Earlier today, Citius Pharmaceuticals issued a press release announcing its intention to spin-off its late stage oncology candidate, I/ONTAK, to a new, standalone publicly-traded company. In making the announcement, the company said that it believed that the market has not adequately valued the potential of its I/ONTAK licensing agreement.
The announcement did not include any details about how the spin-off will be accomplished. It is not clear who will manage the spin-off. The press release also did not identify the financial advisor who will steer the company through the process.
Since Citius itself is an early stage pharmaceuticals development company, a key question is whether I/ONTAK will be launched with sufficient cash resources to complete its development, marketing and commercialization activities. Citius has indicated that its cash resources are sufficient to fund its operations only until early 2023. By that time, the company was probably looking at raising additional capital anyway to continue the development of its pipeline, including Mino-Lok and I/ONTAK. Presumably then, if the spin-off does take shape, it will be completed in conjunction with a capital raise to ensure that both companies have the resources to continue to follow through on their development opportunities.
These are important details that must be addressed before the company completes this effort. Presumably, Citius will disclose these details over time, should it decide to proceed with the spin-off.
May 25, 2022
Stephen P. Percoco
Lark Research
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