Greenbackd

CuraGen Corporation (NASDAQ:CRGN) has filed its 10K for the fiscal year ended December 31, 2008.

We’ve been following CRGN since January 20, 2009 (see our post archive here) because it is a net cash stock with an investor, DellaCamera Capital Management, pushing the company to seek “alternative deployment of [its] capital.” DellaCamera Capital Management has since increased its stake from 5.6% to 6.5% and nominated two candidates to the board. The stock is up 33% from $0.67 when we started following it to $0.89 yesterday, giving CRGN a market capitalization of around $50.8M. We initially estimated CRGN’s net cash value to be around $62M or $1.07 per share. After reviewing the filing, we’ve slightly decreased our valuation to $59.9M or $1.05 per share, which means CRGN is still trading at around 85% of its liquidation value.

The value proposition updated

The company is not generating any operating cash flow as it is a “biopharmaceutical development company,” so the challenge for DellaCamera Capital Management is to persuade the company to pay a special dividend or liquidate before it dissipates its remaining cash. CRGN’s value still lies in its $64.9M net cash position (the “Book Value” column shows the assets as they are carried in the financial statements, and the “Liquidating Value” column shows our estimate of the value of the assets in a liquidation):

CRGN’s $87.6M in cash and cash equivalents consists of $19.1M in cash and equivalents, $30.3M in short-term investments and $38.2M in marketable securities.

Off-balance sheet arrangements and Contractual obligations

According to CRGN’s 10K, the company does not have any off-balance sheet arrangements. Its enforceable and legally binding obligations, along with future commitments related to all contracts that it is likely to continue, regardless of the fact that they are “cancelable as of December 31, 2008,” excluding those captured in the financial statements, are around $5.0M through 2011.

Deducting the $5.0M from the $64.9M in net assets leaves around $59.9M in liquidation value or $1.05 per share.

Conclusion

We are reasonably comfortable with the progress of CRGN and will continue to hold it in the Greenbackd Portfolio.

[Full Disclosure:  We do not have a holding in CRGN. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only. Do your own research before investing in any security.]