Arix Bioscience (ARIX) has been criticised by Peel Hunt, one of its two corporate brokers, for its decision this week to sell its assets to RTW Biotech Opportunities (RTW ) and wind up.

Downgrading the life sciences fund from ‘buy’ to ‘hold’, Peel Hunt analyst Miles Dixon criticised the company for recommending a deal that will see its largest shareholder Acacia Research receive cash while other shareholders are left with illiquid and highly-discounted shares in RTW.

‘Somehow Acacia Research has co-opted RTW to help it “crack the Arix safe”,’ Dixon said as he picked apart the proposal which will see the US fund manager, which is backed by activist hedge fund Starboard Value, receive £47.2m in Arix’s cash for its 25.5% stake.

While in theory this represents the same 143p per share that other Arix investors will get, in practice their stakes are being bought with 141m RTW shares that, due to the bear market conditions in biotechnology, trail at a 28% discount to net asset value and are hard to sell, making it difficult to extract their money.

Dixon estimated it would take three-and-a-half years for Arix investors to sell their RTW stakes based on the last 12 months’ trading volumes in the London-listed rival.

‘Surely an orderly winding up could have been done faster and been fairer to all shareholders,’ he said in a note predicting that investors would block the deal when it is voted on early next year and that RTW would end up as Arix’s external fund manager.

‘[We wonder] what alternatives Arix’s board was driven to consider to see this deal as the “best outcome”,’ Dixon wrote. ‘Regardless of what happens from here, the only certainty we see is that Acacia has its cash.’

The proposed transaction will see non-Acacia investors get 1.4663 RTW shares for each share they hold. Based on Tuesday’s closing price this offered them 143p per share, a 46% premium to their closing price on 12 July, the day before the company announced it was undertaking a strategic review, but a 21% discount below the September net asset value (NAV) of 180p per share. However, RTW shares fell 3% yesterday, diminishing the value.

RTW gains access to Arix’s remaining $60m (£49.2m) of cash which it can invest in depressed biotech shares, a £56m listed portfolio and £68m in unlisted assets.

Dixon said it was paying $146m in illiquid equity for $213m in value, a discount of 31.5%. If it took the cash and sold the listed equities, it would gain Arix’s unlisted portfolio for just 30 cents on the dollar.

AIM-listed Arix’s largest shareholders after Acacia include Shanghai-based investment firm Fosun International Holdings – which is led by billionaire Guo Guangchang and is owner of Wolverhampton Wanderers Football Club – French pharmaceutical company Ipsen Pharma, and fund manager Ruffer, with respective stakes of 8.7%, 5.2% and 5%, according to Refinitiv.

On Wednesday, RTW Investments managing director Woody Stileman said that among the key assets RTW will acquire are larger positions in private UK cancer treatment specialist Artios and Arix’s largest listed position, Disc Medicine, a US company that develops novel treatments for patients suffering from serious haematological diseases.