aibioVeru closes $18.0 million sale of FC2 female condom business
Tickers VERU
Veru closed the sale of its FC2 female condom business on December 30, 2024 for $18.0 million in cash. After a $4.2 million change of control payment to SWK Funding and other fees, it estimates about $12.5 million in proceeds.
Key facts
- Company
- Veru Inc. (NASDAQ: VERU)
- News type
- Distress
- Primary source
- Veru Inc. 8-K (2025-01-03)
Veru Inc., a Wisconsin corporation based in Miami and listed on the Nasdaq Capital Market as VERU, reported in a Form 8-K filed on January 3, 2025 that it had completed the sale of substantially all assets of its FC2 female condom business. The buyer is Clear Future, Inc. The sellers were Veru and its wholly owned subsidiary The Female Health Company Limited. The agreement is dated December 30, 2024, and the transaction closed the same day.
The company issued a press release on December 31, 2024 announcing the closing. The 8-K attaches it as Exhibit 99.1.
What was sold and what the buyer took on
The purchase price is $18.0 million in cash, subject to adjustments. The adjustments include a customary working capital adjustment, based on whether certain working capital items at closing are above or below a target set in the agreement. The buyer acquired the stock of Veru's U.K. and Malaysian operating subsidiaries as part of the assets. It assumed only the liabilities relating to the FC2 business that the agreement specifies.
Each side agreed to indemnify the other for breaches of representations, warranties and covenants, subject to exceptions and limits. The filing does not describe Clear Future, its owners or how it financed the purchase. It also does not give the target working capital figure.
The royalty payment and the proceeds
The sale ended a royalty obligation. In connection with the closing, Veru made a $4.2 million change of control payment to SWK Funding LLC under a Residual Royalty Agreement dated March 5, 2018. The 8-K says the royalty agreement terminated on that payment, in line with its terms. The 8-K reports this under Item 1.02, Termination of a Material Definitive Agreement.
After that payment and other customary transaction fees, Veru estimates net proceeds of about $12.5 million, subject to adjustment under the agreement. The 8-K does not describe a use for the money.
What the company is left with
The company's annual report for the fiscal year ended September 30, 2024, filed on December 16, 2024, describes Veru as a late clinical stage biopharmaceutical company. Its two late-stage drug candidates are enobosarm, an oral selective androgen receptor modulator, and sabizabulin, a microtubule disruptor. Enobosarm is being developed to limit lean mass loss in older patients taking GLP-1 drugs, and for metastatic breast cancer only "subject to the availability of sufficient funding." The annual report says a Phase 2b QUALITY study is testing enobosarm 3mg, 6mg or placebo in approximately 168 randomized older patients.
Sabizabulin is being developed for hospitalized patients with viral-induced ARDS, but the company says it does not intend to pursue that indication until it obtains funding from government grants, pharmaceutical partners or other third-party sources. The company says it will need substantial capital for its drug development and commercialization efforts.
The annual report also says the company's sexual health program was meant to "help fund our clinical development efforts." The annual report names the FC2 condom as the company's FDA-approved commercial product. With that business sold, the report's stated funding approach no longer has the same product behind it, and the 8-K does not say what replaces that revenue.
What the filing leaves out
The 8-K does not describe the business's sales, margins or profitability, so readers cannot judge whether the $18.0 million price was high or low for the business. It does not state whether the company still has any sexual health revenue after the sale, and it does not give a current cash balance or runway.
The 8-K attaches unaudited pro forma financial statements as Exhibit 99.2, covering the balance sheet at September 30, 2024 and the statements of operations for fiscal 2024 and 2023. The body of the 8-K does not state those figures, so the effect of the sale on the company's finances is not given in the filing text.