Cycle Group Holdings Limited has entered into a definitive agreement to acquire Applied Therapeutics, Inc. (NASDAQ: APLT) through a tender offer that values each outstanding share of APLT at $0.088 in cash, plus a non‑transferable contingent value right (CVR) that could provide additional payments if certain milestones are met.
Under the agreement, Cycle will pay $0.088 per share in cash and grant a CVR that offers up to $0.10 for FDA approval of govorestat in a galactosemia indication, up to $0.10 for FDA approval in CMT‑SORD, and up to $0.20 if Applied achieves first worldwide net sales of $200 million in any four‑quarter period. CVR holders also share in a capped closing cash payment tied to Applied’s cash above $500,000, capped at $1.5 million. In addition, Cycle will provide an unsecured promissory note for up to $8.5 million to support Applied’s working‑capital needs.
Applied Therapeutics has been operating under significant financial pressure, with a high cash burn rate and doubts about its ability to continue as a going concern. The low cash price reflects the company’s distressed position and the limited upside that investors can expect from the CVR, which is contingent on regulatory approvals and commercial success that have historically proven difficult for the company’s lead candidate, govorestat.
Govorestat, the company’s lead drug candidate for classic galactosemia and CMT‑SORD, has faced regulatory challenges, including data verification issues and questions about the integrity of clinical trial data. The CVR milestones are therefore tied to a high‑risk pathway: FDA approval in two rare‑disease indications and a substantial commercial sales target. The structure of the CVR is designed to bridge the valuation gap caused by Applied’s financial distress while providing a potential upside if the drug succeeds.
Cycle Group, which focuses on rare‑disease therapeutics, sees strategic value in acquiring Applied’s pipeline and expertise. Interim CEO and CFO Les Funtleyder stated that Cycle has the resources and capabilities to advance govorestat toward market approval, emphasizing the potential to bring a life‑changing treatment to patients. The acquisition aligns with Cycle’s goal of expanding its portfolio in rare diseases.
Following the announcement, analysts highlighted concerns about Applied’s financial health and the execution risk associated with the CVR milestones. The market reaction has been cautious, reflecting the low upfront cash offer and the high uncertainty surrounding the company’s future regulatory and commercial prospects.
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