News Release
Spin-Offs: Potential Catalysts for Big Gains
OSTX MMM K GE
Spin-offs can be powerful catalysts for unlocking shareholder value by transforming distinct business units into standalone entities. This separation often creates growth opportunities and attracts investor interest, potentially leading to significant price gains and the allure of stock dividends. Let’s explore recent examples of completed spin-offs, examine how they have shaped the market, and highlight a potential opportunity to keep an eye on. OS Therapies, Inc. (NYSE-A: OSTX), a clinical-stage biotechnology company focused on innovative cancer treatments, recently announced a strategic move that could significantly enhance shareholder value: the formation of its subsidiary, OS Drug Conjugates (OSDC), and plans to spin off joint ventures (JVs) into standalone public companies. This initiative, coupled with the potential for stock dividends, has, in some cases, driven increased investor interest and share price appreciation, making OSTX a compelling opportunity. On February 20, 2025, OS Therapies unveiled its plan to spin off its next-generation tunable Antibody Drug Conjugate (tADC) and tunable Drug Conjugate (tDC) platforms into standalone entities through JVs with clinical-stage ADC therapeutics companies. These platforms, which use proprietary silicon-based linkers (SiLinkers™) to deliver targeted cancer therapies, are part of a rapidly growing market projected to reach $47 billion by 2029. The company intends to distribute stock dividends of these public JVs to shareholders, a move that could unlock hidden value and provide investors with direct exposure to high-growth segments. Spin-offs often create value by allowing investors to more clearly evaluate the worth of distinct business units. In OS Therapies’ case, the tADC and tDC platforms represent cutting-edge technology with significant potential in oncology. By spinning off these assets into standalone entities, OS Therapies could attract specialized investors and partnerships, further accelerating development and commercialization. Additionally, the spin-off dividend structure provides shareholders with tangible returns, enhancing the appeal of OSTX as an investment. While the spin-off is a key catalyst, OS Therapies’ core value driver remains its lead asset, OST-HER2, an immunotherapy targeting HER2-positive cancers. The company recently reported positive Phase 2b trial results for OST-HER2 in recurrent osteosarcoma, achieving its primary endpoint with statistical significance. The data showed: 33% of OST-HER2 patients were responders vs. 11% in the matched historical control group. 91% survival rate at 12 months vs. 80% in the control group. A strong safety profile supporting regulatory approval. OS Therapies is preparing to submit a Biologics Licensing Application (BLA) to the FDA in 2025, with potential approval by late 2025. If approved, OST-HER2 would be the first new treatment for osteosarcoma in over 40 years, addressing a $500 million market opportunity. The company also stands to receive a Priority Review Voucher (PRV), which it could sell for an estimated $150 million, providing non-dilutive capital to fund further development. OS Therapies is well-capitalized, with a $13.1 million cash position following a recent financing round. The company has also acquired new clinical assets to expand its pipeline, further solidifying its position in the oncology space. With a strong financial position, innovative technology platforms, and a clear path to market, OSTX presents a unique investment opportunity in the rapidly growing oncology sector. General Electric (NYSE: GE), a storied industrial conglomerate, made headlines on April 2, 2024, when it completed the tax-free spin-off of its power business into GE Vernova (GEV). Investors received 1 share of GEV for every 4 shares of GE owned, a move that has since proven to be a significant value driver for shareholders. Since the spin-off, GEV has performed remarkably well, opening at $142.85, briefly selling off, and then rallying to trade above $160 per share. With a market cap of $47 billion and an enterprise value of $41 billion, GE Vernova is now a standalone leader in the global energy sector. The spin-off allowed the market to focus on the growth potential of GE Vernova’s three core segments: Power (55% of revenue), Wind (22% of revenue), and Electrification (23% of revenue). The Electrification segment, in particular, has emerged as a standout, with a growing backlog and expanding margins driven by volume and price increases. This segment is expected to deliver strong revenue growth and continued margin expansion beyond 2024, supported by operational improvements and increasing demand for grid solutions. The Wind segment, while showing improvement in 2024, faces challenges such as lower equipment orders and EBITDA losses in Offshore Winds. Meanwhile, the Power segment remains resilient but may struggle to match the growth trajectory of Electrification. Despite these mixed dynamics, GE Vernova’s diversified portfolio positions it well to capitalize on the global energy transition. GE Vernova’s mission—embedded in its name—reflects its commitment to innovation and sustainability. The “GE” legacy signifies quality and ingenuity, while “Vernova” (from “verde” and “nova”) underscores its focus on a new era of lower-carbon energy. The company is uniquely positioned to benefit from the increasing demand for power generation and grid electrification, particularly in the U.S., where infrastructure investments are accelerating. Management expects GE Vernova to generate $36 billion in revenue in 2025, with $1.5 billion in free cash flow. These projections highlight the company’s strong financial foundation and its ability to deliver value to shareholders. Since its debut, GE Vernova has defied initial skepticism, rallying above $160 per share after opening at $142.85. This performance underscores the market’s confidence in the spin-off’s potential to create value. Historically, spin-offs like GEV have driven aggressive price gains as investors gain clarity on the standalone business’s growth prospects and financials. GE Vernova’s early success suggests it could follow a similar trajectory, particularly as it leverages its leadership in electrification and power generation. 