Curis Inc. (NASDAQ: CRIS) shares made a massive gain to start out the week. The firm has announced that it entered into an agreement with funds managed by Oberland Capital Management for up to $135.7 million in exchange for selling rights to a portion of royalty revenues on worldwide net sales of Erivedge.
Under the terms of the agreement, Curis received $65.0 million in an upfront cash payment, plus it is entitled to receive up to an additional $70.7 million in milestone payments if future net royalties exceed predefined annual and cumulative thresholds.
Oberland Capital will receive 100% of the first $13.2 million and 35% thereafter of annual net royalties due to Curis from worldwide net sales of Erivedge, excluding a portion of non-U.S. royalties retained by Curis.
At the closing of the transaction, Curis used a portion of the sale proceeds to retire existing debt, with remaining proceeds of approximately $30 million, excluding closing costs and related transaction fees, to be used to fund its operations.
Some quick background: Erivedge is approved for use in patients with advanced basal cell carcinoma in the United States and over 60 foreign countries. It is also under regulatory review for commercialization in a number of additional territories.
James Dentzer, president and CEO of Curis, commented:
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.
Shares of Curis were last seen up about 50% at $2.15, in a 52-week range of $0.60 to $3.55. The consensus price target is $9.00.