Book Value as of December 31, 2020 Increases to
$292.5 Million, or $5.94 Per Share
Acacia Research Corporation (Nasdaq: ACTG) today reported
results for the three and 12-month period ended December 31,
2020.
Clifford Press, Chief Executive Officer, stated, “During the
year, we completed our first transaction in our strategic
partnership with Starboard Value LP (“Starboard”), and acquired a
portfolio of late-stage life science assets, increasing our book
value by more than $117.5 million. After acquiring this portfolio
for $282.3 million, we sold several holdings to recover $188.5
million while retaining assets which were valued at more than
$267.4 million as of December 31, 2020. Subsequent to year end,
Immunocore, whose securities are included in the portfolio,
conducted a successful IPO, following the release of positive
clinical data, which increased the value of our holding by $31.9
million as of March 26, 2021. We continue to hold substantial value
in the securities of public and private companies remaining in the
portfolio.”
Our life sciences portfolio as of December 31, 2020
includes:
Public
Company Securities (at market value at December 31,
2020)
Company
Ticker
Number of Shares
Value
Change since 9/30
Arix Bioscience plc 1 LSE: ARIX 25.8 mm $77.3 mm $40.3 mm Sensyne
Health plc AIM: SENS 15.2 mm $23.3 mm $11.9 mm Induction Healthcare
Group plc AIM: INHC 4.2 mm $4.2 mm ($0.2 mm)
Total Public
Holdings $104.8 mm $52.0 mm
Private
Company Securities (at December 31, 2020)
Company
Ownership Percentage
Value
Oxford Nanopore Technologies ¹
6%
$111.1 mm Immunocore 1, 2
4%
$26.0 mm
Next three positions:
Viamet Pharmaceuticals
26%
AMO Pharma
22%
NovaBiotics
4%
$25.4 mm
Total Private Holdings $162.5 mm
1 Value of Oxford Nanopore Technologies
and Immunocore securities based on observed transactions; remaining
holdings of private company securities valued at cost.
2 Completed an IPO on February 4, 2021;
Value at March 26, 2021 was $57.9 million
Al Tobia, Acacia’s Chief Investment Officer, added, “During 2020
we had gains, realized and unrealized, of approximately $175
million from the life sciences portfolio. During the first quarter
of this year, our IP business completed the acquisition of a patent
portfolio from Newracom. This portfolio provides a broad range of
Wi-Fi IP that covers multiple applications including mobile
devices, wearables, digital home, home automation, healthcare, and
industrial automation. Our team is actively exploring licensing
opportunities for the recently acquired patent families.”
Mr. Press concluded, “We remain active in collaboration with
Starboard to evaluate further opportunities within the small-cap
value sector with the goal of acquiring operating companies in the
mature technology, healthcare, industrial and certain financial
services segments.”
Full Year 2020 Financial Summary:
- Cash and short-term investments totaled $274.6 million at
December 31, 2020, compared to $168.3 million at December 31,
2019.
- Debt, which represents the Senior Secured Notes issued to
Starboard, was $115.0 million at December 31, 2020.
- Book value totaled $292.5 million as of December 31, 2020,
compared to $175.0 million at December 31, 2019. Acacia’s current
book value reflects issuance of Senior Secured Notes and
liabilities associated with the funding of the life science
portfolio acquisition, and reflects the public and private values
based on U.S. GAAP of assets as of December 31, 2020.
- Gross revenues were $29.8 million.
- General and administrative expenses increased by 49.5% to $24.5
million, compared with $16.4 million last year due to business
development and personnel expenses, as we build out our capability
to identify, evaluate and execute acquisitions.
- Operating loss was $19.5 million.
- GAAP net income to common stockholders was $88.5 million, or
$1.54 per diluted share, compared to a net loss of $(20.4 million),
or $(0.40) per diluted share, last year.
Fourth Quarter 2020 Financial Summary:
- Gross revenues were $4.4 million.
- General and administrative expenses for the fourth quarter of
2020 increased by 47.6%, compared with the fourth quarter of 2019,
due to business development and personnel expenses.
- Operating loss was $6.4 million.
- GAAP net income to common stockholders was $65.4 million, or
$1.33 per diluted share, compared to a net loss of $(2.6 million),
or $(0.05) per diluted share, in the fourth quarter last year.
- The fourth quarter of 2020 reflected:
- A net non-cash benefit of $99.9 million related to the change
in the fair value of trading and investment securities; and
- Expense of $11.6 million related to the change in fair value of
warrants and embedded derivatives.
Book Value/Dilution
As of December 31, 2020, book value was $292.5 million and there
were 49.2 million diluted shares outstanding in the fourth quarter
of 2020, for a book value per share of $5.94.
