Veru Inc. ( VERU ) shares jumped on Tuesday after the company disclosed the sale of its FC2 Female Condom (Internal Condom) business to clients managed by Riva Ridge Capital Management LP and co-investors for $18 million.

As a result of the FC2 business sale, Veru’s workforce will be reduced by approximately 90%, from 210 employees to 22.

After deducting the change of control premium to SWK Funding LLC under the company's Residual Royalty Agreement, along with customary transaction fees, Veru ( VERU ) expects net proceeds of about $12.5 million, subject to post-closing adjustments.

Upon payment of the change of control premium, the Royalty Agreement, dated March 5, 2018, will terminate, and its liabilities, totaling $9.9 million as of September 30, 2024, will be eliminated.

Mitchell Steiner, Chairman, President, and Chief Executive Officer, said, “The monetization of the FC2 business allows Veru ( VERU ) to be a pure biopharmaceutical company focusing its additional nondilutive resources on the execution and development of its promising late-stage clinical drug pipeline.”

“We are excited about the Company’s successful strategic evolution to the treatment of cardiometabolic diseases with a fully enrolled Phase 2b QUALITY clinical trial evaluating enobosarm to preserve muscle and augment fat loss for a higher quality weight loss in patients receiving WEGOVY, a GLP-1 receptor agonist. We are expecting topline clinical results for this study in January 2025.”

The company’s drug development program includes two late-stage novel small molecules, enobosarm and sabizabulin.

Sabizabulin, a microtubule disruptor, is being developed as a Phase 3 clinical trial for treating hospitalized patients with viral-induced ARDS. Meanwhile, the company does not intend to develop sabizabulin further to treat viral-induced ARDS until it obtains funding from government grants, partnerships, or external third-party sources.

As of June 30, 2024, VERU’s cash and equivalents stood at $29.2 million.

Price Action: VERU ( VERU ) shares are up 29% at $0.8201 at the last check Tuesday.

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