Big pharma firm Allergan has just announced their plans to purchase the tiny Tobira Therapeutics firm. The deal, at least for now, is valued at about $28.35 per share, but Allergen says that it could expand to involve more money.
According to Allergen, in a statement, “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 (CVRs) 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.”
On Monday, Tobira closed the trading day at $4.74 a share and a market cap of only $89 million. The company, however, is in the process of developing two drugs aimed at treating NASH disease. According to Allergen, NASH disease is categorized by the buildup of fat within the liver for reasons we do not yet know; more importantly, this condition can lead to liver failure.
These two drugs—intended to be used, most likely, together—are Cenicriviroc and Evogliptin. It is supposed to pose a major payday for Tobira, especially if the drugs meet certain thresholds. If that happens, the financial yield could be significantly higher.
Of course, the implication is that this move is a bet that the drugs will not only succeed but also address a growing need in a part of the industry where there is little intervention.
Allergen CEO Brent Saunders comments, “With the increasing rates of diabetes, obesity, and other metabolic conditions in the US and in developed nations globally, NASH is set to become one of the next epidemic-level chronic diseases we face as a society.”
He also goes on to say, “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.”
With that in mind, premarket trading of Tobira shares surged up 572 percent to reach $31.85 per share while Allergen shares fell, slightly—only 0.3 percent—to $244.50 per share.
Additionally, other NASH disease-focused drugmakers went into high gear as well. Shares of these companies shot up too: Intercept increased 6.7 percent while Galectin Therapeutics Inc soared 14 percent. Conatus Pharmaceuticals Inc jumped 22 percent and even Gilead Sciences got a bump of 2.6 percent.