Starboard Value holds the following securities:
- $35 million of Series A preferred stock, exercisable into 9.6
million shares of common stock (exercisable at $3.65 per
share);
- $115 million of Notes, exercisable into 31.5 million shares of
common stock through 31.5 million Series B warrants owned
(exercisable at $3.65 per share);
- 68.5 million additional Series B warrants exercisable into 68.5
million shares of common stock for $360 million in cash
(exercisable at $5.25 per share); and
- 5 million Series A warrants exercisable into 5 million shares
of common stock for $18.25 million (exercisable at $3.65 per
share)
Book value at December 31, 2020 reflects the impact of the
following:
- $115 million of Notes issued to Starboard Value;
- $35 million of Series A preferred stock to Starboard Value;
and
- $61.6 million of warrant and additional embedded derivative
liabilities associated with all preferred stock and warrants held
by Starboard Value, to be eliminated upon exercise or
expiration
Assuming Starboard Value converted all preferred stock and
exercised all warrants1:
- $115 million of Notes liability would be eliminated, and 31.5
million shares would be issued;
- $35 million of preferred stock would be eliminated, and 9.6
million shares would be issued;
- $61.6 million of warrant and embedded derivative liabilities
would be eliminated; and
- $378 million of cash would be added upon exercise of the
remaining Series B warrants and Series A warrants, and 73.5 million
shares would be issued
The impact of this would be an incremental $590 million in book
value, and an incremental 114.6 million shares outstanding. Pro
forma for all of this exercise, book value would be $882.5 million,
and diluted shares outstanding would be 163.8 million, for book
value per share of $5.39.
Investor Conference Call:
The Company will host a conference call today, Monday, March 29,
2021 at 11 a.m. ET/ 8 a.m. PT to discuss these results and provide
a business update.
To access the live call, please dial (877) 407-0778 (U.S. and
Canada) or (201) 689-8565 (international). The conference call will
also be simultaneously webcasted on the investor relations section
of the Company’s website at
https://acaciaresearch.com/actg/investor_relations/3413 under the
News & Events section. Following the conclusion of the live
call, a replay of the webcast will be available on the Company's
website for at least 30 days.
About Acacia Research Corporation
Acacia Research (NASDAQ: ACTG) seeks to acquire undervalued
businesses and pursues opportunities for value creation. We
leverage our (i) access to flexible capital that can be deployed
unconditionally, (ii) expertise in corporate governance and
operational restructuring, (iii) willingness to invest in out of
favor industries and businesses that suffer from a complexity
discount and untangle complex, multi-factor situations, and (iv)
expertise and relationships in certain sectors, to complete
strategic acquisitions of businesses, divisions, and/or assets with
a focus on mature technology, healthcare, industrial and certain
financial segments. We seek to identify opportunities where we
believe we are advantaged buyers, where we can avoid structured
sale processes and create the opportunity to purchase businesses,
divisions and/or assets of companies at an attractive price due to
our unique capabilities, relationships, or expertise, or where we
believe the target would be worth more to us than to other buyers.
Information about Acacia Research Corporation and its subsidiaries
is available at www.acaciaresearch.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995
This news release contains forward-looking statements within the
meaning of the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995. These statements are based upon our
current expectations and speak only as of the date hereof. Our
actual results may differ materially and adversely from those
expressed in any forward-looking statements as a result of various
factors and uncertainties, including the ability to successfully
implement our strategic plan, the ability to successfully identify
and complete strategic acquisitions of businesses, divisions,
and/or assets, the ability to successfully develop licensing
programs and attract new business, changes in demand for current
and future intellectual property rights, legislative, regulatory
and competitive developments addressing licensing and enforcement
of patents and/or intellectual property in general, general
economic conditions, including the impact of the COVID-19 pandemic
and the success of our investments. Our Annual Report on Form 10-K,
recent and forthcoming Quarterly Reports on Form 10-Q, recent
Current Reports on Form 8-K, and any amendments to the forgoing,
and other SEC filings discuss some of the important risk factors
that may affect our business, results of operations and financial
condition. We undertake no obligation to revise or update publicly
any forward-looking statements for any reason.
The results achieved in the most recent quarter are not
necessarily indicative of the results to be achieved by us in any
subsequent quarters, as it is currently anticipated that Acacia
Research Corporation’s financial results will vary, and may vary
significantly, from quarter to quarter. This variance is expected
to result from a number of factors, including risk factors
affecting our results of operations and financial condition
referenced above, and the particular structure of our licensing
transactions, which may impact the amount of inventor royalties and
contingent legal fees expenses we incur from period to period.
1 Consistent with the Company's NOL preservation policies, the
terms of the preferred stock and warrants prevent Starboard Value
from converting or exercising such security to the extent such
conversion or exercise would cause Starboard Value, together with
its affiliates, to beneficially own in excess of 4.89% of the
Company's then outstanding shares of common stock following such
conversion or exercise.
