CLVS - Clovis stock slumps amid Chapter 11 filing to sell FAP-2286 to Novartis for $50M upfront

Clovis Oncology ( NASDAQ: CLVS ) said the company and certain subsidiaries have voluntarily started a Chapter 11 proceeding in the U.S. Bankruptcy Court for the District of Delaware and will seek to sell their assets through a court supervised sales process.

In order to provide necessary funding during the  proceeding, Clovis has received a commitment of up to $75M in a multi-draw debtor-in-possession (DIP) financing facility.

The funds will help the company to meet its meet obligations to its employees, and customers throughout the Chapter 11 proceeding while executing on the sales process.

Clovis said that prior to the Chapter 11 filing, and subject to Bankruptcy Court approval, it entered into a "stalking horse"  agreement with Novartis Innovative Therapies, a unit of Novartis ( NYSE: NVS ) to acquire substantially all of the rights of the Clovis' pipeline candidate FAP-2286 for $50M upfront and up to an additional $333.75M upon the successful achievement of development and regulatory milestones and $297M in sales milestones.

The company added that the transaction is part of a sale process under the Bankruptcy Code and is subject to conditions, including allowing for submission of higher or otherwise better offers. The transaction is also subject to U.S. antitrust clerance.

Clovis added that it is also engaged in discussions with several interested parties for a potential sale of one or more of its other assets.

CLVS -9.59% to $0.18 premarket Dec. 12

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