Oncorus Inc (ONCR) Liquidation

I am long Oncorus Inc (ONCR), a biotech firm in Andover, Massachusetts, that is being liquidated. It is trading at a market capitalization of $2.8 million ($0.1093/share). I calculate a liquidation value of 6x that.

Last week they announced the layoff of almost all their employees, the departure of the CEO, COO, and Chief Medical Officer and estimate a cost of $2.6 million in severance and other shut-down expenses. This week they announced the company will be liquidated.

The balance sheet, as of March 31, 2023, showed current assets of $46.7 million, current liabilities of $31.1 million and just one long-term liability of $47.5 million. That one long-term liability is for the lease of 105,000 square feet of biotech manufacturing and lab space in Andover - a suburb of Boston. Biotech real estate has been doing very well in Boston for some time and the landlord owes the company $24.2 million as reimbursement for their improvements to the property. Most likely the company will be able to sublet the property, or extricate its self from the lease with minimal expense.

The balance sheet shows tangible long-term assets of $38.3 million - but these are notoriously hard to estimate their liquidation value so lets figure the company is only able to capture 10% of that - $3.8 million.

Thus our liquidation estimate is $16.8 million. That's 6x the current market price.

 46.7 Current Assets
  3.8 Other Assets
-31.1 Liabilities (excluding lease)
- 2.6 Severance & other charges
------
 16.8 Liquidation Value

Notes:

  1. According to Newmark, "Asking Rents" for life sciences commercial real estate in the "Route 495" area were up 80% from Q4 2021 to Q1 2023. The landlord will likely be open to releasing the space.
  2. Liquidations take time. It will likely be a number of months before the lease is cleared up and the market realizes the mistake. Full liquidation make take a couple years.

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