BTIG downgraded Valeritas Holdings (NASDAQ:VLRX) to “neutral” from “buy” and removed its previous $10 price target after the company reduced its fourth quarter revenue guidance due to a temporary supply disruption and announced it is seeking strategic alternatives, including additional financing, a sale of the company, or a sale through a Chapter 11 process.
Shares of Valeritas plunged $1.01, or 61%, to close at 65 cents on Dec. 20 in heavier than normal trading. Analyst Marie Thibault writes that she believes the stock price represents “fair value.”
The company’s anticipated year-end cash balance of about $11-million is expected to last into February 2020, Ms. Thibault said. “We had previously flagged the need for capital, since this has been an overhang on Valeritas’ stock price for several quarters,” she added.
“With the cut to its revenue outlook, uncertain timeline for resolution of the supply disruption, and expected impact into the first quarter of 2020, the company’s future becomes murkier, in our view, making additional financing less likely,” Ms. Thibault said. “We believe that the most likely scenario is sale through Chapter 11 or a deeply discounted sale to an acquirer for the V-Go and h-Patch assets.” V-Go and h-Patch are medical devices for diabetes patients.
