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Here's Why Flexion Therapeutics Inc. Skyrocketed Today

By Brian Feroldi - Mar 23, 2017 at 3:36PM

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Shares shot up 33% on Thursday, fueled by rumors that the company is about to accept a takeover bid.

What happened

Shares of Flexion Therapeutics (FLXN) rose by more than 33% at $26.28 in Thursday trading, in response to rumors that a takeover bid from Sanofi (SNY 1.02%) is looming.

Businessman whispering in the ear of another businessman

Image source: Getty Images.

So what

According to a report by Fierce Pharma, Flexion has accepted a takeover offer from the French pharma giant Sanofi. This information comes from "a source close to the deal," and the bid is said to value the company's shares in the mid-$30s. If true, the deal could easily be worth more than $1 billion.

Flexion's stock ended Wednesday's trading session at $19.68, so if the terms of this deal are to be believed, shareholders would stand to earn a sizable premium. Traders bid up shares today on the hopes that an official announcement will be made soon.

Now what

While it is hard to know what to make of this report, there are reasons this deal would make sense for both companies. Flexion's lead compound, Zilretta, is an extended-release formulation of triamcinolone acetonide that is designed to provide long-lasting relief to knee pain due to osteoarthritis. Currently, Zilretta is pending FDA approval and a decision is expected by Oct. 6, 2017.

This is a market that Sanofi knows well: The company has an injectable osteoarthritis treatment of its own, Synvisc. If Zilretta wins approval, Sanofi's relationships and resources could go a long way toward making the drug's launch a success. 

Of course, without official confirmation from Flexion or Sanofi that this is a done deal, it is hard to know what to make of Fierce Pharma's report. Flexion's shareholders might want to simply enjoy today's gains and hang on to their shares until more information becomes available.

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Stocks Mentioned

Sanofi Stock Quote
Sanofi
SNY
$52.67 (1.02%) $0.53
Flexion Therapeutics, Inc. Stock Quote
Flexion Therapeutics, Inc.
FLXN

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