Why QLT Inc. Stock Rocketed Higher

QLT shares soar after agreeing to be purchased. Find out how this could affect existing QLT shareholders and investors of the purchasing company.

Jun 26, 2014 at 3:08PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of QLT (NASDAQ:QLTI), a clinical-stage biopharmaceutical company focus on developing therapies to treat eye disorders, jumped as much as 23% after agreeing to be purchased by Auxilium Pharmaceuticals (NASDAQ:AUXL).

So what: Under the terms of the deal Auxilium will pay $346 million to buy QLT in an effort to diversify its product, and likely to escape high U.S. corporate taxes. QLT is based in Canada, and Auxilium relocating its headquarters to Canada could help push its effective tax rate notably lower than the high-end marginal rate of 40% in the U.S. However, this is no ordinary takeover, as QLT shares are being used as the financing tool. Auxilium shareholders will receive 3.1359 shares of QLT stock for each share they currently hold, with Auxilium shareholders owning around three-quarters of the combined company. The deal is expected to close in the fourth-quarter.

Now what: Considering how far away from product commercialization QLT currently is the deal makes complete sense from a shareholder standpoint. For Auxilium, with sales growing and healthy profitability expected in fiscal 2015, the deal could wind up saving it millions of dollars which it'll be able to reinvest into research and development projects, or perhaps more acquisitions. This trend of fleeing U.S. corporate taxes may continue for some time going forward throughout the health care sector, but on the all I'd consider this a pretty fair deal for both parties involved.

QLT may have soared, but the potential offered by this revolutionary new product could dwarf QLT's jump today over the long term!
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information

Compare Brokers