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Pandion Therapeutics (PAND) hit an all-time high on Thursday Merck(MRK) plans to buy the IPO stock for $ 1.85 billion.
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Biotech company Pandion closed its IPO just seven months ago. But Merck plans to take over the fledgling company for $ 60 a share. This represents a premium of around 130% over the IPO’s share price, SVB Leerink analyst Geoffrey Porges said in a report to clients.
Porges called the deal a “disproportionate result for Pandion shareholders given the early stage of the company’s development.” The main active in Pandion is in phase 1 for the treatment of ulcerative colitis and a form of lupus.
“This transaction also validates the notion that investors in recently opened and early stage biopharmaceutical companies may still be tempted by the possibility of a huge early return from a large transaction at a high price,” he said. he declares. “This transaction appears likely to contribute to a sustained dynamism of the appetite for emerging biopharmaceutical equity offerings on the public markets.”
IPO shares increase on repurchase
In the morning of trading on the stock market today, the IPO Pandion share climbed 131.9% to near 59.40. Merck’s stock fell a fraction near 74.20.
Under the terms of the agreement, Merck will acquire the Pandion IPO shares through a subsidiary. Dr. Dean Y. Li, president of Merck Research Laboratories, highlighted Pandion’s work in creating drugs that attempt to “rebalance the immune response”. It could be essential for treating some autoimmune diseases.
“This acquisition builds on Merck’s strategy to identify and secure candidates with differentiated and potentially fundamental characteristics,” he said in a written statement.
The main drug shows the promise
Earlier this year, Pandion reported that its main drug was showing proof of concept, Porges of SVB Leerink said. But the drug is only just beginning clinical trials – the first patient was dosed on Wednesday. This drove the share of the IPO to over 2%. A second drug in preclinical testing also targets inflammatory diseases.
“This data, along with the other data on the platform, has definitely caught the attention of Merck,” he said. “They were probably also motivated by the prior acquisition of SynThorx by Sanofi (SNY), which has contributed to at least one active program in the Sanofi pipeline. “
IPO Pandion stock started trading in July at age 18. Stocks recently broke from a cut base with a buy point at 23.56, according to MarketSmith.com. Thursday’s news sent IPO action high above that entry.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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