NUVB Update (Closed Out)

+45% in ~2.5 months

Disclaimer: Nothing on this blog is intended as financial or investing advice. Please do your own due diligence.

First of all, greetings and thank you to all the new subscribers. I hope you will find this content worthwhile. Feel free to contact me anytime here or on X (@ragingbullcap) for any questions or thoughts on these ideas and any feedback on the blog generally.

I am just writing to provide a quick note that I am closing out the first actionable idea I shared on this blog back in mid-December: Nuvation Bio. Shares had a big +11% move today on 3x ADV, closing at $1.98/share, and are up 45% since the write-up 2.5 months ago. No, not quite NVIDIA, but I’ll take it.

I explained my thinking for closing this out earlier today on X here. In short, while shares still trade at a 30% discount to net cash, the spread to my estimate of the company’s liquidation value is now only around 10%. As a result, the easy, largely risk-free money has been made here and this has gone from a net-net potential liquidation play to a speculative biotech investment that I am ill-equipped to make. With that said, at $2/share, we are still getting the pipeline, which has a Phase 1 data readout for the lead asset just around the corner, for free. The upside could obviously be tremendous if successful, and the downside is still decently protected by the cash balance. Therefore, I am personally going to continue holding ~1/3 of my shares as a flier on how that plays out.

However, for the purposes of an ‘actionable idea’, I am considering this closed as my initial thesis on the stock has largely played out. While there is still a little margin of safety, there is far more risk here than when I first pitched it. For example, data for NUV-868 may suggest a poor but salvageable outlook, in which case the stock could certainly plunge in the aftermath. From there, we would need to trust management to not start throwing good money after bad, in order for shares to trend back towards liquidation value. This concern may be exacerbated by the arrival of the new DDC Platform candidate launched in December, which could provide further upside, but also could be a significant drain on cash the further it moves along in development. Simply, the story moving forward is a lot less clean and beyond my ability to adequately appraise.

Congrats to anyone that went long here with me and good luck to anyone remaining long (I think it’s more likely than not this stock does quite well from here). On to the next one!