Health and Healthcare
Why These 3 Biotechs More Than Doubled on Monday
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Monday was a breakout day for a few biotech companies. Some made absolutely massive runs, practically doubling and then some. The biotechnology sector is pushing near all-time highs, and a few of these standouts are giving credence to these fresh highs.
24/7 Wall St. has picked a few of those standouts from Monday to highlight. We have included information about each company, as well as recent trading activity and the consensus analyst price target.
Synthorx Inc. (NASDAQ: THOR) shares more than doubled to start off the week after Sanofi announced that it would be acquiring the biotech in an all-cash deal worth roughly $2.5 billion.
Under the terms of the deal, Sanofi will buy all outstanding Synthrox shares for $68 apiece, implying a 172% premium to Friday’s closing price.
Keep in mind that this was only an $11 stock in October, and it started the year around $18. So if investors bought at any point this year before this past week, they would have more than tripled their investment.
Paul Hudson, Sanofi CEO, commented:
This acquisition fits perfectly with our strategy to build a portfolio of high-quality assets and to lead with innovation, as you will hear at our Capital Markets Day tomorrow, December 10. Additionally it is aligned with our goal to build our oncology franchise with potentially practice-changing medicines and novel combinations.
Shares of Synthrox were last seen up about 169% to $67.40, in a 52-week range of $11.00 to $67.45. The consensus price target is $28.00.
XBiotech Inc. (NASDAQ: XBIT) shares jumped following the announcement that the firm would be selling its novel antibody (bermekimab) to Janssen Biotech, a subsidiary of Johnson & Johnson (NYSE: JNJ).
As per the deal, Janssen will acquire all rights to bermekimab, and XBiotech will be free to use its True Human Antibody discovery program to develop new antibody therapeutics that target IL-1⍺ to treat non-dermatological diseases. XBiotech plans to re-enter clinical development expeditiously with a next generation anti-IL-1⍺ therapeutic.
Following the acquisition, XBiotech will use its proprietary manufacturing technology to produce clinical supplies of bermekimab for Janssen under a supply agreement. In addition, XBiotech will contract with Janssen to provide clinical trial operation services to complete two ongoing Phase 2 clinical studies evaluating bermekimab in hidradenitis suppurativa and atopic dermatitis.
In terms of the financials of the deal, Janssen will make a cash payment of $750 million to XBiotech. Additionally, XBiotech may receive up to $600 million in potential milestone payments. XBiotech expects to generate additional revenue from the manufacturing supply agreement and clinical services agreement with Janssen over the next two years.
Shares of XBiotech were up about 86% at $20.72, in a 52-week range of $4.11 to $22.95. The consensus price target is $16.00.
ArQule Inc. (NASDAQ: ARQL) saw massive gains after Merck & Co. Inc. (NYSE: MRK) announced that it would acquire the biotech. The companies announced a definitive agreement on Monday morning in which Merck would acquire ArQule for $20 per share in cash for a total equity value of $2.7 billion.
Under the terms of the acquisition agreement, Merck, through a subsidiary, will initiate a tender offer to acquire all outstanding shares of ArQule. The transaction is expected to close early in the first quarter of 2020.
Paolo Pucci, CEO of ArQule, commented:
We are proud that Merck has recognized the contributions that ArQule, together with its scientific collaborators, has made to the field of precision medicine in oncology with ARQ 531 for the treatment of B-cell malignancies and with the rest of our clinical-stage pipeline. With this agreement, ArQule’s pipeline will benefit from Merck’s vast capabilities and determined engagement to benefit the patients who we have always strived to serve.
This stock has seen an incredible run over the course of 2019, with shares just under $3 apiece in January.
Shares of ArQule were up about 103% at $19.68, in a 52-week range of $2.23 to $19.72. The consensus price target is $13.73.
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