3M (NYSE: MMM), the global science and innovation company behind iconic brands like Post-it notes, Scotch tape, and Thinsulate insulation, has been on a transformative journey. On April 1, 2024, 3M completed the tax-free spin-off of its healthcare division into Solventum (SOLV), a standalone company focused on advancing healthcare through breakthrough solutions at the intersection of health, material, and data science. Investors received 1 share of Solventum for every 4 shares of 3M owned, and the spin-off has been a significant catalyst for 3M’s stock, which has surged 89.3% over the past year, far outpacing the S&P 500’s 34.8% return. The spin-off allows 3M to focus on its core industrial and consumer products businesses, which include a diverse portfolio of over 55,000 products. By separating its healthcare division, 3M has unlocked value for shareholders, enabling both companies to pursue their distinct growth strategies. Solventum, now a standalone entity, specializes in products that treat and prevent infections, dental filling materials, and filtration and purification systems. The new company is well-positioned to capitalize on the growing demand for innovative healthcare solutions, while 3M can concentrate on driving innovation in its industrial and consumer segments. 3M retained a 19.9% stake in Solventum but plans to divest its remaining shares within five years, providing additional liquidity and potential upside for shareholders. The spin-off was structured as a tax-free transaction, further enhancing its appeal to investors. Additionally, 3M recently reached a significant milestone with the approval of its $10.3 billion settlement related to “forever chemicals” (PFAS) litigation. This resolution removes a major overhang for the company and provides greater clarity for its future growth trajectory. Since its debut, Solventum has entered the S&P 500 and begun trading on the New York Stock Exchange, reflecting its strong market position and growth potential. The company’s focus on enabling better, smarter, and safer healthcare aligns with global trends toward improved patient outcomes and more efficient healthcare systems. The spin-off of Solventum has been a win-win for 3M and its shareholders. By unlocking the value of its healthcare division, 3M has streamlined its operations and positioned itself for sustained growth in its core markets. Meanwhile, Solventum’s focus on healthcare innovation offers significant upside potential. Together, these developments have driven 3M’s stock to impressive gains, making it a standout example of how spin-offs can create value for investors. Kellanova (NYSE: K) completed a major restructuring, spinning off its North American cereal business into a new entity named WK Kellogg Co (NYSE: KLG) last year. This move created two independent, publicly traded companies: Kellanova (K) on the New York Stock Exchange, which focuses on global snacking, international cereal and noodles, and North American frozen foods, and WK Kellogg Co (KLG), also trading on the New York Stock Exchange, which concentrates on ready-to-eat cereals in the U.S., Canada, and the Caribbean. Shareholders of the original Kellogg Company received 1 share of WK Kellogg Co for every 4 shares of Kellanova common stock they owned, marking the beginning of a new chapter for both companies. Kellanova, which retained the iconic ticker symbol “K,” is now a pure-play snacking powerhouse with a portfolio of beloved brands like Pringles, Cheez-Its, Rice Krispies Treats, and more. The spin-off allows Kellanova to focus on its core strengths in the global snacking market, which is growing rapidly as consumer preferences shift toward convenient, on-the-go foods.” WK Kellogg Co, is now dedicated to revitalizing its North American cereal business, a segment that has faced challenges in recent years due to changing breakfast habits and increased competition. By separating the cereal business, both companies can operate more efficiently and pursue tailored growth strategies. Following the spin-off, both Kellanova and WK Kellogg Co experienced initial declines in their stock prices, with Kellanova falling over 7% and WK Kellogg Co dropping about 5% on the first day of trading. However, the long-term success of each company will depend on their ability to execute their respective strategies and adapt to evolving market conditions. Disclaimers: RazorPitch Inc. "RazorPitch" is not operated by a licensed broker, a dealer, or a registered investment adviser. This content is for informational purposes only and is not intended to be investment advice. The Private Securities Litigation Reform Act of 1995 provides investors a safe harbor in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions, or future events or performances are not statements of historical fact and may be forward-looking statements. Forward-looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties that could cause actual results or events to differ materially from those presently anticipated. Forward-looking statements in this action may be identified through the use of words such as projects, foresee, expects, will, anticipates, estimates, believes, understands, or that by statements indicating certain actions & quote; may, could, or might occur. Understand there is no guarantee past performance will be indicative of future results. Investing in micro-cap and growth securities is highly speculative and carries an extremely high degree of risk. It is possible that an investor's investment may be lost or impaired due to the speculative nature of the companies profiled. RazorPitch has been retained and compensated by O S Therapies Inc to assist in the production and distribution of content related to OSTX. RazorPitch is responsible for the production and distribution of this content. It should be expressly understood that under no circumstances does any information published herein represent a recommendation to buy or sell a security. This content is for informational purposes only; you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by RazorPitch or any third-party service provider to buy or sell any securities or other financial instruments. All content in this article is information of a general nature and does not address the circumstances of any particular individual or entity. Nothing in this article constitutes professional and/or financial advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. RazorPitch is not a fiduciary by virtue of any persons use of or access to this content. Contact Details RazorPitch Mark McKelvie +1 585-301-7700 mark@razorpitch.com
February 27, 2025 07:00 AM Eastern Standard Time
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