LianBio Announces Completion of Strategic Review
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Insights
From a financial perspective, the announcement by LianBio to wind down operations and delist from Nasdaq is a significant event with substantial ramifications for shareholders and the biotech sector. The special cash dividend of $4.80 per ordinary share, amounting to approximately $528 million, indicates a return of capital to shareholders. This move is typically seen in companies looking to maximize shareholder value in the absence of viable operational strategies or as a part of liquidation processes.
The decision to wind down and pay out a large dividend suggests that the company's current projects and pipeline are not expected to yield sufficient returns or that the company is unable to continue operations due to financial constraints or strategic realignment. The sale of remaining assets could potentially offer additional returns to shareholders, but this is not guaranteed. Investors should consider the risks associated with the liquidation value of the assets versus their operational value, which is often lower.
For the biotech industry, this event may signal a cautionary tale regarding the volatility and high-risk nature of biotech investments. The market may react to such news with increased scrutiny on biotech firms with similar profiles or in a comparable financial position. This could influence investor sentiment and potentially lead to a reevaluation of investment strategies within the sector.
The biotechnology industry is known for its high levels of uncertainty and significant capital requirements for research and development. LianBio's decision to wind down operations could be indicative of broader market pressures facing biotech companies, particularly in the context of the current biotech market dynamics. The cessation of clinical trials and the sale of assets suggest that the company's product pipeline may no longer be viable or competitive.
The reduction in force by approximately 50% of the company's workforce is a clear indicator of cost-cutting measures, which are often employed to preserve capital in challenging market conditions. This may have a ripple effect on the biotech labor market, increasing the supply of skilled workers while potentially dampening morale within the industry.
Furthermore, the delisting from Nasdaq and SEC deregistration are actions that typically reduce liquidity and visibility for a company's shares, which can impact investor perceptions and the attractiveness of the biotech sector for public market investors. The strategic review and subsequent actions taken by LianBio could prompt other companies in the sector to reevaluate their own strategies, potentially leading to increased mergers and acquisitions activity or strategic partnerships as firms look to consolidate and strengthen their market positions.
The legal implications of LianBio's wind down process include compliance with securities regulations and fulfilling contractual obligations. The reference to deregistration under Section 12(b) of the Securities Exchange Act of 1934 indicates that the company will no longer be subject to the reporting requirements of the SEC, which can reduce the regulatory burden and associated costs.
However, the company must navigate the legal complexities of asset sales and workforce reductions, ensuring adherence to employment laws and contractual terms. The mention of transition service obligations under existing agreements highlights the need for careful management of these processes to avoid potential legal disputes or liabilities.
The legal process of dissolution, expected to occur during the first half of 2027, will involve settling debts, distributing remaining assets to shareholders and addressing any outstanding legal matters. Shareholders should be aware of the timeline and legal steps involved in this process, as it will determine when and how they might expect to receive any final distributions from the company.
LianBio to commence the wind down of its operations, including sale of remaining assets and reduction in force, delisting from Nasdaq and issuance of special cash dividend
SHANGHAI, China and PRINCETON, N.J., Feb. 13, 2024 (GLOBE NEWSWIRE) -- LianBio (Nasdaq: LIAN) (“LianBio” or the “Company”), a biotechnology company dedicated to bringing innovative medicines to patients in China and other major Asian markets, today announced that the Company’s Board of Directors (the “Board”) had completed its comprehensive strategic review of the Company and determined to initiate the wind down of its operations, including the sale of remaining pipeline assets, the delisting of its American Depositary Shares (“ADSs”), each representing the right to receive one ordinary share, from the Nasdaq Global Market (“Nasdaq”) and deregistration under Section 12(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and workforce reductions. The Company currently anticipates a substantial portion of the wind down activities, including fulfillment of transition service obligations under its existing agreements and gradual cessation of currently active clinical trials, will be completed by the end of 2024. In parallel with the wind down of operations, the Board has declared a special cash dividend in the amount of
“In October 2023, the Board of Directors initiated a comprehensive strategic review of the Company, including numerous options for the future of the Company, as our commitment to represent the best interests of LianBio and shareholders,” said Konstantin Poukalov, Founder and Executive Chairman of LianBio’s Board. “Following the shift in focus away from mavacamten commercialization and the licensing of rights to NBTXR3 to Janssen, the Board unanimously decided that winding down operations is the way to realize maximum shareholder value in the current biotech market.”
In accordance with the strategic review, the following actions will be taken:
Wind Down and Workforce Reduction
LianBio will begin to wind down operations immediately and intends to pursue the sale of its remaining pipeline assets as part of the wind down process. To the extent such sales are successful, the Company expects to distribute any profits from the sales to its then-current shareholders in a subsequent distribution before the final dissolution of the Company. However, there is no guarantee that any shareholder’s original investment, or any material amount, will be recovered.
