Can Celladon Weather the Storm?

The company provided a business update Friday morning. Basically, Celladon is continuing to seek out a merger partner, and at the same time, it is not pursuing the further development of its existing programs.

Earlier in June, Wedbush was taken as Celladon’s exclusive financial advisor for the process of seeking a merger or sale.

Celladon will suspend further research on the development of its Mydicar program, along with its other pre-clinical programs, which include its stem cell factor gene therapy and SERCA2b small molecule programs.

Current estimates from the company indicate that if Celladon were to liquidate during the third quarter of 2015, the net cash available for distribution to shareholders would be roughly $25 million to $30 million.

Apart from this, Celladon announced that it will be reducing its workforce again, with about half of the employees not previously notified of termination of employment expected to depart in the third quarter.

Paul Cleveland, president and CEO of Celladon, said:

Our Board of Directors has unanimously determined that seeking a merger or sale, in lieu of further development of our remaining programs and assets, gives us the best opportunity to maximize shareholder value. We are aggressively pursuing that course. If we are unable to identify a merger or sale that provides superior value to our shareholders, we will move forward with a liquidation and distribution of net cash to shareholders.

So far this year, Celladon has been suffering, with shares are down around 90% year to date. After cutting down its operations, the only way out from here appears to be a sale or merger.

Shares of Celladon were down nearly 42% at $1.29 on Friday morning. The stock has a consensus analyst price target of $2.33 and a 52-week trading range of $1.24 to $28.25.

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