Tobira Therapeutics Inc. (NASDAQ: TBRA) shares skyrocketed on Tuesday after Allergan PLC (NYSE: AGN) announced that it will acquire the company. Both boards of directors have unanimously approved the transaction and expect it to close by the end of 2016. Although it still is subject customary closing conditions and regulatory approval.

Under the terms of the agreement, Allergan will acquire Tobira for an upfront payment of $28.35 per share in cash, and up to $49.84 per share in contingent value rights that may be payable based on the successful completion of certain development, regulatory and commercial milestones, for a total potential consideration of up to $1.695 billion.

Ultimately, this acquisition will add Cenicriviroc (CVC) and Evogliptin, two differentiated, complementary development programs for the treatment of the multi-factorial elements of nonalcoholic steatohepatitis (NASH), including inflammation, metabolic syndromes and fibrosis, to Allergan’s global gastroenterology research and development pipeline.

The acquisition also adds Evogliptin, an oral DPP-4 (Dipeptidyl peptidase-4) inhibitor for the potential treatment of NASH. Evogliptin is being studied in a Phase 1 trial assessing the safety, tolerability and steady-state pharmacokinetic parameters of the compound when administered with and without CVC.

Brent Saunders, CEO and President of Allergan, commented:

The acquisition of Tobira is a strategic R&D investment within a white space area of our global Gastroenterology franchise and an opportunity to advance the development of novel treatments for NASH. With the increasing rates of diabetes, obesity and other metabolic conditions in the U.S. and in developed nations globally, NASH is set to become one of the next epidemic-level chronic diseases we face as a society. It is important that we invest in new treatments today so that healthcare systems, providers and patients have treatment options to face this challenge in the coming years.

Shares of Tobira were trading up over 730% at $39.35 on Tuesday, with a consensus analyst price target of $19.00 and a 52-week trading range of $3.76 to $39.44.

Allergan traded down more than 2% to $238.90. The consensus price target is $299.06, and the 52-week range is $195.50 to $322.68.

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