180 Degree Capital Corp. Provides Updates on Potential $6.8 Million Petra Milestone Payment and Other Business Developments

Rhea-AI Summary

180 Degree Capital Corp. (NASDAQ:TURN) announced updates on potential milestone payments from the acquisition of Petra Pharma Corporation by Eli Lilly, totaling $6.8 million. This payment, if received, could increase cash per share by 9%. Lilly anticipates starting human studies in 2022, with additional payments possible in 2023. Despite market declines, 180 expects its net asset value (NAV) to increase in Q4 2021, surpassing $78.7 million. CEO Kevin Rendino noted that the company has outperformed in volatile markets and remains optimistic about future opportunities.

Positive

• Potential $6.8 million milestone payment from Lilly could enhance cash per share by 9%.
• Expected increase in net asset value (NAV) per share in Q4 2021, despite market downturns.
• Possibility of additional milestone payments from Petra, up to $80 million.

Negative

• Uncertainty regarding the timing of milestone payment from Lilly.
• Market volatility and a 25% decline in the Russell Microcap Index affecting sentiment.

MONTCLAIR, N.J., Jan. 27, 2022 (GLOBE NEWSWIRE) -- With a view towards providing additional transparency with respect to developments relating to its legacy private portfolio, 180 Degree Capital Corp. (NASDAQ:TURN) (“180”) today provided an update on the potential timing of a $6.8 million milestone payment from the acquisition of Petra Pharma Corporation (“Petra”) by Eli Lilly and Company (“Lilly”). In a presentation to investors in December 2021, Lilly noted that it expected to start human studies of the mutant-selective PI3Kα inhibitor developed by Petra in the first half of 2022. Although 180 cannot assure our investors when such an event may occur, if at all, such an event would trigger a contractual payment to former Petra shareholders, including 180. The $6.8 million payment, if received, would increase cash per share by $0.66, or 9% of our closing price on January 26, 2022. Lilly also noted in its Q3 2021 Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission that a subsequent milestone payment could be due in 2023 upon achieving clinical proof of concept from this program. Should that milestone be achieved, 180 would receive an additional approximately $5.5 million.

“We are encouraged by the presentation from Lilly that our former holding of Petra could yield a material amount of cash to 180 in the near term,” said Daniel Wolfe, President of 180. “While the exact timing of achievement of the milestone Lilly discusses in its presentation remains uncertain, and there is always risk that it might not ultimately be achieved, Lilly’s comments make us cautiously optimistic that we will ultimately receive this first milestone payment. Should this payment be received, it would open the door to additional contractual milestone payments of up to $80 million, to the extent Petra’s technology achieves these further milestones in the future.”

“Given the 25% decline in The Russell Microcap Index from its high less than three months ago and the overall sell-off in the markets broadly, I feel compelled to offer our shareholders some perspective of how 180 has been faring, and to provide additional transparency on certain developments within our portfolio,” said Kevin Rendino, Chief Executive Officer of 180. “It is important to acknowledge that we have yet to finalize our year-end financial statements and we will have complete data when we report our year-end results in about a month. While it is not common for us to provide insight into our performance outside of our normal reporting cycle, we did so once when the pandemic started in 2020, and we will do it again with the following thoughts. First and foremost, we currently expect to report that our net asset value per share ('NAV') increased in Q4 2021 from our Q3 2021 NAV of $10.37 despite a decline in the Russell Microcap Index. This was due to the persistent out-performance from our public market investment strategy. As such, we currently expect that our cash plus securities of public and related companies, including carried interest from our separately managed account and net of year-end bonuses (our 'Public Focused Assets') increased in Q4 2021 from the prior quarter. These results include approximately $2 million in carried interest generated from our performance in our SMA. We expect that our year-end Public Focused Assets before bonuses set a new record in the history of 180 by eclipsing the $78.7 million reported at the end of Q2 2021. If you add the potential Petra milestone payment of $0.66 per share to our end-of-year Public Focused Assets, our pro forma Public Focused Assets would be over $8.00. Of course, this amount does not take into consideration any future potential milestone payments tied to our Petra investment, which we presently believe have the potential to generate material cash flows from the achievement of milestones in future periods, nor our securities of AgBiome, D-Wave Systems, TARA, and our remaining legacy private holdings.”

“Year to date, the Russell Microcap Index has sold off 12% as of the close of the market on January 26, 2022,” continued Mr. Wolfe. “Against that backdrop, 180’s gross total return on its Public Focused Assets has started off the year down 8% over the same period. Over the course of our history, we have been fortunate to outperform in up markets and outperform in down markets. As always, we will be both aggressive and circumspect, depending on the opportunities that arise and the backdrop of the market. The markets are fluid and will change, but we believe this weakness is creating exciting opportunities for investment in 2022. We are not surprised with the early sell off in January given the strength of 2021 and the concerns for Fed tightening. We are excited to share the Petra news, and if and when we receive the first milestone payment, we believe that will go a long way towards remaking our balance sheet and closing the gap between our share price and NAV. We are also pleased we grew our NAV in Q4 2021 amidst declining markets. We will have our 2021 audited results to share with you in late-February 2022, but we wanted to share some insight that we believe shows the success in remaking our balance sheet and the strength of our investment process against the backdrop of the volatile public markets.”

About 180 Degree Capital Corp.

180 Degree Capital Corp. is a publicly traded registered closed-end fund focused on investing in and providing value-added assistance through constructive activism to what we believe are substantially undervalued small, publicly traded companies that have potential for significant turnarounds. Our goal is that the result of our constructive activism leads to a reversal in direction for the share price of these investee companies, i.e., a 180-degree turn. Detailed information about 180 and its holdings can be found on its website at www.180degreecapital.com.

Press Contact:
Daniel B. Wolfe
180 Degree Capital Corp.
973-746-4500
ir@180degreecapital.com

Forward-Looking Statements

This press release may contain statements of a forward-looking nature relating to future events. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. These statements reflect the Company's current beliefs, and a number of important factors could cause actual results to differ materially from those expressed in this press release. Please see the Company's securities filings filed with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties associated with the Company's business and other significant factors that could affect the Company's actual results. Except as otherwise required by Federal securities laws, the Company undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties. The reference and link to the website www.180degreecapital.com has been provided as a convenience, and the information contained on such website is not incorporated by reference into this press release. 180 is not responsible for the contents of third-party websites.

FAQ

What is the potential milestone payment from Lilly to 180 Degree Capital Corp.?

The potential milestone payment is $6.8 million, which could increase cash per share by 9%.

When does 180 Degree Capital Corp. expect to report its year-end financial results?

180 Degree Capital Corp. plans to report its year-end financial results in late February 2022.

How is 180 Degree Capital Corp.'s net asset value (NAV) expected to change?

The company expects its NAV to increase in Q4 2021, surpassing the $78.7 million reported at the end of Q2 2021.

What are the future milestone payments that 180 Degree Capital Corp. could receive?

If clinical proof of concept is achieved, 180 could receive an additional payment of approximately $5.5 million.

How has the market affected 180 Degree Capital Corp.'s performance?

Despite the overall sell-off in the markets, 180's gross total return on its public focused assets is down 8% year-to-date.