Veru Inc. Takes a Major Leap Forward with $18 Million Sale of FC2 Condom Business
In a significant move, Veru Inc. (NASDAQ:VERU) has announced the sale of its FC2 Female Condom (Internal Condom) business to clients managed by Riva Ridge Capital Management LP and co-investors for a substantial $18 million. This strategic decision is expected to have a profound impact on the company’s operations, with its workforce set to be reduced by approximately 90%, from 210 employees to 22.
A New Era for Veru: Focus on Biopharmaceuticals
The sale of the FC2 business marks a significant shift in Veru’s focus towards becoming a pure biopharmaceutical company. The company’s Chairman, President, and CEO, Mitchell Steiner, expressed his enthusiasm about this new chapter, stating, “The monetization of the FC2 business allows Veru to concentrate its additional nondilutive resources on the execution and development of its promising late-stage clinical drug pipeline.”
Late-Stage Clinical Trials Show Promise
Veru’s drug development program boasts two late-stage novel small molecules, enobosarm and sabizabulin. Enobosarm is currently being evaluated in a fully enrolled Phase 2b QUALITY clinical trial, which aims to preserve muscle and augment fat loss for a higher quality weight loss in patients receiving WEGOVY, a GLP-1 receptor agonist. Topline clinical results for this study are expected in January 2025. Meanwhile, sabizabulin, a microtubule disruptor, is being developed as a Phase 3 clinical trial for treating hospitalized patients with viral-induced ARDS.
Financial Outlook
As of June 30, 2024, Veru’s cash and equivalents stood at $29.2 million. The company expects net proceeds of about $12.5 million from the sale of the FC2 business, subject to post-closing adjustments. Upon payment of the change of control premium, the Royalty Agreement will terminate, and its liabilities, totaling $9.9 million as of September 30, 2024, will be eliminated.
Market Reaction
Veru’s shares have responded positively to the news, surging 29% to $0.8201 at the last check on Tuesday. This significant increase reflects the market’s confidence in the company’s strategic decision to focus on its biopharmaceutical pipeline.
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