In a significant corporate development, Veru (NASDAQ:VERU) Inc. has revised the forbearance and payment terms of its loan agreements with Onconetix, Inc., previously known as Blue Water Vaccines Inc. The amended agreement, filed on September 20, 2024, extends the forbearance period and modifies the payment structure for two promissory notes totaling $10 million.
The original forbearance agreement, dated April 24, 2024, was in response to Onconetix's default on a $5 million promissory note due April 19, 2024, and another $5 million note due September 30, 2024. These notes were connected to an Asset Purchase Agreement from April 19, 2023.
Under the new terms, the forbearance period for the April 2024 note will end on March 31, 2025, or upon the occurrence of an Event of Default, whichever is earlier. The due date for the September 2024 note has been extended to the earlier of June 30, 2025, or an Event of Default.
The Amended Forbearance Agreement requires Onconetix to increase its monthly payments from 15% to 25% of certain cash receipts starting October 20, 2024, and to allocate 20% of the net proceeds from specific transactions to the outstanding principal, up from the previous 10%. These changes take effect for proceeds received after September 19, 2024.
Furthermore, the September 2024 note will accrue interest at 10% per annum starting October 1, 2024. It can be settled in cash, common stock, or a combination, subject to mutual consent. If Onconetix repays all principal and interest on both notes in cash by December 31, 2024, the principal balance of the September 2024 note will be reduced from $5 million to $3.5 million.
In other recent news, Veru Inc. has been notified of potential delisting from Nasdaq due to non-compliance with the exchange's minimum bid price rule. The pharmaceutical company has been given until February 2025 to regain compliance. In a significant shift in its capital-raising strategies, Veru Inc. has also terminated its Open Market Sales Agreement with Jefferies LLC.
Another recent development includes the expansion of the company's Board of Directors with the appointment of Loren Mark Katzovitz. Jefferies has revised its price target for Veru from $1.20 to $1.00, maintaining a Hold rating, while Oppenheimer reduced its target from $7.00 to $5.00, maintaining an Outperform rating. Veru is currently conducting a Phase IIB clinical trial to evaluate enobosarm for obesity treatment, led by obesity expert Dr. Steven B. Heymsfield.
InvestingPro Insights
As Veru Inc. navigates its financial agreements with Onconetix, Inc., a glimpse into the company's financial health through InvestingPro data may provide context for investors monitoring the situation. With a market capitalization of $114.18 million and a negative P/E ratio indicating that the company is not currently profitable, Veru's financial standing is crucial to understanding the potential risks and rewards of the amended forbearance agreement.
InvestingPro Tips highlight that Veru holds more cash than debt, which could be reassuring for investors concerned about the company's ability to manage its loan agreements. However, it's also worth noting that analysts expect a sales decline in the current year and do not anticipate profitability for Veru within this timeframe. Additionally, the company's stock price has experienced a large uptick over the last six months, which may reflect investor sentiment or market dynamics beyond company fundamentals.
For those considering an investment in Veru, it is important to consider these factors alongside the company's strategic financial decisions. For more detailed analysis and additional InvestingPro Tips, investors can visit https://www.investing.com/pro/VERU, where over ten tips are available to provide further insights into Veru's market position and financial health.
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