Why Is ERYTECH Pharma (ERYP) Stock Up Today?

One of the biggest movers in the market today was ERYTECH Pharma (NASDAQ:ERYP), which gained more than 37% on news it sold off a manufacturing facility.

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So what else do you need to know? Today’s price action in ERYTECH Pharma is the direct result of a press release circulated this morning.

According to the press release, ERYTECH agreed to sell its U.S. manufacturing facility to Catalent (NYSE:CTLT) for $44.5 million. Given that ERYTECH’s market capitalization sits at around $52 million at the time of writing, this is certainly a large transaction. Additionally, ERYTECH and Catalent have entered into a long-term supply agreement.

Let’s dive into what this agreement means for investors taking a look at ERYTECH on this news.

ERYP Stock Surges on Big Announcement

This announced agreement is one that investors appear to be rightfully bullish on. ERYTECH is a clinical-stage biopharma company, and as such, needs cash to be able to monetize its product candidates. Reportedly, the company will have $60 million in cash and cash equivalents as a result of this deal, extending ERYTECH’s cash runway to mid-2024.

In other words, the company has bought itself two years of runway to develop its drugs, and reduced its capital expenditures significantly. From a balance sheet standpoint, there’s a reason why so many investors like this deal.

ERYTECH is a company with a promising pipeline of drugs. However, as an early stage player, the regulatory risk involved with such a company is often too much for many investors to handle. Accordingly, this long-term supply agreement could be bullish for investors looking for an early stage company with the right partnerships to succeed long term.

Personally, I think this deal is a good one for the company. That said, until significant traction is made from here, ERYP stock appears to remain highly speculative. Accordingly, this is a company I’ll happily watch from the sidelines right now.

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On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.


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