Assertio Therapeutics (ASRT) Stock Flies On Asset Sale

Assertio Therapeutics Inc ASRT Stock News

Assertio Therapeutics Inc (NASDAQ: ASRT) is running for the top in the premarket hours this morning, trading on gains of more than 60%. The gains come after the company made an announcement late yesterday, surrounding the sale of an asset. Here’s what’s going on:

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ASRT Stock Screams Upward On Asset Sale

In the release issued late yesterday, Assertio Therapeutics said that it has entered into a definitive agreement with Collegium Pharmaceuticals. Under the terms of the agreement Collegium will acquire the NUCYNTA franchise of products from the company. The company said that it expects the agreement to come to a close by Valentine’s Day.

As part of the agreement, ASRT will recieve a $375 million cash payment at closing, minus any royalties paid to ASRT in 2020. The company said that it will also receive payments relating to inventories and equipment associated with the franchise.

In the release, the company said that it intends to use the proceeds to retire its outstanding debt. In a statement, Arthur Higgins, President and CEO at ASRT, had the following to offer:

A key element of Assertio’s transformation over the last several years has been its focus on aggressive de-leveraging. We have done that successfully by consistently delivering strong bottom line performance and today we look to end that journey. With this transaction, our goal is to retire our outstanding debt and have approximately $50.0 million of cash on our balance sheet. We will use this new flexibility to pursue business development, strategic partnerships and investment opportunities with the goal of having our remaining business becoming cash flow and EBITDA positive by the end of the year.

We have enjoyed a great commercial partnership with Collegium and it became clear that they would be the ideal long-term home for the NUCYNTA® franchise, given their position as the leader in responsible pain management and the synergistic fit of the NUCYNTA® franchise in their portfolio.

At the end of the release, the company said that after discussions with West Therapeutic Development, it is no longer pursuing the development of cosyntropin. The two have determined that development is no longer feasible in a timely manner.

Why Investors Are Excited

Asset sales tend to cause stocks to move up, but they don’t always cause gains of more than 50%. So, what’s the deal here? Well, there are a couple of factors here that are exciting investors.

First and foremost, the asset sale will yield hundreds of millions of dollars. This puts the company in a position to really strengthen its balance sheet. In fact, as ASRT mentioned in the press release, it will be getting rid of its outstanding debt with these funds.

All in all, the transaction puts the company in a strong financial position.

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