Biotech Values

[mcbio]

Re: Aprea/(KDEV.ST) -

Looks to me like it's likely real. But private company so no easy play.

There actually is an easy play here. Aprea is held in part by KDEV.ST, which is a Swedish public investment company with stakes in several private biotechs, including Aprea. What is much more difficult is understanding the impact of Aprea to KDEV.ST and whether or not KDEV.ST is ultimately worth a play.

If you do the currency conversion from Swedish Krona to USD, KDEV.ST has about a ~$50M market cap. Here's the link to the 2017 report, with details on the financials and underlying holdings: http://www.karolinskadevelopment.com/files/6115/2158/8521/KD%20AR%202017%20Eng.pdf . See slide 12 and 13 to understand the capital structure and holdings, respectively. As noted on slide 13, four of the private company holdings, including Aprea, are held through a joint venture with Rosetta. Slide 12 gives some details on this joint venture and the ultimate economic impact to both companies on portfolio company exits. It's a bit hard to follow. But, the JV holds 17% of Aprea then KDEV itself apparently owns 1%. On top of the ownership question/impact, KDEV.ST itself has convertible debt coming due 12/31/19 that is referenced on that slide 12. So, a lot to consider.

Beyond Aprea, I'd guess the next most important holdings are probably Modus with a drug for SCD in P2, particularly since the JV holds 72% of the company. But, you'd have to think the fate of that company is tied to large degree to GBT. Perhaps a failure for GBT's lead drug would make this more interesting, but you still have to think about future competition from the gene editing players too. I'd also think Umecrine is a key holding given that KDEV itself holds 72% and Dilafor since the JV owns 39%.