Versartis, Inc. (VSAR)

[longx]

It's just unbelievable that someone is selling their shares at this level. I wonder if they really know how to read the company latest balance sheet? ... they're basically they're throwing away their own money.

Below is a copy of the balance sheet from the most recent 10-Q (click this link] to view in detail):

ASSETS: (as of 09/30/2017)
- Cash and cash equivalents: $118.783M
- Other assets: $7.836M
- Build-to-suit lease asset: $8.952M
TOTAL ASSETS = ($118.783 +$7.836 +$8.952) = $135.571M

LIABILITIES: (as of 09/30/2017)
- Accounts payable and other current liabilities: $40.903M
- Upfront payment from collaboration partner: $40M
- Build-to-suit lease obligation: $5.428M
TOTAL LIABILITIES = ($40.903 + $40M + $5.428) = $86,331

So the total amount of cash left after total liabilities would be:
$135.571M - $86,331M = $49.240M

However, according to the recent 8-K form filed on 01/08/2018 (click this link to view), which is clearly states the following (please pay attention to the text highlited in bold):

On January 4, 2018, Versartis, Inc. (the “Company”) received notice from Teijin Limited (“Teijin”) that Teijin was, pursuant to the agreement’s terms, terminating the Exclusive License and Supply Agreement among the Company, Versartis GmbH, a subsidiary of the Company, and Teijin, dated August 5, 2016 (the “License Agreement”), effective as of January 31, 2018. The notice of termination followed discussions between the Company and Teijin regarding the failure of the Company’s Phase 3 VELOCITY trial to meet its primary endpoint during which the Company and Teijin determined that continuing with the License Agreement was no longer in the best interests of either party.

Under the License Agreement, the Company had granted to Teijin an exclusive license to develop, use, sell, offer for sale, import and otherwise commercialize, in Japan, any pharmaceutical product incorporating somavaratan (VRS-317). In exchange for such rights, the Company received an upfront payment of $40 million from Teijin, and could potentially have also received up to $125 million in development, regulatory and sales milestone payments, in addition to transfer pricing and a royalty calculated on net sales in Japan. The termination is not associated with any early termination penalty or any further payments by either party.

Based on this agreement "The termination is not associated with any early termination penalty or any further payments by either party", Versartis will not have to return this $40M upfront-payment they received from Teijin when signing the deal. Therefore, this $40M of cash is now no longer under the liabilities section, and the total amount of cash Versartis currently having should be: $49.240M + $40M = $89.240M

Given the total number outstanding shares (as of 09/30/2017 from the 10-Q report mentioned above) = 35,809,311 shares,
The amount of cash per share = $89,240,000/35,809,311 = $2.492/share

Also, in the last earning report (click this link to view), under Corporate Update section, you should find the following text:

- Completed reduction in work force of approximately two thirds and further cost-cutting measures underway to preserve cash
- Select members of management team retained to leverage clinical, regulatory, and commercial expertise in the evaluation of somavaratan and efforts to identify opportunities to diversify the Versartis pipeline
- Cowen engaged to assist in evaluating possible strategic transactions that could maximize the company's expertise and resources

With 2/3 work-force reduction and the majority managegement position eliminated, the most cash burn during the current quarter, should be within $5M or around $0.14/shares, then the cash per share still at around $2.35/share

So, for the worst case scenario which is Cowen was not able to find any M/A target, Versartis to be dissolved and the cash to be redistributed back to shareholders then we would receive around $2.35/shares in the upcoming E/R announcement.

GLTA!