Quick Pitch: Assertio Holdings (ASRT)

CVR: upside TBD (at $18.01)

Not technically a free CVR, but it’s about as close as it gets. Assertio getting acquired by Garda Therapeutics for $18/share in cash (which is where the stock trades) plus a CVR that could pay over $0.50/share. Closing is expected around the end of May. You get all invested capital back in six weeks, while retaining upside optionality for an additional payout in the future. At current levels, the CVR costs $0.01/share.

Assertio Holdings is a company that acquires and harvests commercialized drugs, without conducting any R&D or development itself. Its portfolio consisted of seven products, with the main one being Rolvedon (60% of sales), a drug that accelerates immune system recovery after chemotherapy. This month, ASRT announced two transactions:

• A sale of all six non-Rolvedon drugs to Cosette Pharmaceuticals. The consideration included $35m upfront, plus product-level earnouts. The transaction has already closed, leaving Assertio as a single-asset company centered on Rolvedon.
• A sale of the remaining company to Garda Therapeutics for $18/share in cash plus a CVR. The transaction is expected to close by the end of May.

The stock currently trades at $18.01/share, so you are effectively paying just $0.01/share for the CVR.

The CVR is a bit complicated. It is tied solely to the earnout for Sprix, one of the six legacy drugs that were sold to Cosette. In simple terms, Cosette pays earnouts to Garda Therapeutics, and Garda pays the Sprix portion through to legacy ASRT holders via the CVR.

The CVR has 3 parts.

#1: Delivery Milestone. This is a one-time cash payment of $1.0m ($0.144/share) triggered by the successful delivery of a new batch of Sprix to Cosette’s warehouse, followed by quality inspection and approval by Cosette. The deadline is May 31, 2026.

This is a bit of an unusual milestone, but apparently it was introduced because over the last two years ASRT faced manufacturing quality issues and had to write off a lot of inventory. Management didn’t specify which drugs in particular faced these issues, but apparently most of the problems were related to Rolvedon. Cosette Pharmaceuticals is likely seeking protection around product quality. The incentive alignment on this part is definitely not ideal, and there are no more details available on that upcoming “quality approval” by Cosette.

#2: Gross Profit Milestone. CVR holders will be entitled to a payout equal to 8% of the gross profits generated by Sprix during the period from April 8, 2026 through December 31, 2027.

Sprix is a branded nasal spray used for the short-term treatment of moderate to severe pain (e.g. after surgery). Its exclusivity extends through 2029. Historically, sales have been relatively stable, though a slight downtrend can be seen in recent years:

Gross margins are not disclosed, but generic drugs typically run at or above 50% , while branded drugs at 70%. Assuming $7.5m run-rate sales in 2026 and $7m in 2027, a 65% gross margin, and applying the 8% payout ratio, this part of the CVR could be worth $0.65m, or $0.093/share. The CVR payout tied to gross profit generated from April 8 to September 30, 2026, will hit separately in early 2027. The remaining part will be paid early 2028.

#3: Sprix Net Sales Milestone. Shareholders will get $2.0m ($0.288/share) one-time payment if Sprix net sales exceed $7.0m during calendar year 2027. This is the key value driver of the CVR, and based on the historical sales, it seems to be quite achievable.

In total, the CVR could pay out around $0.525.

Garda is a private company with very little public information available. It looks like a fresh pharma roll-up, and ASRT is probably its first acquisition. They’ve already secured debt financing from Colbeck Capital (a credit lender with $3bn in invested capital), whereas the $17m in equity financing will come from Garda’s CEO and president, who previously ran Genoptics and sold for $125m. He also currently sits on the board of Xoma Royalty (which acquired several biopharmas over the last few years).

The $18/share cash consideration values ASRT’s equity at $125m. For that, Garda gets Rolvedon, which is a growing drug ($68m in revenue generated in 2025, guided to reach $100-$130m over the next few years), plus ~$100m in net cash.

The majority of shares tendered condition should pass easily. The offer comes at a substantial premium to the $9-$12 range where the stock was trading over the last year. Company insiders own 5.7%. The largest shareholder Nantahala Capital Management owns 10.7%, with a cost basis likely below the cash consideration. Shareholders are unlikely to risk rejecting this offer and leaving ASRT extremely sub-scale with only one drug.

The transaction is conditioned on Assertio having $115m in “closing net cash” at closing. The name is a bit misleading, because it includes cash and cash equivalents but explicitly excludes debt and transaction expenses. In other words, it’s just cash, not ‘net cash’.

d) “Closing Net Cash” means the sum of the cash and cash equivalents and marketable securities of the Company and its Subsidiaries as of the Acceptance Time, determined in accordance with GAAP, applied on a basis consistent with the Company’s application thereof in the Company’s consolidated financial statements; provided, that, without limiting the generality of the foregoing, Closing Net Cash shall not be reduced by (i) any amounts to be used to purchase Convertible Notes in connection with the Note Offer, or (ii) any amounts of cash used or to be used by the Company after the date hereof to pay fees and expenses of the type contemplated by Section 8.3(a) incurred in connection with this Agreement, the Offer, the Merger and the other transactions contemplated hereby.

If the company falls below this $115m threshold, Garda has the option to walk away or waive the condition. This condition seems to be put in place to stop Assertio from wasting cash and put all efforts to collect the receivables before closing. The threshold seems to be comfortably achievable.

Following the Cosette deal, ASRT’s pro-forma net cash stood at just $98m at year-end. However, the company is likely to receive (or most probably, has already received) $40-$50m cash inflow early this year, $60m of which is likely to come from normalization of one-off spike in receivables, off-set by smaller normalization in accrued rebates.

Regarding spike in receivables, ASRT has been transitioning to a new distribution partner for Rolvedon. To make the process smoother and ensure supply for end clients, in Q3’25 ASRT sold three quarters’ worth of Rolvedon to the wholesale channel. To push this volume, ASRT offered discounts and favorable working capital terms, extending wholesaler payment terms until around the end of Q1 2026. This dynamic led to somewhat messy financials in Q3 and Q4 2025, including a sharp increase in accounts receivable and elevated cash burn, driven by minimal sales of Rolvedon in Q4. Management expects working capital to normalize this month (April). By the time the takeover closes, the cash should be comfortably above the required threshold.

More background on ASRT’s assets, I recommend reading through this recent post by Everyone Hates Poetry Research.