CTIC Stock: Over 5% Increase Pre-Market Explanation

By Amit Chowdhry ● Aug 25, 2021
  • The stock price of CTI BioPharma Corp. (Nasdaq: CTIC) increased by over 5% pre-market. This is why it happened.

The stock price of CTI BioPharma Corp. (Nasdaq: CTIC) increased by over 5% pre-market. Investors appear to be responding positively to CTI BioPharma and DRI Healthcare Trust (TSX: DHT.UN) (TSX: DHT.U) (DRI) announcing transactions totaling up to $135 million in funding for CTI, with $50 million in secured debt to be funded at closing and $60 million to purchase a tiered royalty on sales of pacrinitib upon product approval of pacrinitib by the U.S. Food and Drug Administration (FDA). 

The proceeds from the deals will be used by CTI to fund the commercialization of pacritinib for the treatment of myelofibrosis patients with severe thrombocytopenia. And CTI has a New Drug Application (NDA) under priority review by FDA with a Prescription Drug User Fee Act (PDUFA) target action date of November 30, 2021, and is preparing for a potential commercial launch by end of the year.

About The Deals

DRI Healthcare is going to provide a $50 million credit facility at closing. And the credit facility bears interest at LIBOR + 8.25% (with a LIBOR floor of 1.75%) and is interest-only for the loan term of 5 years, with the outstanding principal due at maturity. The company will be subject to one financial covenant — which is maintaining minimum liquidity of at least $10 million during the term of the loan.

DRI Healthcare is also going to provide CTI with $60 million upon receiving accelerated approval of pactritinib and will receive royalties on annual pacrinitib net sales in the United States of 9.6% for the first $125 million of annual U.S. net sales, 4.5% between $125 million, and $175 million of annual U.S. net sales, 0.5% between $175 million and $400 million of annual U.S. net sales, with no entitlement above $400 million of annual U.S. net sales. And CTI will be entitled up to an additional $25 million on achievement of certain sales milestones.

KEY QUOTES:

“CTI is in a strong position to deliver a meaningful new treatment option for patients with myelofibrosis with thrombocytopenia who are in urgent need of new therapies. If we achieve our sales goals in the first two years of launch, we anticipate that this transaction will put us on a clear path to profitability. We thank DRI for their support of CTI and for their partnership during the launch and commercialization of pacritinib.”

— Adam Craig, M.D., Ph.D., President and Chief Executive Officer of CTI Biopharma

“We are excited to announce DRI’s partnership with CTI. Pacritinib is a great addition to our portfolio as a new therapy that addresses a high unmet medical need for patients with myelofibrosis with severe thrombocytopenia.”

“This transaction highlights our ability to offer flexible deal structures that provide DRI with excellent assets and strong cash flow, while providing for the objectives of our partners such as CTI.” 

— Behzad Khosrowshahi, Chief Executive Officer of DRI Healthcare Trust

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.