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Cerecor Shares Rise 13% on Sale of Pediatric Portfolio for $32 Million

Streetwise Reports, Streetwise Reports
0 Comments| October 16, 2019

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Shares of Cerecor Inc. are trading higher today after reporting that it will sell its pediatric portfolio to Aytu BioScience for $32 million in a combination cash and stock deal.


Biopharmaceutical company Cerecor Inc. (CERC:NASDAQ), which focuses on development and commercialization of treatments for pediatric rare diseases and neurology, announced that it has entered into an asset purchase agreement with Aytu BioScience Inc. (AYTU:NASDAQ) to sell Cerecor's Pediatric Portfolio in a deal valued in excess of $32 million. In the report Cerecor advises, however, that the overall deal is actually valued in excess of $43 million. The firm indicates that the deal includes a composite of $17 million, which includes $4.5 million in cash and $12.5 million in Aytu convertible preferred stock shares, the assumption of the Deerfield CSF LLC note by Aytu in the amount of $15 million, and the elimination of the existing royalty obligations coupled with various commercial accruals of $11 million.

The company indicated that the Pediatric Portfolio being sold includes the following five product lines: Aciphex Sprinkle, Cefaclor for Oral Suspension, Karbinal ER, Flexichamber, Poly-Vi-Flor and Tria-Vi-Flor.

Cerecor advises that the sale of the unit aligns with its pipeline innovation strategy, enables a debt-free company, adds cost savings from a reduction in commercial sales organization and provides the option to grow sales of its most profitable product, "Millipred." The company also notes the funds from the transaction will extend the runway toward NDA submission of CERC-801 and its associated Priority Review Voucher (PRV).

Cerecor's Executive Chairman Dr. Simon Pedder commented, "We believe this a positive deal for both the business and our shareholders. In totality, it improves our cash position, and removes our debt obligations. It allows the organization to focus on, and invest in, our fast-to-market pipeline in rare orphan diseases with the CERC-800s series. It also accelerates our build toward the launch of CERC-801 which will deliver the first approved product for Congenital Disorders of Glycosylation. Currently there are no FDA approved treatments for this underserved patient population. Lastly, it enables us to further CERC-301 into the clinic in both Diabetic Orthostatic Hypotension and Intradialytic Hypotension, two therapeutic areas with significant market size and unmet medical need."

Joseph Miller, Cerecor's CFO, added, "This deal, coupled with the income generation from Millipred, significantly extends our financial runway. The combination allows us to aggressively develop our rare disease pipeline over the next 18 months, when we expect our first FDA approval. The CERC-800s are three late-stage assets targeted to launch in 2021 and 2022 for the treatment of the orphan rare disease referred to as Congenital Disorders of Glycosylation. We believe the approvals will allow the Company to launch its highly profitable rare disease products, while maintaining optionality around the granted Priority Review Vouchers ("PRV") that accompany each of the three rare disease assets currently under development. Each PRV may be sold or transferred an unlimited number of times and have recently been monetized for values between $85 and $110 million."

The firm indicated that leading up to the close of the transaction it was on track to achieve its 2019 revenue guidance, but due to the transaction it will no longer be providing revenue guidance.

Cerecor is based in Rockville, Md., and describes itself as a fully integrated biopharmaceutical company with a robust pipeline of innovative therapies in orphan diseases and neurology. The company's pediatric rare disease pipeline is led by CERC-801, CERC-802 and CERC-803 programs, which are therapies for inborn errors of metabolism, specifically disorders known as Congenital Disorders of Glycosylation. The company advised that the FDA granted Rare Pediatric Disease Designation and Orphan Drug Designation to all three CERC-800 compounds, thus qualifying the company to receive a Priority Review Voucher upon approval of a New Drug Application.

Cerecor has a market capitalization of about $133.9 million with approximately 42.91 million shares outstanding. CERC shares opened today at $3.20 (+0.08, +2.56%) over Friday's $3.12 closing price. The stock has traded today between $3.20 and $3.69/share and currently is trading at $3.53 (+$0.41, +13.14%).

1) Stephen Hytha compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
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