In a letter to shareholders today, QLT’s (NASDAQ: QLTI) recently elected Board of Directors announced major changes to the business including the reduction of 146 employees, the planned departure of CEO Robert Butchofsky, hiring Goldman Sachs to explore strategic alternatives for the company’s punctal plugs technology, and returning $100 million to shareholders “as soon as practicable”. This is good news for the stock, in that shareholders should expect an approximate $2.00/share Special Dividend in the coming months, with the company becoming cash flow break even by year-end and potentially cash flow positive in 2013. With QLTI becoming self-financing, continued payments from the divestiture of Eligard (company is entitled to ~$113 million in future payments), potential proceeds from the sale of the punctal plug technology, and importantly, the value of the company’s synthetic retinoid candidate (QLT091001) for certain types of blindness, QLTI is clearly being repositioned to return value to shareholders. QLTI currently has ~$4.00 per share in cash, a major support of the valuation.
QLT091001 is the company’s candidate for Leber Congenital Amaurosis (LCA) and Retinitis Pigmentosa (RP), two diseases of the eye that can cause blindness. The company has demonstrated positive proof of concept in Phase Ib trials for the prevention of vision loss in both LCA and RP with QLT091001. QLTI is in discussions with the FDA on the design of a pivotal program for QLT091001 in both LCA and RP. The company plans to initiate late-stage trials later this year. We like QLTI, given the strong balance sheet, improving cash flow, new Board and strategy, and the pipeline.
