KS@Calvsams
 New York, USA
Joined June 2015
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/12 The Cytoff sale reduces winddown costs by $19m. The remaining legacy assets have winddown of $58m. The amended proxy states they expect to sell both legacy assets. If they do, and eliminate winddown costs entirely, LAB shareholder's would own 18.3% of Treeline, up from 15.5%.
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16/ this + cash at close to ~$956m. + LAB's share of newco to 17.1%, up from 15.5% at announcement. And widens the disc to Treeline's negotiated equity. Now $1.24 per LAB share = $2.5b in Treeline equity. Today's EV is $842m, a 18% disc to private mark and a 60% disc to merger EV
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$LAB announced the sale of their other legacy asset (microfluidics) yesterday. Terms undisclosed, i.e. gave it away. Some portion of the remaining $58m in winddown is attached to this asset, so some of it goes away. PF for 0 winddown, LAB = $1.38 (+87%) @ $2.5b TRLN.
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Any $lab owners out there? Standard Biotools, f/k/a Fluidigm, was recapped by Viking and Casdin in April ’22 after a failed sales process. Viking/Casdin backed a private vehicle led by Dr. Michael Egholm (former CTO of Danaher LS) to build a platform for high-impact, sub-scale tools. Their first deal was injecting $250m to reset the business and pursue M&A. 1/
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11/ perhaps more important is the logic behind "giving" the legacy assets away. They have steep winddown costs associated with them, so getting them off the books reduces cash burn and adds to cash delivered at close, increasing LAB shareholder's % ownership of Treeline.
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10/ $lab shares remain at a discount to the private valuation of Treeline. In a recent S-4/A, we learned that there is a 2nd bidder for their Cytof assets and the original bidder raised their offer. The valuations are still modest, but could rise with the added interest.
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1/ $LFCR chief commercial officer commented on a podcast that they see themselves filling their capacity in 5yrs and that they their plan calls for adding more capacity and additional capabilities. Market is not only deeply discounting execution to their '29 midterm targets.
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3/ implied in his commentary is $50m->+$75m EBITDA from '29-'31. 12x = $16 per share (using FYE '31 B/S). Should they decide to add capacity, this team won't do what the last one did and order on spec. I would expect them to take use their site 3 facility and customer fund it.
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4/ the stock has been left for dead after the poor 2026 guide. The preferred redemption overhang has kept buyers sidelined. Their '27 guide for modest growth is a low bar that they can clear now that Alcon has given them firm timing on orders.
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9/admittedly I am not a specialist so would welcome input on valuation. There is a decent chance LAB cash at close is higher than they’ve estimated (since they sold legacy assets, the associated liability is likely smaller). But using their current estimate:
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8/ At today’s LAB price, the implied EV is roughly in line with the valuation the private holders invested at. Again, with no step-up along the way, one big flat round. This feels cheap, despite its early stage. Looking at public comps and similar pedigreed start-ups.
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7/ the “platform” is repeatability. They’re backed by Orbimed, Arch, GV, KKR, Access, Ajax, Aisling, who pumped ~$1.2b into Treeline over 5yrs, all Series A and extensions. Once the merger closes, Treeline will be a top holding for many in their public books.
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6/ they’ve also built a platform to target unliganded proteins/pockets, with sub-teams around small molecules, protein degraders, and TT-ADCs. Josh and team describe themselves as target pickers that make good development decisions.
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5/ 3-BCL-XL oral protein degrader that they’ll likely partner out. And 4- an EZH2 inhibitor, in-licensed by on clinical hold. 3 more clinical starts over the next two years: in neurology and immunology, 1 in an unliganded target, 1 a targeted ADC.
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4/ they’ve disclosed 4 clinical programs among 9 homegrown + 1 in-licensed. 1- BCL6 oral protein degrader in T and B cell lymphoma, w 84% ORR and 32% CRR among 19 heavily pre-treated patients. 2 – pan-kras inhibitor in solid tumors, differentiated chem/free drug exposure.
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3/they elected to reverse merge with Treeline, which has been privately financed since 2021. It is run by excellent mgmt: Josh Bilenker, formerly CEO of Loxo (sold to Lilly for $8b) and Jeff Engelman, who ran oncology discovery at Novartis.
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2/ this estimated excluded ILMN royalties but included wind-down costs including leases associated with legacy businesses. My understanding is this did not contemplate asset sales, just wind-down.
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