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Myrexis Inc. (MYRX) - Another Couchman controlled NOL stub

1/12/2020

9 Comments

 
Picture

Myrexis Inc. (MYRX) is another NOL stub controlled by Johnathan Couchman. Much like AFFY, it's tiny, thinly traded and has significant upside potential.
 Couchman appears to have a penchant for these busted out bio-pharma firms, probably because they tend to rack up such huge net operating losses whilst trying to develop  their products.

The story with MYRX is not too dissimilar to that of AFFY.

MYRX was created in June 2019 when  Myriad Genetics (MYGN) spun off it's pharma R&D division  with a chunk of cash. After spending $90 Mil of the $188 Mil in the coffers on R&D and marketing MYRX decided to rethink it's business plan. The late  biotech executive  Richard Brewer was hired as CEO in May 2012 in an effort to try and put the remaining cash to good use. Sadly Brewer ended up dying of a rare blood cancer disease  and in November of 2012 management decided to just liquidate.

A plan of liquidation was filed and a final distribution of between $2.72-2.91  was expected to be distributed to shareholders.  A shareholder meeting to approve the liquidation was set for January 23rd 2013

You know where this is going,  right?

Enter Couchman!

The day before the shareholder  meeting was due to take place management issued an 8-K   announcing that the liquidation was being called off and a special dividend of $2.86 per share was   to be paid to shareholders instead.

They also noted that;


"Effective at 11:59 pm Eastern time on January 22, 2013, the Company entered into an employment agreement with Mr. Couchman.  Mr. Couchman’s employment agreement provides for an initial term of one year subject to automatic one year renewals unless either party provides at least 90 days written notice to the other party that such automatic renewal will not occur.  Mr. Couchman’s employment agreement provides for the payment of a salary at the annual rate of $1.  Mr. Couchman will be eligible to participate in the Company’s employee and insurance programs generally made available to the Company’s executive employees in accordance with and subject to the terms set forth therein.  Among other things, the employment agreement provides for Mr. Couchman to consider the acquisition of revenue or income producing assets, as well as related financings with respect thereto."

Couchman was made CEO and the rest of the board resigned. Then in February 2013 MYRX issued  an 8-K announcing that it had issued and sold 7 Mil shares to a Couchman controlled entity  for a cost of $250k. This deal gave him control of 20% of the company. Around the same time Couchman brought in  a couple of associates to add to the board.

Once the special dividend was paid  the share price dropped off a cliff as investors  headed for the exit. MYRX issued a Form 15  in July 2013 and there's been no news since then.

Picture
MYRX Long-range chart

I love to see charts like this. A share price collapsing on heavy volume, then as the dust settles volume drops way off and a long base starts to form. In this accumulation period the public is selling out as shares change from weak hands to strong. It is in this quiet period that insiders and other 'smart money' buyers are building their positions in the shadows.


​Right, lets look at a few numbers for MYRX;

Market Cap = $758,539
Share price = $0.022
Common = 34,479,051

The last financials before MYRX went dark show the following;


Picture
MYRX Jun 2013 10-K

 Net cash was  around $0.03 per share at the time.

Couchman put MYRX in  stasis once he took over to minimize cash burn, the firm went dark which meant no filing or auditing costs and his annual wage is $1.

Without current financials it's impossible to know how much of the cash has been burnt away through expenses. Maybe there's  no margin of safety anymore.

Now to the NOL carry-forwards.

The 10-K notes the following;


​"At June 30, 2013 the Company had total federal and state tax net operating loss (“NOL”) carry-forwards of approximately $147,177,000, of which $17,491,000 is attributable to excess tax benefits for which no deferred tax asset has been established. If not utilized, the federal NOL carry-forwards will expire beginning in 2030 through 2033, and the state NOL carry-forwards will expire beginning in 2025 through 2028. The Company had approximately $3,006,000 of federal research tax credit carry-forwards, which can be carried forward to reduce federal income taxes. If not utilized, the federal research credits will expire beginning in 2030 through 2033. Additionally, the Company had approximately $1,066,000 of Utah research tax credit carry-forwards, which can be carried forward to reduce Utah income taxes. If not utilized, the Utah research tax credit carry-forwards will expire beginning in 2024 through 2027."

At a 21% tax rate these tax assets would have a maximum value of around $30 Mil.

Let's assume on 25% gets monetized, that's around $7.5 Mil or  $0.21 per share.  That's  over 9x the current share price. 

Given Couchman's track record of monetizing NOL stubs I'm willing to take this bet.


​Thanks for reading,

David




Long MYRX




Note: Thanks to  ElmSt14 for his V.I.C. write-up on MYRX   which I used to draw information for this post. His write-up is well worth a read.

9 Comments
Mike
1/12/2020 11:44:03 pm

I am wondering if you have seen the stock Cadogan on the London stock exchange. Fundamentals are: P/B of 0.3, P/E of 3.8, P/S of 1.2. MC is 12.2 Mio. and the company has cash of 13.7 Mio. and no debts. The have a lot of stocks but only few are traded and the stock is illiquid and at a multi year low. It also seems that their operations are improving.
This looks quite interesting.

Reply
David
1/13/2020 06:39:59 pm

Hi Mike,

I've not looked at that one yet. I'll check it out. Thanks!

Reply
Mike
1/24/2020 07:49:24 pm

However, I think the cheapest stocks can be found in more obscure markets e.g. in Hong Kong, Poland or Russia. E.g. Ka Shui int. (822) from Hong Kong trades at a P/B 0.36, P/S 0.2, P/E 3 and at an all-time low. On top of that, you get a dividend yield of 10%.

Dave Anderson
3/23/2020 06:56:59 pm

Maybe this is the market event that creates an opportunity here....patiently waiting.

Reply
Scott
8/7/2020 04:05:32 am

I noticed that Couchman filed a Statement of Ownership for shares of Enzon Pharmaceuticals, Inc. (ENZN). It looks like he bought shares of ENZN personally and through Myrexis. Does anyone know much about Enzon? Is it another Couchman NOL Stub?

Here's today's filing: https://www.sec.gov/Archives/edgar/data/1459450/000092189520002115/0000921895-20-002115-index.htm

Reply
David
8/8/2020 08:53:48 pm

Hi Scott,

ENZN is another Pharma firm with NOL's and it also has some royalty interests too. Carl Icahn is also invested in it. For more background on the company you can read this V.I.C. write-up here;

https://www.valueinvestorsclub.com/idea/ENZON_PHARMACEUTICALS_INC/4528816659

Reply
Scott
8/9/2020 01:16:12 am

Thank you, David!

Rose link
3/4/2021 07:42:50 pm

Good job

Reply
c chan
8/18/2021 08:49:39 am

Couchman recently filed a form 4 (https://www.otcmarkets.com/filing/html?id=15171190&guid=Ckb1knG_srAsj8h). Wonder if you have any thoughts on it?

Thanks.

Reply



Leave a Reply.

    David J. Flood

    UK based Investor. I focus
    ​on Net-nets, Pico/Nano caps, AIM/OTC/Dark stocks & Special Situations. Balance sheets & Long-range price charts are my guide. Looking for inflection points. Do not construe my blog as investment advice, always conduct your own due diligence.  Caveat Emptor!


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