ACACIA RESEARCH
CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except share
and per share data)
Three Months Ended
Years Ended
December 31,
December 31,
2020
2019
2020
2019
Revenues
$
4,383
$
688
$
29,782
$
11,246
Portfolio operations: Inventor royalties
506
192
7,349
4,944
Contingent legal fees
564
4
7,419
591
Litigation and licensing expenses - patents
2,186
1,160
5,683
7,803
Amortization of patents
1,159
857
4,681
3,194
Other portfolio expenses (income)
-
1,581
(308
)
1,756
Total portfolio operations
4,415
3,794
24,824
18,288
Net portfolio income (loss)
(32
)
(3,106
)
4,958
(7,042
)
General and administrative expenses
6,387
4,328
24,476
16,376
Operating loss
(6,419
)
(7,434
)
(19,518
)
(23,418
)
Other income (expense): Change in fair value of investment,
net
1,770
277
5,474
9,899
Gain (loss) on sale of investment
10,949
(1,083
)
8,187
(9,230
)
Impairment of other investment
-
-
-
(8,195
)
Gain on disposal of other investment
-
-
-
2,000
Change in fair value of the Series A and B warrants and embedded
derivatives
(11,626
)
4,518
(58,238
)
4,518
Change in fair value of equity securities derivative and forward
contract
(17,542
)
-
-
-
Gain on sale of prepaid investment and derivative
247
-
2,845
-
Change in fair value of trading securities and equity securities
99,878
(277
)
176,173
(145
)
Gain (loss) on sale of trading securities
11,623
1,963
7,352
2,188
Gain (loss) on foreign currency exchange
(5,825
)
104
(4,905
)
(2
)
Interest expense on Senior Secured Notes
(2,745
)
-
(5,923
)
-
Interest income and other
27
419
838
3,432
Total other income (expense)
86,756
5,921
131,803
4,465
Income (loss) before income taxes
80,337
(1,513
)
112,285
(18,953
)
Income tax benefit (expense)
(98
)
2,147
1,159
1,824
Net income (loss) including noncontrolling interests in
subsidiaries
80,239
634
113,444
(17,129
)
Net loss attributable to
noncontrolling interests in subsidiaries
-
-
-
14
Net income (loss) attributable to
Acacia Research Corporation
$
80,239
$
634
$
113,444
$
(17,115
)
Net income (loss) attributable to
common stockholders - basic
$
65,180
$
327
$
90,330
$
(17,422
)
Basic net income (loss) per common share
$
1.34
$
0.01
$
1.85
$
(0.35
)
Weighted average number of shares outstanding - basic
48,508,903
49,875,750
48,840,829
49,764,002
Net income (loss) attributable to
common stockholders - diluted
$
65,352
$
(2,624
)
$
88,471
$
(20,373
)
Diluted net income (loss) per common share
$
1.33
$
(0.05
)
$
1.54
$
(0.40
)
Weighted average number of shares outstanding - diluted
49,244,141
54,406,835
57,435,128
50,896,773
ACACIA RESEARCH
CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
and per share data)
December 31,
December 31,
2020
2019
ASSETS
Current assets: Cash and cash equivalents
$
165,546
$
57,359
Trading securities - debt
-
93,843
Trading securities - equity
109,103
17,140
Investment securities - private equity
143,257
-
Investment securities - equity method investments
30,673
-
Investment at fair value
2,752
1,500
Accounts receivable
506
511
Prepaid expenses and other current assets
5,832
2,912
Total current assets
457,669
173,265
Long-term restricted cash
35,000
35,000
Patents, net of accumulated amortization
16,912
7,814
Leased right-of-use assets
951
1,264
Other non-current assets
4,988
818
Total assets
$
515,520
$
218,161
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable
$
1,019
$
1,765
Accrued expenses and other current liabilities
3,707
7,265
Accrued compensation
2,265
507
Royalties and contingent legal fees payable
2,162
2,178
Senior Secured Notes Payable - short-term
115,663
-
Total current liabilities
124,816
11,715
Series A warrant liabilities
6,640
3,568
Series A embedded derivative liabilities
26,728
17,974
Series B warrant liabilities
52,341
-
Long-term lease liabilities
951
1,264
Other long-term liabilities
591
593
Total liabilities
212,067
35,114
Commitments and contingencies Series A redeemable
convertible preferred stock, par value $0.001 per share; stated
value $100 per share; 350,000 shares authorized, issued and
outstanding as of December 31, 2020 and December 31, 2019,
respectively; aggregate liquidation preference of $35,000 as of
December 31, 2020 and December 31, 2019, respectively
10,924
8,089
Stockholders' equity: Preferred stock, par value $0.001 per
share; 10,000,000 shares authorized; no shares issued or
outstanding
-
-
Common stock, par value $0.001 per share; 300,000,000 shares
authorized; 49,279,453 and 50,370,987 shares issued and outstanding
as of December 31, 2020 and December 31, 2019, respectively
49
50
Treasury stock, at cost, 4,604,365 and 2,919,828 shares as of
December 31, 2020 and December 31, 2019, respectively
(43,270
)
(39,272
)
Additional paid-in capital
651,416
652,003
Accumulated deficit
(326,708
)
(439,656
)
Total Acacia Research Corporation stockholders' equity
281,487
173,125
Noncontrolling interests
11,042
1,833
Total stockholders' equity
292,529
174,958
Total liabilities, redeemable convertible preferred stock,
and stockholders' equity
$
515,520
$
218,161
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210329005217/en/
Investor Contact: Rob Fink FNK IR 646-809-4048
rob@fnkir.com
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