With reduced operations, the Company expects to reduce its workforce by over 50 full-time employees, or approximately
LianBio expects that the full wind down of operations, including the sale of remaining assets or termination of licenses, as well as the termination of employees necessary to complete an orderly wind down, will be substantially complete by the end of 2024, with the complete dissolution expected to occur during the first half of 2027. The Company expects to meet its ongoing operational costs through funds retained after the special dividend.
Nasdaq Delisting and SEC Deregistration
On February 13, 2024, the Company, pursuant to an authorization by the Board, provided notice to Nasdaq that it intends to file a Form 25 with the U.S. Securities and Exchange Commission (the “SEC”) on or about March 8, 2024 to effect the voluntary delisting of the Company’s ADSs from Nasdaq and to deregister the ADSs under Section 12(b) of the Exchange Act. As a result, the Company currently expects that the last day of trading on Nasdaq will be on or about March 18, 2024, when Form 25 takes effect. Ninety days thereafter, the deregistration of the Company’s ADSs under Section 12(b) of the Exchange Act is expected to become effective. Following the delisting of the Company’s ADSs from Nasdaq, the Company intends to file a Form 15 with the SEC certifying that it has fewer than 300 shareholders of record, upon which the Company’s filing obligations under the Exchange Act will immediately be suspended, including the obligations to file all periodic reports.
Following the delisting, any trading in the Company’s ADSs would only occur in privately negotiated sales and potentially on an over-the-counter market. The Company expects that its ADSs will be quoted on a market operated by OTC Markets Group Inc. (the “OTC”) so that a trading market may continue to exist for its ADSs. There is no guarantee, however, that a broker will continue to make a market in the ADSs and that trading of the ADSs will continue on an OTC market or otherwise.
The Board believes that the decision to delist the ADSs from the Nasdaq and deregister and suspend its reporting obligations under the Exchange Act is in the best interests of the Company and the holders of its ordinary shares and ADSs. As the Company undertakes steps to wind down operations and return value to the shareholders through its asset sales, out-licensing efforts and the payment of dividends, the Board has determined that the burdens associated with operating as a registered public company outweigh any advantages to the Company and its holders of ordinary shares and ADSs. The Board’s decision was based on careful review of numerous factors, including the potential for curbing the significant costs associated with preparing and filing periodic reports with the SEC and the legal, audit and other expenses associated with being a reporting company, as well as the substantial costs and demands on management’s time under the Sarbanes-Oxley Act of 2002, SEC rules and Nasdaq listing standards.
Authorization of Special Cash Dividend
The Board has declared a special cash dividend of
In connection with the special cash dividend, the Depositary will close the books to ADS issuances and ADS cancellations at the close of business in New York City on February 20, 2024. The Depositary will re-open the books for ADS cancellations at the close of business in New York City on March 18, 2024. The applicable Depositary fees will apply for all ADS issuances and ADS cancellations.
LianBio stockholders are urged to consult their respective tax advisor regarding the U.S. federal, state, local and foreign income and other tax consequences to them, in light of their particular investment or tax circumstances, of the receipt of the special dividend.
About LianBio
LianBio is a cross-border biotechnology company on a mission to bring transformative medicines to historically underserved patients in China and other Asian markets. For more information, please visit www.lianbio.com.
Cautionary Note Regarding Forward-Looking Statements
Statements in this press release about future expectations, plans and prospects, as well as any other statements regarding matters that are not historical facts, may constitute forward-looking statements. The words “anticipate,” “expect,” “believe,” “intend,” “continue,” “potential,” “may,” “will” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements in this press release include, but are not limited to, statements concerning the Board’s comprehensive strategic review; the Company’s plans for payment of the special cash dividend, including with respect to timing and the special dividend amount, and the potential for payment of any future dividends upon the culmination of the wind down of the Company’s operations; the Company’s plans with respect to the delisting and deregistration of its securities; the perceived benefits and timing of the wind down; the Company’s ability to pursue the sale of its remaining pipeline assets and termination of its outstanding licenses; the Company’s plans and expected timing with respect to the reduction in workforce; the timeline in which the Company expects to be able to wind down its operations; and the trading of the Company’s ADSs following the voluntary delisting of the ADSs from Nasdaq. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: the risk that the delisting, deregistration and wind down process will take longer than expected and that the benefits of such actions may not be realized; general market conditions; the impact of changing laws and regulations and those risks and uncertainties described in LianBio’s filings with the SEC, including LianBio’s Annual Report on Form 10-K for the year ended December 31, 2022 and its subsequent filings with the SEC. Any forward-looking statements contained in this press release speak only as of the date hereof, and LianBio specifically disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. Readers should not rely upon this information as current or accurate after its publication date.
For investor inquiries, please contact:
Elizabeth Anderson, VP Communications and Investor Relations
E: elizabeth.anderson@lianbio.com
T: +1 646 655 8390
For media inquiries, please contact:
Katherine Smith, Inizio Evoke
E: katherine.smith@inizioevoke.com
T: +1 619 849 5378
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