Curis, Inc. (NASDAQ: CRIS) is rocketing early on in the trading session this morning, and for good reason. The company announced that it entered into an agreement to sell a portion of an asset for more than $135 million. Today, we’ll talk about:
- The asset sale;
- what we’re seeing from CRIS stock as a result; and
- what we’ll be watching for ahead.
CRIS Announces Asset Sale
As mentioned above, Curis is having an incredibly strong start to the trading session this mroning after the company announced an agreement to sell a portion of an asset. The announcement came via press release early this morning.
In the release, CRIS said that it has entered into an agreement with funds managed by Oberland Capital Management. The agreement surrounds a payment of up to $135.7 million in exchange for selling rights to a portion of royalty revenues on worldwide net sales of Erivedge.
According to the terms of the agreement, the company has already received a $65 million upfront cash payment. The company will also be eligible to receive up to an additional $70.7 million in milesonte payments if future net royalties exceed pre-defined annual and cumulative thresholds.
Oberland Capital will receive 100% of the first $13.2 million and 35% therafter of annual net royalties due to Curis from worldwide net sales of Erivedge. This agreement excludes a portion of non-US royalties retained by CRIS.
In a statement James Dentzer, President and CEO at CRIS, had the following to offer:
We are pleased to announce this agreement with Oberland Capital. We believe this structure provides Curis with substantial non-dilutive capital today, while retaining significant participation in the future upside potential of Erivedge. The proceeds of this transaction further strengthen our cash position as we fund our three lead therapeutic candidates to reach their near term development catalysts and beyond.
The above statement was followed up by Andrew Rubinstein, Managing Partner of Oberland Capital. Here’s what he had to say:
Erivedge is an attractive asset commercialized by a world-class marketer and we are pleased to partner with Curis as it advances its clinical pipeline. Acquiring a participation in Erivedge royalties reflects our strategy of investing in commercial stage or near-commercial stage biopharmaceutical products that address serious diseases or areas of high unmet medical need.
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. In the case of Curis, the news proved to be overwhelmingly positive.
After all, the sale of royalties will greatly bolster the company’s balance sheet. Ultimately, this improves value for the company in the short term, yet retains the majority of the long term value of the royalties from Erivedge.
As is just about always the case, our partners at Trade Ideas were the first to alert us to the gains. Currenty (9:48), CRIS is trading at $2.08 per share after a gain of $0.65 per share or 45.45% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on CRIS. In particular, we’re interested in following the story surrounding the company’s continued work to expand value for investors. Noentheless, we’ll keep a close eye on the news and bring it to you as it breaks!
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