Talaris Therapeutics a Takeover Target

Struthers Report V29 # 6.0

Talaris Therapeutics, Inc. is a late-clinical stage cell therapy company, which engages in the development of allogeneic hematopoietic stem cell transplantation. The company was founded by Suzanne Ildstad on February 15, 2002 and is headquartered in Wellesley, MA.

Talaris Therapeutics - - - NASDAQ:TALS - - - Recent Price $2.20

On Feb. 16, 2023 -- Talaris Therapeutics, Inc. (Nasdaq: TALS), announced that it has completed a review of its business and program prospects. Based on this review, Talaris has decided to discontinue its FREEDOM-1 and FREEDOM-2 clinical trials evaluating FCR001’s ability to induce durable tolerance in living donor kidney transplant recipients. This decision was primarily attributable to the pace of enrollment and the associated timeline to critical milestones. The company will continue to enroll its FREEDOM-3 Phase 2 clinical trial evaluating FCR001’s ability to induce tolerance in scleroderma.

The Company has initiated a comprehensive review of strategic alternatives focused on maximizing shareholder value, including possible business combinations and/or a divestiture of the Company’s cell therapy CMC capabilities. The Company has not set a timetable for completion of this strategic review and does not intend to comment further on the status of this process unless or until its Board of Directors has approved a definitive course of action, or it is determined that other disclosure is appropriate. There can be no assurance that this strategic review will result in Talaris pursuing a transaction or that any transaction, if pursued, will be completed on attractive terms.

In connection with the evaluation of strategic alternatives and in order to extend its resources, Talaris is implementing a restructuring plan that includes reducing its workforce by approximately one-third, with remaining employees primarily focused on maintaining the Company’s cell therapy CMC capabilities and executing FREEDOM-3.

I believe and imminent takeover is in play. Last Friday night TALS filed that they terminated 95% of their workforce effective April 28. Employees have been given 2 weeks notice and will receive full severance payout. The CEO and Chief HR have been given 6 weeks notice and it will all be wrapped up by May 26. The CFO has been given a 6 month bonus retainer to stay until the takeover is complete. The language in that document suggests it will be a reverse takeover by a private company. If they are letting all staff go, a takeover announcement must be around the corner.

They estimate aggregate severance costs at $8.7m, which leaves the company with around $170m in cash. The stock closed Friday at $81m marketcap, so it’s trading less than half the cash value.

I highly doubt this team will allow any takeover to value the company below its cash value of $4/share. TALS chairman (bio) sits on the board of $60B Moderna, is advisor to Blackstone Life Sciences (who owns 19% of TALS), was chair of Acceleron Pharma when it was sold to Merk for $11.5 billion in Sept 2021, was chair of Prevail Therapeutics when it was sold to Eli Lilly for $1 billion in Dec 2020. TALS CFO (bio) was CFO of Semma Therapeutics when it was sold to Vertex for $950 million in Sept 2019.

Although this deal is not going to be near as big as some of management’s past ones, these guys have the expertise and connections to get more than cash value for Talaris. I’m expecting the takeover to be announced any day, and it could even be tomorrow morning? I have have never spoken to management, but this play for investors is laid out pretty much in black and white. I was tipped off about this company from one of my trusted colleagues and verified the info.

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