Essa Pharma ($EPIX): No signal detected, liquidate!
Speculative liquidation play with a c20% gap, small position sizing... Short thoughts.
[Essa Pharma]: [NASDAQ.EPIC]
Recommendation: [Long]
Current | Target | Upside
Price: 1.72 | 2.05-2.15 | 19-25%
Market Cap: $76.35m
Considering my last participation in a prospective liquidation burned me and it was in real estate, biotech should be a nice new play right? Management here are surely more shareholder aligned (I’m sure ADAR1 and Keros shareholders agree).
Anyways Essa Pharma, keeping it short and sweet. This is completely speculative, low DD and low sized.
Summary
Essa Pharma (Essa) is a biotech cash shell after it failed its sole clinical program. The company holds around $2.40/share in cash and investments, but trades at around a 30% discount to that value. With no viable drug asset left, shareholders are pressing for an immediate wind-up to unlock the cash. Management’s prolonged ‘strategic review’ and golden parachutes raise some concerns, but activist pressure is mounting. The case for liquidation is straightforward: return the money to investors before it dwindles further, rather than letting it be gambled on a dubious second act that is ‘potentially accretive’.
Background
Essa’s lead drug candidate, masofaniten (EPI-7386), was designed to block the androgen receptor in prostate cancer. In late 2024, a PH2 trial combining masofaniten with the standard therapy enzalutamide fell flat; the combo showed no clear benefit over enzalutamide alone, and in fact the control arm outperformed expectations. A futility analysis confirmed that the study was unlikely to meet primary endpoint.
Following this failure, Essa terminated all remaining trials of masofaniten and withdrew its IND filings. With its only program scrapped, management announced a review of ‘strategic options’, ranging from a merger, asset sale, shareholder distribution or outright liquidation. The company has no active R&D, only a cash pile and a promise to consider next steps.
Shareholder Pressure
Shareholders haven’t really been content to wait quietly (and why would you). In April 2025, Soleus Capital (5.1% stake) went public with a letter urging the board to wind down operations and return cash April 23rd. Soleus has pointed out that the stock (c$1.60 at the time( traded far below Essa’s estimated c$2.40 cash/share, with the CIO noting that deteriorating market conditions place a premium on cash.
Soleus isn’t alone, institutional holders have been circling, BVF partners (26.3% stake) filed a 13D switching to an active stance, and Tang Capital (9.7% stake); a known liquidator of distressed biotechs has just accumulated a stake. BML (9.5%) has also sent a letter agreeing with a liquidation April 24th.
Much of the current register is now pushing for a cash out.
Management Incentives and Behaviour
Essa’s management has appeared reluctant to commit to a prompt liquidation. Tellingly, in December 2024 the company adopted a new executive severance plan that cushions management in the event of a sale or termination. Executives are promised 1.0-1.5x their base salary in cash severance (with extra compensation for the CEO) if they lose their jobs due to a change in control or other qualifying events.
Ostensibly this was meant to ‘retain key executives’ during the strategic review, but it also means that C-suite will get paid even if shareholders show them the door. With these incentives, it seems management seem to be dragging its feet. By mid-February, several months into the review, Essa had provided no timeline or substantive update on its progress.
The broad scope of the ‘strategic options’ aren’t just shareholder-friendly outcomes but even seeking a new product to develop, options at odds with the current register. Every month of delay, of course, burns more cash on salaries and advisors.
Valuation
Today the value gap still exists. Essa’s BS remains robust. March 31 2025, the company reported $113.9m in cash and short-term investments (no debt). Roughly $2.40 per share in net cash, using 47.3m shares outstanding.
There are no meaningful assets left, and barring a value-destructive acquisition that cash is essentially the entire pie. Management acknowledges that further development of its Aniten drugs is off the table.
Assuming a reasonable reserve for liquidation costs or a delay for 1-2 more quarters, shareholders could expect to receive c$2.10/share in a wind down scenario. At the current stock price $1.70 it implies a 25-30% upside to intrinsic value. The longer the wait the more the value will slip (cash burn was about $6-7m/quarter, or $0.13/share, expect this to a reduced burn of $2m/quarter, or $0.04/share.
Conclusion
Essa formally started its strategic review in late October 2024, after the termination of its Ph2 trial on October 31 2024. As of late June 2025, the review is now at 8 months and counting.
The outcome is increasingly constrained by pressure, liquidation isn’t confirmed but it’s the path of least resistance, and it prevents shareholder revolt. Activists have been patient but I wouldn’t imagine that patience would extend far beyond Q3 without escalation. With 3 of the largest shareholders being associated with liquidation it is becoming more and more likely that management will not liquidate.
There seems to be no news or rumours of an acquisition or reverse merger. At this point the discount to net cash is wide enough to justify a small position whilst waiting for resolution.
PT: $2.05-2.15