these common diseases.
Below is the link to the latest investor presentation for those of you more familiar with the sector.
https://investors.myovant.com/static-files/ac919f7c-c48e-4845-94d8-8169c2b0952a
Below is part of the plan filed in the 13d discussing planned stock purchases.
APPENDIX A
Purchase Period:
March 16, 2020 through May 20, 2020 (inclusive)
Plan Spend Cap:
$40,000,000 (exclusive of commissions of $0.02 per share purchased)
Daily Purchase Amount:
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Order 1: Purchase up to the Rule 10b-18 maximum allowable volume (including pursuant to “block” purchases as permitted under the Rule) at a maximum price of $15.00 each day until 1,500,000 shares have been purchased in the aggregate
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Order 2 shall commence upon completion of Order 1
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Order 2: Purchase up to $800,000 per day, subject to the incremental limit orders in the grid. As purchases are executed throughout a given day, they shall be allocated to the lowest-priced available limit order that they satisfy.
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Limit Price
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Incremental Daily Shares
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Cumulative Daily Shares
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$15.00
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10,000
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10,000
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$14.00
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10,000
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20,000
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$13.00
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15,000
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35,000
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$12.00
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15,000
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50,000
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$11.00
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20,000
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70,000
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1
Risk include drugs not proving to be successful, needing additional cash, related party transactions (which the stock purchase agreement seeks to minimize)
I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise do not hold a material investment in the issuer's securities.
Catalyst
- recognition of buying by insiders
- success of drug tests