- Short-sell Tyme Technologies (NASDAQ: TYME) at ~$6 a share
- Cover (buy-back) this short at <$3 a share by year-end
We are short Tyme Technologies ("Tyme"), a $500m+ market cap company trading on the NASDAQ under symbol 'TYME'.
Tyme is (i) overvalued, (ii) has no clear scientific rationale or business plan, (iii) sports an inexperienced management team, (iv) is struggling to enroll patients in their only ongoing clinical study, and (v) will need substantial capital investment in the near-term which we believe will come at a sharp discount to the current market price ($6.00).
Why Sell Tyme Now?
This month, 4.66m shares at a cost basis of $2.55 are eligible for re-sale by shareholders. As we believe the Company will need to raise substantial capital to fund theirpipe-dream - err pipe-line - we think these shareholders will be racing for the exit to cash in on their current unrealized gains. An additional 4.66m shares could be issued with the exercise of warrants at a price of $3.
Tyme has already prepared for a registered offering by filing a form S-3, which went effective on August 16, 2017. We think any meaningful capital raise will need to come at a steep discount to the current share price for any investor to be interested.
Up until their 4.66m shares and 4.66m warrants became eligible for sale after a 6-month lock-up, these shareholders benefited from an 'anti-dilution' clause that guaranteed an adjustment of their cost basis if a subsequent round was priced lower than $2.55. With that clause expiring September 10, 2017, the only security holders of these 4.66m shares have is the delta between current market price (~$6) and their cost basis (=<$2.55, depending on how you value the warrant). We think the addition of these shares will be catastrophic for the share price.
We also know from the most recent filing that Tyme had $10.5m in cash at the end of June and will likely end up with $8.5m by the end of September, based on their current burn rate. Since the Company is actively enrolling patients, planning to initiate another Phase II in pancreatic cancer and adding new management, we expect this burn to increase further. At that rate, Tyme could be out of cash by Q1 2018.
Tyme Struggling to Enroll for Their Only Ongoing Clinical Study
Tyme is testing a cocktail (called 'SM-88') of previously-approved drugs in an oral formulation for recurrent non-metastatic prostate cancer patients in an open-label, multi-center study. There are a total of 5 centers enrolling in a study seeking 30 patients. Since Tyme began enrollment in June 2016, a total of 15 patients have been enrolled as of August 1, 2017. The Company claims it will achieve 'full-enrollment' by end of 2017, but it’s clear it will need to speed up its patient enrollment to hit this stride.
Tyme is (i) overvalued, (ii) has no clear scientific rationale or business plan, (iii) sports an inexperienced management team, (iv) is struggling to enroll patients in their only ongoing clinical study, and (v) will need substantial capital investment in the near-term which we believe will come at a sharp discount to the current market price ($6.00).
Why Sell Tyme Now?
This month, 4.66m shares at a cost basis of $2.55 are eligible for re-sale by shareholders. As we believe the Company will need to raise substantial capital to fund their
Tyme has already prepared for a registered offering by filing a form S-3, which went effective on August 16, 2017. We think any meaningful capital raise will need to come at a steep discount to the current share price for any investor to be interested.
Up until their 4.66m shares and 4.66m warrants became eligible for sale after a 6-month lock-up, these shareholders benefited from an 'anti-dilution' clause that guaranteed an adjustment of their cost basis if a subsequent round was priced lower than $2.55. With that clause expiring September 10, 2017, the only security holders of these 4.66m shares have is the delta between current market price (~$6) and their cost basis (=<$2.55, depending on how you value the warrant). We think the addition of these shares will be catastrophic for the share price.
We also know from the most recent filing that Tyme had $10.5m in cash at the end of June and will likely end up with $8.5m by the end of September, based on their current burn rate. Since the Company is actively enrolling patients, planning to initiate another Phase II in pancreatic cancer and adding new management, we expect this burn to increase further. At that rate, Tyme could be out of cash by Q1 2018.
Tyme Struggling to Enroll for Their Only Ongoing Clinical Study
Tyme is testing a cocktail (called 'SM-88') of previously-approved drugs in an oral formulation for recurrent non-metastatic prostate cancer patients in an open-label, multi-center study. There are a total of 5 centers enrolling in a study seeking 30 patients. Since Tyme began enrollment in June 2016, a total of 15 patients have been enrolled as of August 1, 2017. The Company claims it will achieve 'full-enrollment' by end of 2017, but it’s clear it will need to speed up its patient enrollment to hit this stride.
Figure 1: Slow Study Enrollment Could Indicate There Is No Interest in SM-88
This has spurred a number of questions such as:
Is this enrollment rate ordinary for oncology studies? For prostate cancer studies? For recurrent prostate cancer studies? And, if not, why is patient/physician interest low for this trial? Could management's inexperience be a contributing factor?
The Company previously enrolled 30 end-stage metastatic cancer patients (14 of which were breast cancer and only 2 prostate cancer) in an open-label study and insisted the results were clinically meaningful. If this is true, why is the current prostate cancer study struggling to enroll patients? Also, why would the company discontinue development of breast cancer indication, but instead focus on prostate?
We haven't completed our research to be able to adequately answer any of the above questions. In fact, we are struggling to make sense of the scientific rationale behind the Company's clinical studies, and perhaps more importantly, the hypothesis they are designed to test.
The Company insists, for instance, that alternative endpoints are a better measure of their drug-candidates activity:
“Traditional RECIST response criteria may not reflect SM-88's therapeutic benefit”
&
“CTCs are a better prognostic biomarker than PSA levels”
&
“CTCs are a better prognostic biomarker than PSA levels”
Unfortunately, alternative endpoints would make it difficult to compare Tyme’s data to a control arm when the Company gets around to actually initiating a scientifically rigorous study that will be scrutinized by the FDA.
What's The Risk To Short-Selling Tyme?
The main risk we see to going short is unprecedented promotion by management or sell-side analysts, knowing they need to raise capital, lifting the share price. However, we're fairly confident that the shareholders of 4.66m shares (at a cost basis of <$2.55) will want to cash in their unrealized gains now that they're able to do so. Remember, they're well aware of the same facts as us concerning Tyme: it’s current fundamentals make it hard to justify a $500m+ market cap.
What's The Risk To Short-Selling Tyme?
The main risk we see to going short is unprecedented promotion by management or sell-side analysts, knowing they need to raise capital, lifting the share price. However, we're fairly confident that the shareholders of 4.66m shares (at a cost basis of <$2.55) will want to cash in their unrealized gains now that they're able to do so. Remember, they're well aware of the same facts as us concerning Tyme: it’s current fundamentals make it hard to justify a $500m+ market cap.
One or more of PropThink's contributors are Short TYME
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