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Oct. 14, 2019, 6:30 a.m. EDT

Cerecor To Sell Pediatric Portfolio to AYTU BioScience

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    Cerecor Inc. (CERC)

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ROCKVILLE, Md., Oct 14, 2019 (GLOBE NEWSWIRE via COMTEX) -- -Deal Valued in Excess of $32 Million

-Eliminates Debt Associated with Avadel / Deerfield Agreement

-Provides Non-Dilutive Cash Generation to Fund R&D

-Extends Runway Towards NDA Submission of CERC-801

Cerecor Inc. /zigman2/quotes/201368871/composite CERC -0.60% , a biopharmaceutical company focused on becoming a leader in development and commercialization of treatments for pediatric rare diseases and neurology, announced today that it has entered into an asset purchase agreement with AYTU BioScience, Inc. ("AYTU") to sell Cerecor's Pediatric Portfolio in a deal valued in excess of $32 million. The consideration includes a combination of cash and Aytu preferred stock totaling $17 million and the assumption of Cerecor's outstanding payment obligations payable to Deerfield CSF, LLC ("Deerfield Note") and certain other liabilities in excess of $15 million, providing non-dilutive cash generation for the Cerecor. The funds from the transaction extend the runway towards NDA submission of CERC-801 and its associated Priority Review Voucher (PRV).

Dr. Simon Pedder, Executive Chairman of the Board, 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."

Deal Components

-- Overall deal valued in excess of $43 million as a composite of $17 million in cash and preferred stock ($4.5 million in cash and 12.5 million in shares of Aytu convertible preferred stock), the assumption of the Deerfield note of $15M, the elimination of the existing royalty obligations coupled with various commercial accruals of $11 million

-- Cash will be paid, and the Shares will be issued upon closing; the Shares will convert to shares of Aytu common stock following Aytu shareholder approval

-- The Pediatric Portfolio includes the following five product lines: Aciphex(R) Sprinkle(TM), Cefaclor for Oral Suspension, Karbinal(R) ER, Flexichamber(TM), Poly-Vi-Flor(R) and Tri-Vi-Flor(TM)

-- Aytu will retain Cerecor's Pediatric commercial infrastructure and sales force, inclusive of hiring Matt Phillips, Cerecor's Chief Commercial Officer, as Aytu's Executive Vice President of Commercial Operations

-- Aytu will assume all obligations under the Deerfield Note, associated with the Pediatric Portfolio of products acquired from Avadel in 2018

-- Aytu will assume all contractual obligations under the existing license agreements and the assumption of certain liabilities associated with the Pediatric Portfolio

Benefits of the Transaction

-- Aligns with Cerecor's Pipeline Innovation Strategy: Cerecor's strategy is focused on advancing its clinical pipeline and compounds through development and to regulatory approval. We believe the $17 million in near-term value received as part of the transaction will allow the Company to fund its portfolio of development assets focusing on long term value drivers, which includes the near-term development of our CERC-800 series of assets and the advancement and expansion of the CERC-301 program.

-- Enables a Debt-Free Company: The transaction extinguishes the $15 million debt obligation with Deerfield CSF, LLC, which was due in January of 2021. Further, it extinguishes future financial obligations under the Company's license agreements associated with the Pediatric Portfolio, currently valued at approximately $9.6 million. We believe the extinguishment of these obligations allows the Company to continue to develop its pipeline assets.

-- Cost Savings from Reduction in Commercial Sales Organization: We estimate an approximate annual expense reduction of $7 to $9 million associated with the Pediatric commercial sales force and sales management transfer to Aytu. The retention of the customer-facing sales organization by Aytu should help to maintain consistency in the market and minimize customer and product disruption.

-- Optionality to Continue to Grow Sales of Most Profitable Product: The Company will retain all rights to Millipred(R), which is the Company's most profitable product. The cash inflows from Millipred(R) will assist the Company in funding its portfolio of pipeline assets and may provide future optionality towards monetization and further pipeline funding.

/zigman2/quotes/201368871/composite
US : U.S.: Nasdaq
$ 3.33
-0.02 -0.60%
Volume: 20,114
Nov. 13, 2019 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$147.76 million
Rev. per Employee
$286,356
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