If you missed it, this article is part of a short series on the odd debris that collects at the bottom of a brokerage account. Part 1 looked at the portfolio graveyard generally. This time, I want to focus on one of its strangest residents:
The contingent value right, or CVR.
This article uses real examples from my own portfolio, including CVRs with defined payout structures, milestones, and actual distributions.
The Most Dangerous Word in Investing: “If”
If you invest in biotech long enough, you start collecting CVRs.
They show up after acquisitions and restructurings and say:
You’ll get paid… if something happens.
And that “if” does a lot of work.
Importantly, CVRs are not just biotech instruments. They are simply a way to deal with uncertainty in any transaction where value cannot be cleanly agreed upon at closing.
The Two Types of CVRs
1. Milestone CVRs
These pay if a defined event occurs:
- FDA approval
- sales thresholds
- licensing deals
2. Asset Monetization (Trust) CVRs
These pay when a pool of assets is sold or distributed over time.
My portfolio contains both.
303CVR013 — FG Nexus (The One That Already Paid)
This is the CVR that breaks the lazy definition of a CVR as “some biotech thing that will probably never pay.”
Because this one was created in a very different kind of transaction.
Fundamental Global, which became FG Nexus(FGNX), effectively spun out its legacy assets into the FG CVR Trust so that the public company could be left as a clean shell for an Ethereum treasury company strategy. That is a much more modern sentence than most CVRs deserve.
What actually happened
Instead of trying to carry a pile of legacy investments and odd holdings inside a company that was pivoting into something completely different, those assets were transferred into a separate trust structure.
Shareholders received CVRs representing the right to whatever value could eventually be realized from that pool.
So this was not a case of:
“Maybe a drug works someday.”
It was a case of:
“We are leaving the old stuff behind, and if that old stuff gets monetized, you should still participate.”
Of course there is more than meets the eye. Kyle Cerminara and Larry Swets figured out a way to take their public holding company private without buying out shareholders, maintain control of permanent capital forever, and have zero reporting requirements. The crypto move wasn’t the impetus, on the contrary, it was a convenient opportunity to use the empty shell left behind by their maneuver
Who was behind it
This is a holding company of Kyle Cerminara, who has proven to be quite adept at financial engineering. It is a basket of legacy investments, operating businesses, sponsor-style interests, and public and private holdings.
What the CVR trust holds
Though the trust has said it will post updates at fgftrust.com, there appear to be none since the transaction was completed. There is however a list of some of the initial assets:
- Strong Technical Services
- Saltire Capital preferred shares plus accrued dividends
- FG Merchant Partners
- Firefly Systems
- GreenFirst Forest Products
- FG Communities
- Craveworthy Brands
- FG Merger II
- Aldel Financial II
- Greenland Exploration
- Argo Holdings
- Think Markets
- Pivotal Capital
- B-Scada
- cash and cash equivalents
And yes, the GreenFirst piece is especially interesting here, because GreenFirst earlier spun off Kap Corporation. So quite likely the CVR holds Kap as well, if it even still exists.
That is not diversification.
That is a hall of mirrors.
What has happened so far
- Initial distribution: $10 per CVR
- Tax reporting fair market value at distribution: approximately $42 per CVR
That matters because it means this is not a purely theoretical right. It has already produced a real payout.
How it pays going forward
There are no clinical milestones and no binary regulatory events.
Instead, future value depends on whether the trust can monetize the assets over time through:
- asset sales
- security distributions
- cash realizations
- other exit events
Which means the timeline is uncertain, the recoveries are uncertain, and the eventual value depends on what these assets are actually worth in the real world rather than in an investor presentation.
Interpretation
This is not a biotech lottery ticket.
It is closer to:
A permanent capital vehicle created out of a public company with no premium paid to shareholders.
Among the CVRs in my account, this one is the easiest to take seriously because it has already paid once and because its value depends on monetizing an actual basket of assets rather than waiting for a single miracle.
550CVR021 — Lumos Pharma (LUM-201)
This CVR is tied to LUM-201, an oral treatment for pediatric growth hormone deficiency.
Milestone structure
Revenue milestones (through 2037):
- $500M annual revenue → $1.00 per CVR
- $1B annual revenue → $1.50 per CVR
- $1.5B annual revenue → $2.00 per CVR
Short-term (first ~18 months post-acquisition):
- 25% of proceeds from certain asset transactions
- $2.00 per CVR if the company or assets are sold
Current status
- Phase 3 clinical trial ongoing
Interpretation
This is a real asset with a real path.
But that path requires:
- successful trials
- approval
- commercial success
Which is a long chain of “ifs.”
426CVR015 — Hepion (Rencofilstat)
This CVR is tied to Rencofilstat, a Hepion asset that was sold for nominal consideration.
Milestones
- FDA approval → $500,000 total payout
- $350M in net sales → $1,000,000
- $750M in net sales → $3,000,000
Important context
The company explicitly indicated that the probability of achieving these milestones was highly uncertain.
Interpretation
This is the purest form of CVR:
- clear milestones
- binary outcomes
- long odds
A textbook “probably worthless, but technically…” situation.
849CVR014 / 849CVR022 — F-star (The Two-Headed CVR)
These came from the Spring Bank / F-star transaction and represent two separate contingent rights tied to STING-related assets.
CVR #1 — STING Agonist (SB 11285)
- Pays the greater of:
- 25% of proceeds from qualifying transactions
- a target payout of ~$1 per share (capped at ~$18M total)
- Linked to monetization of SB 11285
- Expiration tied to clinical trial timeline
CVR #2 — STING Antagonist Program
- Entitled to 80% of net proceeds from certain development or licensing agreements
- 7-year duration
- Potentially tied to deals like the AstraZeneca STING inhibitor agreement
Interpretation
These are:
- real
- structured
- and difficult to track
Even if they pay, you may need to reread the documents twice to understand why.
How I Think About CVRs
There are four categories:
- Already paid something: real but uncertain
- Backed by a live asset: plausible future value
- Milestone lottery tickets: low probability
- Obscure remnants: functionally invisible
Most portfolios contain a mix.
The Truth About CVRs
CVRs exist because valuation disputes get deferred.
They are not clean.
They are not liquid.
They are not easy to value.
They are simply:
A legally structured “we’ll see.”
Coming Next
Not everything strange at the bottom of a portfolio is this complicated.
Some things are simpler—and harsher:
- a spinoff that never traded
- a bankrupt retailer
- warrants that are alive but useless
- a real estate investment stuck in a dead platform
- a dismantled company where equity sits below creditors