Arquitos Capital Management on Finch Therapeutics
Thesis
Finch won a significant patent infringement lawsuit, with a potential award of $25 to $80 per share. The company is now pursuing a Chapter 11 filing to eliminate a lease obligation and organize a sale of the company. This strategic process is expected to maximize shareholder value and result in a healthy premium.
“The company decided to move forward with a strategic Chapter 11 filing in order to eliminate the lease obligation and organize an outright sale of the entire company... I believe that this process will maximize the value of Finch for shareholders and will monetize the assets more effectively than if Finch remained a publicly traded company.”
Key risks
- An appeal of the patent infringement case is highly likely, which will cost money.
- The outcome of the company sale via Chapter 11 is uncertain.