Northstar Neuroscience is told by a major shareholder to find a buyer for the company or liquidate its assets.

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Some shareholders are suggesting Northstar Neuroscience may be worth more dead than alive.

On Monday, a major Northstar stockholder urged the Seattle medical-device firm to sell itself or split its sizable cash hoard among shareholders.

In a letter, RA Capital Biotech Fund of Boston said it was “surprised” by the company’s rejection of a recent take-over offer from Tang Capital Partners, another major shareholder. RA Capital asked Northstar to maximize shareholder value by “reducing expenses and either finding a buyer or making a cash distribution.”

Northstar’s value plummeted after its lead therapy — which sought to stimulate the brain to improve motion in stroke survivors — failed in a clinical trial in January.

Now the company’s cash stash — $73 million as of March 31 — is bigger than its market capitalization of $49 million. In early July, San Francisco-based Tang Capital offered to buy the company in an offer that valued it at $58 million. Northstar rebuffed the offer, saying it was not in the best interest of all its shareholders.

In its Monday letter, RA Capital suggested that Northstar cease all its operations and lay off most of its employees in order to conserve cash while it finds a buyer. Northstar should resume discussions with Tang Capital, the letter said. If the company does not find a buyer, it could liquidate itself.

“This would clearly be in the best interest of the stockholders of the company in light of the prices at which the company’s stock has been trading since January 2008,” said the RA Capital letter.

RA Capital owns about 2.5 million Northstar shares, about 9.6 percent of the outstanding stock.

Ángel González: 206-515-5644 or agonzalez@seattletimes.com