Avenue Therapeutics Inc (NASDAQ: ATXI) is having a great start to the trading session in the pre-market hours this morning after the company announced that it has entered into an agreement. Under the terms of the agreement, the company will be acquired, generating an immediate return of value to shareholders. As you could imagine, the news is exciting investors. Today, we’ll talk about the asset sale, what we’re seeing from ATXI stock as a result, and what we’ll be watching for ahead.
ATXI Announces Acquisition
As mentioned above, Avenue Therapeutics is flying early on in the trading session this morning after the company announced that it has entered into definitive agreements to be acquired. The acquisition will take place in two phases.
Under the terms of the agreement for the first phase, InvaGen and/or its affiliates will acquire 33.3% of ATXI common stock through the issuance of new shares. This will take place at a value of $35 million or approximately $6.00 per share. As soon as the first phase is closed, InvaGen or its affiliates will appoint three new members to the company’s Board of Directors.
During the second phase of the agreement, either InvaGen or its affiliates will acquire the remaining shares of ATXI common stock. This will take place through a reverse triangle merger and Avenue will remain as the surviving entity. The second stage will include a payment of up to $180 million, which is expected to represent approximately $13.92 per share.
While the agreement has been approved by the boards of directors at InvaGen and Avenue Therapeutics, there are some closing conditions that need to be kept in mind here. As is usually the case, the transaction between the two company’s is subject to customary closing conditions, shareholder approval and regulatory approval. However, one of the closing conditions of the second stage of this transaction is a bit more in tuned.
For the transaction to close completely, ATXI will need to receive FDA Approval, meet labeling and scheduling conditions and IV Tramadol must be approved with the absense of any restrictions in effect from the FDA.
In a statement, Lucy Lu, M.D., President and CEO at ATXI, had the following to offer:
We are very pleased to partner with InvaGen to accelerate the Phase 3 clinical development and potential commercialization of IV Tramadol in the United States. IV Tramadol offers a novel mechanism of action among intravenous analgesics and could be an important new therapy that fills a significant gap in pain management. We believe that this transaction creates significant value for our shareholders and creates a path to maximize their return on investment.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news leads to moves. When it comes to Avenue Therapeutics, the news proved to be overwhelmingly positive. Should the company receive expected FDA approvals, the transaction will lead to an immediate return of value for all investors involved. So, it comes as no surprise to see that excited investors are pushing the stock on a run for the top. As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (9:11), ATXI is trading at $5.75 per share after a gain of $1.59 per share or 38.33% so far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to watch ATXI incredibly closely. In particular, we’re interested in seeing if the terms of this agreement are satisfied and the phases of the acquisition close. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!