EXCLUSIVE: Teresa Palmer, who has three films readying for release including Terrence Malick’s Knight of Cups, has been cast as the lead in Atomic Monster’s Lights Out for New Line Cinema. The horror film will be Atomic Monster’s second with New Line after Annabelle, which grossed $255.2M worldwide when it was released last fall. David Sandberg will make his feature film directorial debut and James Wan will produce. The film is based on Sandberg’s short horror film of the same name which went viral (you can watch it below).

The film, which starts production on Monday, is about a young boy and his estranged sister who are confronted by an evil entity that only appears when the lights are out. Eric Heisserer wrote the screenplay and is also a producer as is Lawrence Grey (Grey Matter Productions).

james-wan-01Wan and New Line previously teamed on The Conjuring which ended up grossing a whopping $318M worldwide on what was a modest budget. Wan, of course, is coming off of Universal Pictures’ box office mega hit Furious 7 which he directed to a $1.5B+ global box office take. He is also currently prepping The Conjuring 2 and is attached to direct Aquaman which is currently in development at Warner Bros.

Interestingly, Wan also started out by directing a horror short Saw and then ended up writing and directing the full length version, launching a successful horror franchise.

Atomic Monster has a production deal with New Line through which it will develop and produce modestly budgeted films from thrillers to science fiction, action, horror, and comedy. Michael Clear will oversee for the production company.

Palmer meanwhile is hot in demand. She will star in Warner Bros. re-make of the cult classic Point Break, Lionsgate’s The Choice which is based on the Nicholas Sparks novel of the same name and the aforementioned Malick project.

Grey Matter recently announced development on a Bruce Lee biopic and is also working on two other projects, Section Six and Winter’s Knight. Ben Everard will oversee Lights Out for Grey Matter while Richard Brener, Walter Hamada and Dave Neustadter will oversee for New Line.

Palmer is repped by WME, Management 360, Shanahan, and Sloane Offer Webber and Dern. Sandberg is repped by Paradigm, Gotham Group and Jackaway Tyerman.