Greenbackd

Neurobiological Technologies Inc (NASDAQ:NTII) has filed its 10Q for the period ended march 31, 2009. After reviewing the 10Q, we have reduced our estimate of NTII’s liquidation value to $19.6M or $0.73 per share. NTII closed on Friday at $0.72, which is approximately our estimate of its value, and so we are taking the opportunity to exit. We opened the position on February 23, 2009 at $0.53, so we are up 35.9% on an absolute basis. The S&P500 Index was at 770.05 when we opened the position, and closed Friday at 929.23, which means we are up 15.2% on a relative basis.

We started following NTII (see our post archive here) because it was trading at a substantial discount to our estimate of its $21.9M or $0.81 per share liquidation value and Biotechnology Value Fund, Millennium Technology Value Partners and Highland Capital Management held approximately 45% of NTII’s outstanding stock (one stockholder estimated 65%) and were calling for its liquidation. NTII has now reached our reduced estimate of its liquidation value, so we are exiting the position.

The value proposition updated

NTII expects “cash, cash equivalents, short-term and long-term investments to total approximately $23 million at June 30, 2009,” which is up slightly from our estimate as at March 31, 2009. The summary of our estimate for the company’s liquidation value is set out below (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):

Conclusion

At its $0.72 close on Friday, NTII is trading at just under our estimate of its $0.73 per share liquidating value. While we believe that there may be slightly more value in NTII (for example, if it receives a portion of the net proceeds paid to Celtic Pharmaceuticals upon a sale of XERECEPT), we ‘re not certain of that value, so we’re taking the opportunity to exit now.

[Full Disclosure:  We do not have a holding in NTII. 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.]