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Affymax, Inc. Message Board

  • godwinpeak godwinpeak Mar 24, 2013 8:58 PM Flag

    How Much Is a Bankrupy Affymax Worth to Shareholders

    I saw one post that suggested AFFY was worth at least $2 per share in bankruptcy. Get real. Let's take a realistic look rather than grab an unrealistic number to try and justify a share spike. I sincerely doubt it.

    With a bankruptcy the shareholders are last in line. First in line: Administrative claims which is the costs of the bankruptcy itself, which includes court fees and costs, lawyer's fees, bankruptcy trustee's or debtor in possession fees, etc., which are not insubstantial. Next is any bankruptcy financing or super lien creditors (Think in a plan of reorganization AFFY wants to continue with its collaboration with Takeda but cannot afford to do so without more money). Then comes property taxes and wage claims. Then comes secured creditors followed by general creditors. After everybody else's claims are satisfied, the very last claimants entitled to anything are the shareholders.

    As per Affymax's Form 8K, filed March 18, 2013, it appears that there is about (and probably less than) $10 million in cash remaining net of current obligations.
    $67M cash as of Feb 28,2013
    Less $33M current liabilities and commitment to 3rd parties
    Less $11M outstanding debt obligations under existing credit facility
    Less $8M to $10M costs/expenses related to reduction in force
    Net $15 to 13M cash as of Feb 28, 2013
    Less $ unknown amount of expenses to continue Takeda collaboration and conduct
    investigation and support the recall of Omontys
    Less $ unknown amount to conduct ongoing business operations as a significantly smaller public

    AFFY has about 37M shares outstanding, so between 35 cents and 40 cents per share free cash without accounting for potential products liabilities claims. Maybe Omontys is worth something, but Takeda is there as a buzzard circling a carcass of a drug and could probably get all of it for a covenant not to sue and a release of all claims. In the end, I would say AFFY is probably worth between 10 cents and 50 cents per share.

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