Zealand Pharma A/S (NASDAQ: ZEAL) is having an incredibly strong start to the trading session this morning after the company announced that it would sell royalty streams and potential commercial milestone payments, generating substantial funding for the company’s fully-owned product pipeline. Of course, the news proved to excite investors, sending the stock climbing in the market. Today, we’ll talk about:
- The asset sale;
- what we’re seeing from ZEAL as a result; and
- what we’ll be watching for ahead
ZEAL Announces Asset Sale
As mentioned above, Zealand Pharma is climbing in the market this morning after announcing an asset sale. In a press release issued early this morning, the company said that it has entered into an agreement surrounding a transaction that immediately provides substantial value and secures funding for the development of the company’s wholly-owned pipeline.
In the release, ZEAL said that the agreement surrounds the sale of future royalty streams and potential commercial milestones amounting to $85 million for Soliqua® 100/33/ Suliqua® and Lyxumia®/Adlyxin® to Royalty Pharma. According to the terms of the agreement, the company will receive $205 million upon the closing of the transaction, which is expected to be completed before the end of the month. Also, the company said that it will redeem the outstanding royalty bond of $24.7 million, which will pay off all of the company’s debts, effectively making it debt free. Finally, the company said that it will remain eligible for a payment from Sanofi (SNY) of up to $15 million, which is expected to be rendered in the year 2020.
In a statement, Britt Meelby Jensen, President and CEO at ZEAL, had the following to offer:
We are grateful for the collaboration with Sanofi, which has been fundamental for our growth during the past 15 years. The sale of the future royalties allows us to accelerate our activities to take our own fully-owned product candidates all the way to market, in line with our long-term strategic objectives. These include two leading rare disease programs, glepaglutide for short bowel syndrome and dasiglucagon for congenital hyperinsulinism, each with a Phase 3 study planned to commence this month.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dive into the market is that it’s important to pay attention to the news. After all, the news moves the market. In the case of Zealand Pharma, the news proved to be positive. The company will not only get its hands on substantial funding for the development of its pipeline, it will be paying off all of its debts, setting it on a strong financial foundation. So, it comes as no surprise that excited investors are sending the stock screaming for the top. As is just about always the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (8:28), ZEAL is trading at $16.13 per share after a gain of $1.76 per share or 12.25% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to follow ZEAL. In particular, we’re interested in following the company’s continued development of its pipeline. Nonetheless, we’ll continue to keep a close eye on the news and bring it to you as it breaks!
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