Health and Healthcare

Are Neon Therapeutics' Shareholders Getting Enough in the Buyout?

Chris Lange

Published: January 16, 2020 11:20 am

Neon Therapeutics Inc. (NASDAQ: NTGN) shares shot up on Thursday after the firm announced that it will be acquired by BioNTech SE (NASDAQ: BNTX). The question is: Are Neon Therapeutics shareholders getting enough out of the deal?

The deal was unanimously approved by both BioNTech’s and Neon’s boards of directors. The transaction, which is expected to close during the second quarter of 2020, is subject to approval of Neon’s shareholders and customary closing conditions.

Ultimately, this transaction will combine two organizations with a common culture of pioneering translational science and a shared vision for the future of cancer immunotherapy.

This all-stock deal is valued at roughly $67 million. Upon closing, Neon Therapeutics will operate as a subsidiary of BioNTech, a global clinical-stage biotechnology company focused on patient-specific immunotherapies for the treatment of cancer and other serious diseases.

At closing, BioNTech will issue Neon shareholders 0.063 American depositary shares (each ADS representing one ordinary share of BioNTech) in exchange for each of their shares of Neon. The exchange ratio implies a deal value of $67 million, or $2.18 per share of Neon, based on the closing price of BioNTech’s ADSs of $34.55 on Wednesday, January 15, 2020.

The implied price of $2.18 per Neon share offers a premium of 65% from the stock’s 50-day moving average ($1.32). However, this is a 33% discount from the 200-day trading average ($3.25).

Ugur Sahin, MD, Co-founder and CEO of BioNTech, commented:

This acquisition fits with our strategy to expand our capabilities and build our presence in the U.S. and further strengthens our immunotherapy pipeline,” “I am particularly excited about the adoptive T cell and neoantigen TCR therapies being developed by Neon, which are complementary to our pipeline and our focus on solid tumors.

Shares of Neon Therapeutics were last seen up about 41% at $1.74, in a 52-week range of $0.88 to $7.51. The consensus price target is $12.86.

BioNTech traded down 5% at $32.91 a share. The 52-week range is $12.52 to $48.85, and the consensus analyst target is $19.55.