Yesterday, the biotech company, Erytech Pharma (ERYP) announced the sale of its manufacturing facility in the U.S. Following the news, the stock surged up by a nice 37.70% as investors responded positively to the huge transaction. Closing the day at $1.68 a share, ERYP has fallen under corrections in today’s premarket on April 26, 2022.
At the last check, the stock had subtracted 8.33% and was trading at a price of $1.54 apiece, in the premarket.
ERYP’s Facility Sale
According to the press release, the company has agreed to sell its U.S. manufacturing facility to Catalent for a consideration of $44.5 million. Moreover, the roughly 40 employees of ERYP at the facility would be offered Catalent’s employment. The company’s state-of-the-art commercial-scale cell therapy manufacturing facility is situated in Princeton, New Jersey.
In addition, the companies also plan to enter into a long-term supply agreement. Under the agreement, Catalent will manufacture the company’s lead product candidate for clinical and commercial supply in the U.S. Furthermore, the company will also leverage Catalent’s expertise in late-stage and commercial manufacturing of products in regard to characterization, and commercial production, regulatory inspections, and approvals.
The company continues to retain its manufacturing facility in Lyon, France, and now plans to focus on developing transformative therapeutics for serious diseases.
Why the Bullishness on the Sale?
Investors were immensely bullish on ERYP due to the sale due to multiple reasons. Given the company’s market cap of $40.07 million at the time of writing, the $44.5 million in sales is a huge transaction for the company.
The company is still in its clinical stage, which means it needs cash for monetizing its product candidates. As per its 2021 year-end financials, the company only had a cash runway into the third quarter of 2022 with a year-end cash balance of $38.1 million. With the capital from this deal, the company now expects its cash balance to total $60 million. Therefore, the company had bought itself two years of runway to develop drugs with a cash runway extending into mid-2024 now.
Added to this, the company has also improved its success prospects with the long-term supply agreement.
Having bought itself two more years of runway, the company now plans to continue assessing further strategic options including partnerships and asset acquisition. Thus, with the right partnerships and capital resources to fund its R&D, the company is on track to succeed in the long term if it continues the current course.